Tag: housing

• Show some laneway love

  

  I just want to do a quick follow-up to my recent post about the momentum currently developing around laneway housing here in Toronto. 

  In the post, I mentioned that two councillors have come out in support of this housing typology. However, I neglected to mention that Evergreen CityWorks is also at the table, as well as a housing advocacy group called Lanescape. It was mentioned in the comments, but I know that not everyone checks that part of the blog.

  I say this for two reasons:

  1) I thought about starting a similar initiative to Lanescape. (I’ve had lanewaylove.com registered for many years. Brand identity shown above.) But after meeting one of the Lanescape founders this past week, I think it only makes sense for me to instead throw my support behind them. They are accomplishing a lot in this space.

  2) Lanescape has a survey up on their website and the results will be used to guide a laneway suite planning framework that will (hopefully) be implemented by the City of Toronto. So I wanted to encourage you all to complete it. Even if you don’t live in Toronto, still fill it out. It’s important for cities to learn from each other.

  Your support will go a long way in making laneway housing a reality in the city.

  2016.11.26

• New political support for laneway housing

  There’s some great news in the Toronto Star this week.

  (Thank you Mike for bringing this to my attention.) 

  Two councillors – Mary-Margaret McMahon and Ana Bailao – have come out in support of allowing laneway housing in Toronto. Some cities call them detached accessory dwelling units (DADUs). 

  If you’re new to laneway housing, check out this post and this post (both are 2+ years old). I’ve been on this horse for over a decade.

  Because going beyond their small space cool factor, laneway housing has the potential to fundamentally alter the housing supply constraint that I wrote about a few weeks ago – namely the yellowbelt. It’s a way to gently allow for new housing, while at the same time preserving the character of our “stable” neighborhoods. 

  And frankly, I can’t think of any other way to add new ground related housing at any sort of meaningful scale within the city limits – not unless we’re willing to give up the “stability” of our neighborhoods. So this is it.

  If you’re on the same page, I would encourage you to reach out to Councillor McMahon and Bailao and let them know that. There’s also a public workshop scheduled for Monday, December 5th at 7pm at the Evergreen Brick Works (550 Bayview Avenue).

  2016.11.16

• Airbnb’s 5 point plan

  New York State Governor Andrew Cuomo recently signed a bill that will levy heavy fines (up to $7,500) on Airbnb hosts who do not abide by local housing regulations.

  Hours after, Airbnb filed a federal lawsuit claiming “irreparable harm.”

  However, they also proposed a 5 point plan that they hope will make home-sharing work in New York City and then serve as a framework for new legislation.

  Here are Airbnb’s 5 points (summarized by me):

  1. One host, one home: Just like it sounds, this would limit people to renting a single home within the five boroughs.
  2. Require registration: State would require short-term rental hosts to register. Airbnb would be authorized to register people on behalf of the state.
  3. Make home-sharing work for all: Landlords would be able to set specific rules for short-term rentals in their buildings and then secure a portion of the revenue for maintenance and so on. (I would imagine that the same could be done by condo corporations.)
  4. Good neighbor rules: Platforms would be required to have dedicated 24/7 hotlines should any neighbor complaints arise as a result of home-sharing.
  5. Taxes to support affordable housing: Airbnb would collect and remit additional taxes on behalf of hosts, which could then be used for things such as affordable housing.

  It’s interesting to think about Airbnb’s evolution. It started out as air mattress rentals on the floor and nobody thought it would ever work as a business. Now it’s a huge business and governments everywhere are trying to figure out an appropriate response. Hopefully a suitable middle ground will be found.

  How do you feel about Airbnb’s proposed 5 point plan? With this framework, would you be comfortable with Airbnb in your building? I know that many of you are also hosts (some of you do it for a living), so I would be curious to hear your thoughts.

  2016.10.24

• Low-rise vs. high-rise

  Yesterday I sent out this tweet, which included this graph:

  

  The chart is from Altus Group and it is a monthly price index of new low-rise vs. high-rise housing in the Greater Toronto Area (GTA). I have posted similar charts in the past, but every time this chart gets updated the spread widens and the market looks even crazier.

  Some people responded on Twitter by saying that this is clearly an indication of a bubble. I don’t know if that is the case. 

