Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.
I learned this morning that Statistics Canada publishes a real-time population counter and that it is currently hovering at just below 40 million people:
So by the time that many of you read this post, Canada will likely be over the 40 million mark. If you’d like to see for yourself, you can do that here.
I went to bed last night watching President Biden’s address to the Canadian Parliament (full transcript, here.). And I woke up this morning to this Globe and Mail article about Canadian competitiveness. In it, Tony Keller talks about some of the things that are broken in this country (shockingly housing comes up), and compares Canada to Argentina (an example of too many bad decisions) and to South Korea (an example of many good decisions).
All of this got me thinking about leadership.
Leadership is a great burden. As a leader, people are looking to you for decisions, for direction, and for you to instil confidence. They are also scrutinizing your every word and action. And in today’s world, they are waiting to criticize you on social media and/or make a funny meme out of your most recent misspeak. As a developer, I get to interface with municipal politicians probably more than your average person, and I can tell you with confidence that it is a thankless job I would never want.
I can only imagine having to constantly worry about your employment and what people are thinking. Given this incentive structure, I’m sure we’d all act accordingly. It is truly public, service. At the same time, I know that it is not only unproductive — but dangerous — to pander to just what is thought to be politically popular. And we have spoken many times before on this blog about housing and land use policies that may be popular, but aren’t at all effective — or worse, are counterproductive.
What we should be demanding from our leaders are difficult decisions. These are the decisions that probably feel uncomfortable and that may require some personal sacrifice, but that are ultimately the right decisions for our collective long-term prosperity. It is about ambitiously deciding where we want to go and who we want to become, and then taking meaningful actions, however unpopular they may be, to get there.
Don’t just tell me what I want to hear. Lead me. Push me. Be bold. In the end, we will respect you for your personal sacrifices and the difficult decisions you are making on our behalf. This is the great burden — but also the great opportunity — of leadership, and it behooves us to empower it. To borrow from Tony Keller, “there’s no reason we [Canada] can’t be the most prosperous and successful society on earth.”
Brian Potter, of Construction Physics, recently tried to determine which cities build skyscrapers the fastest.
Here’s how he went about that:
Here are the results:
And here’s one thing he had to say about them:
Interestingly enough, the huge outlier in slow construction isn’t the US, but Canada, with an average skyscraper construction speed of half that of the US’s.
For a lot more information on this topic, click here.
A lack of affordable housing certainly feels like a global phenomenon. Companies are trying to 3D-print homes for under $100k. Berlin froze apartment rents back in 2019 because things were getting too expensive. And today, Hong Kong is working on building some sort of “light public housing” in an effort to reduce its massive wait times for new homes.
But depending on where you are in the world, it might be somewhat comforting to remember that this problem seems to be particularly pronounced, here, in English-speaking countries. Whether it’s restrictive zoning rules or a general distaste for apartments and urban density, the English-speaking world has fallen behind on housing supply compared to places like continental Europe.
Here’s an excerpt from a recent FT article:
Forty years ago, the UK, US, Canada, Australia, New Zealand and Ireland had roughly 400 homes per 1,000 residents, level with developed continental European countries. Since then the two groups have diverged, the Anglosphere standing still while western Europe has pulled clear to 560 per 1,000.
And this shows in our home prices:
One argument is that continental Europe is simply more culturally accepting of apartment buildings, and that allows more new homes to be built. Seems right:
According to this chart, the average person from the UK or the US would not be happy unless they were living in a detached house. When you get to the continent, people start to become increasingly more positive around missing middle-type housing (something in the 3-4 storey range). Though, anything more than that and things get divided.
All in all, it doesn’t seem to really matter where you’re from, there’s a clear preference for detached housing. But maybe liking apartments even a little bit is all you need to help with overall housing supply.
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!):
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?
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.
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.
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.
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.
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.
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.
