How would you solve the housing affordability crisis?

[saffronleaf]

Originally Posted by Nouvellecosse

Very interesting clip - especially the part toward the end discussing public perception.

• Video Link

Of course the impact is small.

The foreign buyer boogeyman sentiment is just an easy and stupid thing that the masses can get riled up about.

The real problem is obviously urban planning and NIMBYism. This is the same reason why SF housing prices are insanely high.

[ssiguy]

If foreign buyers have so little impact then why is it that Vancouver, the mecca of money laundering, has by far the highest prices in the country? Both Toronto and Montreal are much larger and important economically, financially, culturally, and politically and have higher densities.

I love how the real estate cartel constantly tries to tell everyone that the Chinese have little impact on the market but when the discussion of banning foreign buyers comes up they raise cane and bring stories of an housing collapse. How can such a supposedly small foreign buyers segment conversely cause a housing collapse?

[someone123]

Originally Posted by ssiguy

I love how the real estate cartel constantly tries to tell everyone that the Chinese have little impact on the market but when the discussion of banning foreign buyers comes up they raise cane and bring stories of an housing collapse. How can such a supposedly small foreign buyers segment conversely cause a housing collapse?

It is also weird to pretend that immigrants and those with permanent residency are a completely different set that shouldn't be considered at all when it comes to housing.

Here are 2016 statistics on immigration: http://www.statcan.gc.ca/daily-quoti.../t001b-eng.htm

Vancouver is 40.8% immigrants and 5.9% immigrants from just the 2011-2016 period. Without a constant influx of immigrants, Vancouver wouldn't be growing much. Subtract the (other) foreign buyers and local speculators and there is not much left of Vancouver's housing market.

We may or may not like these immigration levels but if a significant number of immigrants are people showing up with suitcases full of cash and buying real estate without relying on the local labour market that is going to have a huge impact on affordability for everyone else. It has long-term implications in terms of who will accumulate wealth in the future and how the tax burden is shared. Feel-good "a Canadian is a Canadian is a Canadian" type platitudes don't change this reality. There are definitely immigrants who move here to work hard and participate in the economy and many of them have produced huge dividends for Canada. But it's not guaranteed that every immigrant will be like this. It is very unlikely that the investor-class immigrant who flips houses annually, pays $0 in income tax (maybe gets GST cheques in the mail...), sends their kids here for subsidized tuition, etc. etc. contributes more than they take out. The reality of the global economy is that there are millions of people looking for holes to exploit in Canada's laws. If those holes exist they're going to get exploited, and they do exist.

[bless-u]

How would you solve the housing affordability crisis?

1) Create more build-able lands available for developers to work on right away

2) Simplify and expedite the process for getting approval to build

3) Give incentives to developers to develop lands along city outskirts

4) Decentralize down town cores in cities like Toronto and Vancouver

5) Create new business and financial districts in surrounding areas and cities

6) Create new retail and entertainment districts in surrounding areas and cities

7) Create new schools and community centres in surrounding area and cities

8) Build new affordable public housing in surrounding areas and cities

9) Give tax credits or lower taxes for businesses to set up offices and outlets in newly developed zones

10) Build new highways and rapid transit connecting new developed areas to existing communities

11) Create new regulations, taxes and fines to monitor and control speculative activities in housing market for both locals and foreigners

12) Integrate interest rates, mortgage rates with housing policy and control


Canada is a HUGE country with plenty of lands. Theoretically we SHOULDN'T have any housing crisis if we knew how to develop and grow cities. The traditional perception of a single down town core with everything in it should be abandoned. We need more Toronto and Vancouver outside of Toronto and Vancouver.

Locals and new immigrants would flock to new developed areas in fringes of cities if they had reasons to, but they don't currently. So everyone is clustered in down town core and immediate surrounding areas where the majority of good jobs, communities and entertainments are located. Hence, the housing crisis which puts a premium on houses and attracts speculative activities from wealthy locals and foreign buyers.

Crisis will only continue to escalate if the demand and supply issues can't be resolved. We need to use supply side of the equation to control demand and price of houses to a point which speculation will not be justifiable and profitable to those who intend to park their excessive cash here in Canada using houses as deposit boxes.

The dream of home ownership in cities like Toronto and Vancouver is not completely dead, just yet. We need someone with practical expertise in planning, developing and growing cities in charge of housing, and lead us out of the current mess. Political credentials alone is not enough to bring us there.

[mchow]

Hey guys, I'm just testing out an idea that I have for making increased density in SFH areas more palatable, since to me that's the single biggest factor in reducing pressure on sprawl and housing prices.

