Tag: housing

• Toronto housing — where we came from and where we’re probably headed

  This morning I’m working on a presentation that I’m going to be giving one evening next week to a delegation coming in from the US. The title of the presentation is the title of this blog post: Toronto housing – where we came from and where we’re probably headed.

  My plan is to start in and around the 50s and 60s and talk about Toronto’s first tower boom following the war. For this time period, I’m relying a lot on the work of Graeme Stewart of ERA Architects, who is one of, if not the, expert on post war towers in this city.

  

  I’m then going to move onto our current high-rise condo boom and compare the two.

  Because the interesting thing about the first boom is that, after it finished, we basically returned to the typical North American housing model: building single-family homes. And it wasn’t until this recent boom of the early 2000s that we once again resumed building more high-rise than low-rise housing. That is still the case today.

  But the question I want to address is really, what’s next? Where are we headed? Is history going to repeat itself or is – dare I say – this time different?

  I’ll eventually get to those questions here on Architect This City, but first I want to hear from you. So here’s what I’m proposing: leave your thoughts in the comment section below and I will feature the best ones in my presentation next week as the voices of Toronto. I’m sure many of you know that I’m a big fan of crowdsourced information.

  So here goes. Where is Toronto housing headed and how will we be living in the next 10+ years? Will we be raising families up in towers or not? Please comment by Sunday, September 27, 2015 at 6pm (ET) to make sure I have time to feature you in the presentation. 

  Thanks for participating 🙂

  2015.09.26

• The housing typologies of American cities

  Yesterday the Washington Post published a great chart showing the housing types of the 40 largest cities, by population, in the US. The list is ordered from lowest to highest according to the percentage of single-family houses in the city (green bar).

  Here’s the chart:

  

  Not surprisingly, many of the cities at the top of this list (meaning they have the lowest percentage of single-family houses) are in the older east coast cities. 

  It’s also interesting to see just how much the rowhouse dominates the urban landscape in Philadelphia and Baltimore. In Philadelphia, almost 60% of the housing stock is an attached rowhouse.

  Housing is the backdrop for such a big portion of our lives. And when you live in a particular kind of home, it impacts your life whether or not you realize it. The dense rowhouses of Philadelphia and the single-family houses of Oklahoma City are the result of two very different kinds of urban landscapes.

  In Toronto, that backdrop is in the midst of a dramatic change. More and more of us are now living in high-rise condos. That hasn’t always been the case, of course. It’s a recent shift. But it looks like it’ll be a big part of our future.

  2015.09.22

• Mega-cities vs. networked cities

  

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  Ed Glaeser, Giacomo Ponzetto, and Yimei Zou recently published a new academic paper called, Urban Networks: Spreading the Flow of Goods, People and Ideas. 

  The paper looks at whether it’s more advantageous to build huge and consolidated mega-cities or build connected networks of smaller urban centers (perhaps connected by high speed rail). As countries like China rapidly urbanize, this is something that many people are thinking about.

  In China, there is a lively urban planning debate
  about whether to facilitate the increased expansion of the vast agglomerations of Beijing and
  Shanghai or whether to focus on creating networks of cities that are smaller, albeit still much
  larger than almost all of the cities of Western Europe. The current government policy favors
  networks, in the hope that connected smaller cities may be free of the extreme downsides of
  mass agglomeration, such as extreme congestion, pollution and high housing costs.

  Like most things, there are real trade-offs. 

  In the paper, they assume that larger cities lead to more urban amenities, which in turn serves as an important magnet for skilled workers. However, for unskilled workers who may not care/benefit from the same urban amenities, it is possible for them to dislike the bigger cities. In this case, the benefits do not outweigh the negatives of urban expansion and an urban divide is created (rich/poor).

  One of the potential negatives is housing.

  The attraction of denser, not larger, mega-cities is determined also by the elasticity of
  housing supply. When it is easy to add extra homes on a narrow plot of land, as in Texas,
  then density becomes more attractive. European urban networks may well be the right
  answer because history and regulation makes it so hard to build in Europe’s older cities.
  Even though China has usually been quite friendly towards skyscrapers, the sheer scale of
  the Chinese population may still make the case for urban networks.

  If you’re interested in this topic, there’s a section (#2) in the paper on the history of urban networks that you might like.

  2015.09.21

• Where will we live?

  

  This evening I participated in a roundtable discussion at WORKshop here in Toronto. It was part of an exhibition that they currently have on called, Toronto 2020: Where Will We Live? They are located in the concourse level of 80 Bloor Street West, so go check them out.

  The discussion this evening was all about the dramatic change in Toronto’s urban form over the last decade. In other words, the condo boom. We covered everything from the life cycle of buildings and urban design to demographics and policy. It was a lot of fun and I am certain the group could have continued talking all night.

