Buying Land and Developing During a Pandemic and in a Hot Market
Are you interested in sharing an article or your planning-related personal experiences? Send us your content for the chance to be featured in one of our future editions.
Buying Land and Developing
During a Pandemic and in a Hot Market
By James Stevenson
The words “Pandemic” and “Hot Market” should not be synonymous but here we are in 2021. While our political leaders continue to grapple with the COVID-19 pandemic, new and resale housing prices are seeing all time highs and are selling faster than you can say supercalifragilisticexpialidocious!
Typically, with immigration, we see between 250,000 and 300,000 new Canadians in need of a place to call home and start their new lives. Nearly half of our new residents come to Ontario. With the borders essentially closed, immigration levels are significantly lower. So, what is driving the demand and pricing? There are only two contributing factors in my mind that are creating a rise in demand and price and that is foreign investment and low interest rates. How else can someone afford to buy a 1,700 square foot townhouse for $950,000 in Brampton or a 500 square foot condo for $1,000 per square foot in Vaughan?
As a Land Developer, we try to avoid speculation and stick to what we know in the moment when it comes to buying land; however, it is becoming increasingly difficult to buy when there is a feeling that the markets could tumble at any given moment. Land is not cheap so you better have done all of your homework and be able to get your approvals quickly.
In addition to high land prices, we are also faced with surging construction costs, development charges, and a shortage of trades all while coping with the COVID-19 pandemic forcing people to work from home.
For now, the answer is to be extremely smart and do a ton of research before making any decision to buy land. You need to look outside the box and explore areas you may never have even considered in the past. Look at growth trends and other statistics which may help point you in the right direction. Hire the right people who can help you navigate the increasingly complicated approvals process.
Ultimately, we do need to come to terms with the reality that house prices are too high and that there is a huge demand for housing in this Country. We need to start creating public/private partnerships to help solve the problem of providing affordable housing in this Country. We also need to put an end to foreign investment which is a major contributor to the increased cost of land and housing in this Country and we need to work fast!
We can no longer stand idly by and allow the dream of home ownership to die. There should never be a hot market during a pandemic. This bubble will burst eventually, and it will be up to us to find the solutions that will prevent this from repeating.