Canada's 'housing bubble' deemed close to bursting

[Truenorth00]

Read this insanity from BC:

https://www.cbc.ca/news/canada/british-columbia/coal-harbour-school-rezoning-2021-1.6067390

198-2 letters opposing a school and social housing complex in tony Coal Harbour.

There's more. Here's a Toronto NIMBY running a gofundme to fight a seven-plex:

https://ca.gofundme.com/f/save-225-brunswick-avenue

Among many elements of a housing crisis.

[milomilo]

Originally Posted by someone123

Vancouver housing construction is already dominated by a small number of corporations. I dunno about ownership but, well, give it time.

I understand what you are saying about regulation but the reality on the ground in Vancouver is there are a ton of different regulations, most of them are going nowhere, and tweaking minor ones is politically difficult. So a binary line of reasoning about how regulations caused the problem in the first place is kind of pointless. Vancouver basically needs an all-hands-on-deck approach to solving the affordability crisis (government funding of meaningful projects, regulations forcing developers to build certain kinds of housing, more zoning, faster approvals and lower development fees, and so on). That being said, I don't think it will be solved. I think younger people here who don't already own real estate are just kind of screwed and should consider moving away if things like ownership or having a family are important to them. In the long run, I expect the city to become more and more of a playground for the wealthy and childless. It is not the end of the world but I don't think Canada has a great depth of other cities to move to beyond Toronto and Vancouver.

I agree there's little hope the problem will be solved.

I agree there's other cities to go to, but it's a shame there is no policy innovation amongst the cities. You'd think in the free market of ideas that somewhere would have the bright idea of "maybe if we make our housing cheap by allowing it to be built people will move here", but every city has basically the exact same policy when it comes to regulation of housing.

It's also a shame that Vancouver is close to being written off as a place to work and live - it's literally the only place on Canada's western coast where a large city could be located.

[Truenorth00]

Originally Posted by someone123

I understand what you are saying about regulation but the reality on the ground in Vancouver is there are a ton of different regulations, most of them are going nowhere, and tweaking minor ones is politically difficult.

Things that are "politically difficult" are really just things that lack political willingness. And if there's not willingness to change, you can try and fight it to change the culture, or its time to move.

I've said before, I don't know why anybody young who doesn't have specific family issues stays in Vancouver. And increasingly I would argue the same for talented Canadians as a whole. We're a country where realtors make more than engineers and nurses. That should tell young people everything they need to know about how much this country values talent and hard work.

[someone123]

I'd say about 2/3 of the 20- and 30-somethings I have known here have moved away over the years and at any given time a handful of people I know tend to have moving away plans. There is also a new stream of people who move here. Often the people who move here from other cities have no idea how annoying the housing situation will be. A year or two in, they've already been scammed or "renovicted", etc.

I decided not to move to the US for personal reasons (e.g. questionable legal status for same-— relationships back when I considered it, so my partner would have no immigration status; I think that issue has since been resolved). Thankfully we already own property. I still worry that a lot of my friends are going to move away and it is hard to really have "roots" here. A lot of them talk about future plans that involve buying property if only X, Y, Z happen and I think they are in many cases unrealistic. I know a lot of 30-somethings with degrees who live with roommates. A couple years ago the BC Liberal leader, who very well may own a multimillion dollar portfolio of real estate, said this is "fun" and "wacky". He really captured the zeitgeist of generational inequity.

In 2016, rising real estate prices added $2.3M to the net worth of BC's provincial cabinet ministers: https://bc.ctvnews.ca/surging-real-estat...binet-as-affordability-worsens-1.2751578

[cabotp]

Originally Posted by Truenorth00

Would you trust a government that hasn't acted in your interest your entire life, to take care of you in your old age?

Governments through out history have never acted in the best interests of the young working class. So I wouldn't expect the government to change now. But every citizen expects to be helped when they are older.

So even though the government has done nothing to help me through my life. And I've been paying taxes up my —. I expect to cash in through my life's hard work when I get older. Now I don't expect to be helped 100% but I do expect some help.

[MonkeyRonin]

For all the talk of generational inequality and the challenges faced by young people in the housing market, one of the problems that advocates of housing reform like us seem to run into is in effectively conveying what the structural problems at play are and what the solutions should be. Terms like "missing middle" or "the yellow belt (or R1 zoning)" aren't yet part of the common parlance.

Housing is of course a topic that comes up pretty frequently in conversation with my friends & acquaintances, as it naturally does in cities like Toronto and Vancouver. We can all pretty much agree that housing costs are a major problem (if not the biggest challenge they're facing right now), and that there's a major sense of inequality between housing haves and have-nots.

