The availability of land has always been a hot topic in the real estate community. If this is hard to believe then you should continue reading for further insight on this highly important topic. How quickly we’re going to reach the point of no build-able land has yet to be determined but it is going to happen eventually.
Toronto and the Golden Horseshoe – Have a look at the map below. The Golden Horseshoe has been circled in red for you – this is basically the holy grail of investing right now and the available land will quickly diminish over time as projects are completed. Toronto is the centre of attention in the Golden Horseshoe and as demand outpaces supply, all of the surrounding cities will benefit from it. We have seen this in the past few years already as the suburban areas have intensified and are creating their own downtown areas.
Landlocked – Lake Ontario is just directly south of Toronto. You cannot build on water for obvious reasons. Going north, east and west of Toronto are the cities of the Greater Toronto & Hamilton Area (GTHA) in grey. The grey area indicates the developed cities of the GTHA. Slightly past the grey area of the map is a giant blob of green that encloses the GTHA – this is the Ontario Greenbelt.
Nature Lovers Rejoice – The Ontario Greenbelt is the largest protected green space in the world – yes, in the WORLD! Due to the laws and regulations put in place for nature conservation, you cannot build on this green space. During his campaign, even our Ontario Premiere Doug Ford tried to pander to citizens about allowing developers to build on the Greenbelt. Very quickly though, he had to retract this proposition. His follow-up statement was as follows: “The people have spoken — we won’t touch the Greenbelt. Very simple. That’s it, the people have spoken. I’m going to listen to them, they don’t want me to touch the Greenbelt. We won’t touch the Greenbelt. Simple as that.”
Urban Sprawl – This map of the Greenbelt landlock was created in 2017. The small little bits of yellow between the grey and the green is the only land that is available for development (that is, if it hasn’t been built on already). As you can see in the map, there isn’t much left of the yellow bits. This is exactly why you see cities outside of the Greenbelt growing and expanding right now. Take a look at where Guelph, Kitchener, Waterloo, and Brantford are located; they are outside of the Greenbelt. Prices in those cities have been appreciating at a very rapid pace. Builders have already started building high-density buildings in those cities.
But wait there’s more! Evidently, there is a land shortage. However, Ontario has proposed a new policy recently – the Bluebelt. Have a look at the map below.
The expansion of the Greenbelt to the Bluebelt will essentially fill out a large chunk of the remaining land that can be developed, while landlocking the cities outside of the Greenbelt as well. What do you think is going to happen to prices when this goes through? Go up? Yes!
Today’s Going Rates – To give you an idea of where prices are right now, going from east to west, here are some average prices that developers have set for their new detached homes:
- Pickering: $800,000
- Markham: $1,500,000
- Richmond Hill: $1,800,000
- Keswick: $650,000
- Vaughan: $1,200,000
- Brampton: $1,000,000
- Milton: $800,000
- Burlington: $1,200,000
- Hamilton (Mountain): $600,000
Now imagine what will happen to these prices when land becomes scarce for builders to find. When land becomes scarce, prices increase rapidly for build-able land. Here’s another Insight Article that I wrote a while back that will further help to shed light on our land scarcity problem: SOLD! Entertainment District Land Goes for $110,000,000! In a nutshell, 13 years ago a parking lot in the Entertainment District was purchased by a builder for approximately $6,000,000. The most recently sold plot of land (which was 3 times the size of the $6,000,000 parking lot) sold for $110,000,000! The price you have to charge to turn a profit on that cost of acquisition is insane! As a result, this has ultimately led to higher prices for the end buyer – i.e., you and I.
The Wrap – As investors, you can essentially view the Bluebelt map as a treasure map for hunting down investment opportunities. It all starts with Toronto. If you can afford Toronto and make it work, then I would do it. Don’t miss out on these opportunities, while Toronto is still relatively affordable!