Tag: canada

• Non-Canadians can’t buy a lot of real estate

  The Prohibition on the Purchase of Residential Property by Non-Canadians Act — which came into effect in January of this year and bans foreigners from buying residential real estate in the country for two years — is weird.

  We can debate whether banning foreigners from buying residential real estate is really helpful for housing affordability and if it’s the most impactful place to focus our attention (and we have talked about this many times before), but the part that is particularly odd is this feature here:

  …the law’s definition of residential property includes land that is zoned for residential use or mixed use, which covers huge swaths of commercial land across the country. As well, an entity is deemed foreign if a non-Canadian owns a minimum of 3 per cent of the entity.

  What this means is that the following scenario is now technically a problem (not actual legal advice!):

  • You own a commercial property with zero homes
  • You have long-term commercial leases in place that also generally preclude you from building new homes in the foreseeable future
  • The zoning of your property allows for residential uses (which you like having in your back pocket)
  • And your cousin from Italy owns 3% of the entity that owns the real estate

  This is a scenario where residential homes do not exist and they are unlikely to exist any time soon. It seems clear cut, but I suppose one could argue that it’s exceedingly onerous to try and figure out which sites are soft sites and could actually be developed with new residential. And so if you have the potential to build and then own residential, you should be regulated as if you might ultimately own some of it one day.

  But even here, I don’t know why we would want to restrict the supply side of the housing equation. If you’re a developer in Canada where housing is known to be kind of expensive and you want to build more of it for Canadians, isn’t that a good thing? And isn’t it also a good thing if we can get some non-Canadians to help pay for these new homes?

  2023.02.13

• Canadian complacency

  The founder and Editor-in-Chief of Monocle Magazine, Tyler Brûle, recently had a nice trip to Ottawa:

  If you’ve never been to Ottawa, don’t bother. Of all the G7 capitals, it’s one that hardly conjures up much in the way of attractive images. Don’t believe me? Try it. What comes to mind? What stands out? You see what I mean? No Big Ben, no Lincoln Memorial, no Eiffel Tower. Ottawa might have had an easier time when Germany was partitioned and Bonn was its capital but that credit ran out when Berlin was reinstated as Haúptstadt and the Brandenburg Gate roared back as a symbol for the Federal Republic’s capital.

  He and his mom also thoroughly enjoyed their hotel:

  We walked into the bar and the whole space seemed gripped by a similar force that plagued the front desk: no speed, movement or sense of urgency. A man-child showed us to the table and barely said a word. His colleagues at the bar were having their own discussion, disconnected from the patrons around them. I started to laugh. My mother urged me to stop. “It’s incredible that this is the best that our country can do for people coming to the capital, no?” I said.

  As an unabashedly proud Canadian, this is deeply upsetting. It is upsetting because a lack of movement, a lack of urgency, and an overall lack of engagement are truly terrible qualities to possess. But more importantly, it is upsetting because one could argue that Tyler’s Ottawa and hotel experiences were a microcosm of some broader national issues around Canadian complacency.

  2023.01.15

• No more foreign buyers

  Here’s the thing about housing:

  The delegates insisted on one hand that “housing is for living not speculation”, but on the other, emphasised the critical importance of real estate to China’s economic growth.

  In other words, things are complicated. We want housing to be affordable to more people, but at the same time, we recognize that housing appreciation is kind of useful for overall economic growth. So we’re a bit conflicted. And that may be why we tend to take contradictory actions.

  Broadly speaking, the current playbook in Canada seems to be as follows: heavily tax new housing, force those who can afford new market-rate housing to subsidize those who can’t, and then tax/ban foreign buyers.

  Will Canada's foreign buyer ban improve overall housing affordability?

  — Brandon Donnelly (@donnelly_b) January 6, 2023

  Canada’s new foreign buyer ban came into effect on January 1 of this year. And for the next 2 years, it prohibits companies and people who are not Canadian citizens or permanent residents from acquiring non-recreational, residential property in Canada. (What is the definition of non-recreational?)

  While this may sound good to some — finally, more homes for Canadians — we’re talking about a relatively small portion of the market, which is likely why there’s also little evidence that any of our foreign buyer taxes have been all that effective.

  It’s really hard to imagine this one working much better. But it certainly sounds like something.

  2023.01.05

• Japan pays people to leave Tokyo

  We have spoken over the years — here, here, and here — about the centralizing and decentralizing forces that play out within our cities. Agglomeration economies, for example, are a centralizing force. There are real economic benefits to people and firms clustering together in cities.

  However, there are also many decentralizing forces. Traffic congestion is one. And of course, the pandemic also proved to be a powerful one for many cities.

