John Greenwood – Financial Post

It’s become a mantra among urban planner types: If cities like Toronto are to grow successfully, they must make more efficient use of space.

Which partly explains the condo boom. Instead of opting for the kind of houses with big back yards favoured by their parents, new arrivals and the offspring of the existing population are sacrificing all that for affordability and (usually) a central location.

According to the development industry, the condo boom represents a massive shift in the way people in cities choose to live.

But if that’s the case, then why are there so few units designed for families? We know the divorce rate is soaring and people are opting for fewer kids but that hardly explains why in the first quarter of last year there was only one four-bedroom unit that changed hands in the last three months of 2011 in the whole of Toronto.

Comment: Probably the only 4-bedroom condo in the entire GTA. Never even heard of one that size, to be honest.

A recent report by Urbanation, a Toronto-based consultancy, found that of 3,987 transactions reported in the period, 48% were one-bedroom plus den or smaller and 30% were two-bedroom, while just 4% were three bedroom.

Not much room for traditional families.

Comment: But that is because most “traditional” families buy houses. One child works in a condo, as soon as you have two, then you need the space. And when large condos are in the $600k-1m million range – or more – then it makes more sense to buy a house for $500k. Or move to the suburbs and buy a big house for less.

Here’s an interesting factoid: Condos are getting smaller. The average unit sold in the first quarter of 2012 was just 904 square feet, compared to 1052 square feet in the first quarter of 2001.

Comment: Which blows me away, so many new condos I see are 560sf.

We know that there are more condos either on the market or about to come on the market in Toronto than in any other city in North America, and that high-rise units make up a substantial and rising proportion of housing in the city. In 2011, 46.5% of all the mortgage insurance issued by the Canada Mortgage and Housing Corp. went to loans for multi-unit residential housing, largely made up of condos.

So here’s the question. What’s going to happen when all those people start having families? More important, what’s going to happen to condo prices?

Comment: Why do you think there are so many bidding wars for houses? They all want to move up, get some more room, be near schools and parks. Condos are for renters or first time buyers. Young couples and empty nesters. And with more and more condos being built, the supply of houses as upgrades will continue to shrink as demand grows. We do need more options for families, I am just not sure what those options should be.

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Contact the Jeffrey Team for more information – 416-388-1960

Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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