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Economist: Land shortage spikes rents

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Guest | 11 Jul 2012, 07:24 PM Agree 0

“Vacancy rates in the residential rental market are lower than they should be and rent increases are more rapid than they should be,” writes Will Dunning, a specialist in Canadian housing markets. “The increased rents (about $25 per month as of the fall of 2011) are being paid by tenants and, to the extent that costs increase for rent supplements and social assistance, by government.  The excess level of rents will escalate.”
Landlords may be less than sorry to hear that assessment, which supports the observations of many property investors in Toronto and Vancouver.
Dunning’s report “Constrained Land Supply for New Housing is Hampering the Recovery” comes as the government introduces new, tighter mortgage rules. Those changes are specifically focused on cooling the condo markets in Toronto and Vancouver, both of which had already begun to cool even before the new rules came into effect.
Part of the reason for the decline in volume sales has been the shortage of land to build on, said Dunning.
He pegs the shortfall on three factors, none of which are in danger of a quick resolution, say analysts.
“Growth management will have a much bigger impact on future low-density development, says Dunning. “Expectations of future shortages may already be influencing expectations and prices in the land market.
Although, he outlines in the report,  “More pertinent at present are delays in finalizing approvals for new subdivisions and in installing hard services (including water and sewer).
  • Benj List | 12 Jul 2012, 05:36 PM Agree 0
    "Will Dunning, a specialist in Canadian housing markets"

    http://www.wdunning.com/
  • Ron Cameron | 12 Jul 2012, 06:08 PM Agree 0
    In the past 20 years many rental buildings have been turned
    into condominiums. This was a large loss to the rental market
    here in Vancouver. Yes, the real estate sales market would
    slow down at some point because all markets are eventually
    saturated. Farm land being gobbled up is no longer a viable
    option, as food prices are spiking and the ability to grow our
    own food will soon eclipse the real estate value if it.

    Endless growth in anything is not possible. The best thing for
    the market would be if workers in the construction industry
    got into the reno market as there is a larger number of newer
    condos that will soon be leaking. The kind of market where
    real estate values are constantly rising is simply not realistic.
    It has never been that way in the past and never will be.

    Get the money loving blinders off and see that we need rental
    housing and it needs to be small and cheaper so that the folks
    that serve you at Starbucks have a place to live. Your worker
    bees are losing ground at a rapid pace and will eventually
    revolt or cease to exist.

    Single family dwellings are simply an anachronism. Too much
    land taken up for it to continue. When people started flipping
    properties when the prices were quickly rising drove a lot of
    folks out of the buyers market. Monied immigration that fueled
    the boom could not go on forever. Our economy is stagnant
    and there are a lot of other nice places in the world besides
    here.

    Our infrastucture is about to fall apart and creat troubles we
    have never had be fore. Let's get our house in order before
    we go on another round of building.
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