Canada's 'housing bubble' deemed close to bursting

[urbandreamer]

My tone deaf wealthy friend always thinks I'm ranting when I talk to her about things that would make homes more affordable. Some recent ideas
1) pass a bylaw making it illegal to add more than 10% of existing home's square footage in a new addition.
I keep seeing older homes throughout Toronto, KW etc that sold for a reasonable price - $600k in KW; $900k in Toronto - get gutted and a giant addition added, then relisted a year later for double or triple previous asking price.

2) eliminate minimum square footage requirements for new homes in smaller towns - I see so many rules saying 1250 sq ft minimum. I'd happily buy a 900sq ft bungalow without a garage in a town like Campbellford or Brockville.

3) build new garden suburbs on land subsidized by govt

4) curb immigration until supply catches up with demand

[kwoldtimer]

Originally Posted by urbandreamer

My tone deaf wealthy friend always thinks I'm ranting when I talk to her about things that would make homes more affordable. Some recent ideas
1) pass a bylaw making it illegal to add more than 10% of existing home's square footage in a new addition.
I keep seeing older homes throughout Toronto, KW etc that sold for a reasonable price - $600k in KW; $900k in Toronto - get gutted and a giant addition added, then relisted a year later for double or triple previous asking price.

2) eliminate minimum square footage requirements for new homes in smaller towns - I see so many rules saying 1250 sq ft minimum. I'd happily buy a 900sq ft bungalow without a garage in a town like Campbellford or Brockville.

3) build new garden suburbs on land subsidized by govt

4) curb immigration until supply catches up with demand

Especially if the design allowed for the easy addition of a third bedroom, etc down the road.

[MonkeyRonin]

Originally Posted by urbandreamer

My tone deaf wealthy friend always thinks I'm ranting when I talk to her about things that would make homes more affordable. Some recent ideas
1) pass a bylaw making it illegal to add more than 10% of existing home's square footage in a new addition.
I keep seeing older homes throughout Toronto, KW etc that sold for a reasonable price - $600k in KW; $900k in Toronto - get gutted and a giant addition added, then relisted a year later for double or triple previous asking price.

The problem you're describing is flipping - which can be tackled through more direct means than adding yet more red tape to the building process to limit the size of additions.

I've worked on a lot of addition projects where a family has a kid and basically has the choice of either staying put and increasing the size of their current house, or re-entering the market to compete for a new, bigger house. Other additions have been to add accessory rental units or allow for multi-generational households. Point being: we should be seeking more versatility for usage of property, not less.

[rofina]

Originally Posted by urbandreamer

My tone deaf wealthy friend always thinks I'm ranting when I talk to her about things that would make homes more affordable. Some recent ideas
1) pass a bylaw making it illegal to add more than 10% of existing home's square footage in a new addition.
I keep seeing older homes throughout Toronto, KW etc that sold for a reasonable price - $600k in KW; $900k in Toronto - get gutted and a giant addition added, then relisted a year later for double or triple previous asking price.

2) eliminate minimum square footage requirements for new homes in smaller towns - I see so many rules saying 1250 sq ft minimum. I'd happily buy a 900sq ft bungalow without a garage in a town like Campbellford or Brockville.

3) build new garden suburbs on land subsidized by govt

4) curb immigration until supply catches up with demand

What are the positives behind minimum sq/ft limits?

I struggle to see why it should be anyone's business but the homeowners as to the size of house they want to build on their land, and yet we have these minimums across the country. Maximum, I understand, set backs, etc.

If we can build 380sq/ft condos and sell them, why cant someone build an 800sq/ft SFH?

What's the reasoning that I'm not seeing?

[SignalHillHiker]

Presumably to keep out people who can’t afford larger homes.

There are probably other considerations as well… for example, I imagine planners would be concerned that SFD is so sparse they need to ensure nearly every house has children (4+ bedrooms) to keep their new neighbourhood school occupied.

[rofina]

Originally Posted by SignalHillHiker

Presumably to keep out people who can’t afford larger homes.

There are probably other considerations as well… for example, I imagine planners would be concerned that SFD is so sparse they need to ensure nearly every house has children (4+ bedrooms) to keep their new neighbourhood school occupied.

