So, what are the appropriate HH formation numbers?? Where do you think we should be?
High end estimate is 33,000 households per year. Remember that virtually all of TOs pop growth is via international migration. Stats Canada confirms that new immigrant households are on average nearly 50% larger than Canadian households (3.5 vs. 2.4), which means even the household formation estimated may be high.
I estimate we need one new dwelling for every 2.6-2.8 ppl added to TO population. When we've instead been averaging one new dwelling for every 2.2 new ppl, there is clearly a potential that excess supply from years of overbuilding can suddenly and seemingly miraculously appear out of the woodwork in the event of a mild, sustained correction, which can exacerbate the trend. This was part of the issue in the US.
Also, with regards to our supply, in Toronto and Vancouver the supply is pretty inelastic (isn't it?). Toronto has the lake and growth-policies limiting growth, and Vancouver has the Ocean and the mountains.
All evidence to the contrary. Vancouver in particular has built a very high number of new dwelling relative to population change over the past decade. While the net result may be densification, there is clearly the capacity to add new dwellings. Again I would emphasize that the evidence is VERY clear that population growth is NOT the primary driver of the market (a few key locales and certain segments notwithstanding). People serious about understanding the real drivers of the market need to step away from the supply/demand discussion and take a long, hard look at credit dynamics over the past decade and ask honestly if there is any way those same dynamics can be reproduced going forward.