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.
The price of an existing home in the Netherlands increased 14.6% in the first 6 months of this year alone, according to this recent FT article. This is in comparison to 6.1% for existing homes across the EU on a year-over-year basis. Some economists estimate that the Netherlands is short about 330,000 homes right now and that it needs to build at least 1 million more over the next decade to better align supply and demand. I know that there is a lot of debate about the extent to which supply alone can solve problems of affordability. And indeed there are other factors at play here, such as low interest rates. But 330,000 is a lot of missing housing and numbers like this are not unique to the Netherlands. Most big cities have a supply of housing that is highly inelastic because of how difficult we make it to build. Most of us recognize this. But it remains a problem.
Click here if you can’t see the embedded video above.
This is a 93 square foot former boiler room that was transformed by San Francisco-based architect Christi Azevedo into a full service guest apartment. The ground floor only measures 8’2″ x 11’6″ and so a taller volume was created to house a separate sleeping area and bathroom above. Designing small spaces forces you to be creative and consider each element carefully. This tiny home is a good example of that.
James Brown and Kim Storey, who are partners at Brown + Storey Architects Inc., recently put forward this intensification proposal for Toronto’s non-Avenue-designated arterial roads. (The term Avenue is an important designation in Toronto planning.) They call these streets Un-Avenues and here’s what they are getting at with this definition:
The “Un-Avenues” are the city’s north-south arteries, where the standard residential street was widened in the mid-20th century to allow for more lanes for more cars and vehicular intensification. They are not generally lined with retail, but rather with the original houses that have been devalued because of their location on the arterial roads.
These roads often serve as busy bus routes that connect directly to subways. The widening of the roads has meant there are no trees, narrow sidewalks, and negligible front. Four lanes of rush hour traffic are provided, with rare provisions for bike lanes.
The Un-Avenues run silently through the single-family residential zones of Toronto. As countless articles have pointed out, the “yellow belt,” where the single-family house reigns, occupies a substantial swath of Toronto real estate on any zoning map.
It is hard not to drive or move through Toronto’s “Un-Avenues” without thinking that they belong in a different era. They speak to a Toronto that was much smaller and that was not yet a global city. There’s little urbanity. And no grandeur. They feel a bit like forgotten streets in a city that has otherwise decided to grow up.
Here’s what Brown + Storey are proposing as a solution (images via Spacing):
I haven’t spent enough time going through the proposal to comment on whether or not I think this is exactly what should be done. There is also the minor issue of single-family homeowners accepting towers, or anything really, next to their backyards. But I do feel strongly that something needs to be done — for reasons of affordability, livability, urban beauty, and a bunch of other reasons.
One of the debates I came across on Twitter this week was about multi-tenant houses (also known as rooming houses) in Toronto. Currently, they are allowed in the former city of Toronto, parts of Etobicoke, and in York. But they are illegal everywhere else in the city.
The reason why the rules differ is simply because they weren’t harmonized following amalgamation in 1998. And so right now we are debating whether or not things should be changed so that multi-tenant houses are permissible across the city.
As you can probably guess, it’s a divisive issue.
The more urban councillors believe that rooming houses are vital because of their relative affordability. The more suburban councillors are, on the other hand, speaking for their constituents and saying that homeowners really don’t want them in their communities. It’s about “protecting the integrity of single-family communities.”
No surprise here.
For this reason, a recent vote on the issue was deferred. It’s expected to come back to council in September. Maybe there will be more support at that time. Or maybe there won’t be. Either way, rooming houses will continue to exist all across the city. Some of them may just be illegal.
If I had any say in the matter, I would vote “yes.”
One of the ways to try and keep tabs on where people are moving is to look at the number of permanent address changes. Another way is to look at the number of one-way U-Haul trucks that enter versus leave a particular state. And it turns out that if you’re U-Haul, you do care to track where all of your trucks are going. Each year in the United States there are about 2 million one-way truck transactions.
Looking at the data from 2020, the top inbound destinations — that is, the states that had the largest net gain of one-way U-Haul trucks — were (1) Tennessee, (2) Texas, and (3) Florida. This is a big jump for Tennessee as it was 12th in 2019. Texas and Florida, on the other hand, were similarly in the top three last year. In last place on this list is California, meaning that it had the largest net loss of one-way U-Haul trucks leaving the state.
Overall, this data continues to reinforce a shift that is taking place toward more affordable housing markets, such as those in the southern United States.
As most of you know, laneway suites (a form of accessory dwelling unit) are permitted “as-of right” across the City of Toronto. This has led to an explosion of new laneway housing. One framing contractor that I know recently told me that he is now doing a new laneway house every month. Incredible considering how out-there they were only 10 years ago.
However, there are a few barriers to participation with the current policies, one of which is that you need to be adjacent to a laneway in order to have an eligible lot. So the City has been working on adapting these policies to suit residential properties without a public lane. These new accessory dwelling units are being referred to as “garden suites.”
The draft garden suite regulations are now available online and will be heard at Planning and Housing Committee next week. The recommendations are that these regulations form the basis for further community engagement, and that a final report be brought back to the Committee in Q4 of this year.
