[Halifax] The Winslow (2570 Windsor) | 20 m | 7 fl | Completed

[OldDartmouthMark]

Originally Posted by Keith P.

I think you need to adjust your perspective. From what I understand, a unit in an average 7-storey box apartment costs about $200K to build. Add “luxury” finishes and more space and you get up to $300K. Obviously larger units are more costly. I’ve seen the same sort of numbers for high-rises. When the time comes to set rents which include common services, amenities, property taxes and the like, add those to amortization of the construction costs and a profit margin for the developer taking the risk and you end up with your monthly rent. New construction units are never going to be cheap. In a tight market like we’ve had recently those rents are naturally going to be higher due to demand. Not all developers are the “greedy” types the message board mobs like to jump on.

Without actual numbers, though, that sort of analysis is almost meaningless. Yes, large buildings are really expensive to build. They always have been. Amortize their costs over what period of time? Is it enough to justify literally doubling rents since Covid and the massive population increase? I dunno.

One set of numbers that we should all be concerned about is what percentage of income is normal to be spent on a place to live now? If it’s over 30% it’s too high, and it would take a lot to convince me that developers or whomever would lose their shirts if they were to bring their prices down to reasonable levels. And they’re not “greedy developers”… it’s “good business”. And that’s a large part of the problem.

[someone123]

Originally Posted by Keith P.

When the time comes to set rents which include common services, amenities, property taxes and the like, add those to amortization of the construction costs and a profit margin for the developer taking the risk and you end up with your monthly rent.

I don't think this is quite accurate. They charge the market rent. This may result in a loss or a surplus. The developers and financiers have to gamble on construction costs, market prices, and margins. Many owners of older buildings will presumably be in a huge surplus right now generating record profits in Halifax.

Construction costs depend heavily on regulatory factors like building codes. Hence debates around questions like double egress in relatively small buildings. Then there are questions like trades and how easily people can work around Canada or what kind of skilled immigration we get and on and on. There's probably no silver bullet but then again there probably is a way to tighten all these rules up and lower costs.

One good thing in Halifax is that the economics, including lower developer fees, allow for a healthier mix of small developers and newer firms to add supply to the market. In Vancouver or Toronto where land prices may be 9 figures and only large towers are economical it is not as accessible, although some zoning changes have helped. Halifax is in a pretty good sweet spot in some of these areas, although some things could be better, and that's why it grew so much.

[Keith P.]

^^^ None of those arguments really hold water. In a red-hot market, yes, prices will be high due to limited supply. But eventually things cool down and we will see the stratification occur. Buildings in nice areas or with high-quality finishes and amenities will naturally be able to charge more. Ones in less desirable areas or with management problems will not be able to support higher rents. The problem now is that market is overheated because of reasons that have already been discussed and have nothing to do with buildings or the "greedy developers" thereof. If you are expecting to find a nice apartment in a nice area for $800/mo these days, you need to reset your expectations.

[kzt79]

Originally Posted by someone123

I don't think this is quite accurate. They charge the market rent. This may result in a loss or a surplus. The developers and financiers have to gamble on construction costs, market prices, and margins. Many owners of older buildings will presumably be in a huge surplus right now generating record profits in Halifax.

Or, if you're a developer in Vancouver (and maybe soon elsewhere?) you can look to the federal government to bail you out with tax dollars!

Crazy that our own money is being used by our government to maintain inflated prices... of course most people will love this and vote for more of the same.

[OldDartmouthMark]

Originally Posted by Keith P.

you need to reset your expectations.

Respectfully, that’s the problem. Things going to crap and the ones who are not feeling the pain telling the rest of us to reset their expectations.

[Keith P.]

Originally Posted by OldDartmouthMark

Respectfully, that’s the problem. Things going to crap and the ones who are not feeling the pain telling the rest of us to reset their expectations.

What are your expectations?

[OldDartmouthMark]

Originally Posted by Keith P.

What are your expectations?

My expectations? That things will continue as they are and housing will continue to be difficult to find and pay for to the average and below average income earners, and that we can’t expect meaningful change from the people in the positions to do something about it.

What are yours?

[OldDartmouthMark]

Also, that anyone living in a rent-capped apartment will not be able to move because they will lose their rent cap and thus their ability to pay for housing. This also includes people with their lease terminated due to the building owner wanting to ‘renovate’ so they can double the rent. Business as usual, in other words.

[kzt79]

Originally Posted by OldDartmouthMark

Also, that anyone living in a rent-capped apartment will not be able to move because they will lose their rent cap and thus their ability to pay for housing. This also includes people with their lease terminated due to the building owner wanting to ‘renovate’ so they can double the rent. Business as usual, in other words.

Yes, reduced mobility is one of several ways in which rent caps are actually a net negative. They benefit a subset of current renters at the cost of all other/future renters.

[OldDartmouthMark]

Originally Posted by kzt79

Yes, reduced mobility is one of several ways in which rent caps are actually a net negative. They benefit a subset of current renters at the cost of all other/future renters.

Not really. Reduced mobility is a symptom of a poorly designed cap system, or the lack of a better system to replace it. Having no cap or other system (as you appear to be suggesting) just means more expensive rates for everyone. No landlord is going to lower rents across the board in the absence of a cap system. That’s fantasy.

[kzt79]

Originally Posted by OldDartmouthMark

Not really. Reduced mobility is a symptom of a poorly designed cap system, or the lack of a better system to replace it. Having no cap or other system (as you appear to be suggesting) just means more expensive rates for everyone. No landlord is going to lower rents across the board in the absence of a cap system. That’s fantasy.

Well yes really. You said it yourself, some people end up "trapped" in a capped unit that they would otherwise move from. That is a negative. Caps also harm renters by decreasing new construction (reduced supply = higher costs for new renters or anyone moving) and decreasing renovation or even maintenance of existing units.

To be clear, I do think Halifax should have better tenant protections such as true long term leases.

[OldDartmouthMark]

Originally Posted by kzt79

Well yes really. You said it yourself, some people end up "trapped" in a capped unit that they would otherwise move from. That is a negative. Caps also harm renters by decreasing new construction (reduced supply = higher costs for new renters or anyone moving) and decreasing renovation or even maintenance of existing units.

To be clear, I do think Halifax should have better tenant protections such as true long term leases.

Trapped because of cost. Without some kind of rent control maybe they are “trapped” in a shelter or have to go to a building out of town with a long commute. Making everything more expensive doesn’t improve outcomes for them - just helps to secure income for the owners.

Frankly, I don’t really care about the minutiae of how to do it. It should be easy for anybody to see that the current system works well for a few and is (at least) a struggle for many. For some it’s untenable.

I’m old enough to have seen firsthand when it wasn’t bad like this, so it’s possible for it to be better, so let’s stop thinking of reasons to accept the status quo and do something.