Most SFH areas in metro Vancouver are allowed to build to a density equal to roughly 55% lot coverage. Increased buildout to that limit has meant the gradual destruction of our tree canopy due to reduced areas for planting. Houses closer together mean less privacy and a harsher streetscape. Maybe we can introduce some incentives to protect greenspace that allows for mature trees to fluorish, and make "tall houses" a more appropriate built form for the residential streetscape:

-allow extra density and height, if lot coverage is reduced to fit within "enhanced" narrower width recommendations at different heights
-allow additional density and height if permanent greenzone established along a 15' sideyard (no future development on that space for ie: 100 years); trees min. 3 stories tall transplanted there and allowed to grow to maintain privacy between neighbours
-allow additional density if converted to multi-family
-10' wide driveways permitted only - all extra parking must go underground
-etc

The below example maintains some quantifiable aspirations of the single-family home:
-all units must have glazed corners, for connection to nature
-all units to be certain distance from neighbours' windows, distance can be reduced if trees/hedge wall planted in-between
-all units must have substantial yard and covered porch

Below are 2.5-storey townhouses each stacked over two 2-storey ones (each owning the front and rear yards respectively) and using the rooftops of the lower two as a yard. In the 6.5-storey option, there is an additional 2.5-storey townhouse stacked over the middle one, with a roof garden as it's yard. The stacked units are never less than 2 floors above the yard of the unit below so that there's enough separation for privacy.

Wondering how receptive people might be to any proposition along these lines

[MonkeyRonin]

Great renders. That's precisely the kind of infill density we need to allow with our SFH neighbourhoods.

[bless-u]

So the idea is to reduce the foot print of the dwelling and increase its height so as to create a small scale low-rise three to four stories high in a similar fashion like that in urban Japan such as Tokyo. Interesting. It might work in some areas in Vancouver provided there are lots available. I was just looking at map of Vancouver yesterday, and was amazed how packed it was between the ocean and mountains. So many houses there. I think another approach to alleviate the pain of housing shortage is to consider building lane-way houses wherever space available. Perhaps it is already happening.

[mchow]

There are now over 2000 laneway houses in Vancouver, but most of those are rented out or used for relatives/guests. Even if the land title can be made separate, most people aren't interested in being a homeowner of a dwarf house. I'd imagine they'd rather invest in part of a 4-plex that has the grander appearance of a large custom house.

If an average per square foot price of quality construction is $300, and the typical 60x120' lot used in the renders above is about $1.5 million in greater Vancouver, a 4-bedroom townhouse of 1800 square feet shared with 3 other units on a single lot (like in this design) could be about $915K each before soft costs and profit.

Are there any single family homeowners here who can comment on whether they could be comfortable living in a multi-family building like this, for about $1M? Would-be SFH owners are the target demographic here, not condo owners.

[someone123]

Originally Posted by mchow

There are now over 2000 laneway houses in Vancouver, but most of those are rented out or used for relatives/guests. Even if the land title can be made separate, most people aren't interested in being a homeowner of a dwarf house. I'd imagine they'd rather invest in part of a 4-plex that has the grander appearance of a large custom house.

Selling off a laneway house sounds like a huge money-losing proposition. Imagine if the separately-owned laneway house ends up with terrible owners or tenants? The prospect of that makes the main house much less desirable beyond just the loss of land and privacy, and the laneway itself is comparable to an apartment. I don't know what the real numbers are like but I could imagine properties where you can sell a laneway house for say $600,000 but then the value of the main house drops by $1M.

If an average per square foot price of quality construction is $300, and the typical 60x120' lot used in the renders above is about $1.5 million in greater Vancouver, a 4-bedroom townhouse of 1800 square feet shared with 3 other units on a single lot (like in this design) could be about $915K each before soft costs and profit.

Are there any single family homeowners here who can comment on whether they could be comfortable living in a multi-family building like this, for about $1M? Would-be SFH owners are the target demographic here, not condo owners.

$1M is still really unaffordable for almost everyone in metro Vancouver except those who already own more than a starter type condo (which is now $400,000-600,000; I would assume few people young enough to want to upgrade have their places full paid off). If this number were, say, $700,000 it would be much more desirable because it would be within upgrade range for the demographic that is usually looking to upgrade.

My condo is just under $600,000 and it's in a complex where townhouses are now north of $1M. It really doesn't make much sense to upgrade. I would be paying $500,000 for 400 extra square feet. This is one of the aspects of Vancouver's housing market that is most messed up. Hypothetically the extra construction cost for those 400 square feet is more like $100,000-200,000, but multi-unit supply in this range is scarce because the development pipeline is full of shoebox investment condos. New West has tried to counteract this phenomenon with a requirement that 10% of units be 3 bedroom but measures of that sort have proven to be inadequate so far.

Hopefully this market will just correct (even just multi-unit, which theoretically should be much more subject to correction) and there will be at least a bit of an upgrade path to 3 or 4 bedroom places for a substantial portion of the population.