  But the fact that we even have cities in the first place should tell you that the centralizing forces do tend to win out over the decentralizing ones. And a perfect example of this is Tokyo. Usually considered to be the largest metropolitan area in the world, Tokyo has about the population of Canada in one city region.

  And here, the centralizing forces are so great — even for families — that the government actually pays people to relocate to places outside of Tokyo’s 23 wards (and its immediately surrounding areas). Previously the maximum figure was ¥300,000 per child (~CA$3,056), but this has now been increased to ¥1 million per child (~CA$10,188).

  A key driver of this is surely Japan’s demographic problem (namely a shrinking and aging population base). But it doesn’t change the fact that lots of people appear drawn to the world’s largest city.

  2023.01.04

• The Local Project

  Regular readers of this blog will know that I am huge fan of the YouTube channel Never Too Small. I have seen most of their episodes and I like to tell people about it even when it is only remotely related to the conversation at hand.

  I love the urbanity of it all. There is just something so satisfying about turning constrained spaces into homes that are both beautiful and functional. It also makes you question how much space you really need.

  But if constraints aren’t your thing, and you’d like to see a wider variety of homes, another great channel to check out is The Local Project. The homes — which are all in Australia and New Zealand — are equally as beautiful, but tend to be more, uh, extensive. See above video.

  What are some other channels worth checking out? It seems to me like Canada needs something similar to The Local Project. Maybe it already exists.

  2022.09.16

• Sticking close to home — two-thirds of young Americans live near where they grew up

  Here in Canada, there is often a belief that Americans tend to be more mobile than Canadians. Don’t like the cold weather? Just move south. Taxes too high? Just move south. Housing too expensive? Just move south.

  But just how mobile is mobile? A new study by the US Census Bureau and Harvard University found that by age 26, more than 2/3 of young adults in the US actually just live where they grew up, with 80% living within 100 miles, and 90% living within 500 miles.

  Migration distances were also found to be impacted by both race and parental income (though these two things likely exhibit a relationship on their own). If you are a young white or Asian adult, the “radius of economic opportunity” tends to grow and you’re more likely to live further away from where you grew up.

  The most popular destinations overall are New York, Los Angeles, Washington, and Denver (in this order). And while New York and Los Angeles remain at the top regardless of who you are, San Antonio and Phoenix are top destinations for Hispanics, and San Francisco is a top destination for Asians.

  Regardless, home appears to be a pretty sticky place.

  But what about Canadians? Are we less mobile? Looking at net domestic migration rates, Canada saw 254,143 interprovincial migrants between 2018-2019, whereas the US saw just over a million between 2020-2021. So on a per capita basis, Canada’s rate is actually higher.

  Statistics Canada also estimated earlier this year that as of July 1, 2016, somewhere around 4 million Canadians were living abroad — or about 11% of citizens. This is a much higher percentage compared to Americans.

  Of those living abroad, roughly half are believed to have received their citizenship through descent, meaning they were born abroad to Canadian parents. About 1/3 are Canadian citizens by birth. And about 15% are naturalized citizens.

  So it turns out that Canadians are in fact pretty mobile. We also seem to like going further afield.

  2022.07.26

• Toronto-Montréal should be a 2 hour high-speed train ride

  Toronto-Montreal should be a 2 hour high-speed train ride.

  — Brandon Donnelly (@donnelly_b) July 15, 2022

  The Quebec City-Windsor corridor is the most densely populated region in Canada. The last time I checked Wikipedia, it was reported to house about 18 million people, or about half of Canada’s entire population.

  So it is not surprising that there have been numerous high-speed rail studies for this corridor over the decades, as well as studies for other important links in Alberta (Edmonton-Calgary) and other parts of the country.

  And yet, Canada remains the only G7 country without any high-speed rail. Though to be fair, the US doesn’t have all that much either; certainly with respect to the size of its population.

  However, there is some good news. In March of this year, the Government of Canada announced a Request for Expression of Interest related to high frequency rail service between Quebec City and Toronto. More information, over here.

  But from what I have read, it’ll be a faster upgraded service (~200 km/h), but not true high-speed rail (~250-300 km/h). I took the TGV from Marseille to Paris last summer, and this is how fast we were going:

  

  If we’re going to do this, let’s be the absolute best in the world and not settle for mediocrity.

  2022.07.16

• Super-entrepreneurs by region

  A super-entrepreneur, according to the common definition, is a rich person who has amassed a net worth of at least US$1 billion dollars by either starting a company or taking a small company and growing it into a big one. A super-entrepreneur is, by definition, not someone who inherited their wealth. Though I’m not sure what the cut off is. If you inherited $1 million and then started a massive company, does that still make you a super-entrepreneur? What about if you inherited $100 million?

