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Old Posted Jan 17, 2017, 11:55 PM
CaliNative CaliNative is offline
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Has the Toronto building boom peaked?

In my new 2017 edition of the "World Almanac" list of tall buildings, I noticed that Toronto has almost 30 500' (a bit over 150 m) buildings under construction, mostly condo/apt. towers or mixed use towers. This is far more than any other N.Am city (except NYC) including L.A., S.F., & Miami, site of other booms. Is Toronto different in some way, or is this a "bubble" top? Could this be the 2007 peak all over again? I hope not, but who knows? Are the new condos being bought as quickly as last year? Are concessions being offered? What is the vacancy rate in the new buildings? Are more sales starting to fail for whatever reason? Price concessions are being offered in L.A. & S.F. to attract buyers. Are price concessions being offered in Toronto?

L.A., S.F. (& Miami) has a great deal of new supply of new condos catering to wealthy people (often foreigners), few for middle class. Only so many wealthy buyers remain. Maybe this is the problem? I'm pretty sure the building booms in L.A. & S.F. have peaked (or are close to peaking) but don't know enough about Toronto to say for sure about the situation there. Only 10% of people in S.F. & L.A. can afford the new condos & houses being built. Are Toronto condos more affordable for middle income people?

(I have a degree in economics & finance & have a special interest in economic cycles, especially real estate cycles).

Last edited by CaliNative; Jan 19, 2017 at 8:28 AM.
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  #2  
Old Posted Jan 18, 2017, 7:16 AM
isaidso isaidso is offline
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Toronto's building boom started around 2007. By 2011 people started questioning how much longer the frenetic pace of construction could continue. Was there a real estate bubble forming? The issue has been analyzed to death over the years and steps made to take some froth out of the market to avoid a potential crash.

The scale of Toronto's tower boom is due to a perfect storm of factors. First was the formation of the Green Belt and 'Places to Grow'. It protected rich farmland on Toronto's northern periphery and looked to curb sprawl. Intensification was encouraged rather than growing the footprint of the city.

The golden horseshoe is one of the fastest growing regions in the western world and has been for decades. It adds 100,000+ people annually so what one's seeing is a growing % of that demand being satisfied with midrise and highrise developments. Urban planning policies have been designed with the goal of increasing population density and supporting development that's geared around transit.

A 3rd contributor has been the cultural shift happening right across Canada. People still covet a house with a yard but the younger generation covets downtown living more. With real estate prices what they are and supply limited, the only option downtown is a condo. There's so much money up for grabs that developers are upping their game when it comes to design to lure buyers. Price discounts don't happen here and condo proposals need to be 80% sold to proceed. I might be wrong about the exact number but it's around there.

There's also some validity to the idea that Toronto is still in the process of assuming its place at the head of the Canadian table. Montreal, for most of our history, was the nation's economic, political, and cultural power base. It's where the old money resided and accrued all the perks that go along with that. Toronto surpassed Montreal in size in the late 70s but it will take a few more decades till Toronto fully grows into its 'new' role. It's starting to sink in that what's occurring in Toronto isn't a normal real estate cycle. The level of development is the new normal.
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Last edited by isaidso; Jan 18, 2017 at 7:57 AM.
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  #3  
Old Posted Jan 18, 2017, 3:38 PM
CIA CIA is offline
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Quote:
Originally Posted by isaidso View Post

The scale of Toronto's tower boom is due to a perfect storm of factors. First was the formation of the Green Belt and 'Places to Grow'. It protected rich farmland on Toronto's northern periphery and looked to curb sprawl. Intensification was encouraged rather than growing the footprint of the city.

The golden horseshoe is one of the fastest growing regions in the western world and has been for decades. It adds 100,000+ people annually so what one's seeing is a growing % of that demand being satisfied with midrise and highrise developments. Urban planning policies have been designed with the goal of increasing population density and supporting development that's geared around transit.

A 3rd contributor has been the cultural shift happening right across Canada. People still covet a house with a yard but the younger generation covets downtown living more. With real estate prices what they are and supply limited, the only option downtown is a condo. There's so much money up for grabs that developers are upping their game when it comes to design to lure buyers. Price discounts don't happen here and condo proposals need to be 80% sold to proceed. I might be wrong about the exact number but it's around there.
These are all spot on and not unique to Toronto. If population of an area is rapidly growing, combined with physical and regulatory land constraints and preferences for walkable communities over car-dependent suburbs (with its segregated land uses), then the only way to go is up.

