Housing Bubble II: The Quest To Build Enough Homes Where People Actually Need Them

[Build.It]

If he figures out a way to strongarm Ontario into dropping the Greenbelt he will be the best PM of our generation, while also being extremely hated. If that's his intention he'd be smart to keep that to himself though until after he's elected.

[Changing City]

Originally Posted by goodgrowth

The ad-hoc incremental nature of upzoning and development approvals in cities has created these market conditions.

Supply gets drip-fed instead of flooded.

But that's the way industry delivers, and nothing's likely to change that much. Upzoning and approvals already exist - the market builds for profit, not for competition. For condos. they wait for a rival company to sell out, and then they launch their sales centre. They take it in turns, or nobody sells enough for the bank to approve their project financing, and nothing gets built. If they can't sell, they may switch to rental, and there are more of those being built.

For example, looking at some of the suburban municipalities in Metro Vancouver for example, at the end of the year in Coquitlam there were around 48,000 apartments (rental and condo) in towers in the development pipeline, most of them already approved. In Burnaby there were over 62,000, and in Surrey around 30,000. There are tens of thousand more in low-rise apartment buildings (6 storeys or less). There are also at least 50,000 units already approved in the City of Vancouver. So there's a massive potential development pipeline.

The development industry is building pretty much as fast as it can; CMHC showed 54,000 apartments under construction in Metro Vancouver in January, (20,000 of them rental units) which is the most ever recorded - (it's 13,000 more than a last January for comparison).

This is as slammed as construction gets here, and looking at the CMHC data it looks like that's true in Toronto too (91,000 apartments under contruction, and 105,000 dwellings in total, 5,000 more than in January 2023). In Calgary 23,700 were under construction (15,600 of them apartments), nearly 4,000 more than a year earlier.
Historically, this is probably what a 'flooded' construction business looks like; 353,000 homes under construction.

(This is the point at which ssiguy pops up to say there have to be hundreds of thousands of manufactured homes scattered across all the greenbelts of the nation - but the manufactured homes companies are building as many as they can too.)

[Xelebes]

Originally Posted by Changing City

This is as slammed as construction gets here, and looking at the CMHC data it looks like that's true in Toronto too (91,000 apartments under contruction, and 105,000 dwellings in total, 5,000 more than in January 2023). In Calgary 23,700 were under construction (15,600 of them apartments), nearly 4,000 more than a year earlier.
Historically, this is probably what a 'flooded' construction business looks like; 353,000 homes under construction.

Just having some fun with the link here. The data only goes to 1990 and I wanted to compare the numbers from the 1970s and the 1950s, as we had peak house starts in 1959.

In 1996, we had 1/7th the number of home construction sites as we currently do, as a pro-rated to today. The number of homes under construction are at their peak in relation to all years since 1990.

[GenWhy?]

Originally Posted by casper

Is that his plan? I don't think so. He is falling back to traditional conservative thinking that if government gets out of the way private industry will compete and drive down prices. Well that is not the case. Private industry will try to max out the profit from a project.

The only way "affordable" housing is built is for government to build it and either operate it or hand it off to an arms-length non-profit. That is what the liberals are doing. If the conservatives get it, watch those programs get shutdown. That is what they are going to do.

Government IS the problem for building housing and it not being affordable.

[GenWhy?]

Originally Posted by Changing City

The development industry is building pretty much as fast as it can; CMHC showed 54,000 apartments under construction in Metro Vancouver in January, (20,000 of them rental units) which is the most ever recorded - (it's 13,000 more than a last January for comparison).

And if you can't increase that by 15% YOY it looks like a certain to-be Prime Minister is going to cut Metro Vancouver's transit funding for not building enough homes! Super.

[GenWhy?]

Originally Posted by Xelebes

Just having some fun with the link here. The data only goes to 1990 and I wanted to compare the numbers from the 1970s and the 1950s, as we had peak house starts in 1959.

In 1996, we had 1/7th the number of home construction sites as we currently do, as a pro-rated to today. The number of homes under construction are at their peak in relation to all years since 1990.

And pretty close to the height of where we were at in the 1970s, if I recall?

[casper]

Originally Posted by GenWhy?

And if you can't increase that by 15% YOY it looks like a certain to-be Prime Minister is going to cut Metro Vancouver's transit funding for not building enough homes! Super.

The way it works now in BC is when you build a transit line, the areas around the station is automatically upzoned. The municipal government has no say in the matter.