[mchow]

$300 per square foot assumes the upper market end of concrete high-rise construction, since I'm showing a lot of glass and stone in my renders for a higher-end version of the built form aimed at would-be SFH owners. More basic low-rise concrete construction can still be had for $200 per square foot, and if the homes were smaller (say 1400sf) that will bring the price to about $750K. The basic premise is to make SFH-like homes affordable by paying SFH land prices while building multi-family, by upzoning the entire city for a built form that people will accept as the replacement for all SFH.

[someone123]

Originally Posted by mchow

$300 per square foot assumes the upper market end of concrete high-rise construction, since I'm showing a lot of glass and stone in my renders for a higher-end version of the built form aimed at would-be SFH owners. More basic low-rise concrete construction can still be had for $200 per square foot, and if the homes were smaller (say 1400sf) that will bring the price to about $750K. The basic premise is to make SFH-like homes affordable by paying SFH land prices while building multi-family, by upzoning the entire city for a built form that people will accept as the replacement for all SFH.

For me this trade-off seems kind of bad though, and I suspect that's true of a lot of people looking for more space to live in. I would rather have a larger space in a multi-unit building (assuming decent construction that avoids noise issues, etc.) than a smaller space in a detached house, or worse still a plex setup that's somewhere between house and small apartment building. I would be happy to add 400 or 800 square feet onto my condo. Maybe $200,000 worth of happiness. Not $500,000 worth of happiness.

Some people do care about having an exit directly to the outdoors. I have a feeling that demand could be met by putting townhouses along the bottom floor of larger multi-unit buildings. Most people don't want the ground floor, and pay more for higher floors.

Rather than paying $915K for the 1,800 square foot 4-plex I'd prefer to get the land costs down close to zero (construction costs fixed at ~$550,000) and pay, say, $650,000 for 1,800 square feet in a highrise or midrise.

The people who don't want this scenario are homeowners in the city. They would rather have 4 storey buildings built next to them than 10 or 50 storey buildings. Ideally they want no construction at all. They've been getting their way; the level of improvement of most land in Vancouver has been negligible compared to the increase in land costs in recent years. Same old dumpy houses, vastly higher prices.

[ssiguy]

Those infills look great but wouldn't mean anything in Vancouver. They would simply be bought by the Chinese with cash, left empty, and flipped within a couple years. The developemtns would be well over locals ability to buy them in the first place and the more expensive they are the better chance of them selling...........why would a foreigner personally or thru a numbered company bother trying to launder $1 million on a condo when they can launder 2 million?

[MonkeyRonin]

Originally Posted by someone123

Selling off a laneway house sounds like a huge money-losing proposition. Imagine if the separately-owned laneway house ends up with terrible owners or tenants? The prospect of that makes the main house much less desirable beyond just the loss of land and privacy, and the laneway itself is comparable to an apartment. I don't know what the real numbers are like but I could imagine properties where you can sell a laneway house for say $600,000 but then the value of the main house drops by $1M.

How is the prospect of a bad neighbour a problem specific to laneway housing though? It's a (fairly minor) risk in any housing type - though probably greatest in multi-unit buildings. The only way that severing the lot and selling off the land could be a value-losing proposition for the owner would be if the value of the parking space were greater than a buildable housing lot, which I can't imagine it would be in any high-cost, urban city.

More likely, if there were fewer hurdles to severing lots and building laneway housing, it'd be a way for existing car-free homeowners to make a quick buck by selling unused land, or for would-be homeowners to make back some of the money they've overextended themselves on for the house. A $2 million inner-city house in Toronto might drop in value by say, $200,000 by not having on-site parking, but the value of that land as buildable property (without improvements) would definitely be at least $300,000 - probably double.

I think you're really underestimating the demand for standalone housing - it's definitely there, even in the form of smaller houses in lanes. This is Croft Street, a laneway in Toronto with an assortment of housing. These properties can easily sell for over a million on the rare occasion they hit the market. Meanwhile the Victorians that back onto them are still just as desirable as those on any neighbouring block.


Croft St. by Eric H, on Flickr


There are some other (modern, legal) ones scattered around the city's various laneways as well - all very much in-demand properties. They're small, but low-maintainence and free of condo fees, and present an affordable opportunity for architectural expression.






Plus a few haphazard contraptions that are probably rented out not-quite-legally.




But in any case, in a world of easier-to-build laneway houses, most would probably just be a case of homeowners keeping the rear of their property intact and building an apartment over their garage for rental income. Which also happens to be a good way to increase the supply of reasonably-priced rental properties while offsetting the cost of home ownership. Seems like a good deal to me.

