Tag: housing

• Where are Millennials going to move when they start having children?

  

  Kembangan by Jason Waltman on 500px

  Earlier this week I attended RealNet’s Q1 2015 market update webinar for the Greater Toronto Area. If you don’t already subscribe to RealNet, you should consider it. They’re one of the best sources for Canadian real estate market information.

  During their webinars, they occasionally run interactive surveys where they ask the audience a question and participants respond using their web browser. On this particular webinar, they asked the following question, which I thought was interesting:

  What is the likely housing moving by Millennials in raising their families?

  A) Move Up – Embrace urban high-rise housing forms

  B) Move Out – Accept extended commutes (including the Greater Golden Horseshoe and Hamilton Area) to find affordable ground oriented housing
  

  C) Move In – Cohabitate parental homes

  It’s an interesting question because it’s one that I’ve asked myself a number of times. Sure, Millennials are rushing back to cities and living in high density and walkable communities, today, but what are they going to do and where are they going to move when they start having children?

  As a Millennial myself, I know that I’ve always told myself that I want to stay urban for as long as I can (i.e. Move Up). But I’m only one data point. And given the seemingly endless demand for low-rise housing in Toronto, I always felt like I was in the minority. I figured that the majority of people, at least here in this city, still want a ground-related home when it comes time to raise a family.

  Putting aside economics, I still think that may be the case for a lot of home buyers. But the majority of people on this week’s RealNet webinar (which would be almost exclusively folks from the real estate industry) either think that preference is going to change (or already has) or that consumers won’t have a choice due to affordability.

  50% of the people on the call answered A – move up and embrace urban high-rise housing forms. The balance was about 44% for B and 6% for C.

  That’s not the outcome I expected to see. So today I’d like to re-ask this question to the Architect This City Community. Where do you think Millennials are going to move once they start having children? Please let us know in the comment section below.

  2015.04.24

• Art and apartments

  

  Image Source: Vancouver by Marc M on 500px

  According to a recent Bloomberg article, this is where the rich are putting their money today:

  “The two greatest stores of wealth internationally today is contemporary art….. and I don’t mean that as a joke, I mean that as a serious asset class,” said Fink. “And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London.”

  In case you wondering, Laurence Fink is the founder and CEO of BlackRock Inc., which today is the largest asset manager in the world. They have over $4.77 trillion in assets under management according to their website. That’s a mind boggling number.

  And if you read the Bloomberg article cited above, you’ll see that this interest in both art and apartments represents a shift away from gold as the de facto safe haven.

  “Historically gold was a great instrument for storing of wealth,” the chairman of BlackRock Inc. said at a conference in Singapore on Tuesday. “Gold has lost its luster and there’s other mechanisms in which you can store wealth that are inflation-adjusted.”

  What’s interesting and probably most relevant to the Architect This City community though is this investment focus on apartments.

  When people talk about a possible housing bubble in Canada they often cite house prices to median household income as a key ratio. The question then becomes: How can house prices be such a high multiple relative to local incomes?

  That’s relevant, but it’s not the entire story for cities like New York, London, and Vancouver. That ratio alone assumes that real estate isn’t a global investment vehicle. And for some people people it is exactly that.

  2015.04.21

• A comparison between low-rise and high-rise housing costs

  Earlier this week the Globe and Mail reported that the average price of a house in Toronto has risen to $613,933 and that the average price of a detached house has risen to $1,042,405. Those are a big numbers.

  Low interest rates are a big part of this story. But there’s also a supply story at play here. The low-rise housing market in this city is heavily supply constrained and so we have an environment where people with more money simply outbid those with less money.

  The high-rise side of the market, on the other hand, is creating lots of new supply. And in my opinion that’s why its price growth has been more moderate in recent years and why the pricing spread between low-rise and high-rise housing continues to widen.

  Assuming these trends continue, one of the things I’ve thought about and written about in the past is whether we’ll eventually seeing a point where high-rise housing actually becomes a more affordable option for families. Because right now, if you’re in the market for a 3 bedroom home, a low-rise house is likely your most affordable option.

  Here’s a quick comparison that I did up this morning between a detached house and a high-rise condo:

  

  For the detached house, I assumed 1,800 square feet at a price of $1,042,405. That’s the average price mentioned above. 

  For the condo, I assumed a 1,500 square foot 3 bedroom home. I priced it at $650 per square foot (which would be above average for the city) and then added $40,000 for a parking spot. Here you have a slightly smaller condo, but it’s also priced slightly less.

  I then compared operating/maintenance costs. For the condo, I assumed a maintenance fee of $0.59 per square foot (which I think is reasonable) and then added $100 per month for electricity. Typically electricity is billed outside of maintenance fees.

