Why can't US cities build urban housing in mass like Canada?

[Dr Nevergold]

It isn't just Eclipse, I used it as an example since the prices were remarkably low for a number of condos like this in the early 00's.

I do still think its a fair statement to say prices in Toronto have increased significantly above inflation to the point where incomes haven't grown to match the housing cost growth. This would generally constitute a bubble. Toronto's economy is a bedrock of the Canadian economy, the city being the financial centre of the country for example. But even still, I'm not sure I am convinced the income growth over the past decade matches the growth in housing costs to offset a bubble.

My hope is that prices come down slightly just so more people can enter the housing market. A lot of younger people without the higher incomes need to get their financial life started and its hard to do when a nice 2 bedroom condo - not true luxury, but a nice standard condo - is selling for $300-500k up front. That immediately requires a two household income earner even with Toronto incomes.

[mhays]

Nothing ties housing prices to a specific percentage of income. So prices relative to incomes aren't necessarily indicative of a bubble.

In NY/SF, people routinely pay well over half their income for housing. Toronto is adding supply in a larger percentage than they are, which is useful for keeping prices in check. Housing costs also tend to track their replacement value, so maybe that's higher too...I bet land is a lot more expensive than 10 years ago for example.

[Dr Nevergold]

A bubble in a housing market is a market in where the underlying economic conditions cannot produce the income needed to sustain the price levels (with increase in price year over year) that a market has risen to. Of course we know this, but percentage of income toward housing is most certainly a factor. It doesn't provide all answers, but its important in a bubble.

Economics as we all know is as much an art as it is a science. People will choose to pay more and live in smaller quarters for a higher cost per square foot if the geographic location is hip enough and hot enough to attract people willing to pay. Logic goes completely out of the window and it becomes a total art in measurement.

I guess the easy way to say this is that you're both right and also not entirely right in saying that income doesn't measure a bubble. It depends on how much people want to sacrifice to pay the ever-increasing premium of home ownership in a given location such as Toronto.

I hope that Toronto never succumbs to the price pressures found in Manhattan or San Francisco, its high enough as it is today.

[mhays]

That's why I said "necessarily." It's certainly a factor.

[BIMBAM]

Originally Posted by Dr Nevergold

A bubble in a housing market is a market in where the underlying economic conditions cannot produce the income needed to sustain the price levels (with increase in price year over year) that a market has risen to. Of course we know this, but percentage of income toward housing is most certainly a factor. It doesn't provide all answers, but its important in a bubble.

Economics as we all know is as much an art as it is a science. People will choose to pay more and live in smaller quarters for a higher cost per square foot if the geographic location is hip enough and hot enough to attract people willing to pay. Logic goes completely out of the window and it becomes a total art in measurement.

I guess the easy way to say this is that you're both right and also not entirely right in saying that income doesn't measure a bubble. It depends on how much people want to sacrifice to pay the ever-increasing premium of home ownership in a given location such as Toronto.

I hope that Toronto never succumbs to the price pressures found in Manhattan or San Francisco, its high enough as it is today.

Yes it's higher today then it was in the past, but ten years ago there was no green belt, the suburbs had more room for build-out, and infrastructure wasn't under as much pressure. Growth like Toronto's is naturally going to lead to citizens spending a higher percentage of their income on housing over time. Just because the percentage hasn't remained stable doesn't mean it's a bubble, it just means it's a hardship but may not let up despite that being the case.

[Dr Nevergold]

I'm not sure the Greenbelt has been in effect long enough to be the root of housing price increase. There's still plenty of physical room for developers to expand at the moment.

Housing inflation in Toronto is mostly due to speculators combined with individual citizens buying homes and selling them every few years for profit, then forwarding those earnings toward new purchases at much higher prices. This cycle is bound to break down eventually. It always does, in every economy.

[JustSomeGuyWho]

Originally Posted by Crawford

I don't think it's even true in the sprawliest metro areas. Most multifamily tends to be built in more urban, dense, locations, even if we're talking the Phoenix/Charlotte/Dallas type places.

Well, if he means 3 or 4 story buildings with surface parking lots then I would say yes ... that is mostly what I see built these days with the exception of the city core and even there you have some of that where I live. Now, 10 to 20 years ago we were talking mostly 2 story buildings in sprawling complexes with lots of paved parking lots. I don't see a lot of new development going up like that, if any. There is definitely a more urban feel to that type of development these days even if it is still relatively low density.

[mhays]

In some metros you get surface parking even in some of the "urban" locations. In others, the vast majority or recent multifamily has no surface parking, including suburban locations.

[JustSomeGuyWho]

Originally Posted by mhays

In some metros you get surface parking even in some of the "urban" locations. In others, the vast majority or recent multifamily has no surface parking, including suburban locations.

That has not been my experience at all unless perhaps you are talking about very large metro areas and the types of projects that may make it onto this site. Off the top of my head I can rattle off maybe 15 local multi-family developments that have gone up in the last couple of years, most of which have surface parking to some extent with the rest relying on existing surface parking.

[mhays]

Not necessarily very large. But coastal, yes. I'm referring to Seattle and basically any major West Coast city. If there's not much land and it's beyond a certain cost, you don't build surface parking.

[JustSomeGuyWho]

Originally Posted by mhays

Not necessarily very large. But coastal, yes. I'm referring to Seattle and basically any major West Coast city. If there's not much land and it's beyond a certain cost, you don't build surface parking.

Now that I believe and I see that as true for much of the east coast too ... certainly the northeast. Problem with saying the vast majority are like this is that the majority of the country is not the coasts.

[mhays]

Yeah, like I said originally.