I can see that to a point.

Interestingly, the reference point in my head was more big city like.

My thought was; if I want to buy a large lot house, split the lot, and build two 800 sq/ft dwellings, why shouldn't I be allowed to?

Assumption being that throwing up an 800sq/ft house would be fraction the cost of a 4bed 4 bath 3000sq/ft one.

[milomilo]

Originally Posted by rofina

What are the positives behind minimum sq/ft limits?

I struggle to see why it should be anyone's business but the homeowners as to the size of house they want to build on their land, and yet we have these minimums across the country. Maximum, I understand, set backs, etc.

If we can build 380sq/ft condos and sell them, why cant someone build an 800sq/ft SFH?

What's the reasoning that I'm not seeing?

It's utter stupidity, but it's been the default way of managing housing the world over. Don't like something? Ban it and anything else that looks like it!

The only thing we should ban is bans themselves. Every new housing policy has to answer the question "does this increase supply?" If it does not, then the policy should not be allowed.

[rofina]

Originally Posted by milomilo

It's utter stupidity, but it's been the default way of managing housing the world over. Don't like something? Ban it and anything else that looks like it!

The only thing we should ban is bans themselves. Every new housing policy has to answer the question "does this increase supply?" If it does not, then the policy should not be allowed.

Hear, hear!

It just seems silly to me and I struggle to see legitimate justification for it.

I can understand potential practical reasons, limiting ability to resale, lower resale value, etc. But those are considerations for homeowners to make, not governments.

At the least it should be allowed - and if theres no market for it, let a developer try and lose his shirt. I'm 100% sure there is a market for a 800sq/ft SFH at some price.

[SignalHillHiker]

It’s incredibly stupid. It’s like homeowners here who protest any new construction that “blocks the view”. Sure, you paid a premium for a house with a view out the harbour but that’s your risk. If you want to own the view, you need to own every property between you and whatever the — you’re looking at.

[Innsertnamehere]

Most costs for SFDs is not the square footage - especially in high cost markets. We are talking about a million dollar property with $250-300k of actual construction cost. Shrinking that to $150k of construction cost still results in a $850k house.

Most costs are in land costs, servicing, development approvals, and development charges. Development charges can near $100k alone in some parts of the GTA, not including land costs and servicing costs of building the new roads and sewers.

Where construction costs are larger proportionately is condos, but even that IIRC is only about $300/ft for a condo that might sell for $1,000/ft.

[milomilo]

Originally Posted by Innsertnamehere

Most costs for SFDs is not the square footage - especially in high cost markets. We are talking about a million dollar property with $250-300k of actual construction cost. Shrinking that to $150k of construction cost still results in a $850k house.

Most costs are in land costs, servicing, development approvals, and development charges. Development charges can near $100k alone in some parts of the GTA, not including land costs and servicing costs of building the new roads and sewers.

Where construction costs are larger proportionately is condos, but even that IIRC is only about $300/ft for a condo that might sell for $1,000/ft.

That's all totally true and fair, but we still shouldn't be putting any arbitrary constraints on housing, of which size limits are just one.

[urbandreamer]

I'm not talking about lot splitting - this is now happening in KW where a contracter buys a nice 1950s bungalow and builds two hideous semis with large garages, turning a nice red brick neighborhood into an ugly fake stone and stucco grey and brown eyesore (much like how they've wrecked North York around the cemetery.) Lot splitting decreases affordability.

I mean building 750-900sqft homes in cheaper small towns like Wingham, Listowel, Milverton, Hanover, Mitchell etc. None of these communities allow you to build such small homes. Not all of us need large space - we don't all have children - yet not all of us want to be confined to apartments and condos forever. The only way I could build a small home is to buy a large lot in the woods.

[rofina]

Originally Posted by Innsertnamehere

Most costs for SFDs is not the square footage - especially in high cost markets. We are talking about a million dollar property with $250-300k of actual construction cost. Shrinking that to $150k of construction cost still results in a $850k house.

I cant speak for anywhere but the Lower Mainland, but this isn't true here.

To bring your "average" (whatever that means) home to market in Vancouver is about $350 sq/ft. So that means your standard 2800ft home costs the homeowner about a million dollars to build. Finishes installed. It can obvioulsy be much more depending on finishes, bathroom, count, etc. But $350 is your average new product.

