Month: January 2014

• Why Toronto should stop complaining about all its condos

  Below is my latest post from the TAS blog. You can find it cross-posted here.

  Last week I wrote a post on my personal blog about housing policy in San Francisco. My argument was that the backlash against the tech community (for allegedly driving up real estate prices) is actually misdirected and that housing policy should be the target. 

  The reasoning behind this is simple: More people are moving to San Francisco than new housing is being provided. And so regardless of whether you have tech workers or not, you have an environment where the rich are always going to outbid the poor for housing.

  If you look at the numbers from the past 2 decades, San Francisco on average builds 1,500 new housing units a year. And yet the city gained approximately 25,000 new people between 2010-2012 (that’s roughly 8,300 people per year). So what you have is a perpetual housing supply shortage.

  To correct this problem, San Francisco needs to start building. And I’m stealing this idea from Harvard economist Edward Glaeser, who wrote an article on this very same topic back in December of last year for Bloomberg (and a book called Triumph of the City). His argument was that “the surest way to a more equitable housing market is to reduce the barriers to building.”

  Now, if you compare San Francisco’s situation to Toronto’s, we’re almost on the opposite end of the spectrum. Toronto doesn’t have a problem building. We’re building lots. So much so that it’s become fashionable to joke around and complain about all the condos going up in this city.

  But it’s important to remember that all of these condos are making us a relatively affordable city by global standards. We have more people moving to this city every year than San Francisco and yet home prices are less. We’re also less expensive than Vancouver, where there are strong natural barriers to building, namely water and mountains.

  So rather than complain, I’m going to be the contrarian. I like seeing new housing built. I like knowing that the neighborhoods I love in this city are becoming home to more and more people.

  At one point, my home (which is in the St. Lawrence Market) was a “new development” and somebody could have fought and opposed it. But it was allowed to be built and I was allowed to move in. I’m thankful for that. And so my plan is to be just as gracious to the next person who wants to join the neighborhood.

  2014.01.31

• Invest in whatever China blocks

  Last weekend I posted a poll asking readers what they think the “capital of the world” will be in 2050. It was really the 2nd half of a two part poll. The first one asked what people think the capital of the world is today. And the majority of people said New York.

  While New York still came out on top in the 2nd poll, the most notable difference is the rise of Chinese cities. Behind New York is Shanghai, Hong Kong and Beijing. And in a way, this order makes sense to me. China would like to see Shanghai on top of Hong Kong, because it’s perceived as being more Chinese (Hong Kong is still too British). But both are still more economically important than Beijing.

  Still, my own belief is that China is going to need to go through some structural changes before its cities really have a chance of dethroning New York (or London, depending on your vote in the first poll). And I think it has to do with openness, transparency and freedom. Fred Wilson probably put it best when he said to basically invest in whatever China blocks:

  As our [Bitcoin] panel was winding down, Superintendant Lawsky asked what countries were doing it right. I didn’t answer that question but instead decided to talk about one that isn’t doing it right and brought up China and noted that a fantastic investment strategy would be to have invested in every Internet service that China has blocked. My point being that the services China likes to block are the really important ones that have been built on the Internet.

  He then goes on to say that he believes there’s a strong correlation between innovation and freedom. And I would agree. So until China stops blocking the innovation that is likely going to drive the world forward, I think it’s going to struggle to assume a true leadership position.

  What are your thoughts?

  2014.01.30

• Mapping public transit travel times

  

  I just came across an interesting web app created by geographer and programmer Andrew Hardin that maps public transit travel times for San Francisco, Seattle, Boulder and Denver.

  The app allows you to click on a location within one of these cities (or enter an address) and then receive a visual representation of travel times from that location.

  Both public transit and walking are factored in, and the fastest of the two is then modeled. The public transit data is taken from each respective authority and is similar to the data used by Google Maps.
  

  With these sorts of applications, I always wonder what it might look like overlaid with additional data points, such as home prices. Intuitively I would expect the best connected neighborhoods to also have some of the highest real estate values.

  2014.01.29

• Those evil bikes

  

  I just stumbled upon an interesting piece in the Boston Globe (from last December) talking about how the bicycle is “emerging as a new conservative front in the culture wars.”

  It starts by talking about Toronto mayor Rob Ford and asks: Who elected this guy? Their response comes down to mode of transport.

  The answer, in large part, comes down to transit. Ford is famously pro-car, and his strongest support came from suburbs outside downtown Toronto, where voters drive into the city during the day and return by car in the evening. One political scientist found that the strongest predictor of whether someone voted for Ford in the 2010 mayoral election was the person’s method of commuting: Car commuters were Ford voters; everyone else wasn’t. Ford repaid their loyalty by declaring on his first day as mayor that the “war on cars” was over; he abolished the vehicle registration tax and announced a plan to kill light rail in the city simply because, he said, streetcars “are just a pain in the rear end.”