How many single-family housing units have been built in a given metro area for past years? Now, due to the shifts that isaidso describes, say those are now condo or apartment units. If anything, cities, like Toronto, may still be in the infancy of their skyscraper boom. It's happening all across North America.
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  #4  
Old Posted Jan 18, 2017, 4:42 PM
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koops65 koops65 is offline
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500+ foot towers built in Toronto by year:

2005 - 3
2006 - 1
2007 - 1
2008 - 1
2009 - 3
2010 - 2
2011 - 4
2012 - 5
2013 - 1
2014 - 1
2015 - 8
2016 - 9
2017 - 15 * All currently U/C
2018 - 3 * "
2019 - 8 * "

Certainly this year will be a peak as far as towers finishing up goes. Also, these numbers are reflective of shorter towers as well. For each 500 footer, 2 or 3 400 footers go up, and 5 or 6 average sized mid-rises go up. Toronto has had approximately 140 towers U/C at any given time for years now...
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Old Posted Jan 19, 2017, 2:43 AM
isaidso isaidso is offline
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Originally Posted by CIA View Post
These are all spot on and not unique to Toronto. If population of an area is rapidly growing, combined with physical and regulatory land constraints and preferences for walkable communities over car-dependent suburbs (with its segregated land uses), then the only way to go is up.

How many single-family housing units have been built in a given metro area for past years? Now, due to the shifts that isaidso describes, say those are now condo or apartment units. If anything, cities, like Toronto, may still be in the infancy of their skyscraper boom. It's happening all across North America.
I was thinking the same thing. Canadian cities seem to have a bit of a head start on American in this regard but there are signs of it picking up steam everywhere. I don't have figures for single family housing starts but know the numbers have plunged over the last 10-15 years despite new housing demand remaining fairly constant.

Downtown LA is intriguing to me as it looks prime for a Toronto style condo boom. I'm not familiar enough with LA to know if urban planning policies are conducive to this but maybe someone from there can rhyme in.
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  #6  
Old Posted Jan 19, 2017, 3:43 AM
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High-rise living and high-rise construction have been a normal part of Toronto since the 50s. You can see high rises in all of the 50s and 60s suburbs. There are almost two hundred 70s/80s/90s high-rises in Mississauga alone. I don't think what's happening now is a building boom, just a continuation of what's been going on since the 50s. Maybe high-rise construction has been encouraged further by the Places to Grow Plan (Greenbelt),But I'm not sure it even matches the 50s building boom. The new buildings are certainly taller, construction more focused on older parts of Toronto instead of the suburbs, but overall this is not something new to the GTA, and it is probably not something that will go away.

50s high-rises in suburban NW Toronto (North York):
https://www.google.ca/maps/@43.75963...8i6656!6m1!1e1

L'Amoreaux, 50-60s subdivision dominated by high-rises in NE Toronto (Scarborough):
https://www.google.ca/maps/@43.79346...7i13312!8i6656

50/60s high-rise apartments in Cooksville in Mississauga:
https://www.google.ca/maps/@43.57062...7i13312!8i6656

70s high-rise apartments in the Mississauga Valleys subdivision in Mississauga:
https://www.google.ca/maps/@43.59059...7i13312!8i6656

70s high-rise apartments in Bramalea in Brampton:
https://www.google.ca/maps/@43.71867...7i13312!8i6656

Mostly 80s/90s high-rises apartments in Mississauga City Centre:
https://www.google.ca/maps/@43.58395...7i13312!8i6656

90s/00s high-rise apartments north of Mississauga City Centre:
https://www.google.ca/maps/@43.60438...7i13312!8i6656
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  #7  
Old Posted Jan 19, 2017, 8:17 AM
CaliNative CaliNative is offline
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Quote:
Originally Posted by koops65 View Post
500+ foot towers built in Toronto by year:

2005 - 3
2006 - 1
2007 - 1
2008 - 1
2009 - 3
2010 - 2
2011 - 4
2012 - 5
2013 - 1
2014 - 1
2015 - 8
2016 - 9
2017 - 15 * All currently U/C
2018 - 3 * "
2019 - 8 * "

Certainly this year will be a peak as far as towers finishing up goes. Also, these numbers are reflective of shorter towers as well. For each 500 footer, 2 or 3 400 footers go up, and 5 or 6 average sized mid-rises go up. Toronto has had approximately 140 towers U/C at any given time for years now...
Toronto...heaven for construction workers. $$$$$$$
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  #8  
Old Posted Jan 19, 2017, 8:21 AM
CaliNative CaliNative is offline
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Quote:
Originally Posted by isaidso View Post
I was thinking the same thing. Canadian cities seem to have a bit of a head start on American in this regard but there are signs of it picking up steam everywhere. I don't have figures for single family housing starts but know the numbers have plunged over the last 10-15 years despite new housing demand remaining fairly constant.

Downtown LA is intriguing to me as it looks prime for a Toronto style condo boom. I'm not familiar enough with LA to know if urban planning policies are conducive to this but maybe someone from there can rhyme in.
L.A. has a big "NIMBY" problem ("not in my backyard") and there is opposition to highrises in many neighborhoods. There is even a ballot measure to restrict them coming up. But land costs will almost ensure further construction.
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Old Posted Jan 19, 2017, 10:27 PM
isaidso isaidso is offline
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Originally Posted by CaliNative View Post
L.A. has a big "NIMBY" problem ("not in my backyard") and there is opposition to highrises in many neighborhoods. There is even a ballot measure to restrict them coming up. But land costs will almost ensure further construction.
Would that apply to downtown though? The area near where that new Marriott went up looks like prime land for intensification with next to no low rise residential around there. LA seems to lots of areas where one could do a similar thing.
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Old Posted Jan 30, 2017, 3:08 PM
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Actually the building boom started long before 2007. It just took time for property values to increase to the point that proposals got tall enough for some to take an interest.

