It has been mild and wet in Toronto over the last week, but normally at this time of the year, the entire city looks like as if it was just hit by some sort of apocalyptic chalk storm. Everything is white. And that's because we rely on rock salt and liquid salt brine to keep our roads and sidewalks free of snow and ice. Each winter, the city uses upwards of 130,000 tones of salt to maintain its service levels.
This is the tool of choice because it is both reasonably effective and cheap. However, the trade-off is that it does horrible things to the environment. It also ruins perfectly good shoes, which should tell you something about what it's doing to the environment. So it's a balancing act: Yeah, it's terrible for the environment, but we want usable roads and sidewalks. People slipping and falling is also a liability problem.
That said, when I was in Montreal over the weekend, I did notice a greater use of gravel:
This causes its own set of problems in the spring when it all needs to be tidied up. But in the interim, it did allow me to wear my neon Nike Air Max 90s without the fear of them disintegrating on my feet. Sometimes there's also no choice. Road salts only work down to a certain temperature and then they become ineffective. So there are lots of examples of cities using sand and/or gravel to improve traction.
This is not the case in Toronto. We rely on rock salt. And part of the reason for this is that our winter service levels dictate "bare pavement" on highways and arterial roads. Gravel doesn't get you bare pavement. Salt does. Also, Ontario doesn't require snow tires, whereas Quebec does. So there is an argument that, because of this, we are all ill-equipped to deal with anything besides bare streets. (Though have you seen our sidewalks and bike lanes?)
I am not a salt management expert. I opted out of that fascinating elective in University. But in my opinion, the goal should be to use as little rock salt as possible. Maybe that means we need to rethink our service levels and our priorities. And maybe that means we need to do things like mandate winter tires.
This data is from 2019, but I imagine that things would look pretty similar today and that it might even be a little more pronounced. The dataset from the above article looked at how many people have cars in a given area (a darker dot = fewer cars) and then plotted this against population density and income per capita.
Here's what that looks like for the regions of New York, Boston, Los Angeles, and Houston (data from 2013 to 2017):
The central bank tightening and interest rate hikes that we saw last year will come to an end in the first quarter of 2023 as inflation gets under control. This will ultimately lead to a recession but my sense is that it will be more mild than severe. For this reason, I don't think anyone should expect ultra-low rates to return in the short-term.
Much of the real estate sector went on pause in the second half of 2022. But ultimately
It has been mild and wet in Toronto over the last week, but normally at this time of the year, the entire city looks like as if it was just hit by some sort of apocalyptic chalk storm. Everything is white. And that's because we rely on rock salt and liquid salt brine to keep our roads and sidewalks free of snow and ice. Each winter, the city uses upwards of 130,000 tones of salt to maintain its service levels.
This is the tool of choice because it is both reasonably effective and cheap. However, the trade-off is that it does horrible things to the environment. It also ruins perfectly good shoes, which should tell you something about what it's doing to the environment. So it's a balancing act: Yeah, it's terrible for the environment, but we want usable roads and sidewalks. People slipping and falling is also a liability problem.
That said, when I was in Montreal over the weekend, I did notice a greater use of gravel:
This causes its own set of problems in the spring when it all needs to be tidied up. But in the interim, it did allow me to wear my neon Nike Air Max 90s without the fear of them disintegrating on my feet. Sometimes there's also no choice. Road salts only work down to a certain temperature and then they become ineffective. So there are lots of examples of cities using sand and/or gravel to improve traction.
This is not the case in Toronto. We rely on rock salt. And part of the reason for this is that our winter service levels dictate "bare pavement" on highways and arterial roads. Gravel doesn't get you bare pavement. Salt does. Also, Ontario doesn't require snow tires, whereas Quebec does. So there is an argument that, because of this, we are all ill-equipped to deal with anything besides bare streets. (Though have you seen our sidewalks and bike lanes?)
I am not a salt management expert. I opted out of that fascinating elective in University. But in my opinion, the goal should be to use as little rock salt as possible. Maybe that means we need to rethink our service levels and our priorities. And maybe that means we need to do things like mandate winter tires.
This data is from 2019, but I imagine that things would look pretty similar today and that it might even be a little more pronounced. The dataset from the above article looked at how many people have cars in a given area (a darker dot = fewer cars) and then plotted this against population density and income per capita.
Here's what that looks like for the regions of New York, Boston, Los Angeles, and Houston (data from 2013 to 2017):
The central bank tightening and interest rate hikes that we saw last year will come to an end in the first quarter of 2023 as inflation gets under control. This will ultimately lead to a recession but my sense is that it will be more mild than severe. For this reason, I don't think anyone should expect ultra-low rates to return in the short-term.
Much of the real estate sector went on pause in the second half of 2022. But ultimately
What is fascinating about these charts is that they show two different correlations. In dense and transit-rich cities such as New York and Boston, car usage is most closely linked with population density and not with income. The dark dots form a horizontal line near the top.
However, in the case of Los Angeles and Houston, car usage is instead most closely linked with income and not with population density. The dark dots form a vertical line near the left -- the lowest income per capita.
So what does this tell us?
It tells us that if you design a city to broadly require a car, then you are likely to sort people based on those that can afford a lot of car and those that cannot. On the other hand, if you design a city around transit, then you are likely to instead create a place where both the rich and poor get around in similar ways.
There is also evidence that the latter is being increasingly viewed as more desirable. 2017 was the first year in the US where high-income young people (ages 26 to 33) drove less than low-income young people. Presumably these high-income people had choices, and so I tend to view this as a preference.