  The article then goes on to argue that Ford is at the forefront of a growing conservative movement using bikes as a new political lightning rod. Conservative politicians view cyclists as urbanites (statistically this is true) and therefore not part of their core voter base (statistically this is also true). And so hating on bikes has become a convenient way for them to galvanize their support base.

  But beyond bikes, we’re really talking about a bigger city building issue: How do you unify a city with such divergent priorities? How do we stop this downtown versus the suburbs mentality? These are important questions and I don’t think the answer is to de-amalgamate Toronto. That’s the easy way out.

  Whether we like it or not, the Toronto region functions as one contiguous economic unit and, if we want to be able to effectively compete on the global stage, we’re going to need cohesion. We need to get our house in order. It’s still early days for Toronto’s 2014 mayoral election, but I really hope the next 4 years turn out to be better than the last. I think they will.

  2014.01.29

• Keeping our momentum

  This morning Kevin Marshall tweeted me a link to a blog post by Andy Weissman (partner at Union Square Ventures in New York). The post is about how small things matter—even small words.

  He starts by talking about a new sidewalk extension and curb cut at 86th Street and 3rd Avenue in Manhattan. This may seem like a pretty banal thing to talk about, but it’s in support of his argument that small things—like even a curb cut—can be used to solve bigger problems. In this case, the intersection was a dangerous one because of poor pedestrian visibility.

  But what I really like is how he describes the pulse of New York:

  “The rhythm of NYC is such that we need to keep moving and in motion; as a result, waiting to cross a street by standing at the curb is not enough, we must walk into the street to get going or keep our momentum.”

  This is great and it’s bang on. People in New York don’t stand at the curb waiting for the light to change. They impatiently push onto the street and wait for the first opportunity to cross. This may seem like a small tendency, but I think it speaks volumes about the character of New York.

  People in Toronto generally don’t do this.

  They (not me) wait patiently at the street corner even if there aren’t any cars coming. Why? Think about this the next time you’re standing on guard at the crosswalk. Don’t lose the momentum. The world rewards those who poke the box and keep moving.

  2014.01.27

• Tomorrow’s capital of the world

  Last week I polled the ATC community and asked which city they consider to be the “capital of the world.”

  

  I received 62 votes and the overwhelming majority (63%) voted for New York. London came in a distant second with 23% of the vote. Though there’s probably a geography bias here (most of the readers of this blog are from North America), I did have a few people comment on Twitter that the answer to this question is blatantly obvious. The capital of the world is New York.

  But what I was really trying to do was establish a baseline for this week’s poll, which I think is a much more interesting question. Which city do you think will be the “capital of the world” in 2050? Again, there are no other instructions. Just select whatever first comes to mind. I’m using the same list of cities as before, but you can now add a city if you think the right answer is missing. If for whatever you can’t see the poll below, click here.

  2014.01.26

• Housing policy in San Francisco

  The tech community has been receiving a lot of backslash in San Francisco as of late. And Peter Shih’s infamous 10 things I hate about San Francisco post certainly didn’t help. But I think there’s a bigger issue than just rich tech people driving up the price of real estate.

  I was reading Quartz this morning and I think they nailed it: 

  “But the blame shouldn’t go to the tech companies or their employees moving to San Francisco, however despicable some might be. Blame San Francisco for being pleasant, and its policymakers for being foolish: When a lot of people are moving to your city—San Francisco the city gained 50,000 new residents between 2000 and 2012, including some 25,000 between 2010-2012 and likely more since—home prices are going to increase unless you build a lot more housing.”

  I’ve talked about this idea before. But I wanted to break it down a bit more precisely.

  If San Francisco, the city, gained 25,000 people between 2010-2012, let’s say that the city gained roughly 8,300 people per year. I just divided by 3. However, if you look at the rate of new housing supply, you get a 10-year average of 2,350 housing units a year (from the Quartz article) and an even lower amount according to Atlantic Cities.

  Regardless, what you end up with is a pretty simple phenomenon: More people are moving to the city than new housing is being provided and that’s driving up the price of real estate. In fact, San Francisco allegedly only created 269 housing units in 2011! That’s the equivalent of only one fairly typical Toronto condo building going up (and we have hundreds under construction). No wonder there’s upward pressure on prices.

  So rather than just blame the tech community for the city’s housing problems, I think there needs to be a broader look at housing policy. If you really want to help affordability, here’s one simple solution: start building.