  For the detached house, I tried to create a similar living situation. I assumed that the owner wouldn’t be cutting their own grass or shovelling their own snow. I assumed that money would be put away each month as a capital reserve for future house expenses (similar to the reserve fund in a condo). And I assumed a gym membership since most condos have a gym. I ignored property taxes and insurance.

  The detached house still works out to be a less expensive to operate in this scenario, but not by much. Overall, the two appear quite comparable. Which is why I wouldn’t be surprised if we see a tipping point in the future where all of a sudden families start finally adopting the mythical 3 bedroom condo.

  I have published my spreadsheet to the web in case you disagree with my assumptions and want to create your own.

  2015.04.10

• The high cost of poor land use

  

  London street of early 20th century Edwardian terraced houses by Bombaert Patrick on 500px

  Over the weekend The Economist published an interesting article called, Space and the city: Poor land use in the world’s greatest cities carries a huge cost. The argument is that land isn’t scarce. It’s the land use policies we have created that are artificially limiting supply and driving up real estate values.

  In fact, land is not really scarce: the entire population of America could fit into Texas with more than an acre for each household to enjoy. What drives prices skyward is a collision between rampant demand and limited supply in the great metropolises like London, Mumbai and New York. In the past ten years real prices in Hong Kong have risen by 150%. Residential property in Mayfair, in central London, can go for as much as £55,000 ($82,000) per square metre. A square mile of Manhattan residential property costs $16.5 billion.

  And part of the reason this has become so prevalent is because of the shifts we’ve seen in our economy and the great return back to cities.

  In the 20th century, tumbling transport costs weakened the gravitational pull of the city; in the 21st, the digital revolution has restored it. Knowledge-intensive industries such as technology and finance thrive on the clustering of workers who share ideas and expertise. The economies and populations of metropolises like London, New York and San Francisco have rebounded as a result.

  So how do we get better at meeting real estate demand in our cities? The Economist has two suggestions.

  One:

  First, they should ensure that city-planning decisions are made from the top down. When decisions are taken at local level, land-use rules tend to be stricter. Individual districts receive fewer of the benefits of a larger metropolitan population (jobs and taxes) than their costs (blocked views and congested streets). Moving housing-supply decisions to city level should mean that due weight is put on the benefits of growth. Any restrictions on building won by one district should be offset by increases elsewhere, so the city as a whole keeps to its development budget.

  Two:

  Second, governments should impose higher taxes on the value of land. In most rich countries, land-value taxes account for a small share of total revenues. Land taxes are efficient. They are difficult to dodge; you cannot stuff land into a bank-vault in Luxembourg. Whereas a high tax on property can discourage investment, a high tax on land creates an incentive to develop unused sites. Land-value taxes can also help cater for newcomers. New infrastructure raises the value of nearby land, automatically feeding through into revenues—which helps to pay for the improvements.

  These recommendations will probably be unsettling for a number of people. 

  I would imagine that many communities would prefer to have planning and growth decisions happen bottom up, as opposed to top down. But I think there’s some truth to this recommendation and I don’t think it has to mean completely excluding bottom up feedback. Communities and individuals are naturally going to look out for their own self-interests. And so I think many would agree that there’s value in having a holistic urban strategy in place.

  Recommendation number two pertaining to land value taxes is a loaded one. So I’m going to save my specific comments for a dedicated post on LVTs. 

  But I will say that I don’t think trying to squeeze landowners into development via taxes is the most efficient and immediate way to address supply shortages. In advance of this, we should be examining the current barriers to development. Because we’re talking about hyper competitive global cities with perpetual supply deficits. And I don’t believe the problem is incentive-based. The problem is finding sites. The problem is finding ways to build.

  What do you all think? This is an interesting topic of discussion.

  2015.04.07

• From seigneurial land tenure to condominium plans

  One of the things I noticed this past weekend when I was on my Porter Escape in Quebec City was that there’s still evidence of the seigneurial land use system. I saw it on île d’Orléans.

  Established in 1627 in New France, the seigneurial system was a feudal way of distributing land and creating subsistence farming for those who occupied it. It was ultimately abolished in 1854, but you can still see vestiges of it.

  With the seigneurial system, a typical farming lot was a long and narrow strip of land emanating from the water, which in this particular case was the St. Lawrence River. Here’s a map from 1641 showing what that looks like:

  

  The reasoning behind this spatial arrangement was rather simple. By having long narrow lots, it meant that you could maximize the number of farmers who had direct access to water. This was needed for navigation, but also for many other obvious reasons. This was an efficient layout.

  At the same time, the long strips meant that each farmer had access to a broad cross section of different kinds of land. They had fertile land for growing, land for their home, and frequently land with trees so that they had material to build, fuel to burn, and so on. It also meant that, despite the overall lot sizes, people actually lived fairly close to each other. It created communities.

