Brandon Donnelly

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.

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Tag: housing

  • Rethinking the tower

    The Ryerson City Building Institute recently published a new report called, Rethinking the Tower: Innovations for Housing Attainability in Toronto.

    It looks at four possible approaches to improving housing attainability/affordability in the city:

    Micro Living: Well-designed micro units can offer a cost-effective alternative to conventional apartments, particularly in central locations where higher land costs can be a barrier to affordability.

    Shared Space: Co-living, where residents share amenities and services, can improve affordability and create a sense of community, particularly in walkable, transit-connected neighbourhoods where housing costs are high.

    Home Unbundling: Features, finishes and amenities unbundled from the unit price of condominiums can allow greater choice and reduced costs for homebuyers.

    Equity Options: With more households renting, and the transition from renting to owning growing ever more challenging, new shared-equity models can help families invest in their home, even if they rent.

    In addition, the report also provides a number of project case studies from around the world. If you’d like to download a copy, you can do that here.

  • Toronto to market 11 city-owned sites for new affordable rental housing

    At the end of last month, Toronto City Council adopted the “Housing Now” action plan. The first phase of the plan involves the public marketing of 11 city-owned sites for the purpose of finding non-profit and private sector partners to help redevelop the lands with new mixed-income housing. It is expected that these lands could accommodate about 10,000 homes.

    Here is the list of sites:

    As part of the offering, around 2/3 of the built units will need to be rental (the above chart shows more), and of these rental units, 50% will need to be affordable with rents set to 80% of Toronto’s average market rents. All of this should translate into approximately 3,700 new affordable homes. (Mayor Tory’s plan is to build 40,000 affordable rental homes by 2030.)

    The City wants to ultimately retain ownership of these lands, and so the sites will be offered up through long-term land leases. It looks like they’ll be for 99 years. The City will also be forgiving a number of fees and levies for the 3,700 affordable homes. They are pegging the PV (present value) of these development incentives at just over $280 million:

    Making use of surplus public land to increase the supply of affordable housing certainly makes a lot of sense. But there’s a cost burden associated with these affordable units, which is why discussions around inclusionary zoning often come back to offsetting measures. Who is going to pay for these subsidies?

    The above “financial incentives” — which in this case are simply foregone revenue — speak to this cost burden.

    Tables: City of Toronto

  • Laneway house on the market for $2,845,000

    I was looking at this laneway house for sale in Toronto today. It’s located near Queen and Bathurst. It has 3 bedrooms and 3 bathrooms and is about 2,331 square feet (that looks to include a basement). The lot appears to be just over 13′ wide. And the asking price is $2,845,000.

    Single family homes aren’t typically considered on a per square foot basis, but if you do the math here, it works out to be around $1,220 psf. The property previously sold in 2017 for $805,000, which was prior to it being redeveloped. So it likely traded based on land value.

    When Toronto first started considering modern laneway houses, some people thought that only individuals of questionable moral fiber would want to live in one. But today, there are countless examples of some pretty remarkable laneway houses. 

    And in some cases you might need about $3 million or so.

  • Are you happy with where you live?

    This past weekend I saw a few people reacting on Twitter to this article by Wendell Cox talking about how Canadian families are being denied their preferred housing choice: the detached single family home.

    The fact that the article is by Wendell Cox should tell you everything you need to know. But essentially the argument is that misguided planning policies are driving up the cost of housing and that we should, instead, be encouraging unfettered sprawl.

    There’s lots to discuss here, but the first thought that actually came to mind was: “How would this article sound if we replaced all of the references to housing with references to cars?” In case you too are wondering that, this is how the first paragraph would read:

    A new poll by Sotheby’s International Realty suggests substantial disappointment among Canada’s young urban families, unable to afford to purchase the types of [cars] that they prefer. The poll determined that young urban households in Canada strongly prefer [Aston Martins], but they are often “motivated by (financial) necessity to purchases [sic] [cars], especially [BMWs], they do not prefer.“

    The article is clearly one-sided. I don’t disagree that there are people who – all things being equal – would prefer to raise a family in a ground-related single family home. Backyards serve a purpose, as do large basements equipped with beer fridges.

    But all things are not equal. And there also people who value walkability, a reasonable commute, and the kind of urban amenities that come along with being in a dense city. I am one of those people.

    Photo by Adrien Olichon on Unsplash

  • Toronto condo market outlook

    BNN Bloomberg just published this article on the Toronto condo market. It is based on a roundtable discussion that was held at their Toronto office last week with Jim Ritchie of Tridel, Jared Menkes of Menkes Developments, Shamez Virani of CentreCourt, and Jane Renwick of Diamond Kilmer Developments.

    The overarching theme is that, after a couple of frenetic record setting years, the market should settle down in 2019, which is likely a good thing. Hopefully that will also temper construction cost inflation. We have been seeing double digit increases over the last few years (hence some of the cancelled projects).

    But as Jared points out, the fundamentals here are still strong and there are a number of supply constraints creating upward pressure on pricing:

    Jared Menkes, executive vice president of high-rise residential at Menkes Developments was unwavering for the future. “There’s a lot of red tape that’s slowing down bringing more product to market,” Menkes said. “I promise you, pricing is going up.”

    For the rest of the article, click here.

