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

[whatnext]

Originally Posted by GenWhy?

My understanding is that already exists in BC. Effectiveness... not sure.

Unfortunately the demise of journalism has led to the Beneficial Ownership Registry not being used to do in-depth reporting of who owns what.

[MonkeyRonin]

Originally Posted by Berklon

Just like the government before him. It was going to accelerate with or without him or his policies.

I remember the "Crack Shack or Mansion" website before JT:

https://www.cbc.ca/news/canada/briti...nsion-1.880972

Do you honestly think home prices aren't going to continue to increase if PeePee is running the show?

Prices in Vancouver were rising quickly while Harper was PM (and as mentioned, has always been an outlier as the most expensive place in Canada), but look how they exploded starting in 2016:




Vancouver real estate has always been ahead of the curve though. The bigger story of the Trudeau Jr. era is how prices have exploded nation-wide:




As well as how rents have skyrocketed:




I don't know how you can say it isn't at all attributable to federal government policy (even if not entirely their fault - municipal & provincial politicians have certainly played a big part as well, along with larger macroeconomic and social trends beyond anyone's control), when the feds largely control the levers of demand and monetary policy - and we can pinpoint plenty of Liberal policy that's directly contributed to inflating housing costs. Other countries also haven't experienced the same degree of housing inflation as us, so it's not as if it were some sort of apolitical inevitability.




Now do I think Poilievre is actually going to do anything to improve the housing situation once elected? I'm not optimistic; but typically if one is unhappy with the decisions being made by the incumbent government the logical thing to do is to elect the opposition instead of continuing to vote for the same party and hoping for something to change.

[MonkeyRonin]

Originally Posted by suburbanite

Where are you going to stick all these modular homes? Construction capacity and costs are an issue in major Canadian markets, but land availability is at the top of the "hierarchy of the housing crisis".

This is something I was thinking about recently, and obviously you're correct that modular housing isn't really a useful tool under the current regulatory framework; but if housing were made more of a priority (ie. by actually treating the housing crisis as a crisis) could be part of a multi-pronged solution.

Despite the high land values, we don't really lack for space - if governments were more proactive, they could open up small portions of excess public land (and I'm not just talking unused federal buildings, but things like municipal parking lots, grassy medians at the sides of roads, crown lands, etc - singularly small spaces, but considerable amounts of land in aggregate) for quickly & cheaply-built modular housing developments.

Similarly, create some sort of nationally standardized, quick-approval program for private property owners and allow & incentivize them to install modular "pods" on their properties. If zoning permitted it (or could be overrided), there's lots of space in backyards, sideyards, driveways for stuff like this: https://www.dezeen.com/2024/01/05/re...using-cutwork/

[niwell]

^Thats basically the construction strategy used for some supportive housing in Toronto like the one at 321 Dovercourt on the former police station lands. IIRC it took a while for approvals due to the use of the building but once construction started it was very fast. Remember cycling by when it started and then shortly later it was almost done. If this strategy was used for general housing on similar lands it could at least provide some much-needed “missing middle” style apartments. From the outside it looks like a regular small apartment complex.

https://www.toronto.ca/community-peo...21-dovercourt/

https://www.designlinesmagazine.com/...es-to-toronto/

[urbandreamer]

Prices rapidly increased globally starting in 2016. The trigger? Donald Trump's election caused a massive run up of the stock market, which made all participants feel wealthier and thus invest in real estate. Combined with low interest rates, a booming tech economy and relatively peaceful times, 2016-2020 boom had little to do with JT, who in the greater scheme is a nobody.

In turn, rising interest rates combined with record investor income has imo contributed to this war economy: gotta put the poor to work killing each other so the wealthy can profit from weapons, inflation and the eventual rebuilding of Ukraine and Gaza.

[theman23]

Originally Posted by MolsonExport

I left Vancouver in 1998 on account of the exorbitant housing prices. After four years of managing a business with 150 employees, I still could not scrape together enough money for a down payment on a modest condominium. Goddamned Trudeau, it was all his fault.

I'm not sure what your individual financial situation was, but lets do the math for the hypothetical median household shall we?

