Townhouses in the GTA are exceeding price points that put them out of the reach of the average buyer. (veggiefrog/Flickr)

Homebuyers turning to townhouses as an affordable way into Toronto’s heated housing market will have to look elsewhere, according to a new report from Ryerson’s Centre for Urban Research and Land Development (CUR).

Townhouses are typically considered as a solution to the “missing middle” – the lack of multi-unit housing fit for a family within reach of city sights. While these units are typically less expensive than a detached house, townhouses are hitting prices that put them far out of reach of the average buyer, the report said.

This trend stretches beyond Toronto’s borders, with costs creeping up in cities across the Greater Toronto Area. The average price of a 20-foot-wide townhouse site in the GTA is $307,500, according to the Canadian mortgage financing company MCAP, but experts say that this is on the low end in many cities.

“There’s no question that a new townhouse is typically priced lower than a new detached house,” said Frank Clayton, a senior research fellow at the CUR. “But the prices go as high as $1 million in Markham.”

The CUR report found that townhouse prices have accelerated due to the high cost of serviced sites, or land that is already hooked up to utilities like hydro – an issue that could be solved by the provincial and municipal governments.

To improve the affordability of townhouses, the province and municipalities would need to increase the number of serviced sites and reduce government-imposed development costs, which can exceed $70,000 per unit.

Millennials and young couples who don’t want to invest in condos are looking for stacked townhouses and low-rise apartments as an alternative, but the land use planning system, which is determined by the province, “is not gearing up to produce these in large numbers.”

“Governments do not respond to market forces, unlike the other participants in the housing supply system,” Clayton said. “This includes labour, building materials, financing, and entrepreneurs – they all increase supply rapidly in response to robust demand.”

Stefanie Marotta is a broadcast producer at Ryersonian TV and reporter at the Ryersonian. She is also a master of journalism candidate at the Ryerson School of Journalism specializing in digital and broadcast with a focus on business reporting. Reach her on Twitter @StefanieMarotta.

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