Housing Bubble II: The Quest To Build Enough Homes Where People Actually Need Them

[Innsertnamehere]

Sensitive ecological areas like escarpments, the Oak Ridges Moraine, etc. are already protected through other regulatory measures.

The Greenbelt indeed isn't the main cause of the shortfall of ground-related housing in the GTA - the Places to Grow act is the main culprit - but it doesn't help.

I wasn't overly upset when the province reversed the greenbelt removals for this reason. What did upset me is when they announced that they would roll back their forced urban boundary expansions - that decision is going to have massive implications for housing affordability in the coming decades if you are in the market for anything but a high-rise apartment.

[niwell]

Originally Posted by Innsertnamehere

I wasn't overly upset when the province reversed the greenbelt removals for this reason. What did upset me is when they announced that they would roll back their forced urban boundary expansions - that decision is going to have massive implications for housing affordability in the coming decades if you are in the market for anything but a high-rise apartment.

Agreed totally on this point. Some of the greenbelt removals were fine - others made little sense. But the urban boundary expansions are a totally different kettle of fish.

A big part of this is mismanagement on the Ford government's part in how they handled the whole fiasco. If it were only boundary expansions being considered I doubt any of this would have blown up to the extent it did. Places to Grow and the PPP have already been modified under this government with little response outside of urbanist circles. The response is pretty standard in the way this government operates - roll everything back and then prepare to use it as blame for future failures. "My hands were tied folks - we tried to tell you!".

[SteelTown]

Baby born homeless, a new normal I guess, ugh.

Baby born in Hamilton encampment shows extent of 'desperate' housing crisis, councillor says
Coun. Matt Francis nearly witnessed the birth and is calling for provincial funding to address homelessness

https://www.cbc.ca/news/canada/hamil...ment-1.7092490

A Hamilton councillor's recent experience witnessing a baby born in an encampment in the city demonstrates the "unacceptable" housing crisis residents face and "eye opening" situations paramedics and police officers are currently responding to, he says.

Coun. Matt Francis (Ward 5) told CBC Hamilton he was doing a ride along with police on a cold morning in late November when they were called to a medical emergency at an encampment tucked away in an industrial area in the east end.

They arrived at the same time as paramedics and "to our surprise," he said, a woman had given birth in a tent and was holding the infant with the umbilical cord still attached. There was another person in the tent with her.

"I was one of the very first people to see this child born and I was shocked and saddened at the same time," Francis said in an interview Monday.

Paramedics cut the umbilical cord and wrapped the baby in a blanket, while police helped the mother onto a stretcher. She and the baby were taken away in an ambulance, he said.

"My heart goes out to the mother and any other mothers in such a terrible situation," said Francis, a father of two. "My heart goes out and breaks for the children too that are born into the world that way."

[Build.It]

Greenbelt makes it more difficult for developers to acquire land that can be developed, artificially limiting supply. This pushes up land prices, which gets worked into the price they have to charge the end user. It also slows dow nthe rate at which urban boundaries get pushed outward - places like Hamilton which have very little undeveloped land inside the belt (despite having lots of land otherwise) are going to be much more reluctant to expand their urban boundary, which further reduces supply.

Greenbelt also reduces competition among municipalities, those that have the land can charge as much as they want for "development fees" because it's not like the developer has that many other options inside the belt. This also eventually gets worked into the price the end user pays.

Places to Grow is the bigger culprit, but Greenbelt also pushes prices up.

[Innsertnamehere]

Originally Posted by niwell

Agreed totally on this point. Some of the greenbelt removals were fine - others made little sense. But the urban boundary expansions are a totally different kettle of fish.

A big part of this is mismanagement on the Ford government's part in how they handled the whole fiasco. If it were only boundary expansions being considered I doubt any of this would have blown up to the extent it did. Places to Grow and the PPP have already been modified under this government with little response outside of urbanist circles. The response is pretty standard in the way this government operates - roll everything back and then prepare to use it as blame for future failures. "My hands were tied folks - we tried to tell you!".

it's also the optics of the public's knowledge of how planning works in the province. Most have some idea of the Greenbelt as there are signs about it everywhere advertising it, etc.