As per Greater Vancouver Realtors, the benchmark detached house in Vancouver was $327,000 in 1998. A 5 year fixed mortgage was 6.8% back then as per this website. . With a 20% downpayment, that works out to a monthly mortgage cost of $1800. The median family income in 1998 in Vancouver was $53,494 for a husband-wife couple. That works out to the average Vancouver family having to pay 40% of their income towards housing for a single family home. Not cheap, but certainly a lot more favourable than whats available today. They could have saved money if they bought a townhouse or condo instead. Or, as you chose to do so, moved to a cheaper jurisdiction like London where the average house would spend about 15% of their income to afford a SFH. Either way, you had options and were probably able to save up for a down payment by yourself based on the average income at the time.

If the hypothetical Gen-X-leaving-Vancouver-in-1998-due-to-"exorbitant"- housing-costs had any children, the children would be likely looking to enter the housing market soon and be looking at around a 4.8% interest rate currently. If they followed their parents' footsteps and tried to make a go of things in Vancouver and were able to achieve the current median family income of $82,000, they'll have the option of spending 150% of their monthly income on an average detached home, 117% of their income on average townhome, or 70% of their income on an average apartment. They could also do what you did and move to a low cost jurisdiction like London, where they would only have to spend 51% of their monthly income to buy a single family home. Seems downright affordable in comparison, but still 11% more than what someone like you would have paid in 1998 for a SFH in Vancouver. And you left that place because you thought that was "exorbitant".

This is all assuming these children are receiving massive gifts from their parents, since there's no way any one of them are conjuring up 20% down payments on houses approaching a million dollars while making sub 6-figure household incomes.

Funny enough, if these hypothetical children were born 9 years earlier they could have bought a house in London for only 22% of their monthly income. Not quite as good as the 15% that dad achieved, but not too far off.

[lio45]

Originally Posted by theman23

Seems downright affordable in comparison, but still 11% more than what someone like you would have paid in 1998 for a SFH in Vancouver. And you left that place because you thought that was "exorbitant".

It's interesting to realize that if MolsonEx's kids have the same standards as him for fleeing exorbitantly-priced jurisdictions, they'll be leaving Canada, because there's just nowhere in the country that's as affordable relative to incomes as Vancouver was in 1998.

[lio45]

Originally Posted by MolsonExport

Goddamned Trudeau, it was all his fault.

I'm pretty sure one can make a case that Trudeau 1 had something to do with Vancouver being unaffordable in the 1990s.

Now, if Vancouver was already unaffordable in the mid-1960s or earlier, then that for sure cannot be Trudeau's fault, but I think it was reasonably affordable then.

[MolsonExport]

Originally Posted by theman23

I'm not sure what your individual financial situation was, but lets do the math for the hypothetical median household shall we?

As per Greater Vancouver Realtors, the benchmark detached house in Vancouver was $327,000 in 1998. A 5 year fixed mortgage was 6.8% back then as per this website. . With a 20% downpayment, that works out to a monthly mortgage cost of $1800. The median family income in 1998 in Vancouver was $53,494 for a husband-wife couple. That works out to the average Vancouver family having to pay 40% of their income towards housing for a single family home. Not cheap, but certainly a lot more favourable than whats available today. They could have saved money if they bought a townhouse or condo instead. Or, as you chose to do so, moved to a cheaper jurisdiction like London where the average house would spend about 15% of their income to afford a SFH. Either way, you had options and were probably able to save up for a down payment by yourself based on the average income at the time.

If the hypothetical Gen-X-leaving-Vancouver-in-1998-due-to-"exorbitant"- housing-costs had any children, the children would be likely looking to enter the housing market soon and be looking at around a 4.8% interest rate currently. If they followed their parents' footsteps and tried to make a go of things in Vancouver and were able to achieve the current median family income of $82,000, they'll have the option of spending 150% of their monthly income on an average detached home, 117% of their income on average townhome, or 70% of their income on an average apartment. They could also do what you did and move to a low cost jurisdiction like London, where they would only have to spend 51% of their monthly income to buy a single family home. Seems downright affordable in comparison, but still 11% more than what someone like you would have paid in 1998 for a SFH in Vancouver. And you left that place because you thought that was "exorbitant".

This is all assuming these children are receiving massive gifts from their parents, since there's no way any one of them are conjuring up 20% down payments on houses approaching a million dollars while making sub 6-figure household incomes.

