Quote:
Originally Posted by mhays
We're probably actually agreeing. If you upzoned large areas to allow multifamily, the average cost for multifamily-zoned land would drop. That would be seen as a "giveaway" to developers (and landowners in the upzoned land) but it would have a big effect on housing prices for both new and existing units.
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In theory, I agree this might apply; yet I'm not sure it does here in Toronto, right now.
Aside from the fact we're seeing massive levels of new construction, the largest amount being multi-family (condominiums); existing zoning is something that's fairly easy to change in Toronto.
If a development is located along a major road, or in or adjacent to an existing highrise area, for the most part, its a foregone conclusion that an applicant will be able to get approval for tall, multi-residential housing.
Were all of the 'easy' rezone sites unilaterally upzoned, it would surely save some money for the development community, most likely, the majority of it in time, as a typical Toronto rezoning process with Site Plan Approval ranges in the 4-6 year area from beginning to end.
If you could skip part one, you could probably drop that to 2-3 years.
There would be a small secondary savings in what is called 'Section 37' charges as well.
These are essentially 'community benefits' that are payable for exceeding the zoning for the site.
What a each development pays will vary; but for a larger building, something in the 1-3M range might be expected. So something like $6,000-$10,000 per unit.
That said, when developments are often offering entry-level 1brdm suites at more than 600k for the off-prime sites, its a pretty small difference in the overall cost structure.
To lower the cost of land in Toronto you need to actually change how much land is practically developable in key neighbourhoods.
You also need to apply pressure to get some reticent owners to redevelop (I'm thinking B-level shopping centres)
Creating developable plots to affect the market in Toronto would come in two types of change.
The first is to look at an area already deemed desirable but which isn't attracting a lot of development of scale.
Toronto's East York area might be a good example.
What's going on here? I would suggest the problem is that the area is a myriad of 50's era bungalows.
That the only scale you might get would be if you redevelop those that face onto larger roads.
But the way the area is organized, you would have to purchase many lots, and add depth for a development of scale as well.
This is done, here and there, in the most prime of areas.
But in anything that B+ prime, its a lot of hassle to assemble the land.
In the inner-burbs you face 2 larger challenges, one is long stretches without a major road (In Toronto's Scarborough area, major arterials are 2km apart)
But the larger challenge is that much of the area isn't prime for development.
Meaning you won't get top dollar for all your hassle.
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That said, the idea that investors holding condos is not a negative is strange to me.
Those investors whose units aren't vacant AND who are renting to long-term renters serve some purpose in the market; though they are inflating ownership prices while arguably putting peripheral downward pressure on the rental market (though surging rental prices may suggest differently)
However, I suspect that there are a percentage of these units that are being held vacant; and another larger percentage going on the short-term rental market (ie. Air B'n B)
That may serve to suppress the hotel market a bit, but it does little for the long-term rental market and may arguably drive-up land prices in the process.
There are a multitude of other issues affecting the Toronto and other big-city housing markets, but this is one; and its one for which a bit more upzoning (which i must say i am not opposed to) is probably not a material solution.