Toronto’s Townhome Crunch: Meeting Surge in Buyer Demand
Mike Petrovski is on a crusade to build more townhomes in Toronto.
As the principal of GTA-based developer Profile Developments, Petrovski just had dozens of townhome units approved by the City of Toronto for Scarborough’s Victoria Park Avenue northeast of Highway 401.
The development, Fairview Towns, will see 62 four-storey stacked townhomes with 31 parking spaces and bicycle parking. It’s just around the corner from Huntingdale Towns, another site from Profile Developments that features 81 townhome units selling for $1.5 million, or under.
For Petrovski, building housing for families that’s more affordable than most new single-family homes is the goal.
“New ground-oriented units in Toronto just don’t exist,” said Petrovski. “Townhomes are your cheapest bet.”
Townhomes represent a tiny number of new builds in Toronto, even though studies show they’re the type of product many families want.
Since 2022, out of 74,653 building permits the city has issued for new dwelling units, only 1,245 were townhouses — representing just 1.67 per cent, according to the City of Toronto.
The city has been working to increase density, and specifically passed the Major Streets Study, an initiative that allows townhomes on major streets across the city. But since the bylaw came into effect in 2025, only three projects have been approved — Petrovski’s Victoria Park Avenue project, another 12-unit development on Gerrard Street, and a project on Rogers Road just north of The Junction that has been put on hold.
Builders say outdated city policies coupled with high land costs ultimately deter developers from building the product consumers want.
What buyers want
Data shows that townhomes are a popular choice for new home buyers.
From January to May, new townhomes made up roughly 37 per cent of the nearly 5,400 single-family home sales in the Toronto region, up from 24 per cent during the same period a year ago, according to sales data from the Building Industry and Land Development Association. And 66 per cent of new single-family home sales in the City of Toronto, specifically, were townhomes during the same time period, slightly down from 68 per cent compared to the previous year.
A recent report showed that between 2017 and 2024, single-family homes accounted for 40 to 62 per cent of all first-time home purchases in Ontario — exceeding demand for condominium apartments.
“Yet, by the end of 2022, apartments accounted for 86 per cent of all approved and proposed housing units in the Greater Toronto Hamilton Area development pipeline,” said Frank Clayton, report author and senior research fellow at Toronto Metropolitan University’s Centre for Urban Research and Land Development.
There is a disconnect between what developers build and what end-users — buyers who want to live in their units — want, he added.
But the cost of a new semi-detached or detached home can be too costly for first-time homebuyers, which is why townhomes are the ideal product offering more space while being less costly, said Clayton.
Building new semi-detached and detached homes in Toronto doesn’t make sense financially for a developer due to the high cost of land, as it would result in a price point that wouldn’t be feasible for most buyers, said Luke Johnston, executive vice-president of development and general counsel at Toronto-based developer Dunpar.
Dunpar’s project of 96 townhomes called Lambton Towns, on St. Clair Avenue West, is currently underway with units selling for just above $1 million.
“We typically tend to target purchasers who are either first-time buyers or oftentimes who are upsizing from two-bedroom condo,” Johnston said. ”(Lambton Towns) allows people to have some sort of grade-related product without paying the more exorbitant price of a semi or a single.”
He said while it might sound like a townhome for around $1 million is expensive, it’s a reasonable price in Toronto, that targets young families entering the market.
Cheaper land on industrialize sites
But to push more townhomes in the city, the cost of land needs to come down, said Clayton.
“Land prices are too high, that’s the biggest problem,” he said. “It needs to make economic sense for developers to build and to have a price that people will pay for.”
This can happen by subdividing residential lots by six or more townhome units or by building on industrial land, which is typically less expensive than residential land, he said.
“We typically tend to target purchasers who are either first-time buyers or oftentimes who are upsizing from two-bedroom condo,” Johnston said. ”(Lambton Towns) allows people to have some sort of grade-related product without paying the more exorbitant price of a semi or a single.”
He said while it might sound like a townhome for around $1 million is expensive, it’s a reasonable price in Toronto, that targets young families entering the market.
Cheaper land on industrialize sites
But to push more townhomes in the city, the cost of land needs to come down, said Clayton.
“Land prices are too high, that’s the biggest problem,” he said. “It needs to make economic sense for developers to build and to have a price that people will pay for.”
This can happen by subdividing residential lots by six or more townhome units or by building on industrial land, which is typically less expensive than residential land, he said.
A City of Toronto spokesperson confirmed it does not have specific zoning requirements for townhomes citywide. Instead, townhome construction in Toronto is subject to a patchwork of rules.
“Residential development must comply with a variety of standards, which vary across different neighbourhoods reflecting local planning objectives and historical conditions,” the spokesperson said in a statement, noting the standards can include maximum floor space, lot coverage, and height, among others.
There has, however, been work done by the City to target “regeneration” sites for decades, Clayton said.
More than 20 years ago the city rezoned Warden Woods, an industrial area just south of Warden subway station, as a prime housing development area to allow for 1,449 new homes, including 833 townhouses.
Scarborough has some of the cheapest land available in Toronto, said Petrovski, adding that once you’re west of Highway 404 (in the North York area) the cost of land goes up significantly.
Johnston agreed, citing Scarborough and Etobicoke as having some the most cost-effective land, with old industrial sites still available for redevelopment.
City policies continue to be ‘awkward fit’
But even if the price for land is right, the approval process from the city can be a barrier build, experts said.
Johnston said getting the Lambton Towns project approved was “extremely painful,” as the city’s policies continue to be an “awkward fit” with townhouses and missing middle development.
“A lot of times, it’s easier to get a 50-storey building approved downtown than it is to get 100 townhouses approved on an infill site,” he added. An infill site is a vacant or underutilized lot in a developed area.
Revisiting policies to allow for greater building heights would be helpful, as many neighbourhoods have residential buildings capped at nine to 10 metres tall, which doesn’t work for three- or four-storey townhomes, Johnston said.
The city spokesperson confirmed that height limits in the zoning bylaw vary across Toronto, and in most zones, townhouses are subject to the same height limit as other building types.
One exception is the recent zoning amendments to permit townhouses along Major Streets, in which the maximum height for townhouses is 13 metres.
The city said it “is taking a number of steps to help facilitate new housing, including townhomes,” pointing to zoning and development process changes, and said “there will be more to share on certified plans soon.”
Johnston said the Ontario building code could also be updated as it just outlines requirements for lowrise single-family and highrise towers, but isn’t customized for townhomes that sit in-between these two products.
“It’s unfortunate because it really deters builders from doing this type of product, and pushes more and more investment into dog crate condos and then larger subdivisions in more rural areas,” Johnston said.
“The infill townhouse continues to be extremely challenging in the city.”
This article was first reported by The Star
