Canada's 'housing bubble' deemed close to bursting

[niwell]

Toronto has a rental replacement policy for multi-unit rental buildings which sounds great on paper. But a lot of what's being proposed to be demolished - while older - contain larger, very livable units. New stuff? Maybe not so much...

Here's an example of a new floorplan layout (552 Church)including rental replacement - can anyone with a straight face tell me this is good?

https://twitter.com/ProjectEND/status/1598331009669517313?s=20






Proposed to replace this nicer old apartment to the corner: https://goo.gl/maps/Hkpg2MkRCEvzFT4R9

[esquire]

Originally Posted by niwell

Here's an example of a new floorplan layout (552 Church)including rental replacement - can anyone with a straight face tell me this is good?

It's complicated... what is the alternative? Where would the people in the proposed building go otherwise? Where would their new residences be built? In a city like Toronto I don't know how you avoid cramming people in to some extent.

Those suites are probably fine if you are a single 22 year old finishing up school or getting a start in the working world. Admittedly not as great if you're married thirty year olds who want to start a family.

[someone123]

Originally Posted by esquire

It's complicated... what is the alternative? Where would the people in the proposed building go otherwise? Where would their new residences be built? In a city like Toronto I don't know how you avoid cramming people in to some extent.

I would say they should build more transit and not ban medium density construction on 85% of the land or whatever it is. Also either more greenfield development is needed or immigration targets need to come down. The plan to bring in many hundreds of thousands a year and put them on the brownfield mixed use or commercial footprint in cities like Toronto while leaving detached housing neighbourhoods, farms, or forest untouched is not sustainable.

[esquire]

Originally Posted by someone123

I would say they should build more transit and not ban medium density construction on 85% of the land or whatever it is. Also either more greenfield development is needed or immigration targets need to come down. The plan to bring in many hundreds of thousands a year and put them on the brownfield mixed use or commercial footprint in cities like Toronto while leaving detached housing neighbourhoods, farms, or forest untouched is not sustainable.

That's fair. In the long term, these big-picture types of issues will have to be addressed. Something has to give. But those solutions could be years if not decades off. In the meantime, developers are going to respond to their specific circumstances and in this case, I don't think the proposal shown above is an unreasonable one.

[Innsertnamehere]

Originally Posted by niwell

Toronto has a rental replacement policy for multi-unit rental buildings which sounds great on paper. But a lot of what's being proposed to be demolished - while older - contain larger, very livable units. New stuff? Maybe not so much...

Here's an example of a new floorplan layout (552 Church)including rental replacement - can anyone with a straight face tell me this is good?

https://twitter.com/ProjectEND/status/1598331009669517313?s=20






Proposed to replace this nicer old apartment to the corner: https://goo.gl/maps/Hkpg2MkRCEvzFT4R9

Toronto staff are actually extremely particular with replacement units, requiring they be of the same general size and layout (i.e. similar size living room, bedrooms, etc.), or at least as much as reasonably possible.

That example may be replacing smaller units, or isn't approved yet. I don't imagine housing staff accepting some of those layouts.

No regulations on new, non-replacement units though.

[niwell]

Originally Posted by esquire

That's fair. In the long term, these big-picture types of issues will have to be addressed. Something has to give. But those solutions could be years if not decades off. In the meantime, developers are going to respond to their specific circumstances and in this case, I don't think the proposal shown above is an unreasonable one.

I think it’s a completely unreasonable one. We shouldn’t be demolishing fully occupied midrise (and lately even highrise) rental apartments for shitty investor targeted condos marketed at $1500+ per square foot. That’s almost worse than not building anything at all - and in the short term actually is since replacement units aren’t coming online for years.

The system is fundamentally broken and accepting *any* calculation that results in net new units (regardless of how many years it takes to come online) is part of the problem.

(There are also requirements for relocation but from what I’ve heard are not actually great in practise)

[esquire]

Originally Posted by niwell

I think it’s a completely unreasonable one. We shouldn’t be demolishing fully occupied midrise (and lately even highrise) rental apartments for shitty investor targeted condos marketed at $1500+ per square foot. That’s almost worse than not building anything at all - and in the short term actually is since replacement units aren’t coming online for years.

The system is fundamentally broken and accepting *any* calculation that results in net new units (regardless of how many years it takes to come online) is part of the problem.

(There are also requirements for relocation but from what I’ve heard are not actually great in practise)

Fair enough. But then you have to fix the underlying issues that someone123 alluded to. Until that changes, I'd argue that this proposal is a 100% reasonable response to the prevailing conditions.