The municipal government does not build major transit projects in the province either. It is a provincial government agency that does that stuff.

Transit project money in Canada at the federal level is allocated to provinces per capita.

I think it is clear the conservatives will have to back off their plans fairly quickly.

[Xelebes]

Originally Posted by GenWhy?

And pretty close to the height of where we were at in the 1970s, if I recall?

I cannot tell. The numbers that go back to the 1950s are for housing starts. And at a pace, housing starts are still low. very close to numbers we saw throughout the 2010s. 1970s saw +33% and the 1950s saw +50% rates for housing starts. But it looks like because more single-family housing was being built, starts did not remain construction sites for longer. Multi-family housing takes 18-30 months depending on the size and type of construction it is. Single family homes typically take 9 to 15 months to build each unit.

[ZTrade]

Originally Posted by casper

Is that his plan? I don't think so. He is falling back to traditional conservative thinking that if government gets out of the way private industry will compete and drive down prices. Well that is not the case. Private industry will try to max out the profit from a project.

If profit margins become grandiose relative to historical margins, new developers will enter the market to capture those new gains. Over time as more entrants and supply gets built, real estate prices go down.

Do you remember when a large amount of people opened small to medium sized trucking companies during the supply chain issue in covid times? Well, that happened because transportation became expensive and profit margins increased for transportation companies. New entrants entered the market, and transportation profit margins returned to normal as the supply chain became unclogged.

[Changing City]

Originally Posted by Xelebes

I cannot tell. The numbers that go back to the 1950s are for housing starts. And at a pace, housing starts are still low. very close to numbers we saw throughout the 2010s. 1970s saw +33% and the 1950s saw +50% rates for housing starts. But it looks like because more single-family housing was being built, starts did not remain construction sites for longer. Multi-family housing takes 18-30 months depending on the size and type of construction it is. Single family homes typically take 9 to 15 months to build each unit.

I can help - you started me down a rabbit hole. This CMHC site has the Annual data reports back to 1921. (Obviously not in any useful data format, so I copied them one by one). They have starts, completions and under construction at the end of every year.

Starts and completions evened out over the decade are obviously similar. (Only in the 2010s are completions lagging starts a bit - presumably as buildings got taller and projects bigger, so taking longer to build). Here are the decade averages:

In the 1950s it was 115,000 a year, with 68,000 under construction
In the 1960s it was 150,000 a year, with 100,000 under construction
In the 1970s it was 230,000 a year, with 175,000 under construction
In the 1980s it was 180,000 a year, with 105,000 under construction
In the 1990s it was 150,000 a year, with 80,000 under construction
In the 2000s it was 200,000 a year, with 150,000 under construction
In the 2010s it was 200,000 a year, with 218,000 under construction

Peak house starts in the 1950s were in 1958 at 164,000. The 1970s had the most, with 268,000 in 1973 and 273,000 in 1976, but 2021 saw 271,000, so we're there again.

In terms of the numbers under construction, CMHC recently stopped posting data for the whole of Canada, only for CMAs, so the 353,000 under construction I noted earlier is just CMAs. The last 'all of Canada' number I could download was the end of 2022, when it was 378,000 units. That's easily the biggest number, ever, in Canada. It's more than doubled since 2011, when just 175,000 were being built. The previous peaks in the 1970s only saw 200,000 or so under construction.

So it looks like the development industry is genuinely firing on all cylinders, with more under construction than ever before, but they're taking longer to build, in many cases because they're more complex to construct in taller (so slower to complete) towers in many cities.

[1overcosc]

In the 1970s, Canada's population only increased by 3.2 million in the whole decade. We're currently increasing at more than 1 million per year, which comes to 10 million per decade... meaning, we need to be building 3 times more housing than in the 1970s just to match that decade's progress. That would be 690,000 per year. 2022 completions was only half of that.

[Innsertnamehere]

I’ve had this discussion elsewhere, but it’s important to look at the type of unit being delivered too. Back in the day it was mostly houses which had occupancy levels close to 4 people per unit - these days it’s mostly apartments which house less than 2.

You need two apartment units for every detached unit to house the same number of people. And we’ve seen the largest housing markets in the country shift to almost exclusively apartments in the last 20-30 years.

[Truenorth00]

Originally Posted by Build.It

If he figures out a way to strongarm Ontario into dropping the Greenbelt he will be the best PM of our generation, while also being extremely hated. If that's his intention he'd be smart to keep that to himself though until after he's elected.