  But, as I have said many times before, I do believe that it tells a vivid story around supply. Low-rise housing is severely supply constrained in the GTA and high-rise housing is less so. That has helped to stabilize pricing in the latter case.

  Now, you could look at this chart and say that the pace of low-rise price increases is simply unsustainable. The market must correct. 

  But you could also look at it and say that the market is going through a fundamental shift whereby more and more families will start living up, as opposed to out – which should then translate into high-rise pricing trending upwards as unit sizes increase. This is where I think we are headed. 

  What do you reckon is happening?

  2016.10.21

• 6 things about cities from Richard Florida

  Last week Richard Florida headlined an “Urban Lab” panel at the NYU Schack Institute of Real Estate. It was moderated by Sam Chandan, who is dean of the Shack Institute. 

  Here are 6 takeaways from the discussion, with a few of my own thoughts attached:

  1. Suburban brain drain. This is happening. Florida states that (real estate) development is the key to rebuilding the suburbs. It will challenging to reorient the suburbs away from the car (though suburbs vary greatly), but I do agree that many suburban areas need a refresh to keep them relevant against this brain drain.

  2. Decline in home ownership. Florida believes we will see owning vs. renting drop to about 50-50. This would be a pretty big change given that US homeownership is currently hovering in the low 60s and this is already at historic lows. However, the trend is towards urban and that often means more renting.

  3. New city characteristics. Access to urban amenities, cultural capital, and transportation is critical and should drive new development. Transit and rail infrastructure can “open up” new areas and combat issue #4, below.

  4. Housing affordability. Florida reiterates “the great inversion.” Poverty moving to the suburbs; cities now housing the rich. He also isn’t sure that capitalism alone will solve this problem. Gives example of Manhattan where market is focused on high-end luxury residential.

  5. Florida argues that planning and real estate knowledge need to come together to overcome some of the information-asymmetries inherent in the development industry. I’ve written about similar ideas before. I try and apply this sort of multi-disciplinary thinking to urban issues.

  6. Micro-living is not a silver bullet for “chronic poverty.” I think it serves a segment of the housing market.

  2016.10.17

• Tools for promoting healthy, responsive, affordable, high-opportunity housing markets

  This month the White House released a Housing Development Toolkit. The report starts by talking about the local barriers to building and makes this statement:

  “The growing severity of undersupplied housing markets is jeopardizing housing affordability for working families, increasing income inequality by reducing less-skilled workers’ access to high-wage labor markets, and stifling GDP growth by driving labor migration away from the most productive regions.”

  It then goes on to highlight a number of tools that American cities have adopted or should adopt “to promote healthy responsive, affordable, high-opportunity housing markets.” 

  They are:

  • Establishing by-right development
  • Taxing vacant land or donate it to non-profit developers
  • Streamlining or shortening permitting processes and timelines
  • Eliminate off-street parking requirements
  • Allowing accessory dwelling units
  • Establishing density bonuses
  • Enacting high-density and multifamily zoning
  • Employing inclusionary zoning
  • Establishing development tax or value capture incentives
  • Using property tax abatements

  None of this will be news to regulars of this blog. We have spoken about almost every single tool in the above list. 

  I’m not necessarily sold on all of them (good discussion to have), but I have gone on ad nauseam about eliminating parking minimums (off-street parking); the value of accessory dwelling units (commonly called laneway housing here in Toronto); and the negative impacts of barriers to building.

  The good news is that there’s growing alignment around a similar set of actions. Change takes time. There’s usually a heavy bias towards the status quo.

  2016.10.01

• Sharing walls with strangers

  Barry Ritholtz recently published an article in Bloomberg View called: Still a Lot of Negativity on Housing. 

  He basically says that “many people” should go out and buy a home given the current state of the US housing market and the historically low interest rates. That’s a perfectly fine argument. But it’s not all that interesting.

  The article does, however, have a moderately interactive chart showing the percentage of US households that own their homes.

  It shows the pre-2008 peak:

  

  And it shows, somewhat surprisingly, the recent “search for bottom.” I knew there was a significant post-2008 decline, but I guess I thought it had stabilized. Instead, the US is hitting homeownership rates not seen since the mid-1960s.

  

  Big cities tend to have a higher percentage of renters. Millennials are flooding into cities. The digital economy now encourages mobility, which contradicts traditional notions of homeownership. There are all kinds of potential hypotheses that could be extracted here.