[1overcosc]

Originally Posted by esquire

It's complicated... what is the alternative? Where would the people in the proposed building go otherwise? Where would their new residences be built? In a city like Toronto I don't know how you avoid cramming people in to some extent.

Those suites are probably fine if you are a single 22 year old finishing up school or getting a start in the working world. Admittedly not as great if you're married thirty year olds who want to start a family.

This argument affects square footage but not necessarily layout.

Layout is much more important. I find a lot of the time, older apartments may have similar square footage, or even less square footage, than newer ones - but the older ones have much better layouts.

Another example is flats versus townhouses. My brother lives in a 3 story, 3 bedroom townhouse which has about 1300 square feet of living space, but having to fit 3 floors into such a small footprint per floor means so much of the living space is lost to stairwells and hallways. His living room is barely usable because almost every bit of wall is either a door, an opening, the fireplace, or the bottom of the stairs. A 3 bedroom flat on one floor could be 900 square feet and probably have the same amount of usable living space in practice as my brother's townhouse.

Some of these units in that floorplan niwell shared are insanely awkwardly shaped and that's more of a problem than their super small size.

I spent 2014 living in a bachelor apartment in central Ottawa. Walking distance to rapid transit, walkable neighbourhood with everything I needed. $600/month. Those were the days...

And this is the layout I had.



At 240 square feet, it was smaller than any of the units in the floorplan niwell posted. But it's probably a more useful/practical living space for a 20-something single person than any of those units.

[goodgrowth]

Yeah I dunno...it's offering options while still maximizing building floorspace for the apartments at the end of the day.

[someone123]

By the way, development fees and taxes in Toronto were around $150 per square foot in 2019 according to Urban Capital (source). So just the fees and taxes on that 327 square foot shoebox would have been around $50,000 in 2019. I'd guess those costs are still exploding. They went up by 400% from 2005 to 2019.

[1overcosc]

What we need are flats with exterior entrances.

Whenever we do build ground oriented missing middle type housing, its generally townhouses of the type I described in my last post, cramped layouts because each unit is thin. Or they're low rise apartments where a third of the interior space is lost to a collective interior hallway and stairwell used to access the front door of each unit.

Like to go back to my brother's townhouse example:

My brother lives in a 3 story, 3 bedroom townhouse which has about 1300 square feet of living space, but having to fit 3 floors into such a small footprint per floor means so much of the living space is lost to stairwells and hallways.

What instead of having a 4 townhouse building like this--in the same footprint, have 6 flats:

(behond my crude drawing)



50% more housing and units have more usable space as they're all on 1 floor.

[goodgrowth]

The collective hallway in those "awkward apartment layouts" above is precisely smaller because they are awkward.

I mean look at that top layout photo...the collective hallway is as efficient as it gets for 8 apartments....

[niwell]

Originally Posted by someone123

By the way, development fees and taxes in Toronto were around $150 per square foot in 2019 according to Urban Capital (source). So just the fees and taxes on that 327 square foot shoebox would have been around $50,000 in 2019. I'd guess those costs are still exploding. They went up by 400% from 2005 to 2019.

IIRC development charges on a 1 bdrm condo are about $39k in Toronto. I can't speak to the other taxes they reference (and they don't seem to elaborate), but the study is a bit misleading as development charges on residential properties are done by type, not square footage. They are correct in that development charges have risen very significantly, but prior to around 2010 or so the City of Toronto also had very low fees. Still, in the past decade they have more or less tripled.

The Development Charges Act was very prescriptive in what could be charged for, and municipalities had to "show their math", so to speak. But at the same time rising development related costs have been passed onto new buyers which is a legitimate issue. Bill 23 reduced development charges for rental units and waives them for some affordable developments.

However the issue still remains as to how development related infrastructure is funded. The Provincial solution is to "let municipalities figure it out" which would generally translate into property taxes as this is the primary source of stable funding for Ontario munis. While there are good arguments to be made for increasing residential property taxes in Toronto and some other municipalities, it's both an unpopular decision and also one that is unlikely to cover all costs. Not sure what the solution is, but this all goes back to trying to accommodate the amount of growth we are receiving in a overly financialized housing market that currently doesn't have the capacity to do so.

[someone123]

In addition to development fees there is sales tax applied to the price of new housing, and when the price per square foot of the housing increases a lot the tax bill goes up a lot. It's all contributing to unaffordablity and I think people have lost sight a bit of how onerous some of these add-ons are. A typical wage earner would have to work for years just to pay the sales tax on a new mortgaged property.

I'm a bit skeptical that the net municipal infrastructure capital cost bill for a small condo in an already built up part of town is $39k. I suspect that development fees are used to pay for goodies and lower the property tax burden for others. I wonder how the development fee revenues compare with municipal capital budgets and what's in the capital budgets (e.g. is it sewage and water upgrades for the new developments or is it hockey rinks doled out to councillors in various neighbourhoods). I'd guess that as municipalities find they can charge more in development fees their budgets tend to bloat.