It's an investment driven boom with a lot of outside influences. It is a lot more complicated than a trend to urban living and very hard to predict when it will fall all apart and the ensuing severity of the bust. The governments have supported it up to this point because of the huge amount of jobs it provides. Now, they have become concerned

The Greenbelt restricts outward growth but, it's impact is negligible on the building of tall towers. Toronto has plenty of space to add millions of more units without having to build a single tower over 20 floors let alone 50.

I suspect a significant correction at some point and a loss in consumer confidence in condominiums exactly like previous condo boom. It'll probably spell the end to most 50 storey condos but some will persist as developers have little choice. I also suspect once the dust settles these investor driven towers made of small, poorly planned spaces will be seen negatively and impact the selling of prebuilt units. Even today, experienced homeowners prefer to physically touch what they are getting before signing a binding purchase agreement of the biggest purchases of their lives.
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Old Posted Jan 30, 2017, 3:23 PM
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Originally Posted by Doady View Post
High-rise living and high-rise construction have been a normal part of Toronto since the 50s. You can see high rises in all of the 50s and 60s suburbs. There are almost two hundred 70s/80s/90s high-rises in Mississauga alone. I don't think what's happening now is a building boom, just a continuation of what's been going on since the 50s. Maybe high-rise construction has been encouraged further by the Places to Grow Plan (Greenbelt),But I'm not sure it even matches the 50s building boom. The new buildings are certainly taller, construction more focused on older parts of Toronto instead of the suburbs, but overall this is not something new to the GTA, and it is probably not something that will go away.
High rise living took off in the 1960s. The first condo high rise was built in 1968. Yeah, high rise living has been a part of Toronto for the past 50 odd years and has persisted through the many booms and busts. The difference is scale. As you say, today's towers are 3 times taller and twice as large as those from previous booms. This amounts to an incredible number of high rise units opposed to low rise. As I said in my last post, Places to Grow is negligible when it comes to height. There is a ton of property to achieve the necessary numbers without resorting to building tall.

For the sake of Toronto, I hope I'm right. I know some of you are memorized by tall building but, they is a human equation to it as well. It's not right for a family of four with two hard working professionals to live in a tiny one bedroom Cityplace condo because they can't afford to upgrade. Prices are simply out of control and grossly impacting quality of life. This is not good for the future of Toronto.
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Old Posted Feb 7, 2017, 9:00 PM
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Originally Posted by CIA View Post
These are all spot on and not unique to Toronto. If population of an area is rapidly growing, combined with physical and regulatory land constraints and preferences for walkable communities over car-dependent suburbs (with its segregated land uses), then the only way to go is up.

How many single-family housing units have been built in a given metro area for past years? Now, due to the shifts that isaidso describes, say those are now condo or apartment units. If anything, cities, like Toronto, may still be in the infancy of their skyscraper boom. It's happening all across North America.
Except we are now at Peak Millenial, and the funny thing is once people start settling down and raising kids doing it in a condo starts to look really unappealing. Toronto is getting the spillover from BC foreign buyers tax, but with new capital controls brought in by the Chinese government are going to slow even that down.
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Old Posted Mar 30, 2017, 7:36 PM
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Except we are now at Peak Millenial, and the funny thing is once people start settling down and raising kids doing it in a condo starts to look really unappealing. Toronto is getting the spillover from BC foreign buyers tax, but with new capital controls brought in by the Chinese government are going to slow even that down.
You lost me at Peak Millenial...

Not everyone's goal in life is to have kids. Even with them, bringing them up in cookie-cutter suburbia isn't universally accepted as the thing to do as it was in the 70s and 80s, especially if the family can afford something better.

What's the population growth of greater Toronto? Even if only 20 percent of the growth choose to occupy non-single family homes for lifestyle preference or financial reasons, that's still going to be thousands of new units every year to meet demand. The typical apartment/condo development has what -- 200 or 300 units? There is literally demand for hundreds of new ones every year.

I'm amazed that building of tens of thousands of single family homes in the 80s was seen as acceptable, but now a small percentage increase in multi-family living and everyone is screaming bubble.
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Old Posted Today, 7:49 AM
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New real estate sales are slowing rapidly according to David Stockman

Just saw a post from David Stockman on Twitter that new real estate unit sales in Toronto have slowed sharply since the start of the year. Just a blip, or the start of a correction? Maybe the recovery from the 2008 slump has ended for now, in Toronto & other cities. L.A. & S.F. & S.D. sure look "peaky" to me, and maybe Toronto too. Maybe the foreign (especially Chinese) buyers aren't coming in like they were the last few years. Look at Vancouver. Eventually of course the surplus, if any, will be absorbed at perhaps somewhat lower prices, and the building will start anew. It almost always does, in the "desirable" cities anyway.
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