Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
This is a follow-up to yesterday's post about too many people allegedly speculating on underutilized urban land. Over the weekend, I saw Patrick Condon, a professor at UBC and author of the book "Broken City: Land Speculation, Inequality, and Urban Crisis," argue that "urban land is the impossible-to-ignore driver of the housing crisis." Is it really? Let me offer the developer's perspective and explain what has happened in Toronto.
It is certainly true that the price of development land appreciated rapidly toward the end of the last cycle and that, at the time, there was enough margin for developers to bifurcate the work of zoning land and actually building out projects. But since 2022, that has gone away, and we have seen a dramatic correction in pricing.
According to Bullpen and Batory's Q4-2025 High-Rise Land Insights Report, the average sold price for a high-density site in the GTA has gone from $119 per buildable square foot in 2019 to $78 per buildable square foot at the end of last year (a ~34% decline).
But this is a blended average. In my experience, the falloff in pricing has been even more dramatic and, in many cases, land now feels illiquid. With rents declining and new condominiums not selling, what's the value? Land prices are a function of what you can do with the land. If what you can do disappears, so too does the value. Land is not the problem right now.
But even if we were to ignore current market factors, it's debatable whether land prices were really the primary driver of unaffordable housing. About six years ago, Toronto developer Urban Capital published a pro forma comparison between a project they did in 2005 and a project they were doing in 2020.
What they found over this 15-year period was that construction costs increased by 91%, land costs increased by 160%, and government fees and taxes increased by some 413% (development charges alone increased by 3,244%!). The price of development land certainly increased, surpassing the rate of inflation, but we can't ignore that roughly a third of the price of a new home became government fees and taxes.
Today, there are countless development models that don't pencil even if you plug the land value in at $0. That tells me that we've got bigger problems.
Cover photo by Patrick Tomasso on Unsplash
This recent article by Inga Saffron in the Philadelphia Inquirer is behind a paywall and so I, admittedly, haven't read it. But it seems to cover a common urban dilemma: Center City Philadelphia has too many surface parking lots while simultaneously having a need for more housing. The problem, as the argument goes, is that the city's tax system is under-assessing vacant land, creating an incentive to sit on it, and a disincentive to develop new housing. The solution: tax land more; tax improvements less.
(Forgive me if this isn't entirely accurate with Saffron's position.)
It's a classic "stick versus carrot" approach. Let's beat landowners and developers into building more housing. Now, in some situations, I can see the allure of this line of thinking. If we're talking about someone who has owned a surface parking lot for many decades and it's generating a nice stream of cash, there might be little incentive to develop it or sell the land to someone who will develop it. But as a general rule, I believe that carrots are far more productive than sticks.
I have at least two concerns with trying to tax landowners into compliance. One, you have to be careful not to create a double-edged sword. Taxing based on the "highest and best use" can work to suppress some of the small businesses that make cities great. For example, should a site with a local bookstore in a small heritage building, or a mom-and-pop restaurant in a single-storey building, be forced into higher-density housing? I don't think so.
Two, blaming low taxes for the lack of housing can distract from the more fundamental question: Why aren't more developers building housing if there's a need and an availability of land? When I lived in Philadelphia during grad school, I remember developers telling me the following: "The thing about Philly is that the build-costs are the same as New York (Philly is a strong labour union city), but the rents you can command are obviously nowhere near the same." Sticks don't work if the math doesn't math!
I don't know how the market has evolved since the late 2000s, but I do know that developers want to develop. And they will do so if the economics make sense and the right carrots exist.
Cover photo by
This is a follow-up to yesterday's post about too many people allegedly speculating on underutilized urban land. Over the weekend, I saw Patrick Condon, a professor at UBC and author of the book "Broken City: Land Speculation, Inequality, and Urban Crisis," argue that "urban land is the impossible-to-ignore driver of the housing crisis." Is it really? Let me offer the developer's perspective and explain what has happened in Toronto.
It is certainly true that the price of development land appreciated rapidly toward the end of the last cycle and that, at the time, there was enough margin for developers to bifurcate the work of zoning land and actually building out projects. But since 2022, that has gone away, and we have seen a dramatic correction in pricing.
According to Bullpen and Batory's Q4-2025 High-Rise Land Insights Report, the average sold price for a high-density site in the GTA has gone from $119 per buildable square foot in 2019 to $78 per buildable square foot at the end of last year (a ~34% decline).
But this is a blended average. In my experience, the falloff in pricing has been even more dramatic and, in many cases, land now feels illiquid. With rents declining and new condominiums not selling, what's the value? Land prices are a function of what you can do with the land. If what you can do disappears, so too does the value. Land is not the problem right now.
But even if we were to ignore current market factors, it's debatable whether land prices were really the primary driver of unaffordable housing. About six years ago, Toronto developer Urban Capital published a pro forma comparison between a project they did in 2005 and a project they were doing in 2020.
What they found over this 15-year period was that construction costs increased by 91%, land costs increased by 160%, and government fees and taxes increased by some 413% (development charges alone increased by 3,244%!). The price of development land certainly increased, surpassing the rate of inflation, but we can't ignore that roughly a third of the price of a new home became government fees and taxes.
Today, there are countless development models that don't pencil even if you plug the land value in at $0. That tells me that we've got bigger problems.
