Tag: housing

• 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.

  2018.11.28

• 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.

  2018.11.23

• 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.

  2018.11.16

• 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.

  2018.10.20

• 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

  2018.10.18

• Japan’s solution to housing affordability

  

  There’s a debate among urbanists as to the full impact of housing supply on overall affordability. But it should make intuitive sense that as new people move to a city and as new jobs are created, there will be a need for additional housing. Here is an excerpt from Vox citing a recent FT article talking about how Japan may have figured out the solution to rising home prices:

  The reason, argues Financial Times writer Robin Harding, is that Tokyo does a better job of allowing housing supply to keep up with housing demand. In 2014, Tokyo issued permits for 142,417 new housing units. In contrast, the entire state of California — which has three times the population of Tokyo — issued permits for only 83,657 new housing units. Little wonder that demand for housing has outstripped supply in the Bay Area.
  

  In the United States, local housing markets are plagued by grassroots “Not In My Back Yard” (NIMBY) activists who organize to stop efforts to build town homes and apartment buildings in their local neighborhoods. Because every construction project is located near somebody, the result tends to be that little housing gets built anywhere.

  I don’t have a copy of the FT article and I do firmly believe that supply matters a great deal, but I think there are also a number of other factors that need to be taken into consideration here. Japan has a depopulation problem. The country has lost about 1.4 million people since 2010. 

  They also have fairly insular views around immigration. They are over 3.5x larger than Canada in terms of population and yet they take in fewer immigrants each year. So I think it’s worth looking at this conclusion closely. (This is me trying to avoid confirmation bias.)

  Image: Vox

  2018.10.16

• Create things people love

  I just finished listening to this podcast about venture capital and consumer products. One of the underlying questions is whether we are currently in a “consumer downturn.” Rebecca Kaden of Union Square Ventures (USV) talks about the importance of “platform shifts” for venture returns. These are moments where a new technology hits the marketplace and there’s a corresponding mass consumer adoption. When and where will that next shift occur? Maybe it’ll be in real estate.

  I like the discussions at 10:00 and 13:50. The first deals with the importance of non-paid customer acquisition strategies for consumer products. Rather than relying on bought attention, you really need organic growth strategies, which is often an indication that people are passionate about your product. This is arguably more important when you’re fundamentally reliant on massive growth/scale, but whether we’re talking about software or a home, I still believe it’s paramount. Create things people love.

  The second point is about commerce, Amazon, and how USV avoids investing in companies that are unlikely to ever win against Bezos. Kaden’s position is that Amazon’s advantage is and has been more executional than structural. They are simply really good at doing things better. But Amazon wins at logistics, speed, and value. They are not as focused on experience, entertainment, and discovery. And people still want that.

  I’ll stop there. If you can’t see the podcast below, click here.

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  2018.10.06

• Reintroducing Junction House

  

  Today we released the above rendering for Junction House and announced that sales will begin this fall.

  144 condominium homes. A mix of 1, 2 and 3 bedroom suites, including our Two-Storey House Collection and our Laneway House Collection. Prices starting in the $400s.

  One of our partners also happened to serendipitously send me this Globe & Mail article today talking about the increasing demand for and shortage of mid-rise housing:

  “The market is substantially undersupplied in mid-rise,” said Mr. Hildebrand, who notes that mid-rise projects in the GTA [Greater Toronto Area] were just 31 of 2017’s new launches, accounting for 3,833 units (12 per cent of the total).
  

  Stephen Price, CEO of Graywood Developments, went on to say this in the article:

  “There’s a huge appetite for medium density in Toronto. Many don’t want to live in the downtown core, this buyer is more interested in being in a community and there is a greater propensity to buy larger more livable units.”
  

  Given the huge influx of inquiries we received today after the above announcement was made, I would say that feels right. And our focus at Junction House is very much on “larger and more livable.”

  If you’re at all interested in a new home at Junction House, I would encourage you to get on our priority list, here.

  2018.10.04

• Unpacking the family condo

  John Lorinc has a piece in the Autumn 2018 issue of University of Toronto Magazine that is worth a read. It covers families in Toronto being priced out of the low-rise housing market and/or making the conscious decision to live in an apartment or condo.

  He raises an important question:

  The big question hovering over this generational transition is all about city-building, and whether increasingly dense metropolitan regions such as Toronto and Vancouver can figure out how to turn all those newly sprouted forests of highrises into true communities that are both affordable and appealing to the wide range of people who call these cities home.

  The reality seems to be that more people in this city – out of economic necessity and/or because of a lifestyle preference – are choosing to raise a family in multi-dwelling housing. I live in a condo and my neighbors are raising a child two doors down from me.

  I am sure that we will continue to see more of this and I am sure that we will get better at designing for families. We are trying to do our part with the 2-storey homes that we have incorporated into our Junction House project. 

  I would, however, like to respond to the underlying tone in the article that but for developers being stubbornly resistant to larger 3-bedroom apartments in this city, we would have a myriad of new condominiums filled with families.

  The reality is that there are market and structural forces (including cultural biases) that steer what gets built.

  There are affordability considerations. Larger condos cost more money than smaller condos. And that prices out many families, particularly if there are cheaper alternatives available in the form of low-rise housing. 

  The reason we appear to be at an inflection point today is because the cheaper alternatives are disappearing. (This of course returns us to the broader question of overall housing affordability.)

  There are also timing and financing considerations that likely create a supply-side bias. Most lenders require that a certain number of condo units be pre-sold before construction starts. 

  This means that, as a developer, you need people that can both afford what you’re selling and that are willing to buy three to five years out, and perhaps even longer. That can be difficult for many families.

  Lastly for this post, there’s the GST/HST New Housing Rebate in Ontario, which I have argued before on the blog could be incentivizing smaller suite sizes and could use a refresh for today’s home prices.

  All of this is not to say that we shouldn’t be designing for urban families and that we shouldn’t be focused on delivering more affordable housing to this and other cities. Those are two very important things.

  It is simply to say: there’s a lot going on here that needs to be unpacked. 

  2018.10.02

• Housing supply and displacement in San Francisco

  

  Joe Cortright recently wrote about a study by Kate Pennington (UC Berkeley), which looked at the impact of housing production on legal eviction in San Francisco. The goal was to figure out if new housing supply actually causes displacement.

  To do this, Pennington went block-by-block and looked at new housing projects, as well as over a decades’ worth of eviction notices. 

  The relationship between the two was found to be “statistically indistinguishable from zero.” In other words, the “monthly probability of an eviction notice” does not change when new housing supply is completed nearby.

  Some have been critical of her findings and some have questioned whether legal eviction notices are, in fact, the right proxy for displacement.

  But I agree with Joe Cortright in that this still feels like a meaningful relationship to understand, especially when we’re talking about a tight housing market like San Francisco’s.

  Photo by Matthew Cabret on Unsplash

  2018.09.15