  But the other interesting thing I noticed in the article, was this:

  However, at some point in life, you probably no longer want to have a landlord telling you what color your walls can be or become tired of having strangers share a wall with you. I am not a zealous believer that everyone should go out and buy a home. However, for many people, buying makes sense – especially with mortgage rates as low as they are (the current rate of about 3.45 percent for a 30-year fixed-rate mortgage is just 0.10 percent higher than the record low).

  I couldn’t help but notice the embedded cultural bias. The inference is that when you rent, you share walls. In other words, you live in some sort of multi-family apartment. 

  But when you finally go out and buy a home, you graduate from that. You no longer need to share walls with strangers. Because an owned home equals a single-family detached dwelling. That’s how you know you’ve made it.

  Well, I have shared walls in my owned home. I guess I’m not there yet. 🙂

  2016.08.26

• Urban migration, household type, and housing supply

  Here is an interesting discussion paper on the Toronto region’s economy, demographic outlook, and its land use. It was recently published by IBI Group and Hemson Consulting to support the 10-year review of our regional transportation plan.

  I wanted to share a couple of charts from the report that I thought were interesting. If you’re not in the Toronto region, I would be very curious to hear how your city might compare in terms of the way it is trending.

  The first chart is net migration by age group. Like Vancouver – similar chart posted here – people have been moving into the city/Toronto when they’re young and then moving out to the suburbs once they start having families. 

  Will that continue? The oldest Millennials are now hitting their mid-30′s and I am very interested to see if there will be any reversal in this.

  

  Given the above trend, people in this region are not surprisingly also swapping apartments for ground-related housing as they get older. The crossover point seems to be (or at least has been) when people hit their mid-30′s. Again, I am curious how this may evolve as the city matures.

  

  Because if you look at housing completions from 2001 to 2016 (chart below), the only municipality that was able to meaningfully increase its housing supply was Toronto. 

  Every other municipality – except for Hamilton, which posted modest gains – experienced significant declines in the number of new homes delivered to the market over the last census periods. 

  Of course, the only reason Toronto was able to increase its housing supply was by building up – in other words by building condos and apartments. (Shown in the purple below. For some reason the legend is incomplete in the report.) 

  

  If you look at the share of housing completions, over 80% of new homes in Toronto are now in apartment form. 

  

  Intensification is a deliberate policy choice. And we can certainly debate whether it’s a good or bad thing (I believe it’s a good thing). 

  But putting that aside, the above charts are a great answer to the perennial question: “How is it that Toronto is building so many condos?” This is why.

  2016.08.19

• Dear City Council

  Kate Downing was formerly a planning commissioner in the City of Palo Alto. She recently resigned from her position and, about about a day ago, she posted her resignation letter on Medium. It has since gone viral.

  The reason it has spread so quickly, I think, is because it addresses the very same issues that so many cities around the world are facing: a lack of housing supply and eroding affordability.

  As a developer, I obviously have a vested interest in this matter. But to the extent that I can put that aside, I really do believe that our goal should be to build inclusive, rather than exclusive, cities.

  For instance, when I think of great cities such as New York and Toronto, I think of their history of taking in a large number of immigrants and then empowering them to climb the socioeconomic ladder. There’s something magical about that. One of my best friends likes to talk about this potential as “immigrant hustle.”

  But when we sterilize our cities by allowing only the incumbents to survive, I believe we place that socioeconomic potential in jeopardy. So for that reason, I am reposting Kate’s entire letter. I have bolded the points that stood out for me. Let me know what you think in the comments.

  ———————————————————

  Dear City Council Members and Palo Alto Residents,

  This letter serves as my official resignation from the Planning and Transportation Commission. My family has decided to move to Santa Cruz. After many years of trying to make it work in Palo Alto, my husband and I cannot see a way to stay in Palo Alto and raise a family here. We rent our current home with another couple for $6200 a month; if we wanted to buy the same home and share it with children and not roommates, it would cost $2.7M and our monthly payment would be $12,177 a month in mortgage, taxes, and insurance. That’s $146,127 per year — an entire professional’s income before taxes. This is unaffordable even for an attorney and a software engineer.