Funny enough, if these hypothetical children were born 9 years earlier they could have bought a house in London for only 22% of their monthly income. Not quite as good as the 15% that dad achieved, but not too far off.

No doubt, things are much worse today than back when I lived in Vancouver (making $40-$45K at the time...$40K salary and upwards of $5K bonus [but sometimes, zero bonus]).

The mismatch of supply and demand continues to be the biggest culprit. This in and of itself has multiple causes; with extremely high immigration/student sojourners currently being the biggest cause; followed by NIMBYism, restrictive zoning and geographical constraints, excessive codes/requirements in construction, insufficient materials (labour and otherwise), and to some extent, mismatch between what is being built (SFH, towers-in-the-park, shoe-boxes in the sky) and what should be built ('missing middle' type of dwellings).

Years of rock bottom interest rates stoked the fire. The combination of rising prices and low borrowing costs overheated the 'housing as investment' market. This was made worse by the large number of dwellings converted into short-term rentals (Air bnb, etc.).

[lio45]

Originally Posted by MolsonExport

This was made worse by the large number of dwellings converted into short-term rentals (Air bnb, etc.).

At least Quebec fixed that one, it took Airbnb behind the barn and shot it in the head.

In typical Quebec fashion, it took seven roasted bodies to act...

[1overcosc]

Originally Posted by MonkeyRonin

This is something I was thinking about recently, and obviously you're correct that modular housing isn't really a useful tool under the current regulatory framework; but if housing were made more of a priority (ie. by actually treating the housing crisis as a crisis) could be part of a multi-pronged solution.

Despite the high land values, we don't really lack for space - if governments were more proactive, they could open up small portions of excess public land (and I'm not just talking unused federal buildings, but things like municipal parking lots, grassy medians at the sides of roads, crown lands, etc - singularly small spaces, but considerable amounts of land in aggregate) for quickly & cheaply-built modular housing developments.

Similarly, create some sort of nationally standardized, quick-approval program for private property owners and allow & incentivize them to install modular "pods" on their properties. If zoning permitted it (or could be overrided), there's lots of space in backyards, sideyards, driveways for stuff like this: https://www.dezeen.com/2024/01/05/re...using-cutwork/

In Ontario, municipalities are almost comically harsh when it comes to bringing the hammer down on any housing that is "non-standard", so to speak. Even in the most permissive municipalities, it is almost always illegal to park an RV on your property and have a relative live in it, for example. People who have attempted to build informal housing on rural lots have gotten insanely harsh treatment as well. I know through the grapevines of someone who fell on hard times and decided to build a little cabin/camp thing on a large rural lot owned by a relative - the building site he picked was over a kilometre away from the nearest other residence. The government discovered it through satellite imagery and gave him huge fines for building without a permit, even though nobody would have even known about it without the satellites (meaning there is no harm caused to anyone.. other than him, I guess, but that's his choice, and certainly better than being homeless).

Obviously cabins in the middle of nowhere are not a solution to the housing crisis on a population wide scale, but I think the whole story encapsulates part of the problem with our housing system, in that we're very, very rigid about requiring housing to fall within a narrowly defined set of parameters and we make it difficult to impossible to build outside of those parameters. I once tried to volunteer for a charity that was trying to build a tiny home village and between municipal bylaws and the provincial building codes the whole project just completely failed to even get off the ground.

We see it as well with the increasingly high standards demanded by building codes. That same charity's head claimed to me that it costs an insanely high amount (in the $450k-$500k range IIRC) for them to build a single unit of housing--and that's as a non-profit that gets land for free--and that if they were allowed to build units according to the building code standards of the early 2000s, it would be $150k cheaper. Houses built in the late 1990s weren't death traps. I get that building code changes are meant to make newer housing safer, more efficient, more accessible, etc.. but if we really could slash hard costs by 30% simply by going back to the early 2000s building standards (which is probably still better quality housing than what the average Canadian has today).. why not do it? That's what treating housing as an actual emergency would look like: ending the mindset that it's better for a person to be homeless than, god forbid, live in a place where the hallway is 84cm wide instead of 86cm.