  But one thing that I was reminded of this evening is how important it is for great city building to be cross-disciplinary.

  Take, for example, architects and (real estate) developers. 

  The stereotypical developer is greedy and only concerned with money. They don’t care about the impact that their buildings have on the built environment. On the other hand, the stereotypical architect is only concerned with design and not with the economic feasibility of projects. (I’m exaggerating here for effect.)

  The point is that neither of these participants in isolation could build a great city. A beautiful design doesn’t have much value if it can’t be financed and built. And a highly financeable project could end up contributing nothing to the city. In some cases it could actually detract from the built environment.

  So if we really want to build truly great cities, I believe it needs to be a collaborative effort. We need to bridge the divides in thinking and leverage each other’s strengths. 

  I have felt very strongly about this since I first started studying architecture as an undergraduate student, which is how I ended up taking business and real estate classes. I felt and continue to feel that the greatest opportunities exist at the intersection of different ways of thinking.

  2015.09.10

• From stuff to services

  This morning Fred Wilson linked to a Bloomberg article on his blog called, Maybe This Global Slowdown Is Different. There are a bunch of great charts throughout the piece and I’d like to share 3 of them here.

  The first chart shows how per capita energy consumption has dropped remarkably in the United States since the 1990s, but how, not surprisingly, China’s rate is increasing.

  

  The second chart shows car sales in the US. There was a big drop off during The Great Recession, and though sales have rebounded, they still haven’t reached their late 1990s peak. But that’s not to say that they won’t.

  

  And the third chart shows the tremendous shift in the US over the last 65 years from the consumption of stuff to services.

  

  This last one is fascinating. And it ties into the argument that the way value is created in our economy has shifted dramatically.

  But I wonder if this change is really as sharp as it seems. 

  If you look at what makes up “services”, you’ll see that housing (and utilities) and healthcare make up over 50% of what is considered to be personal spending on services. And if you look at housing and utilities spending since the 1960s in the US, it has increased dramatically. 

  

  So how much of this shift from stuff-to-services is actually being driven by housing?

  2015.09.01

• The Starbucks Effect

  

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  This afternoon I was chatting with some friends about Toronto real estate (which is something that happens a lot in this city), and we started talking about “The Starbucks Effect.”

  Basically, we were talking about how this neighborhood just got a Starbucks and how that neighborhood already has one. We were, like a lot of people, using Starbucks as a proxy for neighborhoods that are emerging and neighborhoods that have already arrived.

  There’s been a lot of discussion about the correlation between home prices and the presence of a Starbucks. But the big question is what comes first: the home prices or the Starbucks?

  Earlier this year, the CEO, Spencer Rascoff, and Chief Economist, Stan Humphries, of Zillow.com argued that the mere presence of a Starbucks can cause gentrification. 

  They argued that Starbucks knows the next hot neighborhood before anyone else does and that they are “the fuel, not the follower.” And through their data they demonstrated that homes (in the US) near a Starbucks appreciated significantly faster than homes not near a Starbucks, or even homes near other coffee shops such as Dunkin’ Donuts.

  But I – as well as others – wonder if this isn’t an oversimplification.

  I certainly believe that Starbucks could help fuel home prices in a neighborhood. I think it gives people a comfort level that the neighborhood has arrived and that there are people in the area who are willing and able to spend money on discretionary items.

  But I suspect that for Starbucks it’s a balancing act. They would never want to be late to an emerging neighborhood (and miss that prime corner property), but they also don’t want to be in the business of placing bets on neighborhoods with very few vital signs.

  So I think it’s both. I think Starbucks is analyzing the data and watching home prices like a hawk (the follow) and when it reaches a certain point, they move. And that likely causes a further acceleration of neighborhood change (the fuel).

  What do you think? I would love to learn more about their site selection process.

  2015.08.31

• Japan’s disposable housing

  

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  As further evidence that real estate is a local business, let’s take a look at the housing market in Japan today. It’s a very unique market.

  According to this Freakonomics podcast, 50% of all single family houses in Japan are demolished by the time they reach 38 years old. That’s their half-life. By contrast, in the US, this number is 100 years.

  The reason for this is rapid depreciation. Real property typically consists of two things: land and the building. Land doesn’t depreciate. But the structure sitting on the land does.

  In Japan, the building or structure is thought to be fully depreciated (and therefore worth nothing) after about 30 years for a single-family home and after about 40 years for an apartment/condominium.

  The result is that there’s virtually no resale housing market. When somebody buys a house, it is usually torn down and completely rebuilt. It’s a uniquely Japanese phenomenon.

  So why does this happen?

  The Freakonomics podcast presents a couple of hypothesis. Some believe that it’s caused by a Japanese fixation with newness. New is seen as pure and clean. 