  In any event, here is a chart from New Geography showing super-entrepreneurs by region:

  

  The USA is in the lead in this chart at about 3.1 super-entrepreneurs per one million inhabitants. But the highest rate in the world, at least according to this data set, actually belongs to Singapore at 4.7 per million. Europe, as a whole, doesn’t look all that great here. But again, if you get more specific, some European countries are actually doing quite well. Sweden, for instance, is sitting at around 2 per million, which is higher than Canada’s figure.

  Why this data is potentially interesting is that it tells you a bit about these countries. It tells you whether they have strong property rights, whether it’s easy to conduct business, and whether it’s supportive of new ideas, among, of course, many other things. There also appears to be a clear link between the presence of super-entrepreneurs and unemployment. Turns out that the more people you have starting wildly successful businesses, the lower unemployment tends to be.

  For the full New Geography article, click here. In addition to what I just wrote about, it talks about Europe’s “entrepreneurial paradox” and issues of gender equality.

  2022.07.11

• 1912 Michelin Guide to France

  

  This is a copy of the 1912 edition of the Michelin Guide to France. Most of you have probably heard of Michelin star restaurants, but some of you may not be familiar with how it all started.

  First published in 1904, the Michelin Guide is, as you might suspect, a product of French tire company Michelin. And since the beginning, this free guide has had a pretty clear objective: Its goal was to get you to drive more.

  At the turn of the 20th century, there were only a few thousand cars on the road in France. This guide tried to change that by giving you places to go, as well as telling you where to stop along the way should you need to change a tire or two.

  However, its famous starred ranking system for restaurants was not introduced until 1931, and the criteria for said ranking was not revealed until a few years later:

  • One Star: “A very good restaurant in its category” (Une très bonne table dans sa catégorie)
  • Two Stars: “Excellent cooking, worth a detour” (Table excellente, mérite un détour)
  • Three Stars: “Exceptional cuisine, worth a special journey” (Une des meilleures tables, vaut le voyage)

  Curiously enough, Canada has no Michelin star restaurants. I’m not exactly sure why, but I have heard that it’s because we’re not giving money to the right people. Maybe that’s wrong. I don’t know.

  I do, however, find it interesting that this celebrated restaurant ranking system started as a marketing tool for motorists. Oftentimes you never know where a new idea might lead you.

  P.S. I’m also not sure how the above 1912 copy is the 13th edition when the first Michelin Guide was supposedly published in 1904.

  2022.05.01

• Forget infill development, why not just build entirely new cities?

  

  We talk a lot on this blog about how best to intensify and add housing to our existing cities. But here’s alternative approach: Why not just built entirely new cities? This way you don’t have to worry about fixing any of the things that are currently broken in our existing cities or worry about messy things like community engagement.

  Now, I disagree with many, or perhaps most, of the points that Nathan J. Robinson puts forward in the above Current Affairs article, but I think this is an interesting question to unpack. Robinson’s argument is that the main obstacle for building new cities in the US is ideological rather than technological. You need a bit more central government planning if you’re going to pull off a completely new urban center. And that’s not how things are generally done in the US.

  However, I think the real problem is that cities have powerful network effects that encourage centralization (even if some people are working from home). It’s easy to look at a large country like Canada and say to yourself, “but look at all that empty land. How could we possibly have a housing shortage?” The reality is that most of our land is empty and cheap because it has little value. The jobs are in our cities and that’s why Canada is a largely urban country.

  Indeed, this is how most cities have emerged historically. They start with some sort of economic purpose, be it an important trade route, access to resources, or some other driver of prosperity. It is for this reason that urbanists like Alain Bertaud will tell you that, typically, urban infrastructure follows the market, and not the other way around. Because who wants to live in a city with nice infrastructure but no jobs? More importantly, how long can a city without a strong economic purpose even last?

  Take for example Delhi. By 2030, Delhi is expected to be the largest city in the world. This has made it exceedingly difficult for the city to build enough new housing. So government there has been focusing on building new cities on the outskirts surrounding Delhi. These cities are referred to as “counter magnets”, and their purpose is to intercept and literally attract new migrants before they reach Delhi, thereby relieving some of the urban pressures on the capital.

  The fact that these cities are referred to as “counter magnets” speaks to exactly my point about centralization. It is recognition that Delhi is by far the biggest urban magnet. Because of this, these satellite cities haven’t been as successful as everyone had initially hoped. Migrants seem to still want Delhi. You can build new housing, but without jobs and economic opportunity, people will continue to flock to the biggest urban magnets.

  So sooner or later, you’ll need to fix what isn’t working.

  Photo by Ravi Sharma on Unsplash

  2022.04.09