Canada

Canada Is Running Out of Land. It Does That Every Few Years

Running out of land is as Canadian as hockey, maple syrup, or laundering money for global crime networks. In fact, Canadians love running out of land so much, they do it every few years.

Many are currently justifying high home prices by claiming a lack of land in Canada. This isn’t just something people have come to conclude themselves. It’s supported by politicians, (some) academics, and real estate developers. It doesn’t matter where either. From Vancouver to Toronto, and even into smaller cities like Halifax.

People are convinced this is the last chance to buy a house because the country is running out of land. Those who buy a condo now will live like the Barons and Baroness of the past. Forever their space in the country will be secured. Those who don’t will toile in the code mines. Hacking away at bits for Microzon, a conglomerate that owns everything. I’m pessimistic, but not even I am that pessimistic.

It turns out Canadians feel this way at the top of every real estate bubble though. Going through newspaper archives all the way back to the 1930s, we can find a whack of examples. It’s always the last year people will be able to buy. There’s no more land. Everyone will be childless and stacked in human worker pods. Psh… the last one is only partially true.

Today we’re going to go through a sample of the many times Canada ran out of land. Before that, let’s quickly dive into the land scarcity narrative.

The “Running Out of Land” Narrative

Before we get to all of the times this has come up, let’s talk about land scarcity. When home prices are rapidly rising, people tend to entertain this as an explanation. The seller of the land wants buyers to accept that their goods are more valuable due to scarcity. The buyer wants to justify why they’re paying so much for something they really want. Most of the people perpetuating that claim make a buttload by doing so. It’s much more profitable.

Let’s look at one of the most densely populated places in the world — Hong Kong. People from Vancouver constantly use this as an example, saying it has no land. The Greater Vancouver region will obviously be the next Hong Kong, right?

Hong Kong land is so scarce, they are currently considering a plan to build an artificial island. Politicians from the region argue this would help with housing affordability. All they need to do is spend billions of tax dollars to build more land, for developers to develop.

A Hong Kong Urban Studies prof has a different take. Prof Mee Kam Ng crunched the numbers, and found 24% of the region’s land is developed. Most people assume the rest is protected land, but it turns out that’s not the case. Only 46% of the land is actually legally protected. That leaves 30% of Hong Kong with development potential, not currently used. Obviously, she thinks this should be used before disrupting marine life.

Even one of the most densely populated regions in the world has a s**t ton of land. Acknowledging that point would squeeze a lot of profit though. The preferred narrative has the government giving developers a buttload of subsidized land.

Greater Toronto Can Build Two New Torontos Before 2030, and Land Would Still Not Be Scarce

Sure, but that’s Hong Kong. It’s a wide-open landmass, unlike the tiny Caribbean island of Toronto. Surely Toronto’s Greater region has run out of land, right? Well, that’s not what researchers that have actually crunched the numbers say.

Neptis found the Greater Golden Horseshoe (GGH) has plenty of land for development. The GGH, the economic region with Toronto at the center, has a whack of land. It doesn’t even need to touch the Greenbelt-protected region. It just needs to start using the land that’s being hoarded.

The GGH has 125,600 hectares of land available for development, according to the study. Of that land, 103,200 hectares are designated greenfield. Greenfield is untouched and raw land, often used for development. This land should cover more than enough land for housing and development until at least 2031. They actually say it could last much longer, if effectively used.

Source: Neptis.

For context, the City of Toronto is 63,020 hectares large. The GGH can build the equivalent of almost two Torontos without redeveloping anything. Since redevelopment also occurs to improve densification, it’s hard to argue a shortage. At least not in your lifetime.

“The total inventory of land is sizable, and any future proposals for boundary expansions should take into account the amount of land already available for development,” says the researchers. 

In other words, all of those people saying the Greenbelt is why home prices are expensive? Most of these campaigns are developers looking for cheap and subsidized government land. They’re supported by people that have been convinced to give it away and that is how they will be able to buy a home. Because, you know… people buy homes from developers, thinking the more they buy, the lower prices get.

History Does Not Repeat Itself, But It… Okay, It Repeats

At the peak of every real estate bubble, people buy into this narrative of land scarcity. No one ever seems to think values can extend beyond fundamentals. People are perfectly rational, and never make mistakes or get excited beyond reality. If they aren’t, the government, through sheer political will, will make it so. All they have to do is price out subsequent generations, right?