Talk to someone about "urban boundaries" and 20-30 year land needs assessments and they'll look at you like you are crazy.

If Doug had stuck to the urban boundary expansions, it mostly would have gone unnoticed due to the lack of knowledge on the matter in the general public.

But touch the Greenbelt? That's like selling off public parkland to developers in the public' eyes. I've had people equate it to literally that in conversations I've had about it. People don't understand how land use regulation relating to new subdivisions work - even many involved in the industry in some capacity. Doug's greenbelt removals hit that nerve in the public. Urban boundary expansions didn't.

I can only hope that something clicks in Calandra's head regarding the urban boundary rollbacks and they figure out some way to support low-rise supply as the path the GTA is tracking on right now is absolute critical levels of shortages in the coming decades where all but the absolute wealthiest will be looking at 1-2 bedroom apartments being the most they can afford. And the sad thing is that it will be an entirely artificial shortage led on by some superficial idea of bucolic farm fields and "food supply".

[suburbanite]

Originally Posted by Build.It

Greenbelt makes it more difficult for developers to acquire land that can be developed, artificially limiting supply. This pushes up land prices, which gets worked into the price they have to charge the end user. It also slows dow nthe rate at which urban boundaries get pushed outward - places like Hamilton which have very little undeveloped land inside the belt (despite having lots of land otherwise) are going to be much more reluctant to expand their urban boundary, which further reduces supply.

Greenbelt also reduces competition among municipalities, those that have the land can charge as much as they want for "development fees" because it's not like the developer has that many other options inside the belt. This also eventually gets worked into the price the end user pays.

Places to Grow is the bigger culprit, but Greenbelt also pushes prices up.

Again, the greenbelt only restricts the supply of buildable land if it would otherwise be buildable but for the existence of the greenbelt. There are select places where this may be true (Hamilton is probably the biggest culprit), but for the most part the greenbelt lands would be many years away from development under normal (non-greenbelt) conditions.

As for land values, firstly homebuilders don't determine prices through a bottom up calculation of cost plus profit. They are ultimately price takers, and they sell product for whatever the market is willing to pay for it. Home prices are determined by how much homebuyers are willing to pay, regardless of whether the developer originally paid $100,000 or $1,000,000 per acre for the land. If I overpaid for my parcel, and the guy next to me bought it for dirt cheap 10 years ago, we're still selling units at similar prices, they're just making a lot better returns. Home prices determine land values more than vice versa. Land values across the GTA didn't skyrocket because we suddenly moved 2km closer to the greenbelt, they exploded because the market determined that they could pay significantly more for land when people are lining up to buy new townhomes for $1 million each.

Secondly, the effects of the greenbelt on land pricing are miniscule compared to the already mentioned limitations on urban boundary growth. I pulled three land transactions from the past two years, all in the same area on the border between Brampton and Caledon. Number one is just outside the urban boundary, it might be developable in 2-3 years, and sold for $1,200,000 million/acre. Number two is slightly further outside, likely part of a future secondary plan area and as such not developable for ~3-5 years. It sold for $478,000/acre. Number 3 is years away from even being considered for designation as future residential land, was probably a speculative land banking purchase, and it sold for $282,000/acre. All three of these parcels are outside the greenbelt, and they are all priced based on how long it will take someone to ultimately sell a home on the site, regardless of whether the greenbelt exists or not. Getting rid of the greenbelt while keeping everything constant doesn't solve the land supply problem in most regions. Sure it would provide additional supply decades from now when we've actually run out of buildable land, but we would still be growing at the current slow place until we reached that point.

