Skip to Main Content
You are now in the main content area

Demographics Foretell a Shift to New Single-Family Housing

By: Frank Clayton, Senior Research Fellow

December 10, 2024

 (PDF file) Print-friendly version available

Executive Summary

In a recent presentation, Peter Norman, Vice President and Chief Economist of Altus Group, re-emphasizes the importance of demographics for housing demand by unit type, tenure and location, particularly the shifting population age structure and immigration levels. He concludes:

  • Demographics favour a trend toward single-family housing (ground-related housing) in Canada, away from rental apartments over the coming decade;[1]
  • Demographics signal a robust market for single-family housing in the GTA for 2021-2041.

Even with the provincial government's initiatives to accelerate the production of more housing, including single-family homes, the more realistic prospect is that GTA municipalities will not be able to produce anywhere near the volume of single-family homes required to achieve the Norman forecasts and provide affordability relief.

Urbanists such as David Crombie and Anne Golden want to stop the development of new expensive single-family homes on greenfield lands, substituting development on farmland with "multi-bedroom, multi-unit and multi-storied buildings" constructed in already built-up urban areas.[2]

There are challenges in the Crombie/Golden proposal:

  • First, many households will not regard the multiple housing forms they advocate for as reasonable substitutes for single-family homes;
  • Second, while municipalities can decide what types of housing they allow within their borders, they cannot control the desires and movement of households;
  • Third, they ignore the workings of the filtering-down process, that is, the chain of moves that occurs when a household vacates their more affordable current home to buy a more expensive new single-family home and the over-housed downsize from their expensive home into a smaller and more affordable higher-density unit;
  • Fourth is the impossibility of building enough of the housing types they envision in already built-up areas, especially with the GTA's robust growth.

The bottom line is that both intensification and greenfield development are essential to meet future housing requirements and significantly improve affordability. With current high land costs, the housing built on greenfield lands is expected to incorporate the next best alternative and higher-density substitutes to single-family homes like duplexes, stacked townhouses, low-rise garden apartment buildings, as well as single-detached houses on small lots and townhouses.

Without GTA greenfield development, the results may be worse for the environment as longer commutes, more greenhouse gases emitted by cars, and a gradual dispersal of jobs outside the GTA due to households moving outside the area to find more affordable single-family homes.

Introduction 

David Foot and Daniel Stoffman popularized the concept that "demographics explains two-thirds of everything" in their book Boom, Bust & Echo, published in 1996.[3] I was reminded of what Foot said, during a presentation by Peter Norman, Vice President and Chief Economist with Altus Group.[4] As a long-time observer of the housing scene, I am very much aware of the importance of demographics for housing demand by unit type, tenure and location, particularly the shifting population age structure and immigration levels.

Here is what Norman said about the housing implications of shifts in population growth by age group in Canada and future housing requirements by unit type in the Greater Toronto Area (GTA):

“Demographics favour a trend toward single-family housing in Canada away from rental apartments over the coming decade”[5]

Figure 1 presents Canada's projected population growth in thousands by age group in the 2024-2034 decade compared to actual growth over the past two decades, as calculated by Norman and his assessment of what it means for housing types and tenures.

Bar Chart of the Average Annual Residential Property Tax Paid in Large GTHA Municipalities, 2016 and 2021
  • Compared to previous decades, the sizable acceleration in growth among the 35-50 age group portends more first-time and ‘move-up’ buyers desiring single-family housing;
  • The result of a modest acceleration in the growth of the seniors (65+) demographic is a trend toward condominium apartments and seniors' housing [Clayton: This trend is likely modest as most seniors do not move];[6]
  • The slowdown in the growth of 20-35-year-olds points to a shift away from rental apartments.

Demographics signal a robust market for single-family housing in the GTA for 2021-2041

Figure 2 presents Norman's GTA forecast of household growth by type of housing occupied (single-family housing and apartments) for the 20 years (2021-2041) and compares it to the previous 25 years (1996-2021).

Bar Chart of the average effective tax rate in Large GTHA Municipalities, 2016 and 2021. Source: TMU CUR
  • According to Norman, households in the GTA will increase by 40,720 per year on average between 2021 and 2041, up from 33,310 during the preceding 25 years;
  • Just under half of these households (20,100 per year on average) are forecast to live in single-family housing, about the same number as over the past 25 years on average.

Much of the single-family housing built between 1996 and 2021 was constructed in the first decade. Over the past decade, as Figure 2 shows, the sales of new single-family homes have averaged less than half of the 1996-2021 average. The average annual forecast for 2021-2041 is equivalent to twice the number of new single-family homes sold yearly over the most recent decade.

Implications for planning and housing affordability and challenges with opposition to new single-family housing

The deterioration in housing affordability for single-family homes in the GTA originated from planning policies implemented under the Growth Plan for the Greater Golden Horseshoe in the mid-2000s that discouraged municipalities from designating more greenfield land for single-detached and other types of single-family housing. More recently, though, the provincial government has been encouraging a broader range of new housing, including on greenfield lands.

With current high land costs, however, the housing built on these greenfield lands is expected to incorporate next-in-line and higher-density substitutes to single-family homes like duplexes, stacked townhouses, low-rise garden apartment buildings, as well as single-detached houses on small lots and townhouses.