Historically, that’s never been the case. But don’t take my word for it. Let’s go through some old newspaper articles, and see what we can learn about Canadian real estate. We’ll start with the most recent epic bubble pop, in the late ’80s and early ’90s.

The Late ’80s and Early ’90s Canadian Property Bubble

That Time Toronto Had No More Frontage Land, So Prices Soared

The first article is “Easing The Housing Squeeze” (May 28, 1988; Toronto Star). In it, experts explain a lack of land drove prices higher, and now frontage is rare. Frontage, the street-facing length of land, became so rare, it hit $3,000 per foot. For the late 1980s, that’s a lot of cash.

The typical 40 ft lot would cost around $120,000 ($240,000 in 2021 dollars). The cost of an average home fell until 1996, hitting $190,000. That included the land frontage as well, so sadly Toronto hadn’t run out of frontage.

That Time The Toronto Suburb of Markham Ran Out of Land

In an article titled “Will The Trend Turn Toward Smaller Homes?” (Jun 10, 1989; Toronto Star), the author asked experts about trends in the marketplace. Experts predicted single-family home sales would be over. All future buyers could only afford condo apartments from now on.

“The days of the $300,000 new home in the Greater Metro area are numbered. Planners and politicians are beginning to see the writing on the wall — that demand for that kind of up-scale housing is waning,” the piece opens.

For context, about half of homes sold in the Greater Toronto resale market are detached units. The region still hasn’t hit the condo apartment apocalypse, 32 years later.

That Time Toronto Real Estate Developers Ran Out of Land… Excluding Their Landbanks

In the article “DBRS Lowers CP Rating” (May 25, 1991; Globe and Mail), Toronto developers were running out of land. “They’ve got to sell land each year to show positive cash flow, but they’re running out of land,” said the author.

Just a few paragraphs before explaining the developers own “the best land banks” in the City. For those unaware, land banks are land bought for future development. They often just sit empty while values appreciate. At the perfect cycle peak, developers then use them. In other words, they had a lot of land. They just didn’t get the amount of zoning they wanted, to maximize profits.

The author argues they needed more zoning because there was not enough housing in the area. As a result, home prices would continue to rise due to a lack of development space. Prices dropped just a few months after, for nearly 5 years. I guess they found more land.

That Time Toronto Didn’t Even Have Enough Room For The Dead

In the early 90s, Toronto land was thought to become so scarce the dead would no longer be welcome in the City. An article titled “Toronto Losing Ground In Cemetery Business” (May 25, 1991; Globe and Mail), explained people can no longer be buried in the city. Land prices had become so high, they would need to soon be banished to the suburbs… like an oversized SUV.

“Burial space is running so short in Metro Toronto that the dead may soon be commuting to the suburbs for their final resting places,” said the author.

Source: Globe and Mail.

And no one ever died in Toronto again, because it was too expensive, is my understanding.

The Late ’70s and Early ’80s Canadian Property Bubble

That Time Halifax Ran Out of Land In The 1970s

In a piece titled “No Land In Halifax So Dartmouth Gets Plants, Jobs” (Jun 17, 1976) we find out Halifax ran out of land too. The land was so scarce, they couldn’t even build new factories. The city’s politicians told companies to build across the water instead. Who needs jobs? People owned real estate, right?

“Industrial land is so scarce in Halifax that top city officials are telling industries to look elsewhere in the vicinity for sites to build new plants,” said the author. A little before explaining, “to acquire larger sites in Halifax it would likely mean buying up an existing site and redeveloping it.”

In other words, there was plenty of land. Just not enough to give away cheaply to a company looking to build a new industrial plant in the region. Maybe instead of running out of land, we should say “running out of land the government will give us on the cheap?” 

That Time A Lack of Land Caused Toronto To Become Childless Apartment Dwellers

In “Metro Housing Land Could Become Scarce” (Sep 27, 1977; Globe and Mail) we learn Toronto will live in apartments. “However, in terms of new housing, Metropolitan Toronto is looked upon as mainly apartment land, and the external area is primarily used for low-density housing,” said the author.

