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When it comes to Toronto’s runaway housing prices, the most important question remains the extent to which speculation is driving demand.
Ideally, fundamentals such as demographics and employment are at play, and the price gains reflect natural household growth getting ahead of supply. If that’s true, the market should eventually stabilize once new supply kicks in.
A situation where speculators are bidding up prices would be much more problematic.Canada’s 2016 census, which the statistics agency is releasing piecemeal this year, is providing some insight into the debate. The results: supply may not be the big problem many people thought it was.Between 2011 and 2016, the number of households in Toronto rose to 2.14 million, an addition of about 146,200, according to the census data, the latest round of which came out Wednesday. That compares to 175,825 new homes built over that period. In other words, supply of new houses exceeded real household demand by almost 30,000 over those five years.
That throws cold water on the argument — voiced particularly by the industry — that the city’s affordability crisis won’t be resolved unless the government introduces measures to help increase supply.
Written by: Erik Hertzberg @ErikHertzberg and Theophilos Argitis @theoargitis