Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.
We are in West Virginia now, where the only kind of housing that we have come across is — not surprisingly — low-density, detached, and single-family.
Indeed, approximately 75% of the residential land across the entire US is estimated to be zoned for detached single-family homes. Using data from UrbanFootprint, the NY Times recently published a series of city maps outlining the percentage of land dedicated exclusively to this housing type.
In some cases, such as on residential corner lots in Portland, duplexes are allowed. But generally speaking, the pink corresponds to detached single-family housing. About 15% of residential land in New York City is zoned for this, compared to about 94% of the land in San Jose.
Interestingly enough, none of the residential land in Manhattan is zoned to accommodate detached single-family housing.
I’m in Savannah, Georgia right now. See above (iPhone) photo taken from River Street. My dad and I are road tripping from West Palm Beach to Toronto in order to bring his car back to the city. So why not check out a few, new, cities along the way? I have my Fujifilm with me, but I won’t be posting any of those photos until I’m back in Toronto. Happy Canada Day weekend.
Miami has historically had a volatile housing market because of its position as a second-home destination and because of its dependency on Latin American buyers. There is perhaps no other housing market in the US with the same kind of overall reliance on capital from abroad. This recent article by Candace Taylor in the WSJ is yet another reminder that we are once again in one of those cycles. Below are two excerpts that I found interesting. Note the stats, particularly the last bit in bold. It is also a reminder that when housing supply exceeds demand, usually something happens: prices come down.
At the same time, new condos launched just as the owners of older units looked to cash out. There were 691 condo sales in Miami Beach in the first quarter of 2019, down 24 percent from 909 in the first quarter of 2015. During the same period, single family homes sales dropped to 81 from 117. The threat of climate change has had some impact on Miami home buyers’ decisions. A 2018 study showed that the value of single-family homes near sea level in Miami-Dade County rose more slowly than that of homes at higher elevations. But agents said a greater threat to the high-end market is inventory buildup.
Meanwhile, a strong dollar incentivizes international buyers to sell the units they already own, even at below-market prices. The result is a glut of condos for sale, both new and resale. In December 2018, there were 3,663 condo listings for sale in the greater downtown Miami area—more than double the 1,591 for sale in December of 2013, according to an Integra Realty Resources report. Sunny Isles, where new buildings include the 53-story Jade Signature, the Porsche Design Tower and the Turnberry Ocean Club, is estimated to have about 17 years of inventory of condos priced at $5 million and up.
My friend Eric Roseman, who lives in Los Angeles, just sent me this, knowing that I would almost certainly like the idea and want to write about it on the blog. This, is called The Passage of a Few People Through a Rather Brief Moment in Time.
It’s over now. But from 2009 to earlier this year (2019), it was a collection of people who would meet every Wednesday night at 9pm at California Donuts #21 in Koreatown in order to cycle the city, see new things, and “see old things anew.”
Given that each Wednesday night ride was about 20-35 miles, the group has covered a lot of ground over the last decade. Here is a cumulative map of their routes. You can also see an animated version, here.
I like the idea of traditions and doing things repeatedly, because I think that grit is an important characteristic and I believe in compounding. It’s part of the reason why I write a daily blog and why I do an annual snowboarding trip.
But I also think that biking is one of the best ways to experience a city. So, yeah, Eric, you were right. I do like this.
It has been a while since I wrote about laneway housing, so here’s a panel that I’m going to be speaking on this Thursday alongside Gregg Lintern, Mary-Margaret McMahon (former Toronto City Councillor), and Craig Race. It is being organized by Lanescape.
As most of you know, I’ve been a vocal supporter of laneway housing in Toronto. So I am, of course, thrilled that it has now become a reality. But I must confess that I am less enthusiastic about the broader “missing middle” solution that everyone in the city is enamored with right now.
The problem is that our cost structures make it exceedingly difficult to develop this scale of housing. I have friends who are trying and they can’t make the math work. Maybe this isn’t the case in all cities, but it’s certainly a challenge here.
If you’d like a free ticket to this Thursday’s panel, use the promo code: SLATE.
The latest project out of MIT’s Senseable City Lab examines the “sensing power of taxis” in various cities around the world. Looking at traffic data, they determined how many circulating taxis you would need to equip with sensors if you wanted to capture comprehensive street data across a particular city. This might be useful if you wanted to measure things like air quality, weather, traffic patterns, road quality, and so on.
What they found is that the sensing power of taxis starts out unexpectedly high. It would only take 10 taxis to cover 1/3 of Manhattan’s streets in a single day. However, because taxis tend to have convergent routes, they also discovered rapid diminishing returns. It would take 30 taxis (or 0.3% of all taxi trips) to cover half of Manhattan in a day, and over 1,000 taxis to cover 85% of it. A similar phenomenon was observed in the other cities that they studied: Singapore, Chicago, San Francisco, Vienna, and Shanghai.
However, if you look at the percentage of trips needed to scan half of the streets in a city, Manhattan has the lowest rate at 0.3%. Vienna is the highest at 9%. But I’m not sure if this is a function of the utilization rate of their taxis or if it has something to do with urban form. Singapore has a similarly low rate (0.44%), but its street grid looks nothing like that of New York’s.
Sidewalk Labs just released its draft Master Innovation and Development Plan (“MIDP”) for Toronto’s eastern waterfront. It’s called Toronto Tomorrow: A New Approach for Inclusive Growth, and it’s massive. Over 1,500 pages. It consists of an overview and 3 volumes, all of which can be downloaded here.