Further adding, “… there would be sociological disadvantages because of the tendency for apartment occupancy to be more geared towards non-family households, childless families and the two ends of the adult age range.”

Okay, so this wasn’t totally off. Just about 30+ years too soon. Except for the fact, detached housing is still the largest home resale segment.

That Time Toronto Ran Out of Land, And No Luxury Hotels Could Be Built

In “Work Begins On King Edward To Bring Landmark Up To Snuff” (Sep 28, 1979; Toronto Star) we find out downtown Toronto ran out of land. Consequently, there would be no more luxury hotels in the Downtown region.

“The location in downtown Toronto will attract the business clientele and there’s limited opportunity to develop competitive luxury hotels in this area because there is no land available and because of the high cost of construction and financing,” an expert told the reporter.

And 1979 was the last time a luxury hotel was built in downtown Toronto. Not really. I can think of 3 that are currently under construction off the top of my head. There were also many built between 1979 and 2021. 

That Time Toronto Only Had Land To Build Vacant Homes For Wealthy People

In “Brand New Homes About In Metro — For The Wealthy” (May 29, 1976) we find out Toronto’s lack of land only impacted the poor. “Undeveloped land is rare in Metro now and almost non-existent outside of Scarborough,” says the author. 

Though the author seems not totally convinced by the development narrative. She points out 17,000 new luxury homes that are built, and sit vacant. “Brand new and unoccupied, they prove the argument that there is no housing shortage in Metro, only a shortage of housing people can afford,” she finds. 

Only 17,000 vacant homes? Those are rookie numbers. You gotta pump those numbers up. 

What’s interesting here is in 1976, the housing bubble was just starting to form in Greater Toronto. The vacant homes helped apply a squeeze and panic that would send prices soaring shortly after. The market would crash in the early 1980s. 

That Time Vancouver Ran Out of Land, And It Would Only Last 20 Years

In “Vancouver may tackle density limits for further growth” (Apr 20, 1981; Globe and Mail), we find out Vancouver can no longer have single-family homes. Experts argue the city needs rapid densification, and people shouldn’t be opposed to it.

“Increased purchases of Vancouver houses by absentee owners — whether foreign investors or local speculators also should lessen neighborhoods’ resistance,” said one expert in the article. 

“The Greater Vancouver area is considered to have enough land for 20 years of residential development,” said another city official.

Oh, so that’s why nothing was built in Vancouver after 2000. Makes sense.

The 1960s Canadian Property Bubble

That Time Developers Bought Land and Held It Vacant, Resulting In A “Shortage”

It turns out in the 1960s, developers began banking land for future development. You see, the government was going to ramp up immigration, and there would be a need for a lot of housing. With low property taxes, it just made sense to buy the land and hold it vacant, and watch it appreciate. In an op-ed titled “Land Speculation” (Sep 9, 1967; Globe and Mail) someone suggests a vacant land tax. 

“I would like to see the following idea seriously studied. All vacant land within suitable areas near Metro, should have its yearly taxes greatly increased to the point where it would be unprofitable to hold it vacant any longer,” said the author.

Adding, “An owner of such land would thus be forced into one of two courses. He would either have to develop the land himself immediately in order to create revenues to offset these taxes, or he would have to sell his land.” 

Henry George couldn’t have said it better himself. 

That Time Academics Concluded Real Estate Developers Can’t Cause Bubbles

Don’t worry, academics concluded the above strategy did nothing to prices. A decade later, “Study Holds Soaring Land Prices Were Not Caused By Realty Firms” (Oct 27, 1978) was published. The article concludes the development industry couldn’t cause higher prices during the 60s.

The article actually completely dismisses the buying can contribute to home prices. “Real estate companies can in no way affect the general level of land prices because they have bought land steadily over the past decade so that inventories are now high compared to current consumption levels,” said the author. 

The 1930s Canadian Property Bubble

That Time Saskatchewan Ran Out of Land

In a piece titled “Land Is Growing Scarce,” (Aug 11, 1931; Globe and Mail), we found out Saskatchewan ran out of land. I’ll wait for everyone from Saskatchewan to finish laughing before proceeding. Done? Still? Fine, I’m starting without you. 