[whatnext]

Originally Posted by niwell

I think it’s a completely unreasonable one. We shouldn’t be demolishing fully occupied midrise (and lately even highrise) rental apartments for shitty investor targeted condos marketed at $1500+ per square foot. That’s almost worse than not building anything at all - and in the short term actually is since replacement units aren’t coming online for years.

The system is fundamentally broken and accepting *any* calculation that results in net new units (regardless of how many years it takes to come online) is part of the problem.

(There are also requirements for relocation but from what I’ve heard are not actually great in practise)

A very good summary.

[suburbanite]

Originally Posted by someone123

I'm a bit skeptical that the net municipal infrastructure capital cost bill for a small condo in an already built up part of town is $39k. I suspect that development fees are used to pay for goodies and lower the property tax burden for others. I wonder how the development fee revenues compare with municipal capital budgets and what's in the capital budgets (e.g. is it sewage and water upgrades for the new developments or is it hockey rinks doled out to councillors in various neighbourhoods). I'd guess that as municipalities find they can charge more in development fees their budgets tend to bloat.

I don't know that it's really anything secret or sketchy. Development charges are broken down into the individual levies that are being raised. The biggest components are always transit, parks, roads, and sewers. Given that half of downtown Toronto is pretty much torn up for watermain replacements, road work, and soon a massive Queen Street subway I don't doubt that massive amounts of money are being sourced from DCs and deployed towards capital projects. The worst kept secret in town is that the City is sitting on some ridiculous $200 million+ war chest in park levies that have been raised over the course of the condo boom without any major investments into new or existing parks.

DCs are 100% the addictive drug that have let municipalities hit the sweet spot between accommodating growth and keeping property taxes down. The problem is that the state of infrastructure is getting worse every year, and even general maintenance costs are going to increase drastically over the next decade. As these costs go up and property taxes remain flat, the burden of funding new and existing infrastructure is borne by people who are just getting into the housing market, not those who have lived near and benefitted from said infrastructure for years.

[someone123]

Maybe they will ban residents of the detached housing areas from the Queen Street subway or charge them extra on each ticket since it's a subway line aimed at new condo buyers.

I don't know the details of Toronto so I will leave the debate on whether or not the city is well run to Toronto folks. But it seems to fit the pattern of rapidly rising development fees, and it seems hard to square the volume of construction there and those fees with the amount of new infrastructure that is actually visible. Either way, I think development fees and taxes are one of many factors contributing to deteriorating housing affordability in Canada.

There are issues with ageing water infrastructure and the like around the country, and there's always some maintenance regardless of new development or population growth. I think the correct solution there is to charge the people who use the service rather than tying it to something like a development fee.

[Wigs]

Originally Posted by esquire

It's complicated... what is the alternative? Where would the people in the proposed building go otherwise? Where would their new residences be built? In a city like Toronto I don't know how you avoid cramming people in to some extent.

Those suites are probably fine if you are a single 22 year old finishing up school or getting a start in the working world. Admittedly not as great if you're married thirty year olds who want to start a family.

sub 500 sq ft/ micro units should be outlawed besides dorms on school campuses. You need that extra 100-170+ sq ft for the unit to be livable. I know as I once lived in a micro unit. I dreaded when I had no plans and was home. Couldn't fit a couch! Thank god for big windows.

measure out 331 sq ft and tell me you could live like that as a single person.
Others have ridiculous wasted hallway space in niwell's example.

[1overcosc]

Originally Posted by Wigs

sub 500 sq ft/ micro units should be outlawed besides dorms on school campuses. You need that extra 100-170+ sq ft for the unit to be livable. I know as I once lived in a micro unit. I dreaded when I had no plans and was home. Couldn't fit a couch! Thank god for big windows.

measure out 331 sq ft and tell me you could live like that as a single person.
Others have ridiculous wasted hallway space in niwell's example.

I mean, look at the layout I posted above for 250 square feet.

I wouldn't have wanted to spend my whole life living there but that studio was perfectly fine for the phase of my life I was in. I paid $600 in rent for that. I would not have preferred an outcome where my rent was $1200 because the government mandated the unit be twice the size.

[ssiguy]

One thing that makes matters much worse is what happens all across GV, pulling down ANY SFH pre-1980 and replacing it with a new monster SFH. It is a horrible waste of labour, land, and takes potentially affordable housing off the market.

NO SFH should be allowed to be pulled down unless they increase density by at LEAST triple.