It is very common for jurisdictions to mandate the use of a licensed architect when building homes and buildings above a certain size. This is true in Ontario, and it's true in places like France, though the thresholds can vary widely and change over time. Currently, the threshold is 150 m2 in France. Okay, so what? Well, it turns out this simple rule has second-order consequences, as they often do.
Here's a fascinating research paper by Antoine Levy titled Regulating Housing Quality: Evidence from France. One of the things he looks at is the distribution of floor area in new housing units over time, from before there was an architect requirement threshold (ART), to the moments where this threshold was gradually lowered:
Prior to there being a threshold (1976), the chart shows a positive skew, but with a clustering of homes somewhere around 100 m2. Importantly, the distribution shows a smooth progression. But once an ART is implemented, the distribution then starts to show a clear spike right before the threshold, followed by a cliff and a "missing mass."
This, of course, makes sense. The market is pushing up against the glass to avoid having to use and pay for an architect. And the "missing mass" is the market shifting supply to below the threshold, or sufficiently beyond it. I mean, if you're going to surpass the threshold, you may as well do it confidently.
Now here's where things start to get more interesting. Levy finds that this threshold acts as a focal point that segments the market. Households above the threshold tend to have higher incomes, and homes just past the limit were on average 8-10% more expensive to build. This additional cost cannot be justified by the addition of the architect's fee alone.
On the other side of the threshold, the concentration of demand "up against the glass" was shown to create economies of scale through more standardized home design and production. In other words, the threshold incentivizes the market to get really good at designing and building a certain scale of home.
It was also shown to unintentionally promote greater housing density, because what the threshold does is create a soft cap on housing consumption for a large segment of the market. As you can see in the bottom right chart above, it effectively pulls supply back and under the threshold, away from larger homes and larger lots.
It may seem fairly innocuous to mandate that people use an architect above a certain scale, and I will forever be a proponent of great design, but as Thomas Sowell once said, "there are no solutions, only trade-offs."
Cover photo by Alex Tyson on Unsplash
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
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
It is very common for jurisdictions to mandate the use of a licensed architect when building homes and buildings above a certain size. This is true in Ontario, and it's true in places like France, though the thresholds can vary widely and change over time. Currently, the threshold is 150 m2 in France. Okay, so what? Well, it turns out this simple rule has second-order consequences, as they often do.
Here's a fascinating research paper by Antoine Levy titled Regulating Housing Quality: Evidence from France. One of the things he looks at is the distribution of floor area in new housing units over time, from before there was an architect requirement threshold (ART), to the moments where this threshold was gradually lowered:
Prior to there being a threshold (1976), the chart shows a positive skew, but with a clustering of homes somewhere around 100 m2. Importantly, the distribution shows a smooth progression. But once an ART is implemented, the distribution then starts to show a clear spike right before the threshold, followed by a cliff and a "missing mass."
This, of course, makes sense. The market is pushing up against the glass to avoid having to use and pay for an architect. And the "missing mass" is the market shifting supply to below the threshold, or sufficiently beyond it. I mean, if you're going to surpass the threshold, you may as well do it confidently.
Now here's where things start to get more interesting. Levy finds that this threshold acts as a focal point that segments the market. Households above the threshold tend to have higher incomes, and homes just past the limit were on average 8-10% more expensive to build. This additional cost cannot be justified by the addition of the architect's fee alone.
On the other side of the threshold, the concentration of demand "up against the glass" was shown to create economies of scale through more standardized home design and production. In other words, the threshold incentivizes the market to get really good at designing and building a certain scale of home.
It was also shown to unintentionally promote greater housing density, because what the threshold does is create a soft cap on housing consumption for a large segment of the market. As you can see in the bottom right chart above, it effectively pulls supply back and under the threshold, away from larger homes and larger lots.
It may seem fairly innocuous to mandate that people use an architect above a certain scale, and I will forever be a proponent of great design, but as Thomas Sowell once said, "there are no solutions, only trade-offs."
Cover photo by Alex Tyson on Unsplash
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
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
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
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
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