At a high-level, the objectives of the plan are twofold. They want to revitalize the eastern waterfront (it’s currently appalling) and they want to test new urban ideas that could benefit the broader city, as well as the rest of the world. Deploying new technologies at a larger scale is one of the ways the company intends to make money.
I am still working my way through the plan (I may never finish), but here’s a breakdown of the development program for the Quayside precinct:
If you’re looking for a quick overview of the plan, here are five things to know about the Sidewalk Toronto project and here is an overview of the public-private partnership that they are proposing. Of course, there’s also no shortage of criticism on Sidewalk’s plans for the waterfront. Some links here, here, and here (paywall).
Sidewalk Labs is trying to assuage public concerns through some of its open commitments. They have said that they will not seek special tax subsidies, control urban data, sell personal info and/or use it for ads, or develop the entire eastern waterfront themselves. But the plan remains highly controversial.
I think part of the issue is that, because so much of what they are proposing hasn’t been done before, there are a lot of unanswered questions and a great deal of uncertainty around the future. Many are interpreting this as the company hiding its true intentions. Maybe it is. Or maybe it isn’t.
But let’s not forget what Waterfront Toronto requested back in 2017 for these lands. It wanted an innovation and funding partner:
Waterfront Toronto is seeking a unique partner, one with invention ingrained in its culture, which can transform conventional business practices and help to establish a benchmark climate positive approach that will lead the world in city building practices.
There’s no question that what Sidewalk Toronto has put forward is bold. As I scanned through the plans today, I found myself hard pressed to think of any “conventional” developer that would be willing to come forward with a proposal as ambitious as this one.
As you all know, Sidewalk Labs’ parent company is called Alphabet. But I think it’s worth mentioning that “alpha” is a finance term that refers to the excess return of a strategy beyond that of a benchmark index. Put differently: How much better are you than the status quo?
The whole point of Alphabet is that they’re supposed to make “alpha bets” on ambitious projects. They are given the “resources, freedom, and focus” to try new things. Sometimes those projects will fail. But in other cases they will succeed in moving the world forward.
Every city today is trying to grow a thriving technology ecosystem. We want to be innovative. We want to transform conventional businesses practices. And we want to lead the world. Unfortunately, that rise to the top is almost never a smooth and linear one. There will be mistakes along the way.
I was at a wedding last night (congrats, again, Kate + Rob) and a group of us started talking about Facebook, or, more specifically, how most of us have stopped using it all together. I deleted my account last year, but ended up having to create a ghost account with no friends just so that I could run social ads. But other than that, I don’t go on. This, of course, is a problem for Facebook. Here are some stats on its declining user base.
This trend line could be one of the motivating factors behind Libra (Facebook’s new blockchain-based currency). Payment infrastructure, if successful, should be a lot stickier than social infrastructure. But being the classic underachiever that he is, Zuckerberg’s ambitions run even deeper than this. Max Read published a fantastic article on Libra in New York Magazine last week. Here is an excerpt:
As far as I know, there’s only one other entity out there developing a blockchain-based digital currency for a billion-plus-member economy: China. The People’s Bank of China has been amassing blockchain and digital-currency patents as it develops its own cryptocurrency — loosely pegged to a basket of other currencies, just like Libra — which could help it more efficiently monitor and control capital flows. (So much for the decentralized, anarchist dream of cryptocurrency.) Facebook doesn’t want to compete with Mastercard, or even with Goldman Sachs. It wants to be the currency platform Mastercard operates on. Facebook’s payment product is a whole new currency because its long-term competition isn’t PayPal or Visa or even WeChat, but the renminbi, the euro, the yen, and the dollar.
Libra is expected to be first available to Indian WhatsApp users. The goal is to gain a foothold in the $689 billion global remittance economy, of which $80 billion flowed to India last year (2018). In the short-term, this probably won’t make any or much money for the company. But it should get people using and bought in to Libra in the medium-term.
If you’re looking for more on Libra, including what checks and balances can expected to be in place regarding your privacy and personal information, have a listen to this podcast:
The July/August issue of Monocle is hot off the press and, as has become tradition, it includes their annual Liveable Cities Index. Now, some of this could be construed as objective, but a lot of it is of course subjective. A liveable cities index is also very different from a global cities index, which is why you won’t find New York or London, or Toronto for that matter, on this list. Click here for a video of the 25 most liveable cities in 2019.
I have been writing about algorithmic home buying on the blog since Opendoor launched back in 2014.
I don’t have anything new to report on that today, but this recent article from the WSJ is interesting in that it talks about why Phoenix, in particular, has become ground zero for algorithmic home buying, as well as for institutional investors looking to buy cheap rentals.
Across Opendoor, Offerpad, and Zillow, nearly 500 homes are now being purchased — largely by software — in Phoenix each month:
One of the reasons why Phoenix is well suited to these platforms is that the housing stock is cheap and fairly homogenous. (The WSJ calls it “stucco sprawl.”) This makes it easier for the algorithms to put a value on the homes.
A big chunk of the housing stock is also relatively new. Just over 36% of it was built in 2000 or later. And it tends to trade fairly often. Below is the percentage of homes in 2018 that were resold within a year of purchase.
It’s also worth noting that Arizona is a non-recourse state, meaning you’re typically not personally liable if you default on your home mortgage. You simply hand back the keys. So it’s viewed as a fairly risk tolerant state, which may be one of the reasons why Phoenix’s median home price chart looks like this:
I’ll end with this quote from the article: “It’s the dawn of e-commerce for real estate,” said Zillow Chief Executive Rich Barton. “Phoenix is ground zero.”
