It is sometimes stated that as many as 75 percent of potential home buyers would prefer to buy a single detached house. That is undoubtedly correct. However, in housing, as in most aspects of life, "You can't always get what you want." People make compromises. Increases in house prices can cause economic rationing -- people live in the housing they can afford, rather than in the housing they say they would prefer.
In future, the actual mix of housing in the GTA, the Inner Ring, the Outer Ring, and the GGH will continue to be influenced by pricing, as well as by interest rates.
- If pricing in future is similar to current pricing (in real, inflation-adjusted terms), and interest rates remain at current levels, then the mix of housing will probably resemble the current mix -- single detached houses would account for less than half of new housing construction in the Inner Ring and about three-quarters in the Outer Ring.
- If, on the other hand, prices rise in real terms (for example, if the cost of land increases), the share for singles would be expected to fall. Increasing mortgage interest rates would have a similar effect.
- If prices fall in real terms, or interest rates fall, then the share for single detached houses would increase -- although based on past experience, the share is unlikely to exceed 60 percent for the Inner Ring and 65 percent for the entire GGH. Furthermore, this trend would occur in a weak economic and housing market situation in which total starts would be low. Therefore the actual number of single detached houses would not be very large.
Changing tastes may also affect the housing mix. For example, apartments have become increasingly accepted as a form of homeownership. And for many home-owners, a condominium apartment is the preferred housing form, irrespective of the relative costs of low-rises versus high-rises. This is an evolving trend, which is likely to result in further shifts in the housing mix.
Demographic change, combined with changing tastes, also affects the future mix of housing. For example, many of today's empty nesters and retirees are making different housing choices from those of their parents, and future generations will show further changes. There is also a possibility that new housing forms (or the rejuvenation of old forms, such as walk-up apartments) could alter the mix of housing.
Although it is difficult to draw definitive conclusions about the future mix of housing, we need to use assumptions in order to make projections. In the next section, the shares seen in recent CMHC housing starts data (for 1999 to 2004) are used to project future housing requirements.