Under the current planning and growth environment, the affordability crunch for single-family homes will not disappear. Even with the provincial government's initiatives to accelerate the production of more housing, including single-family homes, the more realistic prospect is that GTA municipalities will not be able to produce anywhere near the volume of single-family homes required to achieve the Norman forecasts and provide affordability relief. Consequently, many households will continue to flee the GTA to other municipalities to secure their desired single-family homes. The results may be worse for the environment and include longer commutes, more greenhouse gases emitted by cars, and a gradual dispersal of jobs outside the GTA.

Environmentally sensitive urbanists such as David Crombie and Anne Golden want to stop the development of single-family homes on greenfield lands, substituting "multi-bedroom, multi-unit and multi-storied buildings" constructed in built-up urban areas. [7] CUR does support such initiatives to intensify existing single-family communities and increase densities along major streets and transit stations.

However, there are challenges in the Crombie/Golden proposal:

  • First, many households will not regard the multiple housing forms they advocate for as reasonable substitutes for single-family homes;
  • Secondly, while municipalities can decide what types of housing they allow within their borders, they cannot control the desires and movement of households. Eliminating the production of new single-family homes will increase the prices of existing homes even greater, causing even more households to move further from the GTA to find more affordable single-family homes;
  • Another issue is that they ignore the workings of the filtering-down process, that is, the chain of moves that occur when a household vacates their more affordable current home to buy a more expensive new single-family home—similarly, for the household moving into the home vacated by the new home purchaser.
  • A fourth challenge is building enough of the housing types they envision in already built-up areas, especially with the GTA's robust growth. Both intensified and greenfield development, preferably transit-connected and with a denser mix of ground-related units and their closest substitutes, are essential to meet future housing requirements and significantly improve affordability.

Concluding Comments

In addition to the data and analysis reported here on the presentation by Peter Norman, several CUR releases are consistent and support his analysis. In reporting on the Ipsos surveys undertaken for the Toronto Regional Real Estate Board and surveys released by Sagen Canada, a significant majority of actual or potential homebuyers opt for ground-related homes.[8]

Also, the surge in new housing supply in the major Alberta markets, Edmonton and Calgary, reflects the availability of ample short-term greenfield land for ground-related homes.[9]

End Notes

[1] Single-family housing as defined by Altus Group includes single- and semi-detached houses and townhouses. CUR refers to these housing types as ground-related housing. The blog uses Altus Group’s single-family housing terminology.

[2] David Crombie and Anne Golden. “Opinion | Doug Ford is failing us on housing. This is why.” Toronto Star. November 26, 2024.

[3] David K. Foot with Daniel Stoffman. “Boom, Bust and Echo - How to Profit From the Coming Demographic Shift.” 2016.

[4] Peter Norman. “State of the Market Canada.” Altus Group. November 14, 2024.

[5] Single-family housing as defined by Altus Group includes single- and semi-detached houses and townhouses. CUR refers to these housing types as ground-related housing. This blog uses the Altus terminology.

[6] See John Clinkard and Frank Clayton. “Something to Think About: What is Driving Declining Population Mobility in the Greater Toronto Area?” CUR. July 22, 2019.

[7] David Crombie and Anne Golden. “Opinion | Doug Ford is failing us on housing. This is why.” Toronto Star. November 26, 2024.

[8] See Frank Clayton. “Why do the ‘Experts’ Treat Housing Types as Irrelevant?” CUR Blog. May 7, 2024, and Frank Clayton. “What Kinds of Housing Are Homebuyers or Intending Homebuyers in the GTHA Choosing?” CUR Research Report. June 28, 2022.

[9] See Frank Clayton. “The Globe & Mail Is Correct: Ontario Can Learn About Housing from Alberta But Disregards the Importance of Greenfield Development.” CUR Blog. November 22, 2024.

References

David Crombie and Anne Golden (2024). “Opinion | Doug Ford is failing us on housing. This is why.” Toronto Star. November 26, 2024. [Online]. Available: https://www.thestar.com/opinion/contributors/doug-ford-is-failing-us-on-housing-this-is-why/article_09370164-a848-11ef-aa1b-fbbbe4cf67ae.html (external link) 

David K. Foot with Daniel Stoffman (2016). “Boom, Bust & Echo – How to Profit From the Coming Demographic Shift.”

Frank Clayton (2022). “What Kinds of Housing Are Homebuyers or Intending Homebuyers in the GTHA Choosing?” CUR. June 28, 2022. [Online]. Available:  (PDF file) https://www.torontomu.ca/content/dam/centre-urban-research-land-development/CUR_Preference_Homebuyers_Intending_Hombuyers_GTHA_June_2022.pdf

Frank Clayton (2024). “Why do the ‘Experts’ Treat Housing Types as Irrelevant?” CUR. May 7, 2024. [Online]. Available: https://www.torontomu.ca/centre-urban-research-land-development/blog/blogentry731111111/

Frank Clayton (2024). “The Globe & Mail Is Correct: Ontario Can Learn About Housing from Alberta But Disregards the Importance of Greenfield Development.” CUR. November 22, 2024. [Online]. Available: https://www.torontomu.ca/centre-urban-research-land-development/blog/blogentry7311111111111111111111/

John Clinkard and Frank Clayton (2019). “Something to Think About: What is Driving Declining Population Mobility in the Greater Toronto Area?” CUR. July 22, 2019. [Online]. Available:  (PDF file) https://www.torontomu.ca/content/dam/centre-urban-research-land-development/pdfs/Projects/CUR_Population_Mobility_in_the_GTA.pdf

Peter Norman (2024). “State of the Market: Canada.” Altus Group. November 14, 2024.