The guy that pledges he won't tell provinces what to do will somehow bully a Conservative Premier to scrap reserved land that isn't needed for current housing needs and has popular support amongst the rural conservative base?

It's so funny how people ignore the utterly partisan instinct of Poilievre and expect him to be policy Jesus on their pet issues.

Poilievre has only made one actual commitment on housing. That he will pressure large cities to build more by making federal funding (across portfolios) conditional. This policy doesn't at all lend itself to the idea that rural areas would be opened up to development. What it will do is pressure cities to densify substantially and quickly by eliminating single family zoning substantially.

[Truenorth00]

Originally Posted by Innsertnamehere

I’ve had this discussion elsewhere, but it’s important to look at the type of unit being delivered too. Back in the day it was mostly houses which had occupancy levels close to 4 people per unit - these days it’s mostly apartments which house less than 2.

You need two apartment units for every detached unit to house the same number of people. And we’ve seen the largest housing markets in the country shift to almost exclusively apartments in the last 20-30 years.

When I look at large chunks of the GTA where virtually every new SFH is being built to enable the basement being rented out (the only way to afford the $1.3M an SFH costs), it's utterly ridiculous to me that these lots aren't being developed as multiplexes or townhomes to ensure that each family gets their own adequate living space. We are getting density by default, instead of by design, in a rather unmanaged and uncontrolled manner.

[Innsertnamehere]

Originally Posted by Truenorth00

When I look at large chunks of the GTA where virtually every new SFH is being built to enable the basement being rented out (the only way to afford the $1.3M an SFH costs), it's utterly ridiculous to me that these lots aren't being developed as multiplexes or townhomes to ensure that each family gets their own adequate living space. We are getting density by default, instead of by design, in a rather unmanaged and uncontrolled manner.

Most are secondary unit supported though - and SFHs represent only 7% of the new construction market in the GTA these days. They are a niche luxury product at this point, accessible to probably only the top 1% of incomes. Ultimately if you can afford a $1.3 million home, you probably don't need the $1,500 a month of extra income from a basement apartment to support it and would rather have the privacy and not deal with being a landlord.

The GTA is building in extremely dense patterns. There's no if ands or buts about that, having 5% of units being single-unit detached properties on 10x25m lots isn't the problem.

Those lots are so expensive because of regulation, as well - policies like the Greenbelt and Places to Grow have driven land costs up so high that the units can't be delivered for less than $1.3 million. Detached houses don't have to cost that much. We chose for them to cost that much.

Regardless - we can debate for months about the moral superiority of not living in a detached home or whatever, but the simple fact is that we as a society have largely made them illegal (apparently not illegal enough to many people..). We have to respond to that to ensure adequate supply can happen in other forms, and that means if it's going to be apartments (the route we have chosen), we need to basically double unit completions to even just keep pace with historical housing completions on a persons-housed basis.

Honestly, If you asked me, I would immediately drop policies like the Greenbelt and force municipalities to do large-scale urban boundary expansions, with a strict minimum density policy that basically forced the areas to be mostly townhouses. I get that SFHs are not the best urbanistically or environmentally, but think that forcing everyone into expensive apartments isn't the answer either. Townhouses can deliver quite high densities with minimal impacts to quality of life over a SFH (still have private garage, large amount of square footage, decent sized exterior space, etc) while also being significantly less land intensive and much more supportive of things like frequent transit service and walkable amenities.

Ultimately though policies like the Greenbelt have proven extremely politically toxic. Until the public can make the connection between the land supply issue with the cost of low-rise housing (for which the vast majority of the public still sees as their desired housing form), it's not going to go anywhere regardless of who is at the federal level. For this reason I have very little hope of seeing substantial housing affordability gains in Southern Ontario for the foreseeable future, especally for anything related to low-rise housing.

[yaletown_fella]

Home prices in the Lower Mainland is driven by cheap money , anti development fees/policy, and intrinsic land value/ geographical scarcity.

Prices in the GTA are driven by cheap money , anti development policy/fees, and artificial land scarcity driven by the greenbelt.

If you don't believe me compare condo & home prices from each region between the years 2000-2005 (before Places to Grow had any effect)

While someone like me obviously prefers transit oriented urban midrise or highrise living, I don't want suburbanites being forced to compete with me to live In a condo as this would ultimately force me into overpaying or renting.

Let the free market determine how people want to live.
Getting rid of SFH will just artificially inflate the value of townhomes and condos .

Sellers soliciting offer dates on entry level condos for sale are a disgusting symptom of a dysfunctional housing system and disprove the myth that it's a buyers market.

