The Starter Home, Revisited

On the heels of a recent survey that found more than 50% of young professionals would like to purchase a home in Toronto, the Toronto Region Board of Trade (TRBOT) convened a panel discussion on housing affordability in the region. The Star’s Tess Kalinowski provided an overview of the event’s discussion.

I was asked to provide opening remarks and it gave me an opportunity to reflect on the issues challenging affordability in the region, and the implications for our planning policy.

In the United States, research shows that families with children put more money into a city’s local economy than any other demographic group: on average $15,046 more per year than young professionals and $18,787 more per year than retirees.

Maintaining a young, healthy population is also crucial to a city’s fiscal stability. Cities see the true benefit of investment in schools, community services, recreation and programming when they provide a high quality of life and opportunity that attracts and supports people of all ages to live, raise their families and grow old in the city.

If we want to help families into the market today, the need is especially strong as rising housing prices that used to mostly affect ground oriented stock has also spread to multi-unit housing.

May 2017 saw the average Toronto condo resale price increase 27.7% year over year. That’s a higher rate than the 16.6% year over year increase for the detached homes in “low supply” (May TREB Market Watch report).

Starter homes evoke a very distinct, low-density (maybe even sprawling?) image – something along the lines of the Sears Catalogue Homes from the early 20th century.

If that was the notion of a starter home – we can’t – and probably shouldn’t even if we could – go back to that as the primary model.

Given everything we’ve spent the last decade talking about in planning – building complete communities, promoting neighbourhoods, transit-oriented development, environmental sustainability, fiscal responsibility for cities, and good urban design – we need to continue to search for new approaches.

Today, medium and high density development is the dominant new housing form in Toronto. 83% of housing units built between 2011 and 2016 were apartment condos (CMHC).

If we’re going to accommodate most growth through infill and intensification, then it follows that infill and intensification will have to be where we accommodate most starter homes.

Neither intensification nor higher-densities have to look the same everywhere in the city. That’s why a fine-grained planning approach layered into a city-wide vision is so important to Toronto’s continued success.

The Board’s survey results corroborate what we’ve seen in research from ULI in the United States – that millennials are still hoping to live the dream of owning a single-detached home.

While this isn’t surprising, it is challenging given our current patterns of growth and this generation’s strong preference for urban living.

Perhaps one of the reasons this preference persists is because we don’t have a lot of recent examples of new complete communities with neighbourhoods, buildings, and suites in higher-density forms to show young families the type of lives they could live, in the type of housing that will realistically be built. The West Don Lands is just one of the emerging examples we can start pointing to and show how our planning framework can truly transform the housing and lifestyle options available to families.

The City’s planning framework recognizes the importance of family-friendly housing. Our Official Plan encourages a diversity of housing stock and our new Growing Up guidelines speak explicitly to the need to plan a family-friendly city.

Our Provincial partners are also speaking the same language. The new Growth Plan explicitly acknowledges the need to house families throughout our cities and they’ve updated the definition of ‘complete communities’ to reflect that.

At the Federal level consultations have been conducted for a National Housing Strategy to provide a framework on supporting affordability.

However, affordability has to be layered into the market through many different mechanisms.

That’s part of why we’re also reviewing our definition of affordable ownership in the Official Plan to ensure that we can deliver more units. The review is still ongoing but we are thinking through how the definition can be improved for implementation by all partners, and how it can be more consistent with market conditions to ensure the City is securing a full-range of affordable housing.

We’re also asking the Provincial government to make inclusionary zoning implementable. The policy is important to ensure the City maintains a consistent supply of affordable housing stock and continues to accommodate a full range of housing.

In a complex housing market and an era of slow growth, starter homes won’t only look different in terms of built-form but maybe in their tenure and ownership structure.

Policies to support starter homes might also need to address opportunities like second suites and securing non-traditional housing finance models so that families can be adequately housed, as the most important priority.

Laneway suites

Finally, last week Council provided direction on laneway suites that will give us the opportunity to explore ways to increase the mix of Toronto’s housing supply.

When demand for housing is so high, new housing opportunities can have an important role in alleviating pressure in the market. But we have to be cautious about affordability—it can be expensive to build an entirely new structure and even if DCs were waved and laneway suites were permitted as-of-right, rents would probably reflect that expense.

As such, we also need to keep moving forward on other aspects of our housing agenda, including inclusionary zoning and exploring options for sensitive infill throughout the city.

The policy choices we make today are crucial since they will shape the long-term housing stock we will have for decades.

TRBOT is conducting a more robust survey over the summer to follow-up on the housing wants and needs of Toronto region young professionals, the ways they will pursue their preferred housing choices and the trade-offs they are willing to make. You can read more about their last survey here.