Insider: Rate Cuts A Must For Housing Supply (And Soon)

The data shows it is completely plausible — and possible — to serve tens of thousands of new housing units into the market in the coming months, just by lowering ratesAs of late, governments at all levels have woken up, and have been taking action on housing supply… Kind of.

In January, zero projects launched nationally, compared to four last year in what was a down market. Move into February, and we facilitated the launch of just five projects vs. 10 last year.launched in the GTA in the same timeframe, and only one launched in Vancouver’s Lower Mainland. Dig deeper into unit-level data and we see that by the end of last February, developers had launched more than double the new-supply units nationally as they have in 2024.

Construction costs are not coming down… and they’re a result of a number of items that are being maxed:Labour costs are rising as there are not enough skilled workers to meet building needs. Programs incentivising trade schools to bring more trades in are counterproductive, as they send the small number of existing trades back to school and off the job sites, making the pool smaller.

Banks need something to loan against, and if the government is taking more value from the land, then developers have to come up with more equity themselves. On sites the size of what’s mentioned, that new equity requirement can be larger than what’s available from the average developer, so it often needs to be loaned — increasing the size of the debt on the site, and ultimately making many projects not work at all.

The data shows it is completely plausible — and possible — to serve tens of thousands of new housing units into the market in the coming months, just by lowering rates to the point that these existing and approved developments work. I can see these projects lined up in our system, ready to go, if only politicians would enable the flood gates to open.

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Toronto home sales up in February from last year as consumers eye rate cuts: TRREBGreater Toronto home sales and listings were up in February from last year, but adjusted sales were down from a month earlier, the region's real estate board said Tuesday.
Source: CTVToronto - 🏆 9. / 84 Read more »

BoC To 'Watch Housing Carefully’ As It Deliberates Rate CutsZakiya is a staff writer with STOREYS. She has reported on real estate for Apartment Therapy, Curbed, and Post City Magazines. She also writes a quarterly series for a Canadian design publication.
Source: storeyspub - 🏆 16. / 74 Read more »