Cover photo by Patrick Tomasso on Unsplash
This recent article by Inga Saffron in the Philadelphia Inquirer is behind a paywall and so I, admittedly, haven't read it. But it seems to cover a common urban dilemma: Center City Philadelphia has too many surface parking lots while simultaneously having a need for more housing. The problem, as the argument goes, is that the city's tax system is under-assessing vacant land, creating an incentive to sit on it, and a disincentive to develop new housing. The solution: tax land more; tax improvements less.
(Forgive me if this isn't entirely accurate with Saffron's position.)
It's a classic "stick versus carrot" approach. Let's beat landowners and developers into building more housing. Now, in some situations, I can see the allure of this line of thinking. If we're talking about someone who has owned a surface parking lot for many decades and it's generating a nice stream of cash, there might be little incentive to develop it or sell the land to someone who will develop it. But as a general rule, I believe that carrots are far more productive than sticks.
I have at least two concerns with trying to tax landowners into compliance. One, you have to be careful not to create a double-edged sword. Taxing based on the "highest and best use" can work to suppress some of the small businesses that make cities great. For example, should a site with a local bookstore in a small heritage building, or a mom-and-pop restaurant in a single-storey building, be forced into higher-density housing? I don't think so.
Two, blaming low taxes for the lack of housing can distract from the more fundamental question: Why aren't more developers building housing if there's a need and an availability of land? When I lived in Philadelphia during grad school, I remember developers telling me the following: "The thing about Philly is that the build-costs are the same as New York (Philly is a strong labour union city), but the rents you can command are obviously nowhere near the same." Sticks don't work if the math doesn't math!
I don't know how the market has evolved since the late 2000s, but I do know that developers want to develop. And they will do so if the economics make sense and the right carrots exist.
Cover photo by
I recently came across this tweet by Patrick Collison, the CEO of Stripe, where he argues that the YIMBY movement "employs an inadvertently dishonest sleight-of-hand" when it promises "Paris-scale density" only to ultimately deliver something quite different in cities.
In the post, he shares a fairly banal mid-rise development that looks nothing like Paris, and then says that if we're talking about Paris-style building, he'd be all for it, and likely voters would be too. His point seems to be that if only we made developments more beautiful, fewer people would oppose them.
I had to read the tweet a few times to make sure I was understanding it correctly because the "Paris-scale density" language was throwing me off. Paris is not a medium-density city. It's a high-density city and generally considered to be the highest-density city in Europe. Is this the Paris promise?
I don't actually think most people want Paris; they want a city that looks like Paris, and that's because they ignore most of its urban ingredients and only focus on the two most obvious things: (1) its outward architectural expressions and (2) its modest building heights.
Paris-scale density is single-stair buildings with minimal setbacks and stepbacks, dark light wells, tiny 130-square-foot studios in the penthouse, no parking minimums, and area population densities that can exceed 50,000 people per km2. Is this what most voters want, provided they look pretty?
For the purposes of this post, let's just run with the argument that urban environments people broadly feel are beautiful would elicit less NIMBY opposition. Just build Paris-like buildings. Unfortunately, I also don't think the answer is as simple as this.
As Sam Deutsch of Better Cities points out, this runs counter to NIMBY history. Let's not forget that the Paris everyone visits today was vehemently opposed during the time of its initial development and that the city's most iconic structure was called a hateful column of bolted sheet metal, among other things.
Beautiful buildings and great places are, of course, fundamental to cities. But even then, expect turbulence along the way.
Cover photo by Deniz Bireroglu on Unsplash
I recently came across this tweet by Patrick Collison, the CEO of Stripe, where he argues that the YIMBY movement "employs an inadvertently dishonest sleight-of-hand" when it promises "Paris-scale density" only to ultimately deliver something quite different in cities.
In the post, he shares a fairly banal mid-rise development that looks nothing like Paris, and then says that if we're talking about Paris-style building, he'd be all for it, and likely voters would be too. His point seems to be that if only we made developments more beautiful, fewer people would oppose them.
I had to read the tweet a few times to make sure I was understanding it correctly because the "Paris-scale density" language was throwing me off. Paris is not a medium-density city. It's a high-density city and generally considered to be the highest-density city in Europe. Is this the Paris promise?
I don't actually think most people want Paris; they want a city that looks like Paris, and that's because they ignore most of its urban ingredients and only focus on the two most obvious things: (1) its outward architectural expressions and (2) its modest building heights.
Paris-scale density is single-stair buildings with minimal setbacks and stepbacks, dark light wells, tiny 130-square-foot studios in the penthouse, no parking minimums, and area population densities that can exceed 50,000 people per km2. Is this what most voters want, provided they look pretty?
For the purposes of this post, let's just run with the argument that urban environments people broadly feel are beautiful would elicit less NIMBY opposition. Just build Paris-like buildings. Unfortunately, I also don't think the answer is as simple as this.
As Sam Deutsch of Better Cities points out, this runs counter to NIMBY history. Let's not forget that the Paris everyone visits today was vehemently opposed during the time of its initial development and that the city's most iconic structure was called a hateful column of bolted sheet metal, among other things.
Beautiful buildings and great places are, of course, fundamental to cities. But even then, expect turbulence along the way.
Cover photo by Deniz Bireroglu on Unsplash
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