[Innsertnamehere]

Originally Posted by suburbanite

As for land values, firstly homebuilders don't determine prices through a bottom up calculation of cost plus profit. They are ultimately price takers, and they sell product for whatever the market is willing to pay for it. Home prices are determined by how much homebuyers are willing to pay, regardless of whether the developer originally paid $100,000 or $1,000,000 per acre for the land. If I overpaid for my parcel, and the guy next to me bought it for dirt cheap 10 years ago, we're still selling units at similar prices, they're just making a lot better returns. Home prices determine land values more than vice versa. Land values across the GTA didn't skyrocket because we suddenly moved 2km closer to the greenbelt, they exploded because the market determined that they could pay significantly more for land when people are lining up to buy new townhomes for $1 million each.

I agree with the rest of your post - but this isn't quite right.

The reality is that they play off of each other.

A developer is beholden to what a purchaser will pay - correct - and the developer will naturally want as much as they can get from a purchaser.

What you ignore is how much a purchaser is willing to pay is driven by supply. A purchaser in a market is only given the options which supply can provide. In the case of housing - the average purchaser may have $1 million, but in a supply-shorted market that money does not go as far as a market with excess supply as they get bid out by those with larger budgets. They are willing to pay a million for a townhouse because someone else is willing to pay $1.2 million for the detached.

If there is enough detached houses which can be profitably constructed for $1 million to supply all those with a $1.2 million budget however, those with less money to spend can get one as well for $1.1 or $1 million.

The problem in the GTA is that we have made it cost prohibitive to develop a detached home for less than $1.2 million (as an example), so developers simply won't sell them for less than that.

If we make it cheaper to build the homes, developers will have a larger market for them, and can sell more of them.

How we make them cheaper can come from increased land supply - lowering the land cost - or other measures like reduced construction costs (less stringent building codes) or reduced government fees and approval timelines (reduced payments on construction mortgages and fee payments).

Increasing the supply of available development land means developers would have more options on bidding for land - lowering that input cost. Which means that they could turn around and undercut their competitors on the market side of things when selling the end product. Capitalism at work.

What we've seen in the last 20 years in the GTA is a complete attack on the cost to deliver a low-rise residential unit. The province has restricted land supply, sending land costs skyrocketing, municipalities have jacked development charges to insane levels to try to keep property taxes low and pay for a million things which historically were not funded by new homes, they have become far slower to approve projects and have required far more detailed planning applications, requiring more upfront capital and money long before a return is received (i.e. disproportionate cost impacts), and other problems.

If we want lower home prices, we need to make it cheaper to build them, and we need to give developers a way so that they can take those cost savings and deliver the savings in the way of increased supply.

That's the only way it's going to happen. To lower land costs you need more serviced land available for developers to build on. You need less regulations and quicker approval timelines, including better timing of infrastructure, so that they can deliver units faster. You need to charge less taxes on units so that the developers profit margin for a unit increases, allowing them to build on increasingly marginal properties while still returning an profit. Etc.

[1overcosc]

Originally Posted by suburbanite

Again, the greenbelt only restricts the supply of buildable land if it would otherwise be buildable but for the existence of the greenbelt. There are select places where this may be true (Hamilton is probably the biggest culprit), but for the most part the greenbelt lands would be many years away from development under normal (non-greenbelt) conditions.

As for land values, firstly homebuilders don't determine prices through a bottom up calculation of cost plus profit. They are ultimately price takers, and they sell product for whatever the market is willing to pay for it. Home prices are determined by how much homebuyers are willing to pay, regardless of whether the developer originally paid $100,000 or $1,000,000 per acre for the land. If I overpaid for my parcel, and the guy next to me bought it for dirt cheap 10 years ago, we're still selling units at similar prices, they're just making a lot better returns. Home prices determine land values more than vice versa. Land values across the GTA didn't skyrocket because we suddenly moved 2km closer to the greenbelt, they exploded because the market determined that they could pay significantly more for land when people are lining up to buy new townhomes for $1 million each.