[lio45]

Originally Posted by 1overcosc

I know through the grapevines of someone who fell on hard times and decided to build a little cabin/camp thing on a large rural lot owned by a relative - the building site he picked was over a kilometre away from the nearest other residence. The government discovered it through satellite imagery and gave him huge fines for building without a permit

In retrospect, the solution was easy

https://www.camouflage.ca/camo-netting

[Innsertnamehere]

Originally Posted by 1overcosc

In Ontario, municipalities are almost comically harsh when it comes to bringing the hammer down on any housing that is "non-standard", so to speak. Even in the most permissive municipalities, it is almost always illegal to park an RV on your property and have a relative live in it, for example. People who have attempted to build informal housing on rural lots have gotten insanely harsh treatment as well. I know through the grapevines of someone who fell on hard times and decided to build a little cabin/camp thing on a large rural lot owned by a relative - the building site he picked was over a kilometre away from the nearest other residence. The government discovered it through satellite imagery and gave him huge fines for building without a permit, even though nobody would have even known about it without the satellites (meaning there is no harm caused to anyone.. other than him, I guess, but that's his choice, and certainly better than being homeless).

Obviously cabins in the middle of nowhere are not a solution to the housing crisis on a population wide scale, but I think the whole story encapsulates part of the problem with our housing system, in that we're very, very rigid about requiring housing to fall within a narrowly defined set of parameters and we make it difficult to impossible to build outside of those parameters. I once tried to volunteer for a charity that was trying to build a tiny home village and between municipal bylaws and the provincial building codes the whole project just completely failed to even get off the ground.

We see it as well with the increasingly high standards demanded by building codes. That same charity's head claimed to me that it costs an insanely high amount (in the $450k-$500k range IIRC) for them to build a single unit of housing--and that's as a non-profit that gets land for free--and that if they were allowed to build units according to the building code standards of the early 2000s, it would be $150k cheaper. Houses built in the late 1990s weren't death traps. I get that building code changes are meant to make newer housing safer, more efficient, more accessible, etc.. but if we really could slash hard costs by 30% simply by going back to the early 2000s building standards (which is probably still better quality housing than what the average Canadian has today).. why not do it? That's what treating housing as an actual emergency would look like: ending the mindset that it's better for a person to be homeless than, god forbid, live in a place where the hallway is 84cm wide instead of 86cm.

It's important to remember that a lot of code changes which have happened since the 1990's are energy efficiency and climate change related. We should think twice about rolling them back - but some of them can probably be axed.

The single largest impact on housing construction cost has been and continues to be land costs though. We simply do not have adequate supply of land.

Honestly hard construction costs are probably one of the smaller issues on cost inputs on development and given the impacts they have on climate change, I think should be the last to be "cut". There is a whole lot of pork in land costs, approval timelines, and government taxes which can be whacked.

One easy thing the feds could do is remove GST on new construction homes. they already did it for rentals (temporarily) - but that alone would immediately cut housing construction costs by 5%, more if the provincial counterparts joined the feds. And it can be done literally with a stroke of a pen.

The next step is to look at DC costs and start funding more of it from general government coffers, and encourage municipalities to lower costs in delivering the services identified in the DC funds. Municipalities love to inflate the scale of DC projects since it's "free money" to them. We need the community centres, roads projects, and servicing projects DCs pay for - but how can they be completed at a more reasonable cost?

Same with approval timelines - deregulate approvals as much as reasonable and push municipalities to work more efficiently. Give them the tools to make approvals easy.

Finally - Land. Forced upzonings country-wide and create large new greenfield communities wherever possible.

[YOWetal]

Originally Posted by Innsertnamehere

It's important to remember that a lot of code changes which have happened since the 1990's are energy efficiency and climate change related. We should think twice about rolling them back - but some of them can probably be axed.

The single largest impact on housing construction cost has been and continues to be land costs though. We simply do not have adequate supply of land.

Honestly hard construction costs are probably one of the smaller issues on cost inputs on development and given the impacts they have on climate change, I think should be the last to be "cut". There is a whole lot of pork in land costs, approval timelines, and government taxes which can be whacked.

One easy thing the feds could do is remove GST on new construction homes. they already did it for rentals (temporarily) - but that alone would immediately cut housing construction costs by 5%, more if the provincial counterparts joined the feds. And it can be done literally with a stroke of a pen.

