Townhouses offer a perfect solution for those who can’t afford a single-family home but need more space than an apartment condominium can provide. But townhouses are becoming increasingly difficult for many Canadians to afford.
The first townhouses to appear in Canada popped up in the 19th century, when they were the most common form of urban housing, according to The Canadian Encyclopedia. It says they were reminiscent of the Georgian and Victorian townhouses of Great Britain, but less formal.
“The width, size and appointment of the townhouse reflected the wealth of its occupants,” says the site.
In 1967, the first condominium village to be registered in Canada was a townhouse development – Brentwood Village in Edmonton. Since then, both freehold and condominium townhouses, and more recently, stacked townhouses, have been popular housing choices for Canadians.
A report by Altus Group in Toronto says that in the 1950s, townhouses accounted for only one per cent of housing starts. Since then the market share has gradually increased, with a sharp bump in the 1970s as the baby boomers started having families and government programs encouraged home ownership. In 2017, townhouses represented 24 per cent of all single-family housing starts, but only 13 per cent of all starts as condo apartments took away market share.
Altus Group says that townhouses are an attractive product for younger families because they are more affordable than single-family and semi-detached homes, but more family-oriented than condo apartments.
“This, along with policies aimed at increasing densities for greenfield areas and the growing number of baby boomer retirees looking for move-down product, suggest new townhouse sales are poised for growth in the years ahead,” says the report.
It notes that compared to buyers of single-detached homes and semis, “new townhouse buyers are less likely to be under 50 years of age with children (although this was still the largest buyer group), and more likely to be younger singles.”
Townhouses in Calgary and Edmonton are more suitable for first-time buyers because they are smaller than in Vancouver and the Greater Toronto Area (GTA). The average Calgary unit is 1,300 sq. ft., while in Edmonton the townhouses average 1,400 sq. ft. The average new condo price in Calgary is $275 per sq. ft.; in Edmonton it’s $225 per sq. ft.
In Vancouver, the average new townhouse is 1,600 sq. ft and sells for $575 per sq. ft., while in the GTA, the average unit is 2,100 sq. ft., selling for $400 per sq. ft.
A typical Canadian single-family home has about 2,500 sq. ft.
The report says stacked townhouses “provide a more affordable option often to single-family product, given higher densities, with many of the attractive aspects of condominium tenure – but without living in a high-rise environment. However, they still play a relatively smaller role than traditional townhouses.”
The report adds: “Part of the market challenges with stacked townhouses versus row townhouses are those similar to condominium apartments – longer planning and construction timelines.”
Despite the long-term growth of the townhouse as a great alternative to expensive single-family housing or condo apartments, and despite pent-up demand, Altus Group says new townhouse sales in Calgary and Edmonton have been flat during the last year, down in Vancouver and “plummeting” in Toronto, due to a lack of product that has driven up prices and impacted affordability.
Frank Clayton, senior research fellow at the Centre for Urban Research (CUR) and Land Development, Ryerson University in Toronto, says affordability problems in the GTA are largely due to local and provincial government policies.
“The Ontario government and municipalities inflate housing prices – both existing and new – by imposing direct costs on the development of land for new housing in order to achieve planning goals,” says Clayton. “These direct development costs include local and regional development charges, planning review fees, building permits, engineering and servicing fees and parkland dedication.”
Another issue is the lack of serviced land available for development, resulting in a rapid increase in land values.
A 2014 CUR study “concluded that a major component of development charges – the financing of growth-related sewer and infrastructure – should be financed by all users of these services, not just those living in new homes.”
Clayton studied the development charges for townhouses in the City of Toronto and surrounding municipalities and found that “the serviced land component of new townhouses is inordinately high, not only in the GTA but in other parts of the Greater Golden Horseshoe as well. Oakville and the southern York Region (Markham, Richmond Hill and Vaughan) in particular, have unusually high townhouse costs.”
Clayton says the lowest charges in the GTA are in Ajax and Bradford West Gwillimbury.
He says the keys to enhancing townhouse affordability are to increase the supply of serviced sites for both greenfield and intensification development; and to reduce the government-imposed costs of new housing.
Builders have been pleading for a break on these charges for years. The provincial government, elected this fall, has promised to help cut regulation and the time it takes to get building permits issued.