Brandon Donnelly
THE DAILY INFILL is a blog for city builders written by Toronto-based real estate developer Brandon Donnelly.
Brandon Donnelly
THE DAILY INFILL is a blog for city builders written by Toronto-based real estate developer Brandon Donnelly.
Emily Badger's recent piece on "how 'developer' became such a dirty word" has been getting passed around within the industry over the last few days. I had a chuckle when I read this bit:
The notion that development is inherently bad, or that developers are inherently bad actors, seems to ignore that the communities residents want to protect from developers were once developed, too, and often by people who made money at it. (That is, unless you believe in “immaculate construction.”)
The article hits on a number of points that are absolutely true. There's generally a lack of understanding around the economics behind new housing. And the cost structures, today, are dramatically different compared to the suburban-industrial complex.
To provide one example, our cost consultant, Finnegan Marshall, recently shared with me a chart (dated April 2019) that broke down the various government fees that typically make up every new condo suite in Toronto.
What it showed is that between 20-24% of the price of a new condo is generally compromised of government fees and taxes that span all three levels of government. This includes everything from development charges (impact fees) to parkland dedication.
Similarly, the article quotes one developer from Montgomery County who estimates that the impact fees alone for his projects are usually upwards of $60,000 per housing unit. (This is pretty cheap compared to Toronto.)
I raise this as an example because development charges/impact fees have become an important source of revenue for cities across both Canada and the US. They often offset lower property taxes. (Whether this is appropriate is an entirely other debate.)
And so I find it paradoxical that many homeowners would like to simultaneously see lower property taxes, no new development, and more public services and infrastructure.
Every year since 1984, the National Association of Home Builders (in the United States) has commissioned a home with the goal of showcasing new trends and technologies in the industry. At the same time, it also serves as a kind of dream home. This is what one should aspire to achieve. The initiative is called the New American Home (TNAH).
The first home was built in Houston by Village Builders. The architect was Booth/Hansen & Associates and the home was about 1,500 square feet. It cost $80,000. Last year the home was in Montverde, Florida and was about 10,690 square feet (6,676 square feet of air-conditioned space). Not surprisingly, these homes have grown over the decades.
According to a recent New York Times opinion piece by Allison Arieff -- called, The New 'Dream Home' Should be a Condo -- the square footage of this New American Home has been steadily rising:
Emily Badger's recent piece on "how 'developer' became such a dirty word" has been getting passed around within the industry over the last few days. I had a chuckle when I read this bit:
The notion that development is inherently bad, or that developers are inherently bad actors, seems to ignore that the communities residents want to protect from developers were once developed, too, and often by people who made money at it. (That is, unless you believe in “immaculate construction.”)
The article hits on a number of points that are absolutely true. There's generally a lack of understanding around the economics behind new housing. And the cost structures, today, are dramatically different compared to the suburban-industrial complex.
To provide one example, our cost consultant, Finnegan Marshall, recently shared with me a chart (dated April 2019) that broke down the various government fees that typically make up every new condo suite in Toronto.
What it showed is that between 20-24% of the price of a new condo is generally compromised of government fees and taxes that span all three levels of government. This includes everything from development charges (impact fees) to parkland dedication.
Similarly, the article quotes one developer from Montgomery County who estimates that the impact fees alone for his projects are usually upwards of $60,000 per housing unit. (This is pretty cheap compared to Toronto.)
I raise this as an example because development charges/impact fees have become an important source of revenue for cities across both Canada and the US. They often offset lower property taxes. (Whether this is appropriate is an entirely other debate.)
And so I find it paradoxical that many homeowners would like to simultaneously see lower property taxes, no new development, and more public services and infrastructure.
Every year since 1984, the National Association of Home Builders (in the United States) has commissioned a home with the goal of showcasing new trends and technologies in the industry. At the same time, it also serves as a kind of dream home. This is what one should aspire to achieve. The initiative is called the New American Home (TNAH).
The first home was built in Houston by Village Builders. The architect was Booth/Hansen & Associates and the home was about 1,500 square feet. It cost $80,000. Last year the home was in Montverde, Florida and was about 10,690 square feet (6,676 square feet of air-conditioned space). Not surprisingly, these homes have grown over the decades.
