I get so frustrated with the same tired commentary about new housing, especially from people that have zero exposure to the industry, and have clearly not looked at the data.

My thread on supply and demand. #ToRE #Condos

People will constantly say, its not about supply and demand.

It is about supply & demand, and will always be about supply & demand.

It's foreign buyers! That's demand.
It's low interest rates! That sparks more demand.
It's just FOMO! That's about BOTH supply and demand.

It's not about supply! If you go to an auction to buy something on a limited budget, would you rather there we 100 of those items or one of those items, in which circumstance do you think you'd pay more in the auction?

Well, new housing in not affordable. Why did you think it would be?
Do you think rebar grows on trees? Do you think developers just go down to Home Depot to pick up 40-storeys of glass from the discount pile? Should our electricians just watch a couple You Tube videos & go!?

New developments are expensive because land is scarce, there are only a few areas where you can build, just because you see a bunch while driving on the Gardiner, doesn't mean they are everywhere. Developers can't get financing without an acceptable profit level.

Let me get to my sore point. Investors. They're only buying as a commodity & they're crowding out end-users. The first is true, but it is not all bad. Investors sell eventually, and outside of a couple huge downtown towers, most are majority end-user buildings in 5-7 years.

The investor is the middle man, who is actually taking the biggest risk of putting down 20% on a project that may never get built. Even better for tenants, they often subsidize them by being cash flow negative while renting the suite before they sell!

And yes, more investors means more demand, BUT, in the mid-2000s, a huge tower was 35-storeys and 250 units. Add that investor demand, and towers are 95 storeys and 950 units.

Without investors buying upfront (as end-users rarely do due to downpayment requirement, wait times, cancellation risk), even 250 unit buildings would be VERY rare today. Developers would concentrate on boutique super luxury projects, like many US markets.

Yes they're expensive, but there will always be people with more money than you, and you want them to buy one of these new homes, not the resale property you were looking at. They'll tear down that dump and build a McMansion!

The older condos in Toronto are the cheapest on a per-square-foot basis. But you need to build new condos now to have cheaper 30-year old condos in 2051.

For some of you, you'd much rather pay 50% of your income on housing, as long at Toronto has that cool bar you go to three times a year. But we could turn that bar into 500 housing units, that in 30 years will be inexpensive entry-level product. Hard to believe, but true, IF...

..we continue to building new housing, and a lot of it. 25,000-30,000 condos and apartments in the GTA annually at the least. There will be high demand, we need supply to match it.

Some might be vacant! So what, build more to offset that. Some might be AirBnB, so what, regulate and build more to offset. They're too tiny! Most buildings have a mix, if you don't want to live there you don't have to, people have choices, let them make them.

I don't know how to end this, but I have to get back to work. You have to build, it creates jobs, it creates homes, it creates taxes. You can park somewhere else, another restaurant will open, move to the other side of the building, there is sun there!

The stock market as a whole, the yield curve, and pre-con investors: crowd-sourcing opinion on the future. Trust people that are willing to put their money where their mouth is. So many dinks on here wouldn't even bet me $10 the market would crash over the past 10 years. Weak.

You're biased! Good one. At least I study the subject and ask questions of people in the industry to form my opinion. If you're getting your information from MassiveMeltdown69 on Reddit, you might want to check your sources.

You made it this far? Wow. Thanks.

Supply and Demand, always, always, always, always.