The next step is to look at DC costs and start funding more of it from general government coffers, and encourage municipalities to lower costs in delivering the services identified in the DC funds. Municipalities love to inflate the scale of DC projects since it's "free money" to them. We need the community centres, roads projects, and servicing projects DCs pay for - but how can they be completed at a more reasonable cost?

Same with approval timelines - deregulate approvals as much as reasonable and push municipalities to work more efficiently. Give them the tools to make approvals easy.

Finally - Land. Forced upzonings country-wide and create large new greenfield communities wherever possible.

Land costs are almost entirely regulatory and infrastructure. Thus because of government actions. Otherwise why can builders build houses for less than the cost of our land across the US?

Agree on GST. A good compromise would be ending the rebate for investors and removing the cap for those buying a PR. Or make the cap $2 million if you must fleece the rich.

[ssiguy]

Originally Posted by suburbanite

Where are you going to stick all these modular homes? Construction capacity and costs are an issue in major Canadian markets, but land availability is at the top of the "hierarchy of the housing crisis".

As I stated, this could be done on excess gov't land or land that is not fulfilling any productive use, ie a good chunk of Vancouver ALR which is now little more than a money laundering exercise and hence shockingly unproductive or Greenbelt areas that are within a one km radius of a rapid transit station ie GO in Toronto. Ottawa/provinces/cities could also ban long-term ownership of vacant land zoned as residential under the threat of being permanently designated as a heritage property and location meaning the house cannot be sold for developable land............the shack on it now is the only structure that will be allowed on it hence completely taking away the land's value on the open market.

[whatnext]

Gosh, Vancouver seems to be building plenty of housing yet developers are having to offer promos to unload it. Maybe the problem is they're not building what Canadians need....

Land Values: Vancouver condo developers draw up all sorts of perks nowadays—but are these deals actually a bargain?
With the current high mortgage rates, premium condo developers have started making things interesting for buyers
By Frances Bula / April 30, 2024

A free business-class trip to Japan worth $20,888 with that condo! A year’s worth of beer with your future Surrey townhouse! A decorating budget of $38,000 for that Richmond apartment! A 3.88-percent mortgage rate for a suite in one of the region’s most expensive developments, Oakridge Park!...

...Although I have no intention of buying a pre-sale condo, it’s been quite the expedition into a new world of a Black Friday-style “LIMITED TIME OFFER BUY NOW OR ELSE” kind of advertising normally reserved for electronics or purses, now applied to purchases of a million or more. And there have already been a lot of them this year. It was Polygon with the Japan trips, Concord Pacific with the decorating allowance, Century Group with the beer, not to mention a couple dozen others, too.

The industry always goes into high gear around Lunar New Year, which is seen as a prime time to market to visiting Asian tourists and the lead-in to one of the traditionally busiest house-buying periods of the year. ...

https://www.bcbusiness.ca/industries...lly-a-bargain/

[SignalHillHiker]

This is not one of the... three?... on my street, but close enough.

https://www.tiktok.com/@beyondhomele...03442150329606

[YOWetal]

Originally Posted by whatnext

Gosh, Vancouver seems to be building plenty of housing yet developers are having to offer promos to unload it. Maybe the problem is they're not building what Canadians need....

When land and basic construction costs are so high you can build a $650k one bedroom with cheap finishes or a $700k fairly luxurious one. The choice is easy even if there aren't lots of buyers at that price right now. You can't build a affordable 3 bedroom with any math.

To change land prices we need a crash or signal immigration is permanently being lowered. Even shutting it down to 0 for a few zeros which would help renters a lot wouldn't tell landowners they should dump their land. They will wait for the next liberal government.

[whatnext]

Originally Posted by YOWetal

....To change land prices we need a crash or signal immigration is permanently being lowered. Even shutting it down to 0 for a few zeros which would help renters a lot wouldn't tell landowners they should dump their land. They will wait for the next liberal government.

Bingo! From a real estate commenter this morning "why do we have a housing crisis":

[IMG]graphhouse by bcborn, on Flickr[/IMG]
Credit: Steve Saretsky on X

[goodgrowth]

Development charges up nearly 2000% over the last 20 years in Toronto.

State-backed generational warfare.



https://opencouncil.ca/development-charges/