This is the song that Toronto condo buyers are singing according to a recent article by Kenneth Kidd of the Toronto Star. The Toronto skyline is filled with cranes but the industry is facing grave completion delays due to capacity issues. For example, for 2012, the industry was supposed to complete roughly 25,000 units in the GTA but only half that number will be finished on time and the rest will finish early next year at the earliest.
Factors that have contributed to the delay:
- Shortage of skilled labour. "How do you create another generation of 60-year old Italian bricklayers?" Less than one per cent of skilled laborers enter the market each year. The good news is that each crane that dot the skyline equates to 300 to 500 construction jobs that will last for at four years.
- Of the more than 55,000 units now listed as being under construction in 2013 and beyond, 88 per cent are sold so there is a critical need for the developers to deliver these units to the buyers.
- Ottawa's tightening of the credit market also means that developers, especially those involved with larger projects, have to collaborate with three to four banks for their financing and this takes longer to syndicate.
- Construction is more complicated in high rise developments due to the smaller footprint of the project coupled with the complexity and sensitivity of working in a smaller space. More care is required when building in an already established neighbourhood so that existing businesses and offices are not inconvenienced.
The article concludes by saying that longer-term demand is apt to remain strong, not least because of the province's intensification policy favours high rise buildings over urban sprawl. About 75 per cent of new housing in the GTA is now high rise.
With roughly 100,000 people move into the GTA annually, there's a built-in demand for perhaps 35,000 new housing units each year and with average price of low rise homes hovering in the mid-$500,000s, high rise condos will be the more affordable option for most newcomers and first time buyers.
Exciting times are up ahead for the city of Toronto as we experience growth and development worthy of a city that leads Canada to be one of the greatest countries that we're proud to be a part of.