The problem is - and this is just anecdotal here, but - I find that as soon as I mention things like liberalizing zoning to allow for higher-density in the yellow belt or reducing development fees & red tape, people tend to get their backs up and think that I'm advocating for giving developers free reign to run roughshod over the city. Banning foreign buyers meanwhile is still seen by some as a racist dogwhistle. The solution in their minds is that the government just needs to wave a wand and build more affordable housing.

Aside from a few policy wonks and those with a keen interest in urban affairs, NIMBY arguments hold a lot of sway and most people even in the affected demographics don't seem to understand the basic equation that rapid population growth + barriers to intensification + limits on sprawl = high housing costs and inequality; and that at least one of those has to give (of which, removing barriers to intensification would produce the least negative impact).

Until we can better convey the message to the masses, this will continue to be an issue that is politically expedient to ignore - governments can get away with funding a few boutique low-income housing developments to appease the housing advocates, and then turn around and place barriers to development to appease the NIMBYs.

[cabotp]

Originally Posted by rofina

In my experience, yes.

Most of my age cohort has left the city.

I have friends who bought SFH in Vancouver 5-6 years ago, who are also contemplating leaving even though they have secure housing.

The capital gains are so massive, one can sell, but elsewhere in BC with minimal or in some cases no mortgage.

Life becomes more free - yes, career opportunity is lesser outside the big cores, but if you have rent/mortgage payment to make lower salary becomes a lot more palatable, and in my personal case, will actually not affect me financially at all.

Further, many are getting passionate about helping people leave. I'm taking active steps to promote folks to leave Vancouver, I rather not post about it here, but I want to do whatever possible to erode the tax base in Vancouver to make it aware of the horrendous decisions being made.

For every person you help to convince to move out of Vancouver. Far more will want to move in.

[MonkeyRonin]

Originally Posted by Truenorth00

There's more. Here's a Toronto NIMBY running a gofundme to fight a seven-plex:

https://ca.gofundme.com/f/save-225-brunswick-avenue

Among many elements of a housing crisis.

I just googled this. Seems like a great, small-scale, low-impact adaptive reuse project of an existing building that would otherwise be sitting empty. Seems like a win-win for the community and for the city's housing market. Yet the developer has apparently been fighting for 3 years already to get this approved?

225 Brunswick Ave is yet another example of why the missing middle is so damn hard to deliver
March 6, 2021

Building buildings is really hard.

It’s hard for countless reasons, but one reason in particular is that it can be difficult to please everyone. Take parking, for example. This is often a primary concern when you’re trying to develop something new. Too little parking and people might be concerned that cars will start flooding the surrounding streets in search of a spot. Too much parking and people might be concerned about traffic congestion. So it can often feel like you’re damned if you do and you’re damned if you don’t.

I thought of this as I was reading through Alex Bozikovic’s recent opinion piece in the Globe and Mail called, “Yes, in my backyard: How urban planning must shift to meet our postpandemic challenges.” In it, he mentions a small missing middle-type infill project at 225 Brunswick Avenue here in Toronto. A century-old office building located in a residential neighborhood, a small developer has been working (with Suulin Architects) since 2018 to convert it into seven apartments.

This is the kind of infill housing that planning staff and many councillors are trying to encourage across the city. And yet, the year is 2021. This developer is on year three in a process that will, maybe, deliver a total of seven new rental homes. There are also many other examples that we can point to in the city that have faced similar challenges, like this one here on Gerrard Street East. While not nearly as interesting architecturally speaking, it would have delivered 10 new homes proximate to transit. Maybe that will still happen. I can’t say for sure.

I’m not going to get into the specifics of any one proposal, but two things are clear to me: (1) Our city, and many other cities around the world, have a need for more missing middle-type infill housing and (2) our system is greatly flawed if it takes years and years to ultimately green light the delivery of only a half dozen or so new homes.

Time equals money. And when we make the process this difficult it means that many developers aren’t going to bother (because the math probably doesn’t work) and that the ones who are successful will need to absorb a bunch of unnecessary costs in the end pricing/rents of their homes (i.e. make the homes more expensive than they need to be).

225 Brunswick is exactly the kind of project that I would love to work on: a small-scale adaptive reuse project where design is clearly a priority. But with a 3-4 year entitlement timeline (perhaps longer?), it’s simply not worth it (though I do commend the efforts of the project team). I’m sure many others feel the same way that I do and that’s unfortunate when you’re trying to build a more vibrant, inclusive, and competitive global city.

https://brandondonnelly.com/2021/03/06/2...ssing-middle-is-so-damn-hard-to-deliver/

[Innsertnamehere]

The image of “developers are evil” is oddly persuasive and often verges on racism in many aspects.

The recent popularity of articles inflating automatic corruption because a bunch of Italian developers own land in designated greenfield areas along the 413 is a great example. They are Italian and own land along a provincial infrastructure project! There must be corruption there, right? The Star runs massive “expose’s” that illustrate nothing but insinuate the fact.

