Urbanation Takes on the Condo Crash Pundits
By Lucas on Dec 12, 2012
Some in the media love to play on the fears of Torontonians: “The sky is falling, a crash is coming, run for the hills!” The “everything is normal” message just doesn’t get people to open newspapers, visit websites, or turn on the news, so they choose to take a more negative approach.
With that in mind, we trust an independent body, one that simply looks at hard numbers and stats to make projections, not cash in on fear. Early this week, Urbanation, the kings of Toronto condo stats, published a blog about fear mongering in the media, why it’s incorrect, and why a more balanced look at the condo market is probably the best one.
A few days ago, two Toronto dailies ramped up the hyperbole, suggesting that Toronto has a massive supply issue. We have heard this before, but the increase in population should mostly counteract that. Urbanation explains it here:
“So let’s make some conservative assumptions: the population will be 9% greater in 2016 than in 2011 (below each of the increases listed above), an increase of 100,500 people annually. Let’s assume that the household size decreases only slightly by 0.6% (the last period was 0.5%, therefore we went with a lower estimate than the 2% average listed in the above paragraph). So with the 2.67 average household size, the 100,500 population per year would require 40,000 new households per year.”
The other fear that is often presented is that we are somehow going to bring too many units to market, upwards of 40,000 a year, but according to the numbers above, we might need them. Plus, this isn’t even an issue that we need to worry about for 2012 because the second half of the year hasn’t produced nearly as much as the first. Urbanation explains why it’s OK to hit 40,000 units in one year:
“If the construction industry in Toronto is somehow able to deliver 25,000 condominium units in a single year (which many experts in the industry do not believe is possible in the next five years), that’s 63% of 40,000, so yes, there is a remote possibility that more than 40,000 units could be completed in one year, but that is expected given that other years will be under 40,000 and our 2011 to 2016 estimates are based on the AVERAGE annual growth in total units.”
At the end of the day, fear and scare tactics may sell newspapers, but that’s it. Trust numbers, not headlines. Urbanation’s data doesn’t lie, and their reputation for predicting the market’s status is unblemished.
