Laneway houses can help ease Toronto’s tight housing market, city officials had argued, because some 800 of the smaller units are currently occupying empty space around the city. But amid a spike in new home construction in Toronto, few of these tiny homes are ready to start drawing in buyers, and city officials are realizing that the scheme has significant limitations.
Laneway houses, which are featured prominently on the city’s mayor’s website, were a centerpiece of Toronto’s response to a hot housing market that was pricing many out of the market in the city. An industry group had suggested that overbuilding in Toronto could cause its prices to rise by almost 30% by 2027, while the city’s real estate agency says housing construction per residents has nearly doubled since 2006. It’s possible that the global popularity of Toronto and neighbouring Vancouver could one day draw more people to build houses there.
Until the end of 2015, Toronto had enjoyed steady, job growth, and it has plenty of tech and financial industries to draw people and their money. But home ownership rates are on the decline, and will get even lower if Toronto’s population gains begin to slow in the coming years. In that scenario, the city would need to add nearly 100,000 more households each year between now and 2027 to keep pace with its population growth, according to the International Monetary Fund (IMF).
How might home builders meet these challenges? The IMF has listed, among other measures, the introduction of laneway housing for sale as one of the possible solutions. It estimates that laneway housing could reduce the number of new condos in Toronto by over 30,000 units, and bring the number of sales at those prices down by around 15%. In August, city officials had released statistics showing that more than half of the more than 300 laneway homes available for sale had been sold, and they boasted that one quarter of those homes had already been snapped up. However, there has been little real interest in the housing option, and the few that have been snapped up in recent months were built with cranes, rather than a construction worker’s hat.
According to the Centre for Addiction and Mental Health (CAMH), more than 5,000 people have attempted suicide in the last three years alone, and 1,500 people die from suicide in the city every year. Given the economy’s uncertainty, it is not realistic to think that homes will be built so quickly as Toronto’s housing crisis continues. Sales of townhouses or condos are worth about one-third to one-half the price of a single-family home, according to CAT.com, and many young people and empty nesters would prefer to live in a house rather than share a basement or a street in the city.
The city also introduced a 20% rebate on all school fees for new homeowners who move into a newly constructed dwelling. This program had been expected to be fully implemented in January 2018, but officials now say the rebate will be operational by the start of next year. Still, some observers believe that the small amount of housing being built so far is simply not enough.
“There are two things happening at the same time,” says Darrel Bilello, head of strategy and delivery at lister New Homes. “First is developers have adequate supply – what they have is enough of what they need, but they are all sitting on land parcels because they don’t have homes to sell. Then they also have to have inventory available, and because we don’t have homes to sell they have to have inventory.”
Lister New Homes has released a series of designs for laneway houses in Toronto that it hopes will help with the inventory issue. Bilello says the studio’s most successful strategy for working with developers has been to model each home after a Canadian family’s lifestyle, and then either create a portion of the home to sell or rent out as single rooms or kitchens.