[someone123]

Originally Posted by MonkeyRonin

How is the prospect of a bad neighbour a problem specific to laneway housing though? It's a (fairly minor) risk in any housing type - though probably greatest in multi-unit buildings. The only way that severing the lot and selling off the land could be a value-losing proposition for the owner would be if the value of the parking space were greater than a buildable housing lot, which I can't imagine it would be in any high-cost, urban city.

Not really. It could be value-losing because two unusually small lots are worth less than one normal-sized lot. Here in Vancouver most of these lots with detached houses are worth approximately the value of the land. The market is driven by speculation, not the inherent value of the housing.

In most other Canadian markets laneway houses aren't that attractive because it's easy to buy a full-sized house or upgrade to a larger one.

Bad neighbours aren't unique to laneway housing but the sold-off laneway house property would have one extra and particularly close neighbour that the other houses wouldn't have. Most of the neighbourhoods in Vancouver have back alleys and your rear neighbour is typically separated from you by an alley plus both backyards. A laneway house would be much closer. Why not just live in a condo if you're going to have houses right next to you on 3 sides and no backyard?

[dleung]

Originally Posted by someone123

For me this trade-off seems kind of bad though, and I suspect that's true of a lot of people looking for more space to live in. I would rather have a larger space in a multi-unit building (assuming decent construction that avoids noise issues, etc.) than a smaller space in a detached house, or worse still a plex setup that's somewhere between house and small apartment building. I would be happy to add 400 or 800 square feet onto my condo. Maybe $200,000 worth of happiness. Not $500,000 worth of happiness.

Some people do care about having an exit directly to the outdoors. I have a feeling that demand could be met by putting townhouses along the bottom floor of larger multi-unit buildings. Most people don't want the ground floor, and pay more for higher floors.

Rather than paying $915K for the 1,800 square foot 4-plex I'd prefer to get the land costs down close to zero (construction costs fixed at ~$550,000) and pay, say, $650,000 for 1,800 square feet in a highrise or midrise.

The people who don't want this scenario are homeowners in the city. They would rather have 4 storey buildings built next to them than 10 or 50 storey buildings. Ideally they want no construction at all. They've been getting their way; the level of improvement of most land in Vancouver has been negligible compared to the increase in land costs in recent years. Same old dumpy houses, vastly higher prices.

$100k in land cost per unit in Vancouver proper is possible only if you put 30 units on a single family lot. At 1800sf each before common areas, it would be about 10FSR of density - imagine the Olympic village with 20 storey canyons... Zoned likewise for all of Vancouver to keep multi-family land rates equal to SFR land. Not realistic. Also, diminishing returns. For an extra $100k in land cost per unit (10-15% on total cost) u can live in half the density, and so forth.

Based on mchow's sketch. $300-$400k seems to be the minimum land cost for ground-oriented housing in metro Vancouver. I can totally see scenarios where the yard area can be divided up as large terraces among more units and more height, in which case $200k for land for each "townhouse" is possible.

[MonkeyRonin]

Originally Posted by someone123

Not really. It could be value-losing because two unusually small lots are worth less than one normal-sized lot. Here in Vancouver most of these lots with detached houses are worth approximately the value of the land. The market is driven by speculation, not the inherent value of the housing.

In most other Canadian markets laneway houses aren't that attractive because it's easy to buy a full-sized house or upgrade to a larger one.

Bad neighbours aren't unique to laneway housing but the sold-off laneway house property would have one extra and particularly close neighbour that the other houses wouldn't have. Most of the neighbourhoods in Vancouver have back alleys and your rear neighbour is typically separated from you by an alley plus both backyards. A laneway house would be much closer. Why not just live in a condo if you're going to have houses right next to you on 3 sides and no backyard?

Would the lots really be unusually small though? The value of the lot is not equal across it's entire surface area - the real value comes from the buildable area. The backyard has minimal monetary value, especially in an urban setting.

Here are some pretty typical early-20th century inner-city lots in Toronto. Pay attention in particular to #235, 237, and 239. Despite having an extra 15' or so of yard space, I would expect 235 & 237 to have pretty similar property values, which I'd probably estimate at around $0.9-1.1 million in the current market, all else being equal. 239 meanwhile, would probably go for more like $1-1.2 million because it has a garage.




Now take the rearmost 30' off #239 for a laneway house, making it the same size with the same amount of parking was lot 235. That new rear lot might be sold for $300,000-$400,000, but do you really think the front lot would decrease in value by more than the $100,000-$200,000 that its neighbours are worth?




Small backyards are pretty normal for urban housing - that's not what you're paying for to get a standalone house in the middle of a city (or as in many townhouse developments, even suburban ones, there is no yard - but they still command a premium over apartment condos). Yard & privacy or not, these are still very desirable properties - and I'm sure most people would much prefer one of these to a condo.