This final report is expected to recommend Official Plan policies and Zoning By-law regulations so that garden suites, along with laneway suites, can be as-of-right across the city. This is great news. So if you have a lot without a public lane and you’re considering an ADU, now might be a good time to start planning.
This is a chart from Abundant Housing LA (a YIMBY group), via City Observatory, showing the relationship between median household income and single-family zoning across the 88 cities that make up L.A. County. On average, about 80% of the land in the County is zoned for single-family housing. This is also true for Los Angeles, which is not surprisingly its biggest city. What is pretty clear from this chart is that the richest areas tend to have a higher percentage of single-family homes. If you read Anthony Dedousis’ post, you’ll also see that the housing tends to be more expensive (makes sense) and that the homeownership rates are higher in these single-family areas. One obvious takeaway is that it shows you how clearly we are dividing our cities. Zoning is regulation. And here we are seeing some of the socioeconomic implications. But I’m curious if this relationship would be as strong in other cities around the world and at different scales (i.e. neighborhood levels). When it’s made available (not all cities have this much space), how universal is this pull toward single-family housing?
Back in 2008, Dasha Zhukova and Roman Abramovich hired starchitect Rem Koolhaas and founded a new contemporary art museum in Moscow called the Garage Museum. Supposedly this was the first philanthropic institution in Russia dedicated solely to contemporary art. (Here’s a short video in case you’re curious what it looks like.) After it opened, the founders apparently had a realization about the way people like to consume art. Yes, people like to look at art and ponder deep things. But it turns out that people also like just being around art and other art-like things. People started coming to the Garage Museum not only to view the various exhibitions, but also to just hang out.
This insight is now being used to inform a new real estate development company, also by Dasha, called Ray. The mission of the company is to create “architecturally-inspired homes at the intersection of art, culture, and community.” Their first two projects are in Harlem and Fishtown, Philadelphia, but apparently they have something cooking in Miami as well. What Ray hopes to do is integrate art and culture in a more meaningful way through cultural programming, exhibitions in their buildings, artist studio spaces, and other creative ideas.
There’s also an affordable housing angle. According to the WSJ, Ray’s Harlem project is a joint venture with L+M Development Partners. I don’t know any of the specifics of this deal, but I know L+M, because one of their founding partners, Ron Moelis, was a professor of mine in graduate school. L+M is focused on affordable and mixed-income housing and uses tools like the Low-Income Housing Tax Credit (LIHTC) to make these sorts of projects financially feasible. They aren’t, otherwise. I learned all about them in school and I always found it to be a great way to get the private sector building affordable housing.
“Art and culture, community, and accessible pricing.”
The National Association of Realtors in the US has a “Community and Transportation Preference Survey” that it conducts usually every two years. Last year (2020), wasn’t supposed to be a survey year, but given the pandemic, they decided to run it in June and see if people’s preferences had changed at all during that time.
Last June feels like eons ago to me and I bet that if you asked people how they were feeling today it may be slightly different. Nonetheless, the survey asked 2,000 adults from the fifty-largest metro areas a bunch of questions about where and how they live and where and how they might want to live in the future.
The topline results can be found over here. But for a bit of context, 58% of respondents were people who lived in a single-family detached house; 26% of respondents were people who lived in a building with two or more apartments and condos; and the rest of the respondents were split across townhouses, rowhouses, mobile homes, trailers, and other. (I’m kind of curious about the 2% who answered with other.)
One of the questions that I thought might be interesting to this audience is this one here about housing preferences going forward:
The question asks the respondents to imagine that they are moving into another home. It then asks about priorities and, more specifically, about their preferred trade-off between amenities and walkability versus a large detached house with a big yard.
Overall the split in preferences has remained close to 50/50 over the last three surveys. But there appears to be a small uptick toward large homes and less amenities. I wouldn’t be surprised if the pandemic contributed to this thinking last summer. But who knows if this will persist. At the same time, actions speak louder than words.
My response to the above question would be less space, greater walkability, and more amenities. I have no desire to live in a low-rise grade-related house, especially one that is disconnected from the city. I like urbanity. What about you?
Inclusionary zoning has been on my mind this week and so I thought I would revisit some of my old posts on the topic. I wrote about it here, here, here, here, here, and probably in a bunch of other places that I am forgetting right now. A number of these posts go as far back as 2015-2016.
As well-intended as inclusionary zoning may be, I have never been able to get my head around it. There are lots of cities with inclusionary zoning polices in place and what history generally tells us is that it tends to reduce overall housing supply and increase market rents/prices.
This makes intuitive sense when you consider that inclusionary zoning is in effect a tax on new development. And one of the only things I remember from my economics classes is that it’s generally good practice to tax the things we want less of. You know, things like cigarettes and carbon.
This is why I have also been a strong supporter of road pricing over the years on this blog. Traffic congestion is bad (demand also happens to be relatively inelastic). So tax it and redirect the funds toward transit.
Housing supply, on the other hand, isn’t bad. It’s pretty good and fairly useful. So in my simple mind, I don’t know why we would want to apply a tax to it instead of figuring out way to simultaneously encourage and incent the supply of new affordable housing. Here’s one idea.