Secondly, the effects of the greenbelt on land pricing are miniscule compared to the already mentioned limitations on urban boundary growth. I pulled three land transactions from the past two years, all in the same area on the border between Brampton and Caledon. Number one is just outside the urban boundary, it might be developable in 2-3 years, and sold for $1,200,000 million/acre. Number two is slightly further outside, likely part of a future secondary plan area and as such not developable for ~3-5 years. It sold for $478,000/acre. Number 3 is years away from even being considered for designation as future residential land, was probably a speculative land banking purchase, and it sold for $282,000/acre. All three of these parcels are outside the greenbelt, and they are all priced based on how long it will take someone to ultimately sell a home on the site, regardless of whether the greenbelt exists or not. Getting rid of the greenbelt while keeping everything constant doesn't solve the land supply problem in most regions. Sure it would provide additional supply decades from now when we've actually run out of buildable land, but we would still be growing at the current slow place until we reached that point.

That's only true because of:
a) limited competition and the high barrier to entry that zoning and urban boundary limits ultimately creates, which allows a tiny handful of companies to dominate homebuilding; and
b) limited supply available to match demand.

If we combined more permissive zoning rules with reduced population growth, and supply & demand actually matched, reducing costs for developers through more land being made available would be passed on to homebuyers through reduced costs.

[goodgrowth]

Saying the greenbelt has no impact on land values(and thus house prices) is sort of like saying the mountains surrounding the lower mainland have no impact on land values in the lower mainland. The reality is that it just makes what land is available that much more scarce and valuable.

The core problem with current politics around land use is that it became fashionable to restrict outward development before it became fashionable for broad upzoning. It has largely been done unconditionally.

Add in the vetocracy that is involved with housing production:

Oakville council rejects 10-storey mixed-use building plan
https://www.insidehalton.com/news/oa...a403e0527.html

....and no wonder housing is a shit show.

[Build.It]

Originally Posted by goodgrowth

Add in the vetocracy that is involved with housing production:

Oakville council rejects 10-storey mixed-use building plan
https://www.insidehalton.com/news/oa...a403e0527.html

....and no wonder housing is a shit show.

Figures - Oakville is very elitist as you approach downtown. This part was interesting:

"This recommendation also saw the number of units reduced to 124, the retention of the McCraney-Robertson heritage house at the site, a requirement for commercial parking spaces, increased ground-level setbacks, and modifications to address overlook and privacy."

For the record, this infested rotting piece of shit is the "heritage house" that they want the developer to keep on the site:


https://maps.app.goo.gl/w6ZSsBmQSYonvQ777

[theman23]

I don’t the the city of Oakville is the only place prioritizing the whims of people who will be dead in 10 to 20 years when making long term planning decisions.

[Build.It]

Originally Posted by suburbanite

Here is a satellite overlay of the exact same area. The red line is the approximate greenbelt boundary. There are a lot of farms north of that line that from above look no different than the ones south of that line. It seems arbitrary, which it probably is.

[suburbanite]

Originally Posted by Build.It

Here is a satellite overlay of the exact same area. The red line is the approximate greenbelt boundary. There are a lot of farms north of that line that from above look no different than the ones south of that line. It seems arbitrary.

That's not the point. The point is the red line's location, arbitrary or not, is not a large determinant of pricing for future development land in this area.

[Build.It]

Originally Posted by suburbanite

That's not the point. The point is the red line's location, arbitrary or not, is not a large determinant of pricing for future development land in this area.

Do you seriously want us to believe that all that farmland around Caledon Village and Alton wouldn't be significantly more valuable if it wasn't north of the red line (and could therefore be developed as new neighbourhoods for those settlements)? And that if those areas could be developed it wouldn't take some pressure off the areas to the south of the line?

[WhipperSnapper]

Originally Posted by goodgrowth

Saying the greenbelt has no impact on land values(and thus house prices) is sort of like saying the mountains surrounding the lower mainland have no impact on land values in the lower mainland. The reality is that it just makes what land is available that much more scarce and valuable.

