River Davis' recent article in the Wall Street Journal about Tokyo's generally flat home prices had me, again, wondering about demographics. I mean, aren't their demographics working in reverse? They have an aging population, low immigration, and a low birthrate. But Tokyo, which represents about 11% of Japan's total population, is still growing. And their home price index looks like this compared to San Francisco and New York:
Davis' argument, which of course has been made by others before, is that deregulation has allowed housing supply to actually keep up with demand. Land use policies were relaxed to allow taller and denser buildings to be built and some degree of decision making (I'm not sure how much) was moved to the central government in order to counteract the NIMBY problem that invariably attaches itself to local politics.
The result is housing numbers that look and compare like this:
In Tokyo last year, housing starts came in around 145,000, according to Japan’s land ministry. This figure is on par with the total number of new housing units authorized last year in New York, Los Angeles, Boston and Houston combined, based on the U.S. Census Bureau data. The same feat was achieved in 2017.
If we are to normalize against New York, it looks like this:
And the belief seems to be that it is working:
“A reason why housing prices in Japan are not rising as fast as in New York, for example, is the large number of housing starts,” says Masahiro Kobayashi, a director general at the Japan Housing Finance Agency, a state-run entity which supports the housing market by purchasing home loans.
One sentence that really stood out for me in the article is this one here: "Private consultants were given permission to issue building permits to speed up construction." If any of you have tried to pull a building permit for a large project in Toronto, you'll know that it can take a very long time (understatement). Maybe it is the same in your city. Should we be looking at this?
Charts: WSJ
Last month Oxford Properties submitted a site plan application for the redevelopment of the rundown Cumberland Terrace in Toronto’s Yorkville neighborhood. If you’d like to browse the full application (including all the drawings), you can do that here.
The proposal is a departure from previous plans and now includes 3 buildings: a 4.5 storey building, a 2.5 storey building, and a midblock 54 storey residential tower (the lobby is shown above). There will be both retail and residential uses.
For those of you familiar with the mall, it should go without saying that Cumberland Terrace is in desperate need of redevelopment. So I’m not going to talk about that today. Instead, I’d like to mention 2 other points that stood out to me about the application.
The first is the 2 midblock connections on either side of the tower, running from Cumberland Street to Mayfair Mews in the rear (see below). Yorkville has a history of intimate laneways, and so it’s nice to see some of this being carried through in a new development. It also opens up the opportunity for an improved Mayfair Mews.
Secondly, it’s somewhat surprising to see that the 54 storey residential tower is being proposed as rental. Toronto doesn’t build a lot of purpose-built rental apartment buildings. There are some (from the likes of Morguard and Concert Properties), but we haven’t done it at scale for decades. And that’s largely because the demand for condos has been so great.
But recently I’ve been noticing a renewed interest from the real estate community in multi-family rental assets. Cadillac Fairview also proposed a 65 storey rental building at the north west corner of Yonge Street & Queen Street last year – though they later withdrew their application.
In the US, rental apartments as a share of all new housing is also at record highs – over 30%. And that’s partly because credit remains tight (certainly compared to pre-2008) and economic growth has been tepid. But also because of demographic changes. People are having fewer children, later in life, and so many are putting off buying.
So I think we’re going to see even more rental apartments being built in Toronto in the coming years.
River Davis' recent article in the Wall Street Journal about Tokyo's generally flat home prices had me, again, wondering about demographics. I mean, aren't their demographics working in reverse? They have an aging population, low immigration, and a low birthrate. But Tokyo, which represents about 11% of Japan's total population, is still growing. And their home price index looks like this compared to San Francisco and New York:
Davis' argument, which of course has been made by others before, is that deregulation has allowed housing supply to actually keep up with demand. Land use policies were relaxed to allow taller and denser buildings to be built and some degree of decision making (I'm not sure how much) was moved to the central government in order to counteract the NIMBY problem that invariably attaches itself to local politics.
The result is housing numbers that look and compare like this:
In Tokyo last year, housing starts came in around 145,000, according to Japan’s land ministry. This figure is on par with the total number of new housing units authorized last year in New York, Los Angeles, Boston and Houston combined, based on the U.S. Census Bureau data. The same feat was achieved in 2017.
If we are to normalize against New York, it looks like this:
And the belief seems to be that it is working:
“A reason why housing prices in Japan are not rising as fast as in New York, for example, is the large number of housing starts,” says Masahiro Kobayashi, a director general at the Japan Housing Finance Agency, a state-run entity which supports the housing market by purchasing home loans.
One sentence that really stood out for me in the article is this one here: "Private consultants were given permission to issue building permits to speed up construction." If any of you have tried to pull a building permit for a large project in Toronto, you'll know that it can take a very long time (understatement). Maybe it is the same in your city. Should we be looking at this?
Charts: WSJ
Last month Oxford Properties submitted a site plan application for the redevelopment of the rundown Cumberland Terrace in Toronto’s Yorkville neighborhood. If you’d like to browse the full application (including all the drawings), you can do that here.
The proposal is a departure from previous plans and now includes 3 buildings: a 4.5 storey building, a 2.5 storey building, and a midblock 54 storey residential tower (the lobby is shown above). There will be both retail and residential uses.
For those of you familiar with the mall, it should go without saying that Cumberland Terrace is in desperate need of redevelopment. So I’m not going to talk about that today. Instead, I’d like to mention 2 other points that stood out to me about the application.
The first is the 2 midblock connections on either side of the tower, running from Cumberland Street to Mayfair Mews in the rear (see below). Yorkville has a history of intimate laneways, and so it’s nice to see some of this being carried through in a new development. It also opens up the opportunity for an improved Mayfair Mews.
Secondly, it’s somewhat surprising to see that the 54 storey residential tower is being proposed as rental. Toronto doesn’t build a lot of purpose-built rental apartment buildings. There are some (from the likes of Morguard and Concert Properties), but we haven’t done it at scale for decades. And that’s largely because the demand for condos has been so great.
But recently I’ve been noticing a renewed interest from the real estate community in multi-family rental assets. Cadillac Fairview also proposed a 65 storey rental building at the north west corner of Yonge Street & Queen Street last year – though they later withdrew their application.
In the US, rental apartments as a share of all new housing is also at record highs – over 30%. And that’s partly because credit remains tight (certainly compared to pre-2008) and economic growth has been tepid. But also because of demographic changes. People are having fewer children, later in life, and so many are putting off buying.
So I think we’re going to see even more rental apartments being built in Toronto in the coming years.
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