Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1297

Whenever I read studies that cite census data, I’m often left feeling like the data is out-of-date. 

Five years – which is how often Canada conducts its national census – is a long time. Somebody could move to this country for school, complete a 4-year degree, and then leave, and we wouldn’t even pick it up in our data.

Thankfully, we’ve at least reinstated the long-form census for next year. Here are the questions, if you’re curious.

But all of this is a digression. 

This morning I read through a housing report that the City of Toronto published in October of this year. It’s about housing trends. And I wanted to share the below chart that covers housing completions for the period of 1996 to 2014. Keep in mind that this is for the City of Toronto, and not the Greater Toronto Area.

What it shows is that over this 18 year period, 78% of all housing completions in this city have been either low-rise or high-rise condominiums/apartments. The remaining 22% is a mix of detached and semi-detached houses and townhouses.

However, this 22% is an average. 

Detached and semi-detached housing completions declined from 22% in the 1996-2001 period to 10% a decade later. And row and townhouses declined from 16% to 6% during this same period.

At the same time, “many” of the housing units in this 22% were actually replacing existing and older housing stock. That is, according to the report, many were “knock-downs” and rebuilds. In these cases, it means that the completions actually do not represent net new housing units. So in reality, the supply of new single-family housing is even lower than it appears in the chart above.

When you look at all of this, it should come as no surprise to you that our current combination of low interest rates and low supply has been leading to huge price increases on the single-family side of the market.

And it’s for this reason that I believe Toronto will eventually start to look towards allowing more low-rise intensification . Laneway housing, as one example, would represent virtually 100% new ground-related housing in already built up areas. Where else are we going to find that kind of housing opportunity?

So in my view, it is a question of when, not if, this will happen.

Just a few days ago, The Federal Reserve Bank of San Francisco published an interesting research study where they argue that this U.S. housing boom is different than that of the early 2000s.

During the last boom, U.S. home prices peaked in 2006 and then dropped about 30% in the wake of The Great Recession. Since then prices have rebounded – almost to their pre-recession levels. This has some people asking whether this story is headed towards the same ending.

But the FRBSF is saying no :

“We find that the increase in U.S. house prices since 2011 differs in significant ways from the mid-2000s housing boom. The prior episode can be described as a credit-fueled bubble in which housing valuation—as measured by the house price-to-rent ratio—and household leverage—as measured by the mortgage debt-to-income ratio—rose together in a self-reinforcing feedback loop. In contrast, the more recent episode exhibits a less-pronounced increase in housing valuation together with an outright decline in household leverage—a pattern that is not suggestive of a credit-fueled bubble.”

And here’s the chart:

Source: Flow of funds, Bureau of Economic Analysis (BEA), CoreLogic, and BLS. Data are seasonally adjusted and indexed to 100 at pre-recession peak.

I love the work that LSE Cities (London School of Economics) is doing with Urban Age. If you haven’t yet checked out their site, you should do that now . If you’re a city geek, it’s the kind of site you can get lost in for hours. Especially if you’re a sucker for great diagrams like I am.

Here’s one I found today that shows where cities are growing in the world:

Each circle represents a city (well, metropolitan area). The dark green dot is the city’s population in 1950. The lighter green dot is the city’s population in 1990. And the yellow dot is the city’s projected population by 2025. Click here for a larger version of the map.

What’s fascinating about this diagram is that you can so clearly see how the most significant population growth has shifted away from the West to the rest of the world and in particular Asia. That is, those dots have more yellow than green.

We, of course, already knew this was happening. And population is just one dimension. But it’s still interesting to see this in diagram form. We are living through the rise of the East . And this diagram is a reminder of that.