The core problem with current politics around land use is that it became fashionable to restrict outward development before it became fashionable for broad upzoning. It has largely been done unconditionally.

Add in the vetocracy that is involved with housing production:

Oakville council rejects 10-storey mixed-use building plan
https://www.insidehalton.com/news/oa...a403e0527.html

....and no wonder housing is a shit show.

The Greenbelt has nearly no impact on land values. It's a investor bubble supported by foolish population growth like someone earning $45,000 a year and having 6 kids.

I probably have the wrong impression here posting about the denial of a 10 storey building and offering zero background but, it's a crying shame that a modest house with a yard is contemplated as elitist in Canada or that a 20 storey building near a subway station is so often refereed to as insufficient land use on urbantoronto. A stalled renovation near me of a bungalow into a 2.5 storey home was recently completed as a 3.5 storey four plex. The units are livable but cramped. The original driveway (for perspective one of the only driveway on the block) was retained and can fit 3 compact cars bumper to bumper right up to the sidewalk. The design is a featureless oversized white stucco box with black trim. It's 4 units instead of one but none of those 4 units amount to the original family bungalow. Is that really what we desire?

[suburbanite]

Originally Posted by Build.It

Do you seriously want us to believe that all that farmland around Caledon Village and Alton wouldn't be significantly more valuable if it wasn't north of the red line (and could therefore be developed as new neighbourhoods for those settlements)? And that if those areas could be developed it wouldn't take some pressure off the areas to the south of the line?

Removing the greenbelt without equal or greater changes to the overall planning and approvals framework means Caledon Village and Alton are not adding any significant amount of residential developable land even if you legislated away the red line right now.

[goodgrowth]

Originally Posted by WhipperSnapper

I probably have the wrong impression here posting about the denial of a 10 storey building and offering zero background but, it's a crying shame that a modest house with a yard is contemplated as elitist in Canada or that a 20 storey building near a subway station is so often refereed to as insufficient land use on urbantoronto. A stalled renovation near me of a bungalow into a 2.5 storey home was recently completed as a 3.5 storey four plex. The units are livable but cramped. The original driveway (for perspective one of the only driveway on the block) was retained and can fit 3 compact cars bumper to bumper right up to the sidewalk. The design is a featureless oversized white stucco box with black trim. It's 4 units instead of one but none of those 4 units amount to the original family bungalow. Is that really what we desire?

No offense but this view is why we have a housing problem. We have busybodies micromanaging housing development based on their preferences.

I rarely see a truly legitimate reason for development rejections. It's always some NIMBY nitpicky shit that's just an excuse to not have any change in a local area.

Also what's the point of having a million bylaws if you are just going to veto shit anyway. The ad-hoc process is just terrible.

[niwell]

Originally Posted by WhipperSnapper

A stalled renovation near me of a bungalow into a 2.5 storey home was recently completed as a 3.5 storey four plex. The units are livable but cramped. The original driveway (for perspective one of the only driveway on the block) was retained and can fit 3 compact cars bumper to bumper right up to the sidewalk. The design is a featureless oversized white stucco box with black trim. It's 4 units instead of one but none of those 4 units amount to the original family bungalow. Is that really what we desire?

Architecture aside this doesn't really bother me that much. Certainly better than putting down shoebox highrises on every formerly commerical/industrial plot than can be found (outside the core that is). Depending on design 4 units may be a bit cramped, but a 3.5 storey houses with 3 separate units is a pretty common housing typology in Old Toronto. Even historically - most of the houses in the West End were originally built with "lodgers" in mind and then eventually either converted to a single family home or renovated to self-contain the units. Pretty much every rental I've lived in Toronto has been this configuration (I think around 10 over the years?). They've always had their issues given the age of original construction but I much prefer it to anyone's new rented condo I've been in.

Most of the plex conversions happening in my area are in houses that contained apartments previously so it's not as obvious externally. Though some like the semi attached to us went from 3 to 5 (the footprint is massive and they underpinned the basement). The real crime is the price they're charging, not the units themselves.