  It’s clear that if professionals like me cannot raise a family here, then all of our teachers, first responders, and service workers are in dire straits. We already see openings at our police department that we can’t fill and numerous teacher contracts that we can’t renew because the cost of housing is astronomical not just in Palo Alto but many miles in each direction. I have repeatedly made recommendations to the Council to expand the housing supply in Palo Alto so that together with our neighboring cities who are already adding housing, we can start to make a dent in the jobs-housing imbalance that causes housing prices throughout the Bay Area to spiral out of control. Small steps like allowing 2 floors of housing instead of 1 in mixed use developments, enforcing minimum density requirements so that developers build apartments instead of penthouses, legalizing duplexes, easing restrictions on granny units, leveraging the residential parking permit program to experiment with housing for people who don’t want or need two cars, and allowing single-use areas like the Stanford shopping center to add housing on top of shops (or offices), would go a long way in adding desperately needed housing units while maintaining the character of our neighborhoods and preserving historic structures throughout.

  Time and again, I’ve seen dozens of people come to both Commission meetings and Council meetings asking Council to make housing its top priority. The City Council received over 1000 signatures from Palo Alto residents asking for the same. In the annual Our Palo Alto survey, it is the top issue cited by residents. This Council has ignored the majority of residents and has chartered a course for the next 15 years of this city’s development which substantially continues the same job-housing imbalance this community has been suffering from for some time now: more offices, a nominal amount of housing which the Council is already laying the groundwork to tax out of existence, lip service to preserving retail that simply has no reason to keep serving the average Joe when the city is only affordable to Joe Millionaires.

  Over the last 5 years I’ve seen dozens of my friends leave Palo Alto and often leave the Bay Area entirely. I’ve seen friends from other states get job offers here and then turn them down when they started to look at the price of housing. I struggle to think what Palo Alto will become and what it will represent when young families have no hope of ever putting down roots here, and meanwhile the community is engulfed with middle-aged jet-setting executives and investors who are hardly the sort to be personally volunteering for neighborhood block parties, earthquake preparedness responsibilities, or neighborhood watch. If things keep going as they are, yes, Palo Alto’s streets will look just as they did decades ago, but its inhabitants, spirit, and sense of community will be unrecognizable. A once thriving city will turn into a hollowed out museum. We should take care to remember that Palo Alto is famous the world over for its residents’ accomplishments, but none of those people would be able to live in Palo Alto were they starting out today.

  Sincerely,

  Kate Downing

  2016.08.11

• Should we love bubbles?

  There’s no shortage of talk about a Canadian housing bubble:

  

  In Vancouver, the price of a single-family home (as of June of this year) increased 39% to C$1.6 million from the year prior. Does that constitute bubble territory?

  In an effort to stop prices from running away even further, I am sure you all know that the BC government has recently imposed an additional 15% transfer tax on Metro Vancouver homes purchased by foreign buyers (people who are not Canadian citizens or permanent residents).

  The data that I have seen (here and here) suggests that foreign buyers could make up somewhere around 5-10% of the market. Given that many will now get creative in terms of hiding their foreignness, I am not so sure this new tax will have a dramatic impact on affordability. But it certainly sounds nice if you’ve been grouchy about home prices and thinking “those damn foreigners.” We’ll have to see how it plays out.

  Having said all of this, if Vancouver is in fact in bubble territory, would that be so bad? Are we thinking about this the right way?

  Here’s an alternative viewpoint.

  I recently stumbled upon an old blog post by Tom Evslin (2005) called: Why we need bubbles. I discovered it via it Fred Wilson. Tom’s argument is that we need irrational exuberance because it provides the capital that allows for dramatic overbuilding. The overbuilding of things like rail infrastructure, internet infrastructure and – I’m adding this – housing infrastructure. And once this happens, it dethrones the incumbents and paves the way for future economic progress.

  Tom’s focus is on technology, but I couldn’t help but think of the parallels with city building. Is the proposed Rail Deck Park in Toronto so bold that it’s only possible during a period of irrational exuberance? Should Vancouver instead be working to dramatically expand its housing supply instead of trying to tax away a portion of demand? Is a period of irrational exuberance precisely the moment where we lay the ground work for our future successes?

  I’m not saying we’re in a bubble. I don’t believe in or know how to time markets. But I am asking whether the bubble headlines are missing the greater opportunity.

  2016.08.06