And nobody thinks anything about it. It’s odd. And speaks to people’s completely skewed perspectives on how housing actually works.

[someone123]

Originally Posted by MonkeyRonin

The problem is - and this is just anecdotal here, but - I find that as soon as I mention things like liberalizing zoning to allow for higher-density in the yellow belt or reducing development fees & red tape, people tend to get their backs up and think that I'm advocating for giving developers free reign to run roughshod over the city. Banning foreign buyers meanwhile is still seen by some as a racist dogwhistle. The solution in their minds is that the government just needs to wave a wand and build more affordable housing.

I have seen the same thing. The way our politics are set up in Canada is almost perfect for not addressing housing. The real estate haves are okay with the status quo and a lot of the people who understand real estate well are cashing in. The have-nots tend more toward progressive politics and tend to think in terms of "affordable housing" and government subsidy rather than markets (and often what "ought" to be done rather than dollars and cents). Then there's all the other stuff like immigration being a radioactive topic, even though Canada obviously can and does need to set some target (I'd guess that few people would say it's racist to be against 10 million immigrants per year for example; we just don't have the capacity for that).

I have no problem with the notion of the government building affordable housing but I don't think that approach can work when the units cost $700,000 each and 70% of the population would qualify for some kind of subsidy. Lest somebody accuse me of inventing straw men, that Victoria housing project went up to household incomes of $160,000.

[Truenorth00]

Originally Posted by MonkeyRonin

For all the talk of generational inequality and the challenges faced by young people in the housing market, one of the problems that advocates of housing reform like us seem to run into is in effectively conveying what the structural problems at play are and what the solutions should be. Terms like "missing middle" or "the yellow belt (or R1 zoning)" aren't yet part of the common parlance.

You'd be surprised. The millennials on all those Reddit and Twitter groups are educating themselves awfully quick. And they do look like they are starting to organize.

I was listening to an interview with today with Conor Dougherty, New York Times economics correspondent who wrote a book on the housing crisis in the US. He compared what is happening now to environmentalism in the 70s, where it became a core value for many folks, who to this day just vote for candidates endorsed by the Sierra Club. He said he sees housing starting to become an actual value among younger generations, who are becoming more and more active as YIMBYs and staunchly pro-development.

Given how much worse things are in Canada, I can't imagine it's that different here. I'm curious to see how the protests planned by the Canada Housing Crisis group go in August.

[milomilo]

Originally Posted by someone123

I have no problem with the notion of the government building affordable housing but I don't think that approach can work when the units cost $700,000 each and 70% of the population would qualify for some kind of subsidy. Lest somebody accuse me of inventing straw men, that Victoria housing project went up to household incomes of $160,000.

The genie is out of the bottle when it comes to the government building affordable housing. I don't think it's any coincidence that we used to build government housing and now we effectively don't (what we build is in such small numbers as to be meaningless). The reason likely isn't because we are meanies now and were nice before - we happily sustain other government welfare. The reason we stopped building government housing is because it was cheap before but is now very expensive. If the government was to meaningfully assist, say build 100,000 houses per year, that would be a $20B+ program, and it would cause construction cost inflation on top.

Even cities in Europe that did keep up with substantial amounts of social housing now seem to be failing - the rooms might be cheap, but the waiting lists are long. Canada might failing particularly badly on housing, but it looks like a global phenomena of advanced economies.

[milomilo]

Originally Posted by Truenorth00

You'd be surprised. The millennials on all those Reddit and Twitter groups are educating themselves awfully quick. And they do look like they are starting to organize.

I was listening to an interview with today with Conor Dougherty, New York Times economics correspondent who wrote a book on the housing crisis in the US. He compared what is happening now to environmentalism in the 70s, where it became a core value for many folks, who to this day just vote for candidates endorsed by the Sierra Club. He said he sees housing starting to become an actual value among younger generations, who are becoming more and more active as YIMBYs and staunchly pro-development.

Given how much worse things are in Canada, I can't imagine it's that different here. I'm curious to see how the protests planned by the Canada Housing Crisis group go in August.

But what I fear is that a modern movement based on affordable housing gets misunderstands the whole thing and focuses on the wrong policy, in exactly the same way those hippy environmentalists did and still do (like opposing nuclear, GMOs and modern farming methods). All the rhetoric I see supports this fear.

[lio45]

Originally Posted by rofina

It cannot be overstated what a horrendous precedent this sets.

From this point, forever onward, those houses will be considered a tradable securitized asset first, housing second.

They will never be returned to market, and will forever trade as part of this fund. If Core goes bankrupt, it will sell of these as packages.

Extrapolate this 10, 20, 30 years, you end up with a dozen housing owners that supply housing how they see fit.

Horrible from every angle.