I have a habit of checking permits every time I run across a reno and was surprised at how many are multi-unit - even a few years ago the norm was gutting multi-unit homes for single-family. Though there's still quite a few of those.

[Innsertnamehere]

Originally Posted by WhipperSnapper

The Greenbelt has nearly no impact on land values. It's a investor bubble supported by foolish population growth like someone earning $45,000 a year and having 6 kids.

I probably have the wrong impression here posting about the denial of a 10 storey building and offering zero background but, it's a crying shame that a modest house with a yard is contemplated as elitist in Canada or that a 20 storey building near a subway station is so often refereed to as insufficient land use on urbantoronto. A stalled renovation near me of a bungalow into a 2.5 storey home was recently completed as a 3.5 storey four plex. The units are livable but cramped. The original driveway (for perspective one of the only driveway on the block) was retained and can fit 3 compact cars bumper to bumper right up to the sidewalk. The design is a featureless oversized white stucco box with black trim. It's 4 units instead of one but none of those 4 units amount to the original family bungalow. Is that really what we desire?

Honestly I'm perplexed about how everyone seems to see the desirable land use future in Canada being everyone living in an awkward 6-800sf, 1-2 bed unit with a shared backyard and maybe a parking spot if you are lucky.

Then we turn around and complain that quality of life isn't what it used to be - and it's no wonder! We've simply banned a lot of the historic hallmarks of what made quality of life so great in Canada for so many.

[Build.It]

Originally Posted by WhipperSnapper

The Greenbelt has nearly no impact on land values.

Even if this were true, what are the benefits of keeping the greenbelt?

Originally Posted by suburbanite

Removing the greenbelt without equal or greater changes to the overall planning and approvals framework means Caledon Village and Alton are not adding any significant amount of residential developable land even if you legislated away the red line right now.

This is a reasonable point - however I would still like to know what people think the greenbelt actually achieves and why they think it's worth keeping.

But you are right in that we have layers upon layers of bureaucracy that goes beyond just the greenbelt which also results in fewer buildings getting built.

Every now and then I come across yet another stupid rule that some city has that makes it just a little bit more difficult and expensive to get a permit.

A couple of days ago someone from Mississauga told me that they wanted to add a second storey to one side of their house. They had an architect and engineer design it, and had everything ready to go, only thing left was the permit. When they went to submit the permit, the City told them that 12 individual city staffers need to each sign off on it, and that the cost of the permit review would be $20K.

Why do 12 city people need to sign off on it? In what world does this make any sense? They already hired an architect and engineer to design and comply with the rules. What's the point of duplicating work 12 times?

It's really important that people understand that this is relatively unique to Ontario. I don't know why Ontario's municipalities have so much power over permits, but they do. That's not saying it's not bad in certain other parts of the continent (mainland BC, Bay area), but Ontario puts things at a different level.

Did you know that Southern Ontario is the only place in North America where almost every city has rules about what lighting specifications can be used for outdoor lighting? And that these rules are completely different from one city to the next?

For example, off the top of my head:
- Caledon has a rule that poles can't be taller than 29.5ft and can't be closer than 14.5ft to the property line
- Guelph has a rule that poles can't be taller than 20ft, and that each light mounted to a pole can't be more than roughly 30 watts (which is basically nothing)

No where else in North America are so stringent, and this is just in one miniscule part of construction. I can only imagine how many other stupid rules our cities have for other sectors of the industry that add yet another hurdle to prevent things from getting built / make it a little bit more expensive to build.

I have no idea how it got like this, but this is deeply engrained in the "culture" of Southern Ontario's municipalities.

And now people from Southern Ontario are selling their houses here and taking their equity en masse to other parts of the country, like Halifax and Calgary and bidding up their markets as well.

It is now no longer just a municipal or Provincial issue - rather it has become the federal government's responsibility to do something to force Southern Ontario's municipalities to get rid of all these stupid rules, because it's starting to affect the whole country, not just the GTA.