  Of course, there’s a lot more to the seigneurial system than just its physical form and there are reasons it was eventually abolished. But today I just want to focus on spatial layout. Because I think there are parallels to how we continue to plan our communities.

  If you live in a city you’ve probably come across a narrow rowhouse, a narrow townhouse, and/or a long and narrow condominium – which many people like to pejoratively refer to as a “bowling alley” plan. In these cases, the width of the home could be somewhere between 10 and 13 feet.

  If you stop and think about this, it’s exactly the same spatial principles as the seigneurial land use system. But instead of maximizing the number of people with access to the St. Lawrence River, it’s about maximizing the number of people who front onto the street and who have access to natural light.

  In tight urban conditions, it’s not uncommon to have no “side yard windows.” In my case, I live in a condominium with 20′ feet of windows on one side only. The other 3 sides of my box have none. And that’s a fairly common urban condition.

  I find this interesting because as much as the world is rapidly changing, some things don’t actually change all that much.

  Image: Wikipedia

  2015.04.03

• Towards more publicness

  Back when the commercial internet first started to take off it was uncommon to use your real name online. Instead people relied on usernames and other pseudynoms to represent themselves. I honestly can’t remember what I used in those days, but I’m sure it was something ridiculous.

  Over time though that started to change. 

  Blogging started to take off in the late 1990s. And we started to become more comfortable sharing personal information online. Perhaps the biggest shift though, came with the introduction of Facebook in 2004 (over 10 years ago!). All of a sudden people – young college students initially – started sharing lots of personal information online, including photos of themsleves and their friends.

  But this wasn’t an overnight change. When Facebook first launched, privacy was an important component. It still is, but I would argue that it has become less central given how public a lot of other social media platforms are today. Twitter, for instance, is what it is today largely because of its publicness. 

  For my own social media accounts, I have made every single one of them completely public. From Twitter to Facebook to Instagram to Snapchat, nothing I post to social media is restricted in any way. And I do that because I believe we are headed towards a world with more – not less – openness, transparency and publicness.

  Of course, I’m not just talking about social media and tech. I’m talking about open data in general.

  Earlier this year, the Toronto Real Estate Board clamped down on real estate brokers who were publishing historical sales data online. Citing privacy concerns, TREB ordered them to stop or lose their access to the MLS system. 

  For those of you not from familiar with the Toronto real estate market, historical sales data for homes is not open and published online. You generally need to go through a realtor to get access to this data. Some think this is the right approach. And others think it is antiquated.

  But as I explained above, our conception of what should be private can, and will, evolve over time.

  Here are the details on my home:

  I purchased it in September 2012 for exactly $400,000 (Canadian). It’s a 650 square foot condo in the St. Lawrence Market neighborhood of Toronto. It has one bedroom, a 400 square foot terrace, one parking spot, and 10′ ceilings.

  Sooner or later, I believe this information will be freely available online. But since that’s not the case today, I figured I would just tell you. Sharing this information is not a big deal for me.

  2015.03.25

• Reading between the lines of a midtown triplex

  

  A few days I retweeted the above home from Dwell Magazine. Then yesterday I was driving through midtown Toronto and I stumbled upon it. And that got me thinking more about this kind of project.

  The house is a triplex with, presumably, one unit in the basement, one unit on the main floor, and one unit across the 2nd and 3rd floor. The existing detached house was only 2 storeys and so a third floor was added to create what is likely the “owner’s suite.”

  It’s not uncommon for many of the houses in central areas of Toronto to be converted into duplexes and triplexes or to flip back into single family homes after being subdivided for rentals. It goes to show how adaptable the single family house can be.

  But it’s not everyday that you see such a high end triplex being built as, what seems to be, a permanent residence and kind of dream home for the owners. Historically, when people built their dream home it has meant a single family home.

  This might not seem like an important distinction, but I think it demonstrates a growing acceptance of intensification within low-rise single family neighborhoods.

  Part of this I’m sure has to do with rising housing costs. But I think it also has to do with valuing location over raw space and with an acceptance of urban density.

  I don’t know about you, but I would have no concerns with permanently laying down roots in a house like this. It’s beautiful.

  Image: Dwell

  2015.03.21

• A look at homeownership rates

  The Old Urbanist (Charlie Gardner) recently published an interesting post talking about the origins of American zoning using the work of Professor Sonia Hirt and her new book, Zoned in the USA: The Origins and Implications of American Land-Use Regulation.

  One of the central themes in his post is the American (and Canadian) fixation on single-family homes:

  …the United States is the only developed country of those surveyed, apart from Canada, to widely employ single-family detached residential zones that bar all commercial and multifamily uses.