  Others believe that it has to do with a building code that is constantly changing due to the high frequency of earthquakes in Japan. 20% of the world’s earthquakes with a magnitude of 6.0 or greater happen in Japan. And so there appears to be a belief that newer homes – with the latest seismic technologies – are the safest.

  Whatever the case may be, the fact that there’s virtually no resale housing market in Japan, not surprisingly, produces some interesting outcomes. For one, maintenance and DIY home projects are uncommon. Why invest in your home when it’s not viewed as an asset, but as a disposable good?

  At the same time, people worry very little about marketability when they are building new. And this is a big reason why Japan is so famous for its radically designed homes. When you’re building only for yourself, you just do what you want.

  But most importantly, some (such as Richard Koo, who is interviewed in the podcast) believe that this approach to housing is a huge “obstacle to affluence.” Without a functioning resale market, the Japanese don’t get the opportunity to build wealth/equity in the same way that other countries do.

  Do you buy that?

  2015.08.24

• 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

• The missing middle will come, eventually

  Yesterday Lloyd Alter of Treehugger wrote a great rebuttal to my post about homes for families. His argument was that I missed a whole world of building typologies between single family homes and apartments. (Something that architect and urban planner Daniel Parolek calls “The Missing Middle”.)

  Now he’s absolutely right. I didn’t mention it – other than provide an option in the survey for townhomes. And he’s right that it’s a tremendous opportunity for cities looking to increase housing supply and improve affordability.

  But the reason I didn’t mention it in my survey is because, here in Toronto, we’re not very good at that middle scale.

  I previously wrote a post talking about Toronto’s 3 stages of intensification. It went from high-rise to mid-rise, and then to low-rise intensification. And my argument was that we’re still in and figuring out the mid-rise scale. (There are challenges at this scale, but that deserves a separate post.)

  Eventually though, I think we will get to low-rise intensification. And that will cover off many of the building typologies that Lloyd is talking about: duplexes, triplexes, fourplexes, and, my personal favorite, laneway houses.

  This, of course, isn’t the case in every city. Many cities, such as Montreal, have a strong history of neighborhood-scaled apartments. Lloyd points that out in his article. But that’s not the case here in Toronto.

  In fact, Toronto’s Official Plan explicitly designates these low-rise “Neighborhoods” as areas that are stable and should not see much intensification. And it was a great selling point for the Places to Grow Act: intensification here, but not there.

  But I think this will change. Not because I’m a real estate developer and I think it should change, but because our current arrangement is causing a dramatic erosion of affordability at the low-rise/ground-related housing scale.

  If it were up to me, and it most certainly is not, I would start with laneway housing. It’s a great way to intensify low-rise neighbourhoods without altering the character of the streets.

  If you live in a single family neighborhood, I would especially love to hear your thoughts in the comment section below. It will be interesting to see how this all plays out. 

  2015.06.03

• Most people still want to raise kids in a house (not an apartment)

  

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  Yesterday I ran a quick 3-4 question survey on ATC called homes for families. The objective was to get a sense of people’s preferences for apartment vs. ground-related housing (house or townhouse) when it comes time to raise a family.

  The results are public so anybody can take a look at the data. At the time of writing this post there were already 70 responses. That’s not a huge data set, but the data is more or less what I expected to see. 

  Here’s what I found (if the data set was larger, I would have made charts):

  The vast majority of respondents were from Toronto. No surprise there. That reflects the readership of this blog, which itself can be quite Toronto-centric at times. (I’ve been trying to branch out more, I swear.) That said, I was thrilled to also see respondents from cities like Seattle, Denver, Chicago, Porto, and Sydney.

  Of the people who specified that they have kids, 11% live in an apartment. 17% live in a townhouse. And 72% live in a house. If you add houses and townhouses together, you get 89% of people with kids living in some kind of ground-related dwelling.

  Of the people who specified that they don’t have kids, 61% live in an apartment. 6% live in a townhouse. And 33% live in a house. This is the kind of split that I generally expected to see for Toronto.

  For the people who specified that they don’t have kids, they were then asked where they plan to move if/when they do have kids. 13% plan to move to another apartment. 8% plan to move to a townhouse. 33% plan to move to a house. 23% don’t plan to move (i.e. they are planning to stay put). And 23% don’t plan to have a family.

  Interestingly enough, 100% of the people who said that they were not planning to move, were already living in a ground-related housing unit (a house in almost all of the cases). So in reality – and if you exclude the people who don’t plan to have kids – about 83% of respondents expect to raise their kids in a house or townhouse.

  Again, this isn’t a big sample size, but the trend appears more or less flat. 89% of respondents who already have kids are already living in a ground-related unit. And when people were asked to project where they would like to be living once they have kids, 83% said they want a house or townhouse.

  Do you think these numbers accurately reflect consumer preferences in your city?

  2015.06.01