First of all townhomes suck to build. Now that this fact has been established we can discuss why. It is due to compliance costs and endless burdensome regulations, fees, delays and engagement expectations. These eat up a lot of builder capital, without improving the product for the client. As you may recall, Rndsqr published this some time ago and pointed largely at City hall as to why it was abandoning the townhouse market. In classic bureaucratic incoherence, there was no response from the City, certainly no internal soul searching and promise to change.
The city has the developed areas guidebook and the municipal development plan MDP. These call for more infill development and less sprawl. Again, the city makes infill development of anything except detached homes super painful, yet it expects for some reason the builders will just line up to get slaughtered building something nobody wants because the planning department publishes a policy document. Just look at the market data from January 2021. Some of the market is on fire, and some of it is in the toilet. I know some serious builders who aren’t touching what used to be their core business of townhomes. What will the city do if the goals of the municipal development plan and the new guidebook are ignored by the industry? Why doesn’t the city do something to achieve its goals for densification by incentivizing rather than punishing those who’d create the product that aligns with the MDP? Can the city change buyer tastes during a pandemic? Market data says no.