  • How London became the center of the world

    Some of you may want to debate the “center of the world” title (New York may be more deserving), but Laura Parker of National Geographic recently published a great essay describing the tremendous growth that London has seen over the last 30 years thanks to in part the deregulation of the financial services industry. Here is an excerpt:

    As the manufacturing industry splintered, the docks of what was once the world’s largest port fell victim to shipping modernization and closed. The death in 1965 of Winston Churchill, the great prime minister, marked “the last time that London would be the capital of the world,” the Observer noted. Population continued a downward slide, bottoming out at 6.7 million in 1988. By then London’s fortunes had changed with deregulation of the financial services industry, known as the Big Bang, along with the shift to electronic trading, which enabled London to rival Tokyo and New York. A new financial district rose on the ruins of the West India Docks on the Isle of Dogs, a marshy nub that juts into the Thames. Canary Wharf, as the district is called, became London’s first modern large-scale regeneration project.

    According to National Geographic, London’s population grew by about 1.2 million between 2006 and 2016. That’s a pretty incredible number and is why the city estimates that they need about 66,000 new housing units a year just to keep up the growth. Like many supply constrained big cities, they’re not meeting that target.

    For the full essay, click here. It comes packaged with some incredible photographs by Luca Locatelli.

  • Increasing housing supply in Ontario

    The Government of Ontario is currently working on a Housing Supply Action Plan that they hope will address “the barriers getting in the way of new ownership and rental housing.”

    Through initial consultations, they have already identified 5 key themes (my words below):

    1. The approvals/entitlement process for new housing is too slow
    2. There are too many restrictions on what is allowed to be built (that is, we should be encouraging more “gentle density” and “missing middle” type infill)
    3. Development costs are too high
    4. Tenants need protection; regulation is making it increasingly difficult to be a small landlord
    5. Overall housing innovation

    The province is also looking for public input and is currently running this online survey. It is open until January 25, 2019. And I would encourage all of you to complete it and help shape the action plan.

    My understanding is that the plan should be ready by Q2-2019.

  • Shortage of cities

    Joe Cortright of City Observatory recently looked at “the myth of revealed preference for [the] suburbs.” In it, he cites the work of Jonathan Levine, who is the author of a 2006 book called, Zoned Out: Regulation, Markets, and Choices in Transportation and Metropolitan Land-Use.

    There’s an argument out there that, on average, people prefer the suburbs to urban neighborhoods because, well, more people in the US live in auto-oriented neighborhoods compared to urban ones. What Levine wanted to figure out was whether this was truly a result of consumer preference or simply a lack of urban neighborhoods – or a “shortage of cities” as Cortright calls it.

    To do this Levine examined two cities with very different urban fabrics: Boston and Atlanta. The idea was to take a city with lots of urban neighborhoods (Boston) and compare it to one with relatively few (Atlanta). 

    For his comparison, he classified all of the neighborhoods in both cities on a scale according to how urban they were. “A” meant very urban. And “E” meant sprawling/exurban. He then went out and interviewed residents, asking them about both the kind of housing they would ideally like to live in and how happy they were with their current housing. 

    What Levine discovered, among other things, was that in Boston – where about half of all housing fell into the top 3 most urban categories – about 83% of people with a strong preference for urban neighborhoods were also living in one. Whereas in Atlanta, just 48% of people with a strong for urban neighborhoods were living in one.

    Put differently, the study suggests that in cities with fewer urban neighborhoods, it is more difficult for people with a preference for that housing type to find and live in it, which makes intuitive sense. The spread between preference and reality widens, once again suggesting that this could be about supply rather than an issue of demand.

    Anecdotally, I have seen this phenomenon play out here in Toronto. I often hear people talk about the neighborhoods that they would ideally like to live in, if only they could find a reasonably priced home. (Low supply leads to upward pressure on pricing.) How aligned would you say you are with your ideal level of urban-ness? 

    For more on Levine’s work, head over to City Observatory.

  • Decline of children in some, but not all, parts of Chicago

    The Institute for Housing Studies at DePaul University recently published this overview of the “socioeconomic factors affecting demand for housing in Chicago.”

    Here is the change in population in the City of Chicago from 1950 to 2016:

    And here is a comparison between Chicago and the five biggest cities in the US. Note the “sun and sprawl” phenomenon. Also note that the list below is for city proper boundaries.

    One particularly interesting set of stats is the decline of children (population under the age of 18) in the city:

    Since 2010, the city has lost over 40,000 children and teenagers. 

    But, if you break it down by neighborhood market type, it is the low-cost and moderate-cost neighborhoods that lost the population. The high-cost neighborhoods were up.

    The study posits that the old trend of moving to the suburbs after you have kids may not be for everyone – provided, of course, that you have the means. And it goes beyond Chicago. DC is predicting a 25% increase in K-12 students within the District.

    For the rest of the charts, click here.

  • First-year building project

    Each year, first-year graduate students at the Yale School of Architecture are tasked with designing and then physically building a new single-family house in an economically depressed neighborhood. Sometimes, like this year, the house may have multiple dwelling units.

    I have always thought that this is a great exercise both from a pedagogical standpoint and from a positive impact standpoint. Young architecture students get to experience designing and building something from scratch, and lower-income families get a new house. I toured one of the completed houses in New Haven back in, I think, 2005. 

    This building project, which was started in 1967, is fairly unique among architecture schools, though others have replicated the model. When I was living in the US, I spent a few weekends working on homes for Rebuilding Together Philadelphia. But the scope was fairly limited. It was nothing like this.

    I think more schools should do this. And I also wonder if there aren’t permutations of this model that could live outside of the university context.

    Image: Yale