The Shifting Foundations in Toronto’s Housing Story

Population Growth, Affordability, and the Future

The City of Toronto continues to experience dynamic shifts in its housing landscape, driven by demographic, social, and market trends. A recent report , received by Toronto's Planning and Housing Committee this past week, provides a comprehensive overview of these changes from 2001 to 2021, highlighting both emerging and longstanding trends that shape our city's growth and housing needs.

Key Insights:

1. Population Growth Driven by Migration: Toronto's population growth is primarily fueled by migration, with the city welcoming a significant number of new residents annually. Between 2022-2023 alone, the population grew by 125,756 people, a sharp increase compared to the average annual growth of 15,500 people from 2001 to 2021. In 2023, Canada observed its fastest rate of population increase (over 3%), among the fastest growth of any industrialized country in the post-war period.

2. Millennials and Baby Boomers Dominate: Millennials and Baby Boomers are now the two largest age cohorts in Toronto, each with distinct housing needs. The Millennial cohort is approaching the size of the Baby Boomer generation at its peak, while turnover of much of the City's ground-related housing stock is slow, necessitating diverse housing solutions. The anticipated downsizing among Baby Boomers has not materialized as older households prefer to age in place leading to the slower turnover of ground-related stock in many of the City's designated neighbourhoods.

3. Smaller Household Sizes: The trend toward smaller household sizes continues to drive the city's housing dynamics. The traditional nuclear family of the postwar is no longer the central organizing feature of household demand. More people are living alone or in non-family households or in any number of diverse forms of household formation. Overall this is leading to an increased demand for housing units to accommodate the same population. This means that the same level of new housing supply does not necessarily have the same impact as it did in housing past generations due to these smaller household sizes on average.

4. Millennials Leaving Toronto : Interestingly, there is a noticeable trend of people of child bearing years and millennials moving out of Toronto. Millennials are observed in the report to have a pent-up demand for housing and for Millennials who are in search of ground related housing, the slow turnover of this housing type will mean that this supply will likely arrive too late to meet their current needs in the City. This migration is reshaping the demographic profile of various neighborhoods, which are concurrently growing older.

5. Rise in Mid/High-Rise Living: The number of occupied mid/high-rise apartments nearly equals the number of houses and low-rise units, accommodating all household types including couples and families with children. Toronto's multi-unit buildings house all household types in the City and must accommodate a variety of needs.

6. Challenges in Housing Affordability : Affordability remains a critical issue, with housing costs far outpacing income growth. Renters are particularly affected, and the recent improvements seen during the COVID-19 pandemic due to income supports are proving temporary.

Implications:

- Demand-Supply Mismatch: There remains a persistent mismatch between housing demand and supply, exacerbated by the varying needs of different age cohorts. As Baby Boomers age in place, the turnover of ground-related housing stock is slow, delaying the availability of these units for younger generations seeking such housing.

- Suitability of Investor-Driven Housing : The current condo market dynamics raise concerns about the suitability of investor-driven housing products, which may not meet the evolving needs of millennials, especially those entering the coupling or child-rearing phases.

- Increased Pressure on Housing Stock: Fast population growth and increased migration add pressure on the housing stock, particularly for ground-related and affordable housing units .

City’s Response:

In response to these trends, the City of Toronto is implementing a range of programs and policies aimed at increasing housing options and supply.

This includes:

• Expanding Housing Options in Neighbourhoods (EHON) initiatives to incrementally increase ground-related housing stock and to increase density in proximity to neighbourhood amenities, provide new opportunities for development or to provide options for home owners to accommodate different ways of living including typologies for multi-generational households
• Encouraging more two-and three-bedroom units in new developments through the Growing Up Guidelines.

• Utilizing City-owned land to create mixed-income communities with affordable rental and rent-controlled homes.

• Accelerating the approval processes for housing development to meet urgent need.

• The Generational Transformation of Toronto’s Housing System adopted by council in 2023 updated the City's housing target to 65,000 rent-controlled home approvals including 41,000 affordable rental, 6,500 RGI homes, and 17,500 rent-controlled homes by 2030.

Initiatives that unlock the potential of small-scale development in neighbourhoods across the City can help to make our housing system more agile and flexible in responding to changing demographics and market conditions. Reducing the administrative burden on the approval process by simplifying zoning rules and policies like the mid-rise guidelines can increase the predictability of new development, reduce timelines and increase development unit yield. Exploring initiatives like single-exit stair changes to the building code can go further and unlock human-scaled development in both downtown and neighbourhoods in the City's inner suburbs.

We can also take the opportunity now to support a more diverse development industry including private, non-profit and social housing. I strongly believe that a crucial part of the response to these housing trends must include building non-market housing at scale. Non-market housing can leverage public, private and philanthropic investment to more directly target social and demographic needs in areas that Toronto's housing industry is not currently equipped to address adequately. By focusing on non-market solutions, we can better meet the diverse and ever-evolving housing needs of our population and retain talent and youth in the City.

Given the seismic changes we've seen in the housing market recently, it's worth taking a moment to check out the City's report and the trends driving these changes.

To read the full City report,?find?it?on?the?City of Toronto’s?website .

https://www.toronto.ca/legdocs/mmis/2024/ph/bgrd/backgroundfile-247209.pdf