As a whole, this is surely a good thing for our cities. But now I think we need to be careful not to allow density and walkability to become the new luxury that only the rich can afford.
Construction costs tempered in the second half of 2022 and started to show some evidence of price softening. I think we will see more of this in 2023, which will be healthy for the market. Cost management over the last few years has been a meat grinder for the development industry.
Pre-construction condominium sales for well-located projects will return in a more fulsome way by the spring. This will be driven by buyers now having clarity around where interest rates will be hanging out in the short-term and, in the case of Canada's largest cities, by record-high immigration levels.
For the tertiary/fringe housing markets that saw big run ups in pricing during the pandemic, I unfortunately think it will take many years for prices to fully rebound. The price increases we saw in these submarkets were of course a result of low rates, but it was also driven by a view on urban decentralization that in my view did not actually materialize.
The desire to add more housing to single-family neighborhoods will continue to pick up steam across North America. How exactly this plays out will be market specific, but in Toronto I expect to see new planning policies put in place, as well as supportive building code changes.
Public transit ridership will remain below pre-pandemic levels throughout 2023. This will continue to exacerbate public finances.
Autonomous taxis will grow rapidly this year. Companies, such as Cruise, will expand into a number of new US markets and, at some point during the year, I will take my very first ride in an autonomous vehicle.
2023 will be a big year for augmented reality and “phygital” goods. Last year I thought Apple would release a new product in this space. That didn't happen, but it will this year. At the same time, we will see more companies releasing products that blur the lines between our online and offline worlds (hence "phygital"). This will include NFTs and other crypto-related things that will start to operate more seamlessly in the background of consumer-facing products/services.
I continue to be bullish on Ethereum and I think it will overtake Bitcoin in terms of market cap in the next 2-3 years. But I was very wrong about Solana last year. And now I am struggling with its value proposition. Today, layer 2 chains such as Polygon feel more likely to win out. Broadly speaking, I suspect 2023 will be a positive year for crypto, but not a record-setting one.
In summary, I think we are going to see more pain at the beginning of 2023, but that on the other side of it will be healthier and more balanced markets. This means that we can look forward to the end of the year feeling much better than it does right now. All of this said, please keep in mind that I'm often wrong and that nothing in this post should be construed as actual advice.
Happy 2023, friends. I'm excited to get going.
What is fascinating about these charts is that they show two different correlations. In dense and transit-rich cities such as New York and Boston, car usage is most closely linked with population density and not with income. The dark dots form a horizontal line near the top.
However, in the case of Los Angeles and Houston, car usage is instead most closely linked with income and not with population density. The dark dots form a vertical line near the left -- the lowest income per capita.
So what does this tell us?
It tells us that if you design a city to broadly require a car, then you are likely to sort people based on those that can afford a lot of car and those that cannot. On the other hand, if you design a city around transit, then you are likely to instead create a place where both the rich and poor get around in similar ways.
There is also evidence that the latter is being increasingly viewed as more desirable. 2017 was the first year in the US where high-income young people (ages 26 to 33) drove less than low-income young people. Presumably these high-income people had choices, and so I tend to view this as a preference.
As a whole, this is surely a good thing for our cities. But now I think we need to be careful not to allow density and walkability to become the new luxury that only the rich can afford.
Construction costs tempered in the second half of 2022 and started to show some evidence of price softening. I think we will see more of this in 2023, which will be healthy for the market. Cost management over the last few years has been a meat grinder for the development industry.
Pre-construction condominium sales for well-located projects will return in a more fulsome way by the spring. This will be driven by buyers now having clarity around where interest rates will be hanging out in the short-term and, in the case of Canada's largest cities, by record-high immigration levels.
For the tertiary/fringe housing markets that saw big run ups in pricing during the pandemic, I unfortunately think it will take many years for prices to fully rebound. The price increases we saw in these submarkets were of course a result of low rates, but it was also driven by a view on urban decentralization that in my view did not actually materialize.
The desire to add more housing to single-family neighborhoods will continue to pick up steam across North America. How exactly this plays out will be market specific, but in Toronto I expect to see new planning policies put in place, as well as supportive building code changes.
Public transit ridership will remain below pre-pandemic levels throughout 2023. This will continue to exacerbate public finances.
Autonomous taxis will grow rapidly this year. Companies, such as Cruise, will expand into a number of new US markets and, at some point during the year, I will take my very first ride in an autonomous vehicle.
2023 will be a big year for augmented reality and “phygital” goods. Last year I thought Apple would release a new product in this space. That didn't happen, but it will this year. At the same time, we will see more companies releasing products that blur the lines between our online and offline worlds (hence "phygital"). This will include NFTs and other crypto-related things that will start to operate more seamlessly in the background of consumer-facing products/services.
I continue to be bullish on Ethereum and I think it will overtake Bitcoin in terms of market cap in the next 2-3 years. But I was very wrong about Solana last year. And now I am struggling with its value proposition. Today, layer 2 chains such as Polygon feel more likely to win out. Broadly speaking, I suspect 2023 will be a positive year for crypto, but not a record-setting one.
In summary, I think we are going to see more pain at the beginning of 2023, but that on the other side of it will be healthier and more balanced markets. This means that we can look forward to the end of the year feeling much better than it does right now. All of this said, please keep in mind that I'm often wrong and that nothing in this post should be construed as actual advice.
Happy 2023, friends. I'm excited to get going.
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