Vol.53, No.2 - Summer 2023
Vol.53, No.2 - Summer 2023
The Importance of Shovel-Ready Land Inventory to Increase the Greater Golden Horseshoe’s Supply of New Housing Faster
I was pleased with the invitation to participate in the 60th anniversary celebration of the establishment of the Association of Ontario Land Economists. Initially, I thought that since my career covers most of the time the Association has existed, I was invited to provide a historical overview of the Toronto region’s real estate and urban evolution—a dreary topic which would require a lengthy speech. Then I realized with only a 30-minute time slot that, I must have been invited because the organizers believe in the adage that wisdom comes with age. Therefore, they rightly presumed, in my opinion, I would convey lots of wisdom to you. You will have to be the judge.
My topic this evening is “land,” which seems appropriate for an organization with land economics in its name.
Introduction to the topic of shovel-ready residential land
Convinced: What governments have done to the housing land supply is a primary cause of the affordability crisis in the GTA.
Residential land: Not just any land. Refers to land with approvals for what the market wants (zoned suitably for financial viability), serviced & ready to go (shovel-ready).
- If a shortage of shovel-ready sites – housing prices up
- If a surplus of shovel-ready sites – downward pressures on prices
My first interest in land issues: When I moved from Ottawa to join CMHC as its Winnipeg-based economist for the prairie region in the latter 1960s, I was struck by how affordable home purchase was
in Winnipeg and the four other metropolitan areas in the prairies compared to Toronto. Differences in the land markets helped to explain the sizeable affordability gap:
- Winnipeg and its counterparts in Saskatchewan and Alberta could expand on flat land in all four directions, and they did so.
- While Toronto could grow in three directions, the supply of developable land was reduced by the concern about water quality, which resulted in the closures of smaller upstream sewage treatment plants in favour of massive lake-based plants – this resulted in less developable land than before.
- Montreal was an oddity: Canada’s second-largest metropolitan area with physical constraints like sizable rivers intersecting the region – at the time, Montreal dumped its raw sewage in the St. Lawrence River, which allowed more land to be developed with a much lower cost base than Toronto.
Land availability and its cost base became apparent major factors in housing affordability.
My 1987 study of the evolution of the housing industry in Canada
The pivotal role of land in housing affordability was reinforced in a 1987 study I conducted for CMHC dealing with the housing industry’s evolution in Canada from 1946-1986. All of the major factors of housing production other than land – labour, materials, entrepreneurship and mortgage funding – are subject to the pricing mechanism of the marketplace. When their prices rise, supply will follow along. On the other hand, land supply depends on a political process independent of the pricing signals of the marketplace.
Shovel-ready land - what is it?
Shovel-ready land is land with all planning permissions and servicing in place for viable residential projects. It’s a concept increasingly used in the economic development arena regarding industrial land.
More details are contained in a recently completed CUR study of shovel-ready residential land in the Greater Golden Horseshoe (GGH) (https://www.torontomu.ca/content/dam/centre-urban-research-land-development/CUR_shovel_ready_land_May_2023.pdf).
In this study, we approximate shovel-ready land with the definition of short-term land in policy 1.4.1b) of the Provincial Policy Statement (PPS): land suitably zoning to facilitate residential intensification and redevelopment plus land in draft approved and unbuilt registered plans.
Using the PPS definition overstates the shovel-ready land inventory, but it’s the closest definition with data available.
(See the Journal for the full article)