Completely disagree that they'll never return to market. The best way to get top dollar selling houses is to sell each one to an individual owner-occupier who qualifies for the largest loan possible.

My American portfolio is mostly rental SFHs and I've always known if I wanted out, I should start selling them individually over a certain time period. In each case, an interested owner would pay more than the max justifiable by the cap rate.

(By contrast the one I have in my Canadian hometown's downtown might be more interesting as a package. They're all downtown, and some complement each other (there are parking lots in there, as well as urban-style parkingless buildings occupying their entire lots).)

[urbandreamer]

Core is behind the trend not ahead of it; everywhere in Waterloo small property firms are building large additions to SFH and splitting them into 2-6 apartments. Btw this adds to the housing affordability crisis because now everyone thinks their SFH is worth more and can do the same, driving up property prices. In Toronto, the rich are building massive additions for themselves or tearing down bungalows to the foundation and building expensive mcmansions. Laneway housing likewise drives up prices and creates two classes of people: the original landower/homeowner and the new micro home owner. Arguably this enlargement trend, along with realtors encouraging multiple bids over ask and openly bragging about it on social media is the real problem. Middle class condo kids are now doing the same thing in small towns, cities across Ontario.

It's the lower middle class who could benefit the most from a 40% affordable/social housing mix in every large development. If it can be done in Manchester, Birmingham and London it can easily be done in Ontario.

I'm not opposed to building massive mobile home parks on the outskirts of small towns off the 401 - I'd rather own a mobile home in Southern Ontario for $120k than rent a $2200 2 bedroom apartment in downtown Kitchener, Woodstock or Ayr if I was married with 2 kids and making under $50k.

[milomilo]

Originally Posted by urbandreamer

It's the lower middle class who could benefit the most from a 40% social housing mix in every large development. If it can be done in Manchester, Birmingham and London it can easily be done in Ontario.

If you think the UK housing market is a good example, you are misinformed. They have it even worse than here. Nominal house prices might look comparable, but what you get for the money is much less. They are just much further along the house price supply problem than Canada is. Packing homes full of additional tiny rooms is the norm, you can't build on green belt but you can't build highrises either. People are at the limit of their affordability so prices might plateau, but they find a way to put increasing numbers of people in the limited supply available.

[urbandreamer]

^Maybe have a look at what's happening today:
https://twitter.com/urbinfomanc/status/1404735621466296321
https://twitter.com/BuildsWeAre/status/1402942459806683137

While London is obviously expensive, most development contain 40% affordable housing. In Toronto, developers brag about having 4 affordable homes in a 450 unit building!

I grew up in a c.1880s home based on an English country house plan: many small 10'x10' or 10'x7' rooms: I love small intimate spaces.

There's no reason house prices in Canada should be high: we've got billions of acres of land that could support at least 30 million more people, affordably.

[Truenorth00]

Originally Posted by milomilo

But what I fear is that a modern movement based on affordable housing gets misunderstands the whole thing and focuses on the wrong policy, in exactly the same way those hippy environmentalists did and still do (like opposing nuclear, GMOs and modern farming methods). All the rhetoric I see supports this fear.

Conor Dougherty's point was not that these people just care about affordable or social housing. It's that they increasingly have YIMBYism as a core value now. They are likely to be pro-development for the rest of their lives. This is in no small part because of that generation's struggles with the housing market. They absolutely do not see "neighbourhood character" as substantially valuable.

One of the examples he gave was from his own neighbourhood in Oakland. Apparently just a place of 20 000. But millennials organized to fight down a NIMBY who was complaining about a development near a farmer's market. He said he's seeing evidence of this all over the US. Not just in big cities.

[urbandreamer]

In my experience most yimbies are tied to the real estate business: in Canada that's 25% of the population ha. In the USA, there's likely closet racism involved: developers drive out the urban poor.

[Truenorth00]

Originally Posted by urbandreamer

Core is behind the trend not ahead of it; everywhere in Waterloo small property firms are building large additions to SFH and splitting them into 2-6 apartments. Btw this adds to the housing affordability crisis because now everyone thinks their SFH is worth more and can do the same, driving up property prices. In Toronto, the rich are building massive additions for themselves or tearing down bungalows to the foundation and building expensive mcmansions. Laneway housing likewise drives up prices and creates two classes of people: the original landower/homeowner and the new micro home owner. Arguably this enlargement trend, along with realtors encouraging multiple bids over ask and openly bragging about it on social media is the real problem. Middle class condo kids are now doing the same thing in small towns, cities across Ontario.

There needs to be a distinction between housing affordability (as in the cost for shelter) and affordability of a single family homes for ownership. You are conflating them here. And far too many people do the same.

The priority should be to have housing be affordable for all. Home ownership is step behind that. Ownership of single family detached housing should not really be a policy goal at all. Sadly, it is. And that is adding to the problem.