Tag: housing starts

• Density is good

  Here is an interesting chart (source) showing housing starts in Canada, by type, between 2000 and 2023:

  

  As recent as 2000, single-family houses accounted for 61% of total starts and multi-family housing accounted for 39%. This flipped somewhere around the financial crisis and, last year in 2023, the percentages were 23% and 77%, respectively. This is a meaningful inversion which has helped our cities become more vibrant and more conducive to non-car modes of transport.

  But in this recent article about Canadian housing, Donald Wright more or less argues: so what? We’ve been densifying our cities for all these years, but it hasn’t helped our affordability problem. Supply must not be the answer to our housing crisis.

  I’m not exactly sure what he believes to be the solution, but I don’t think this problem is as simple as “we’ve built some housing, we made our cities denser, and yet housing is still expensive — more supply must not be the answer. Let’s move on.”

  Among many other things, it’s important to understand what kind of density we’ve been building. Because up until very recently, we’ve basically taken the position that single-family neighborhoods should never be touched, and that density should only go in very specific areas — and only after a lengthy and expensive rezoning process has been completed.

  We’ve designed new housing to be expensive.

  But attitudes are changing all across North America. We are now starting to do two very important things: (1) we are opening up more of our cities to intensification and (2) we are now allowing more multi-family housing on an as-of-right basis. Meaning, no lengthy rezoning exercises and no risk of community opposition.

  These are two fundamental changes that should alter the kind of density that gets built. And in my view, it’s going to be a positive thing for Canadian cities.

  2024.10.04

• More people, fewer new homes

  

  This is an interesting chart from the Centre for Urban Research and Land Development at Toronto Metropolitan University (TMU).

  It is based on recent population estimates from Statistics Canada, and what it is saying is that the Greater Toronto Area grew by 233,000 people during the 12 months ending July 1, 2023. If you include Hamilton, this number increases to 246,000. And if you include the entire Greater Golden Horseshoe, it increases to 340,000.

  This is significantly more population growth compared to any of the six preceding years. And assuming this 2021 population estimate of about 9.8 million people is more or less correct, it represents an almost 3.5% growth rate. That’s remarkable. It’s also happening at a time when housing starts are declining.

  2024.06.07

• Housing starts up 63% in Calgary

  

  The Canada Mortgage and Housing Corporation (CMHC) just published its latest housing supply report for Canada’s 6 largest city regions (downloadable over here).

  One figure that stands out is the increase in housing starts in the Calgary CMA — it was up almost 63% last year compared to 2020. This is a positive indicator for that market.

  It’s also worth mentioning that Calgary’s supply is more evenly split between low-rise and apartment housing. This is in contrast to markets like Toronto, where 3/4 of all new housing is now “apartment”, and in Montreal, where the percentage is even higher.

  My view is that it’s time to get more granular with our reporting of higher density housing. In the above example, we are showing 3 categories for grade-related housing and only 1 for anything outside of that.

  This is our national bias toward low-rise housing coming through.

  2022.05.07

• A nation of apartment dwellers

  The Canada Mortgage and Housing Corporation (CMHC) recently published its latest data on housing starts, housing under construction, and housing completions. Here are a few of the highlights:

  • Canada saw 271k housing starts last year (2021). This includes single-detached housing and multiples, which captures semi-detached housing, row housing, and apartments (and other unit types). This is the highest number of annual housing starts that we have seen over the last five years. The range for the prior years has been between roughly 209-220k.
  • Ontario saw 100k (~37% of the country), Quebec saw 68k (~25% of the country), and British Columbia saw 48k (~18% of the country).
  • What I was curious about when I first saw these numbers was the split across the various housing types. Single-family homes, for instance, came in at 82k for all of Canada. So that’s about 30% of total housing starts. If you add in semi-detached and row, which I believe would also be all grade-related, you get to 124k or 46% of all housing starts.
  • Apartments and other unit types make up the balance at about 147k or 54% of all housing starts. This is kind of interesting because they now represent a majority.
  • Looking at Ontario, the percentage of apartments actually drops to 50%. But the numbers are much higher in both Quebec and BC at 69% and 63%, respectively. Again, this is kind of interesting.

  Despite all of our deference to single-family housing, the numbers suggest that we are actually in the midst of building a different kind of country — one that entails people living in “apartments and other unit types.” Maybe it’s time we got more granular with this line item.

  Note: CMHC defines “apartment and other unit types” to include not just apartments, but also stacked towns, duplexes, triplexes, double duplexes (whatever this is), and row duplexes. A number of these will, of course, be grade-related. But they still represent more intense forms of land use.

  2022.01.24

• Housing supply in Tokyo

  It has been well documented that Tokyo tends to build a lot of housing. And the argument goes that this has helped to maintain a certain level of housing affordability. The city is constantly building and rebuilding. It also has different views about housing. Now, we could, of course, debate how much of its relative affordability is a direct result of supply but, regardless, there seems to be a lot of it. In 2014, the city of Tokyo saw 142,417 housing starts, according to this recent FT article. This is compared to ~5,000 units across the Bay Area (2015 data), 83,657 units for the state of California, and 137,010 units for all of England.

  If you’re wondering how Toronto is doing, here are the latest numbers:

  # of units included in BPs issued (housing starts) for Toronto: 18,737 in 2019; 19,239 YTD in 2020 (Note: given multi year construction period, Toronto in the last few years has had about 45k units under construction at any one time)

  — Gregg Lintern (@GreggLintern) September 17, 2020

  2020.09.17

• How Japan increased its housing supply

  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

  2019.04.07

• 2017 was a record year for housing starts in Canada, but…

  According to Bloomberg (using data from CMHC), 2017 was a surprising record year for housing starts in Canada: 219,675 units. This is the most since 2007 and is up from 197,916 units in 2016.

  The explanation: job growth (nearly 400,000 new jobs) and population growth were both more robust than expected.

  Multiple unit project starts are also up significantly with 142,840 units starting in 2017. This is a 15% increase from the prior year. Of these units, 102,516 of them were “apartment-like homes.”

  But all of this is nationwide data. Look at what happened in Toronto and Vancouver:

  The increased activity mostly sidestepped land-constrained Toronto and Vancouver, the country’s two most expensive markets, but was robust in the suburbs and less pricey surrounding cities. Starts in Toronto fell 1 percent to 38,738 in 2017, while declining 6 percent in Vancouver to 26,204 units.

  This is not because of a lack of demand. It’s becoming systematically more difficult and more costly to build new housing in these two markets.

  2018.01.10

• Multifamily vs. single family

  Since 2009 when the U.S. economy started to recover, housing starts (i.e. new residential construction) have favored multifamily buildings over single family housing. Apartment/condominium construction has grown 3 times faster according to the U.S. Census Bureau (via Bloomberg).

  

  A lot of this multifamily construction is assumed to be rental apartments, but this category also includes for sale condominiums. The classification has to do with building typology rather than housing tenure. (I would love to see how the above graph breaks down in terms of the latter.)

  The typical explanations for this trend often relate back to Millennials being poor and saddled with student debt. That’s why they’re delaying buying single family homes. But eventually the expectation is that they will resume doing

  (largely) what previous generations have done.

  Money and the economy, I’m sure, have something to do with the above trend. But I’m not convinced that it’s the whole story. 

  There are also shifts happening with respect to consumer preferences and with respect to how we plan and build our cities. That’s why I’m very interested in monitoring family formations and housing choices. 

  At the same time, I’m also a Millennial. And whenever I catch myself thinking a certain way, I assume that there are probably other Millennials out there who feel similarly.

  2015.07.17

• Rise of rental

  

  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.

  2014.09.16