In a legislative session, the Premier of Saskatchewan declared land had become scarce. Even the unattributed author found this to be rich. They wrote, “a glance at the map does not reconcile so large an area with a relatively small population.” 

Source: Globe and Mail.

They added, “the West is still a ‘vast open space,’ capable of maintaining many millions of people.”

I think you probably get the point by now. Now if you’ll excuse me, the internet is running out of space.

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33 Comments

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  • GTA Landlord 2 weeks ago

    “running out of land” and negative cap rates will correct and then my property will be worth it, are perpetual statements from investors.

    No developer will deny there’s a real estate cycle.

    Every home buyer will though.

    • Ottawa Resident 2 weeks ago

      This isn’t about land. It’s about politicians not wanting the business cycle to end in their term.

      • Joe B 2 weeks ago

        Spot on. Kick the can down the road as long as possible until someone is forced to pick it up.

    • kEN 2 weeks ago

      I think we just need a bit of global warming for Canada to move some of the people about 5-10 miles Norths. It looks like 85-90% of the population is pretty bunched up to it’s southern border with the US.

  • Gabe 2 weeks ago

    Stephen woke up this morning and chose violence.

    Great article!

  • KL 2 weeks ago

    It drives me insane when I hear Canada is running out of land, when there are literally three mansions on my street that are vacant.

    There is no lack of land. Canadian property taxes are so low, there’s no motivation to efficiently use it.

    • Joe B 2 weeks ago

      Agreed. Supply manipulation is the real problem, not supply itself.

  • Daniel 2 weeks ago

    With low interest and tax rates, there is just no need for land to be productive. Then it gets scarce, but it is a political decision.

    • Mitch 2 weeks ago

      This is exactly it. If your property is rising by hundreds of thousands of dollars per year, why would you bother developing it? That would actually cut into your profit, because it attaches a real value to it.

  • Tanner Harper 2 weeks ago

    Well researched and funny piece. Really is amazing to see this kind of stuff happen every ten years, and everyone has amnesia because they don’t want to believe their homes can be worth less.

  • Hannah 2 weeks ago

    Ugh! I know this has only been happening since 2017, but I being too young to buy a home, now has to watch 5 years of bubblely, government-given gains, while trying to actually invest in companies with real cashflow.

  • RWZM 2 weeks ago

    On the one hand, yes, there are exaggerations.

    On the other hand, the population increases significantly increase the cost of the land. Suppose we have a crash (what a thought)–the bottom will be way, way above the 1990 bubble peak.

    • Paul 2 weeks ago

      I guess you’ve never heard the saying the bigger they are, the harder they fall. Volume of the debt pile says something different to what you claim.

  • Sam 2 weeks ago

    Greenbelt was installed only in 2005. Before that land supply was not restricted. Since that, value of any land available to build within GTA has skyrocketed. Supply of new homes has dwindled, especially single family homes. So can’t compare what happened before 2005 to what has happened after 2005.

    • Marco Von Marcovich 2 weeks ago

      Yeah but who need facts about extreme material changes if it doesn’t fit their narrative? 😛

      • Laurel 2 weeks ago

        Slow bus made a stop to the comment section again I see. I’m happy it’s operating.

      • Dumbo Von Dumbovic 2 weeks ago

        Well it’s a good thing prices are proving your theory correct…since only the GTA, has appreciated, and not places like Barrie, Windsor, or London, which have seen little to no appreciation due to the lack of greenbelt.

        Oh wait…

    • Canaduh 2 weeks ago

      I’m not even sure where to start here. All the best to you.

    • Paul 2 weeks ago

      Actually to the contrary. If the value of the land skyrocketed wouldn’t we be seeing developers cashing in? Perhaps the developers know something that we don’t?

      Here is a thought, they build when materials and labour are cheap. Not at the top of the bubble. That’s why they are developers and you aren’t. It benefits them to hold and build into a boom, not the bust. Businesses that have been around for generations, this is child’s play for them.

    • TO YIMBY 2 weeks ago

      I’m not even sure what your point is. If someone said in 2015 there’s no more land, and then researchers found they can still build two cities the size of Toronto (and much more dense and efficient), it doesn’t matter that it didn’t exist in 2004. The point is refuting the current lack of density.