  2014.01.25

• Housing tenure in Europe

  Yesterday I came across an incredibly fascinating chart from Eurostat, analyzing housing tenure (in 2011) across Europe. Here it is:

  

  And here’s what I found interesting.

  Working from left to right, there seems to be a clear difference between Eastern and Western Europe in terms of the amount of leverage they use to buy homes. If you look at Romania, not only does over 90% of the population own a home, but they also don’t seem to have any outstanding mortgage or housing loan. That means they’re buying their homes in cash.

  By the time you get to the United Kingdom, you start to see numbers that are comparable to Canada and the United States. The percentage of owner occupied homes is sitting at or below 70% and the majority of them have a mortgage or loan.

  But as a whole, Western Europe seems much more likely to rent than Eastern Europe. And in the case of Switzerland, more people rent than own. Why is that? This seems odd given its economic strength. But the same could be said for Germany and Austria, which also show relatively low ownership rates. Here’s one possible explanation.

  Finally, I found it interesting that in Denmark, the Netherlands, and Sweden, there’s virtually no such thing as subsidized rental housing. If you rent, you’re paying market rate (at least according to this chart). I wonder if this has something to do with there being less income inequality.

  If anyone has any insights on some of these points, I’d love to hear from you in the comment section below.

  2014.01.25

• Poke the box, dammit

  Last night before bed I decided to buy a book on my Kindle (iPad app) that I’ve been meaning to read for awhile. It’s called Poke the Box and it’s by Seth Godin. It’s a short read and it’s meant to be that way. You could easily read it in one sitting.

  The book is about taking initiative. Taking action. And drawing your own map. It’s about not being scared of failure and realizing that failures are how you learn. It’s about poking the box, which is a computer programming reference. Programmers learn by poking the box (computer) and seeing what works and what doesn’t work.

  As I read through the book I’m reminded of something that venture capitalist Ben Horowitz wrote a few months ago on his blog:

  “Every employee in a company depends on the CEO to make fast, high quality decisions. Often any decision, even the wrong decision, is better than no decision.”

  Both Godin and Horowitz are, in a way, talking about the same thing: You have to keep moving. Make decisions. Start stuff. And stop worrying so much about being wrong, because it’s virtually impossible to know how things will eventually play out in the future.

  A perfect example of this is Starbucks.

  The first Starbucks in Seattle didn’t sell brewed coffee. It sold beans. And had it continued along this path, it certainly wouldn’t have become the brand that it is today. In fact, it may have failed completely. It wasn’t until Howard Schultz saw what they had started and combined it with what he had learned in Italy, that the Starbucks experience of today was born.

  The important thing is that somebody (Jerry Baldwin, Zev Siegl and Gordon Bowker) took the initiative to start and build a Starbucks. It didn’t matter that they got the recipe wrong, they poked the box and it ultimately lead to something magical.

  The same reluctance to poke the box can also be found in city building.

  Here in Toronto we spend a significant amount of time debating and vacillating around transit decisions (as well as many other things). Should we build LRT? Or should we build subway? What should we replace the Scarborough Rapid Transit line with?

  But we’ve fallen into analysis paralysis.

  The original Transit City Plan was announced on March 16th, 2007. It’s now 2014. And transit still sucks. Imagine if we started and finished, say, 2 kilometers of rapid transit each and every year. Forget worrying if it’s LRT, subway or a horse drawn space ship. We just kept moving.

  Something tells me that we’d be better off, even if we did make a few mistakes along the way.

  2014.01.23

• A culture of transparency

  One of the things I think the real estate industry is notoriously bad for is transparency. It’s getting better, but we’re nowhere near as transparent as some other industries, such as tech. In tech, you get companies like San Francisco-based Everpix who fail and then release all of their private documents to the public, including revenue, subscribers, cap table and so on.

  Could you imagine a real estate developer failing and then releasing all of its financials? This is what we paid for the land. This is how many units we sold. And this is why we failed. It doesn’t happen (or at least I’ve never seen it).

  Sure you might be able to get some of this information with a publicly traded real estate company, but that’s because they have to be more transparent. Everpix was 7 employees working out of a co-working space. They didn’t have to do this. But they did it because they wanted to help the larger startup community. They didn’t want to let a good failure go to waste.

  But at the same time, I actually don’t think that transparency is all about being altruistic. Transparency can also drive the bottom line. Every company wants to stand out from the competition and engage with its customers on a deeper level. But in order to do that, I think you need to give your customers something to engage with. You have to put yourself out there.

  One way to do that is to be more open and transparent. Be genuine and tell your customers who you are, what you believe in and, perhaps most importantly, why you’re doing the things that you’re doing. I like Simon Sinek’s philosophy that “customers don’t buy what you do, they buy why you do it.”

  2014.01.22