According to a recent New York Times opinion piece by Allison Arieff -- called, The New 'Dream Home' Should be a Condo -- the square footage of this New American Home has been steadily rising:
This is, of course, reflective of what has been happening in the market as a whole. According to Arieff, the average size of a new U.S. home today is about 1,000 square feet larger than it was in 1973. The average space per human has increased from 507 to about 971 square feet. As our wealth has grown we have naturally become more consumptive.
But as Arieff asks in her article:
What if the next New American Home was a condo? And what if there was a new American dream, not of auto-dependent suburbia, but walkable urbanism?
She then contrasts last year's 10,000 square foot "Tuscan style" New American Home against this 6 unit urban infill condo project in Los Angeles, where the average home is about 1,800 square feet and the building in its entirety is around 11,000 square feet.
Which one would you prefer?
Charts: New York Times
This morning BILD and Altus Group released their January 2019 new home sales figures for the Greater Toronto Area.
Here are the highlights:
1,362 new homes sold in January 2019 across the GTA. This is up 14% compared to last January.
Of these, 942 (~69%) were condominiums (includes low, mid, and high-rise, as well as townhouses). And 420 (~31%) were single-family homes (includes detached, semi-detached, and freehold townhouses).
Condominium sales volume is sitting only about 5% below the 10-year average and the benchmark price increased this month to $803,638, which represents a 12.5% year-over-year increase.
On the other hand, single-family home sales are down about 53% from the 10-year average and the benchmark price decreased by about 8.1% compared to last year. It is sitting at $1,130,046.
While there continues to be a bifurcation in the new home market, we are seeing improvements across the board and the data is consistent with Altus' prediction that 2019 will see an increase in overall sales.
It is also important to consider how geography might factor into the above numbers. Here are the January sales numbers for the last three years broken down by region within the GTA:
Just under 80% of the new condominiums sold last month took place in Toronto, whereas only about 1.2% of the single-family homes sold last month took place in the city. You can count them on one hand. There were only 5.
So rather than just look at this in terms of housing type, I think the other way to interpret the data is that it could suggest strong and continued demand for centrally located and transit-oriented communities.
And that just so happens to translate into a condominium.
Photo by Eugene Aikimov on Unsplash
This is, of course, reflective of what has been happening in the market as a whole. According to Arieff, the average size of a new U.S. home today is about 1,000 square feet larger than it was in 1973. The average space per human has increased from 507 to about 971 square feet. As our wealth has grown we have naturally become more consumptive.
But as Arieff asks in her article:
What if the next New American Home was a condo? And what if there was a new American dream, not of auto-dependent suburbia, but walkable urbanism?
She then contrasts last year's 10,000 square foot "Tuscan style" New American Home against this 6 unit urban infill condo project in Los Angeles, where the average home is about 1,800 square feet and the building in its entirety is around 11,000 square feet.
Which one would you prefer?
Charts: New York Times
This morning BILD and Altus Group released their January 2019 new home sales figures for the Greater Toronto Area.
Here are the highlights:
1,362 new homes sold in January 2019 across the GTA. This is up 14% compared to last January.
Of these, 942 (~69%) were condominiums (includes low, mid, and high-rise, as well as townhouses). And 420 (~31%) were single-family homes (includes detached, semi-detached, and freehold townhouses).
Condominium sales volume is sitting only about 5% below the 10-year average and the benchmark price increased this month to $803,638, which represents a 12.5% year-over-year increase.
On the other hand, single-family home sales are down about 53% from the 10-year average and the benchmark price decreased by about 8.1% compared to last year. It is sitting at $1,130,046.
While there continues to be a bifurcation in the new home market, we are seeing improvements across the board and the data is consistent with Altus' prediction that 2019 will see an increase in overall sales.
It is also important to consider how geography might factor into the above numbers. Here are the January sales numbers for the last three years broken down by region within the GTA:
Just under 80% of the new condominiums sold last month took place in Toronto, whereas only about 1.2% of the single-family homes sold last month took place in the city. You can count them on one hand. There were only 5.
So rather than just look at this in terms of housing type, I think the other way to interpret the data is that it could suggest strong and continued demand for centrally located and transit-oriented communities.
And that just so happens to translate into a condominium.
Photo by Eugene Aikimov on Unsplash
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