  • No Land 2 weeks ago

    Vatican, Andora or Lichtenstein can run out of land. Canada is the second largest country in the world and has more land then any other country (besides Russia) can only dream to have. Funny.

  • Rick Abrams 2 weeks ago

    The Law of Supply and Demand is a myth. It is based upon belief and not on facts. We have the same foolishness in Los Angeles, but people ignore the fact when Judge Beckloff, who hate Braodband as it might reduce the urgent need to construct another multi-billion dollar subway order a developer in the Antelope Valley NOT to build. Why? Admitting that there is a “sh***” load of land would reduce housing prices in the Basin.

    The latest absurdity is Judge Woker (davi O carter) who thinks he should rule that single-family homes are a conspiracy by white racists to make Black people homeless and then developers should be allowed to buy single family detached homes, tar them down and then construction multi-unit complexes. Not surprisingly the cost of r-1 homes immediately jumped up since now everyone was no longer worth living space for a family, but a commercial opportunity for developers. People believe the price jump is because somehow over night LA had fewer homes. They also ignore that demand is dropping since Family Millennials are leaving.

    • Jeremy 2 weeks ago

      Not to mention in LA single-family homes are the type of housing located in low-income and racialized areas, and are being replaced with high-density housing that’s more expensive to build than it is to deal with low-density housing.

      Like LA’s spot zoning issue, they’re predators trying to convince low income people their lives will get better if they just let developers do whatever they want.

  • Alex 2 weeks ago

    I’ll I have to say is: Politicians don’t want the credit crunch to happen during their term, so here’s free money people, knock yourselves out!

  • Pepp 2 weeks ago

    Well, let me give you an example.

    Supply of land close or within city center is basically all bought up now. No more supply. Let say you have a house with a large lot and a great private backyard 5-6 mins drive from core downtown. That kind of house will never be built again in that kind of location. Especially in a neighborhood with shopping and transit nearby. However what about the same house and lot 1.5 hours drive from city center? Well then there is really no shortage of supply.

    If there is a crash, which do you think will lose more value? See, running out of land is partially right because urban big lots are scarce now. Not so much for suburbs, we are looking at two completely different markets.

    • Daniel 2 weeks ago

      If you raise interest and tax rate, your city center lot needs to earn income. You better invest and densify, create new units, etc. For now, it is counterproductive as Mitch pointed out.

    • Emily 2 weeks ago

      With the growth of WFH, those city center homes aren’t the sure bet they’ve been. Yes, I think they’ll retain more value than exhurbs but I think post-pandemic there’s going to be a divergence between homes with backyards and more rooms and everything else. Boomers and Gen X might not be fans of WFH but 90% of Gen Y prefer it. And with the bulk of them entering middle-age, a disruption is coming.

      Some businesses drag their heels, but a lot of people from work jumped ship during the pandemic when head hunters came looking with jobs from competitors offering WFH arrangements. Same at my partner’s work. Competition to live near downtown Toronto isn’t going to continue to be what it was for those earning a decent income. As it stands, we’re leaving Toronto. If my partner’s employer doesn’t allow WFH after we move, he’s quitting. We have other means to earn income remotely and have come to the realization that we don’t actually need them and probably never did.

    • Average Man 2 weeks ago

      Let say you have a house with a large lot and a great private backyard 5-6 mins drive from core downtown.

      Every single one of those houses should be re-zoned, torn down, and turned into townhomes.

  • Oakville Rob 2 weeks ago

    When calculating the land vacancy of a city, I wonder if GFA (Gross Floor Area as a percentage of the Gross Lot Area) comes into play. If so, the reality of undeveloped area is quite different.

    If I have a 10,000 square foot lot and current zoning allows me to build a house that is 30% of that (3000 square feet) but I only build 2500sf, is the remaining 500 calculated as being available for future development?

    Local municipalities can change those ratios any time making calculations of undeveloped land amorphous from day to day, certainly from decade to decade.

  • Herry 2 weeks ago

    Canada is not running out of land. You’re running out of brains.

  • Ashley 2 weeks ago

    Oh boy, Canada running out of land, time to move away from Canada.
    These elections will turn out to be very expensive for Canada – inability at political level has just put Canadians into more debt and free money moving into non-productive assets.

Comments are closed.