I came across these survey results in a guest column by Wendy Waters in Connect CRE Canada called, "What Will Attract Young Professionals to a New Rental-Apartment Building?" If I ignore the typo in "strong cel [sic] signal" and just look at the results, many of them are intuitively obvious. The vast majority of renters believe that in-suite laundry is essential, and it's the number-one want in this survey.

Pet-friendly is also not surprising given that pets are going to outnumber kids in most new purpose-built rental apartment buildings. And, of course, people want connectivity. I interpret high-speed wireless and strong cell signal throughout the building to specifically mean the common areas. Presumably, 100% of people want internet and cell signal within their apartments.

At the same time, there are some other interesting results. For example, 55% of respondents (in this segment) said that a private balcony is essential and 97% said it was either essential or a nice-to-have.

There's a common debate in developer boardrooms about whether private outdoor spaces are essential to sell or lease an apartment and there are certainly rental developers who abstain from them altogether. But tenants seem to like them a lot, at least according to this survey. And a "nice-to-have" is still something that helps with leasing.

People also seem to want a king-size bed. Whether they'd be willing to pay for the additional space is a separate matter. There is always an affordability and willingness to pay dimension to surveys. I mean, who wouldn't like more? But a larger primary bedroom appears on this list and, right now, there's a growing sense in the market that buyers and tenants want livable spaces over things like podcasting rooms and ski simulators.

From a Maslow's hierarchy of needs perspective, this seems to make sense. People want their physiological needs — such as a comfy bed — solved first, and then they'll worry about finding self-actualization in their new podcast.

Cover photo by Lotus Design N Print on Unsplash

Chart via Connect Canada CRE

We talk a lot around here about the obstacles to missing middle housing and one of the key themes is that it's not a singular problem, it's a "many-things" problem. It's zoning, single-stair code requirements, elevators, environmental policy, servicing, and so much more. So we need to treat it like a multidisciplinary problem and collectively chip away at the barriers.

Today, let's focus on one important item on the list: servicing. My friend Brendan Charters from Eurodale forwarded me a letter that he submitted to City Council this week concerning Toronto Hydro policies. It does a great job outlining the issues, the impact on housing delivery, and the potential costs that new housing projects must bear. So I thought I would share it verbatim here on the blog.

The costs outlined in the letter below are just one example of the direct and indirect costs (time value of money) that get added onto every new home in the city, provided the new home even gets built. There are also too many instances of housing projects that never get off the ground because the costs are deemed too great right from the outset.

For those of you who are in the industry, or who just care about this issue, here's the agenda item. The City is hoping that the industry will use this opportunity to clearly articulate the challenges they have had with Toronto Hydro when it comes to multiplexes and housing development in general. Here's your opportunity. Write to the City and share Brendan's letter. This is how we work to solve our "many-things" problem.

Photo by Pavel Polansky on Unsplash

Aziz Sunderji of Home Economics has come up with an interesting way of measuring luxury home sales. He starts by identifying the top-decile price in 2019 for a collection of metro areas (i.e., the top 10% of all home sales in a given market).

This means that if the top 10% of homes in a city sold for $1 million or more, then $1 million is the threshold for a home to be considered "luxury."

But to prevent general market inflation from skewing things over time, he then adjusts this luxury threshold according to how the entire market performed. For instance, if average home prices have increased by 30% since 2019, then the luxury threshold also increases by 30%. In our example, it is now $1.3 million.

Now what?

By definition, in 2019, exactly 10% of sales in a given market were deemed to be luxury. But because the luxury threshold moves in tandem with the general market, Aziz is then able to see if the luxury segment grew or shrank in a particular market.

If, for example, only 4% of home sales are now above the new trended luxury benchmark, well then this indicates a shift toward affordability, as opposed to luxury. To be considered luxury today, a home's value has to have grown faster than the average home in that market.

The result is the above chart, which shows three luxury outliers, and two in particular: San Jose and Miami. This illustrates that so-called "K-shaped" economy.

Cover photo by Charlie Lederer on Unsplash

Charts from Home Economics