Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
The Seattle Times has an article up about “widespread single-family zoning” that will feel familiar to many here in Toronto who, I know, are having similar conversations about the amount of land dedicated to low-density housing.
The article, by Mike Rosenberg, estimates that 49% of all developable land in Seattle is dedicated to single-family housing; that 8% is dedicated to multi-family housing; and that another 8% is dedicated to commercial and mixed-use buildings. The rest of the land is institutional, open space, vacant, and so on.
Of all the residential lots in the city, the estimate is that 69% of them are occupied by single-family houses. This is compared to 1% in Manhattan.
I tried to reverse engineer the 69% based on the land use areas in the article, but the math didn’t quite add up. In any event, the argument here is, of course, that single-family homes are too expensive in Seattle and that the city needs more land available for multi-family housing.
Housing supply is no doubt important, but looking at the above chart, having a low, or lower, percentage of residential land dedicated to single-family housing doesn’t seem to necessarily guarantee affordable housing.
I like looking at real estate values over longer periods of time because it helps to put things into perspective.
Below is a land value index for Manhattan running from 1950 to 2014 that was recently created by economists out of Rutgers University.
The study was also cited in this recent article by Richard Florida.
A friend of mine sent me this article earlier today with a sarcastic comment about the relationship between housing supply and rents.
The article talks about how rents in almost every Manhattan neighborhood have fallen compared to a year ago because of a flood of new apartment supply coming online. The median rent dropped 3.6% (year-over-year) which is the biggest decline since October 2011.
There has also been a spike in the number of leases with some sort of incentive attached to it (see above). As a landlord you typically want to use incentives, such as free rent, before resorting to lower face rents. Because lower rents mean a lower overall net operating income, which in turns depresses the value of your property.
But sometimes you have no choice:
“Landlords have finally realized, ‘OK, we have to adjust these prices because the concessions aren’t doing as much,’” said Hal Gavzie, who oversees leasing for Douglas Elliman. “Customers are looking past the concessions being offered and just looking for the best deals they can find.”
A few weeks ago I wrote about a similar story playing out in Seattle. It’s almost as if excess housing supply is driving down rents.
The Seattle Times has an article up about “widespread single-family zoning” that will feel familiar to many here in Toronto who, I know, are having similar conversations about the amount of land dedicated to low-density housing.
The article, by Mike Rosenberg, estimates that 49% of all developable land in Seattle is dedicated to single-family housing; that 8% is dedicated to multi-family housing; and that another 8% is dedicated to commercial and mixed-use buildings. The rest of the land is institutional, open space, vacant, and so on.
Of all the residential lots in the city, the estimate is that 69% of them are occupied by single-family houses. This is compared to 1% in Manhattan.
I tried to reverse engineer the 69% based on the land use areas in the article, but the math didn’t quite add up. In any event, the argument here is, of course, that single-family homes are too expensive in Seattle and that the city needs more land available for multi-family housing.
Housing supply is no doubt important, but looking at the above chart, having a low, or lower, percentage of residential land dedicated to single-family housing doesn’t seem to necessarily guarantee affordable housing.
I like looking at real estate values over longer periods of time because it helps to put things into perspective.
Below is a land value index for Manhattan running from 1950 to 2014 that was recently created by economists out of Rutgers University.
The study was also cited in this recent article by Richard Florida.
A friend of mine sent me this article earlier today with a sarcastic comment about the relationship between housing supply and rents.
The article talks about how rents in almost every Manhattan neighborhood have fallen compared to a year ago because of a flood of new apartment supply coming online. The median rent dropped 3.6% (year-over-year) which is the biggest decline since October 2011.
There has also been a spike in the number of leases with some sort of incentive attached to it (see above). As a landlord you typically want to use incentives, such as free rent, before resorting to lower face rents. Because lower rents mean a lower overall net operating income, which in turns depresses the value of your property.
But sometimes you have no choice:
“Landlords have finally realized, ‘OK, we have to adjust these prices because the concessions aren’t doing as much,’” said Hal Gavzie, who oversees leasing for Douglas Elliman. “Customers are looking past the concessions being offered and just looking for the best deals they can find.”
A few weeks ago I wrote about a similar story playing out in Seattle. It’s almost as if excess housing supply is driving down rents.
Here are some of the highlights from their study:
We find three major cycles with land values reaching their nadir in 1977, just after the city’s fiscal crisis.
Since 1993, land prices have risen much faster than population or employment, at an average annual rate of 15.8%.
We estimate the entire amount of developable land on Manhattan in 2014 was worth approximately $1.74 trillion.
We estimate the long run return to Manhattan land values [since the island was first inhabited by Dutch settlers in 1626] to be about 6.4%.
What’s fascinating to me is the accelerated appreciation. The index starts at 100 in 1950, ends up slightly above that by 1993, and then simply takes off.
Here are some of the highlights from their study:
We find three major cycles with land values reaching their nadir in 1977, just after the city’s fiscal crisis.
Since 1993, land prices have risen much faster than population or employment, at an average annual rate of 15.8%.
We estimate the entire amount of developable land on Manhattan in 2014 was worth approximately $1.74 trillion.
We estimate the long run return to Manhattan land values [since the island was first inhabited by Dutch settlers in 1626] to be about 6.4%.
What’s fascinating to me is the accelerated appreciation. The index starts at 100 in 1950, ends up slightly above that by 1993, and then simply takes off.
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