New research from Toronto-based Neptis Foundation is pouring cold water on claims that a shortage of land in the Greater Toronto and Hamilton Area, including Waterloo region, is driving up the cost of single detached homes.

The research, which was built on work done in 2013, shows that only 20 per cent of land that was set aside for development in 2006 has been built on. 


On the following map, pink indicates areas where new developments – also known as greenfield developments – were built between 2006 and 2016. Purple indicates areas that remain open for greenfield developments.


Of the 6,800 hectares that were set aside in Waterloo Region, only 1,100 hectares had been built on by the end of 2016, according to Neptis Executive Director Marcy Burchfield.

"So, this notion that we don't have enough land to build ground-related housing is a false one," Burchfield said, but that hasn't stopped developers from asking the province to make more land available.

Explaining the housing shortage 

The Building Industry and Land Development Association continues to argue that there is a shortage of land, and that this in turn is contributing to a shortage of single detached homes. 

What results, they say, is a sellers market where there are more people looking for homes to buy than there are houses for sale, and therefore homes sell for more than the listing price.

The dearth of homes for sale in Waterloo Region is a trend that University of Waterloo professor Dawn Parker has been watching closely, but she doesn't think it's solely responsible for the hot housing market.

"There might be some price effect from opening up more land for development," Parker said, "but it's unlikely to completely solve the problem."

Housing Starts 20141026

Dawn Parker says there are other explanations for why the housing market is so hot, including psychological reasons. (Graeme Roy/Canadian Press)

'Panic response'

She said the housing market in the region is complex, influenced by real and psychological factors and expectations that respond to public policy and government planning.

"Once a buyer perceives that housing is scarce, they might push their housing budget above what it was before," she said.

"This creates a self reinforcing effect, especially when you get the news – as we do every week in the paper – that there's a scarcity of houses in the market. So, that causes an upward cycle of bidding and in our [mathematical] models it can lead to more land conversion than what would occur in more stable markets."

Parker calls this a "panic response" and said it could offer a better explanation for the hot housing market in Waterloo region.

As for why there are so few homes for sale, she said home owners along the LRT corridor could be waiting for construction to be finished before putting their properties on the market.

She also pointed out that single detached homes are not the only residential options on the market: many new condo developments are being built in Waterloo and Kitchener.