  And the reason for this is largely because of two longstanding beliefs in American (and again Canadian) culture: Your goal should be to become a homeowner, and that home should ideally be a single-family detached home.

  But there’s lots of evidence to suggest that these legal protections (and many of the other things being done to encourage/subsidize homeownership) aren’t actually that effective at driving up homeownership.

  In his post, Charlie includes a chart showing the percentage of detached homes and the homeownership rates for various countries (data is from 2013/2014). I sorted it based on homeownership and added urbanization rates to see if there was any correlation (doesn’t appear to be).

  

  Source: Charlie Gardner & Wikipedia

  The US and Canada are quite good at putting lots of people in detached housing (though not as good as Australia!), but the homeownership rates are nowhere near the top. In fact, the US falls in the lower half.

  Did you think the homeownership rate would be higher in the US?

  2015.02.01

• An example of low-rise intensification: Union Street EcoHeritage

  

  In yesterday’s post about the 3 stages of intensification, I mentioned a project in Vancouver called Union Street EcoHeritage by SHAPE Architecture. I used it as an example for sensitive low-rise intensification.

  Since it’s a very cool project (and most of you probably didn’t click through), I thought I would dedicate today’s post to explaining the project.

  The picture at the top of this post is what it looks like today (the front elevation). If you were to pass by it, I suspect most of you would just think it was a pair of renovated single family homes. But there’s much more to it. What started out as only 2 dwellings, ended up as a site for 7 dwellings.

  Here’s the before shot:

  

  The homes were moved and actually raised up in order to accommodate additional density. Here’s a section that better explains what was done (black is existing; green is new):

  

  The 2 existing homes were raised up so that an additional dwelling unit could be placed beneath each one. At the same time, additional units were added in the rear, both attached to the existing homes and at the back of the site facing the laneway. And so this project is actually one part laneway house.

  Here’s a photo of what that rear interior space looks like (it’s stunning):

  

  Not surprisingly, this project won a bunch of awards and has been widely celebrated as an affordable housing solution. It’s exciting to see Vancouver take the lead on low-rise intensification. It’s one of the reasons that I think it’s only a matter of time before Toronto starts to look towards similar solutions.

  Images: SHAPE Architecture Inc.

  2015.01.28

• 3 stages of intensification

  

  We all know that the Greater Toronto Area is growing and intensifying at an incredible pace. In fact, last year the region set a record with 25,571 new condominium units completed.

  If you listen to industry experts, such as George Carras of RealNet, they’ll tell you that this level of intensification — which usually means condominiums — is really a decade in the making. That’s when the government set out to explicitly encourage this type of growth.

  But in the decade since that decision, we’ve seen both government and the market evolve in terms of what that intensification should look like. It started out with a largely high-rise building typology. Tall buildings were to be allowed in the downtown, as well as in specific growth nodes throughout the region. But for everything in between — the officially designated “neighborhoods” — there was to be no development.

  This is what I’ll call the first stage of intensification.

  Then, we started to think about mid-rise intensification along the avenues. Most of these “avenues” (also an official term) cut through those same stable neighborhoods, but the main streets were seen as an appropriate place to allow additional growth. It makes perfect sense and so guidelines were created to help dictate what this new building typology should look like.

  This is what I’ll call the second stage of intensification.

  And it’s one that I’d argue we’re currently living through with new mid-rise projects like DUKE in the Junction (TAS project), Kingston&Co in Kingston Road Village (another TAS project), Abacus Lofts on Dundas West, and The Hive in Etobicoke. These are all mid-rise buildings going up in established neighborhoods.

  With the recent decision to also allow wood frame buildings up to 6 storeys in Ontario (instead of 4), we’ll probably see an even greater surge in mid-rise buildings once the private sector gets its head around this shift.

  So what’s next?

  I think it’s inevitable that we’ll eventually see low-rise intensification within our established neighborhoods. We started by avoiding them altogether, and then deciding that it was desirable to build along their periphery. But as demand for urban housing continues to increase, I believe it’s only a matter of time before we start to loosen the reins on our single family neighborhoods.

  Some of you might be thinking that this is going to be a bad thing, but I actually think the opposite. Projects such as Vancouver’s Union Street EcoHeritage prove that it’s entirely possible to intensify existing neighborhoods through sensitive and beautiful infill interventions. And of course, let’s not forget about laneway housing.

  The fact of the matter is that Toronto has already been intensifying its neighborhoods for a very long time — likely since the beginning — by converting single family homes into duplexes, triplexes, and other multi-family dwellings. We just haven’t been doing it in any sort of structured way.

  I don’t know when this will change, but I think it’s only a matter of time. And that will be the third stage of intensification.

  Image: Flickr

  2015.01.27