[yaletown_fella]

Originally Posted by Innsertnamehere

Most are secondary unit supported though - and SFHs represent only 7% of the new construction market in the GTA these days. They are a niche luxury product at this point, accessible to probably only the top 1% of incomes. Ultimately if you can afford a $1.3 million home, you probably don't need the $1,500 a month of extra income from a basement apartment to support it and would rather have the privacy and not deal with being a landlord.

The GTA is building in extremely dense patterns. There's no if ands or buts about that, having 5% of units being single-unit detached properties on 10x25m lots isn't the problem.

Those lots are so expensive because of regulation, as well - policies like the Greenbelt and Places to Grow have driven land costs up so high that the units can't be delivered for less than $1.3 million. Detached houses don't have to cost that much. We chose for them to cost that much.

Regardless - we can debate for months about the moral superiority of not living in a detached home or whatever, but the simple fact is that we as a society have largely made them illegal (apparently not illegal enough to many people..). We have to respond to that to ensure adequate supply can happen in other forms, and that means if it's going to be apartments (the route we have chosen), we need to basically double unit completions to even just keep pace with historical housing completions on a persons-housed basis.

Honestly, If you asked me, I would immediately drop policies like the Greenbelt and force municipalities to do large-scale urban boundary expansions, with a strict minimum density policy that basically forced the areas to be mostly townhouses. I get that SFHs are not the best urbanistically or environmentally, but think that forcing everyone into expensive apartments isn't the answer either. Townhouses can deliver quite high densities with minimal impacts to quality of life over a SFH (still have private garage, large amount of square footage, decent sized exterior space, etc) while also being significantly less land intensive and much more supportive of things like frequent transit service and walkable amenities.

Ultimately though policies like the Greenbelt have proven extremely politically toxic. Until the public can make the connection between the land supply issue with the cost of low-rise housing (for which the vast majority of the public still sees as their desired housing form), it's not going to go anywhere regardless of who is at the federal level. For this reason I have very little hope of seeing substantial housing affordability gains in Southern Ontario for the foreseeable future, especally for anything related to low-rise housing.

100% agree. But unfortunately our sober and realistic view is not going to be politically popular. Most of the masses are incapable of understanding supply side economics and prefer unrealistic populism.

[CanSpice]

Originally Posted by yaletown_fella

Getting rid of SFH will just artificially inflate the value of townhomes and condos .

Proof needed please.

If you replace a single $2m SFH with four $1m townhouses, isn't that new housing more affordable?

[Truenorth00]

Originally Posted by Innsertnamehere

Most are secondary unit supported though - and SFHs represent only 7% of the new construction market in the GTA these days. They are a niche luxury product at this point, accessible to probably only the top 1% of incomes. Ultimately if you can afford a $1.3 million home, you probably don't need the $1,500 a month of extra income from a basement apartment to support it and would rather have the privacy and not deal with being a landlord.

You should visit the street in Brampton where my wife was renting a basement apartment in a semi, a decade ago. Or my parents' street in Scarborough today where virtually every home has its basement rented. It's not just SFH. Go to any area where the average home costs more than say $700-800k and basements being rented out are quite common. And this phenomenon is starting to go beyond the GTA, as basement suites become more of standard revenue tool to pay for a multi-million dollar home. At this point, I'd say even semis are useless. We need a lot more quadplexes and three storey townhomes to provide the kind of density that people are actually living with, but that the public and politicians are either ignorant of, or don't want to be honest about.

In general we need way more redevelopment too. I look at the street I grew up on Scarborough. And the lot sizes and single family homes are anachronistic. Our home was crap quality too. I would not shed a tear if the thing were torn down and got a quadplex there. We were three houses down from a bus stop that will soon offer a 15 min bus ride to the new transit terminus at Sheppard/McCowan.

[urbandreamer]

It's shocking how inept Canada's urban/suburban planners are, essentially letting developers blight our countryside for the next century with short-sighted Street networks, shit architecture and inappropriate zoning. I found myself exploring new instahoods in Bond Head, Tottenham and Nobleton recently and wow, wtf are there so many roundabouts, a sea of beige, grey and faux stone mcmansions with large driveways? Roads are too wide, there's very little greenery, yards are an after thought, over engineered curbs and drains.

Talking to the teenager I'm teaching to drive and her high school friends, they mostly agree this new aesthetic is hideous. It will be interesting to see how they counter this vernacular as they grow up over the next thirty years.