You throw in about $1.3 for the land, and you arrive at the usual new house cost of around $2.something million.

Reduce that cost, to no basement, slab on grade, 800sq/ft SFH. And you can cut that construction cost 75%. Down to $250,000-$300,000.

Most costs are in land costs, servicing, development approvals, and development charges. Development charges can near $100k alone in some parts of the GTA, not including land costs and servicing costs of building the new roads and sewers.

Yes. True. Land, permits, and design are a huge input.

Where construction costs are larger proportionately is condos, but even that IIRC is only about $300/ft for a condo that might sell for $1,000/ft.

This is really low for GVRD. Concrete condos cant come to market at below $800sq/ft and turn a profit. At $1000/ft, considering inflation, its a tight margin, and I doubt anyone today would proceed with that pro-forma.

[milomilo]

Originally Posted by urbandreamer

Lot splitting decreases affordability.

No it doesn't. As long as there are people that think things that fly so much in the face of simple economics, house prices will remain high.

[someone123]

Originally Posted by milomilo

No it doesn't. As long as there are people that think things that fly so much in the face of simple economics, house prices will remain high.

It is overrated by some people though. In a lot of NIMBY areas people have stepped back from BANANA lobbying and argue for gentle density with a duplex or laneway house here or there. There's nothing wrong with allowing such things but they won't make housing affordable. The numbers don't work out. Each new duplex unit costs 1/2 the cost of the original property plus demolition and construction.

[Innsertnamehere]

Originally Posted by rofina

I cant speak for anywhere but the Lower Mainland, but this isn't true here.

To bring your "average" (whatever that means) home to market in Vancouver is about $350 sq/ft. So that means your standard 2800ft home costs the homeowner about a million dollars to build. Finishes installed. It can obvioulsy be much more depending on finishes, bathroom, count, etc. But $350 is your average new product.

You throw in about $1.3 for the land, and you arrive at the usual new house cost of around $2.something million.

Reduce that cost, to no basement, slab on grade, 800sq/ft SFH. And you can cut that construction cost 75%. Down to $250,000-$300,000.




Yes. True. Land, permits, and design are a huge input.



This is really low for GVRD. Concrete condos cant come to market at below $800sq/ft and turn a profit. At $1000/ft, considering inflation, its a tight margin, and I doubt anyone today would proceed with that pro-forma.

I admit my numbers are for the Ontario context - which isn’t quite as high cost as BC. $150-$200/ft is pretty standard for a “standard” finish home in southern Ontario. Not sure if pandemic lumber pricing has thrown that off. If you push high end finishes that obviously increases. Custom builds would also be higher - that’s more for mass production subdivisions.

The outer GTA has new construction detached homes for ~$800k still, with costs increasing as you get closer to downtown. This is mostly because of increased land costs, as well as some finish quality creep. Of that $800k, you are probably looking at $300k of construction cost with $500k for profit, servicing, approvals, municipal fees, etc.

$350-$400 a foot is what you are looking at for something like a laneway house in toronto which has complex approvals, construction, etc.

[ssiguy]

Just ban all foreign, VISA holding, students from buying and disallow all purchases from anyone who already owns a second home except for strictly recreational?

[GreaterMontréal]

In Montreal, most of the price growth comes from locals. People are looking for houses with 2 or 3 bedrooms to convert them into workspaces.

[milomilo]

Originally Posted by someone123

It is overrated by some people though. In a lot of NIMBY areas people have stepped back from BANANA lobbying and argue for gentle density with a duplex or laneway house here or there. There's nothing wrong with allowing such things but they won't make housing affordable. The numbers don't work out. Each new duplex unit costs 1/2 the cost of the original property plus demolition and construction.

Absolutely. We're so far gone, it's going to take a very long time to get us out of this mess. My overarching point though is that almost anything that restricts development will increase prices. The more we can allow the market to build what people want (within what they can afford), the better.

[milomilo]

Originally Posted by ssiguy

Just ban all foreign, VISA holding, students from buying and disallow all purchases from anyone who already owns a second home except for strictly recreational?

That doesn't create more houses.