Cost of housing in Canada

[YZT580]

Condo's are about to go into free fall in Vancouver. New projects are grinding to a halt. Seems average Canadians were not the target market and the lack of foreign buyers has gutted the market. Apparently a group of developers has asked the Feds to reconsider their stand.

Excuse me as I don't shed a tear.

following Toronto's lead. For those going after Ford, and he is not on my Christmas card list, there are thousands of building permits already issued in Toronto that aren't being acted upon. There are any number of buyers who are walking away from their deposits and condos sitting finished, half finished, and empty. Families don't want what has been built; they are designed for singles, couples, and investors to rent out and your average immigrant can't afford the down payment

 

[lenaitch]

following Toronto's lead. For those going after Ford, and he is not on my Christmas card list, there are thousands of building permits already issued in Toronto that aren't being acted upon. There are any number of buyers who are walking away from their deposits and condos sitting finished, half finished, and empty. Families don't want what has been built; they are designed for singles, couples, and investors to rent out and your average immigrant can't afford the down payment

No kidding. The average size of a condo in Toronto built after 2016 is 650sf. Some only have a 'bar fridge' and microwave - no stove.

 

[YZT580]

No kidding. The average size of a condo in Toronto built after 2016 is 650sf. Some only have a 'bar fridge' and microwave - no stove.

so none of them were designed to meet the needs of an expanding population. What is the group of people then who have the capital reserve to design and construct housing that is suitable and who aren't already financially strapped by guessing wrong 10 years ago? All of those building permits will have to be re-negotiated to permit a different dwelling which is fine if construction hasn't started but anything else will have to be completed and then sold to a market that doesn't want them before any new stuff, other than fill-ins and renos where the cash is up front, can be financed. I am guessing a couple of years if they are lucky.

 

[Brad Sallows]

So... a government expecting concrete results in return for funding is a bad thing now, because Doug Ford is saying it?

Municipalities have the ability to encourage home building, by tying permits to abbreviated timelines, and expecting builders to actually build, not just get a permit to build. They also have the power to shorten and simplify the permit process, so that things can happen much faster.

"Well, I can't meet that timeline. I guess I'll just sit on the property until someone offers me enough."

That is only one example to illustrate a point: whatever it is the handful of clever people in Ford's government think they are doing, they are going to be outguessed and outmanoeuvred by thousands of others with real money in play. They should stick to eliminating or reducing the impediments over which they have full control, and then shut up and stay out of the way. They are not going to solve the "housing crisis" in a generation, much less on a time scale that will matter to voters in the next election. But they can find new ways to fuck things up with unintended consequences.

 

[Furniture]

"Well, I can't meet that timeline. I guess I'll just sit on the property until someone offers me enough."

That is only one example to illustrate a point: whatever it is the handful of clever people in Ford's government think they are doing, they are going to be outguessed and outmanoeuvred by thousands of others with real money in play. They should stick to eliminating or reducing the impediments over which they have full control, and then shut up and stay out of the way. They are not going to solve the "housing crisis" in a generation, much less on a time scale that will matter to voters in the next election. But they can find new ways to fuck things up with unintended consequences.

You're suggesting that, as if it isn't already what's happening...

Under the current housing plan, the municipality doesn't get rewarded for giving a permit that will never be used. The municipalities want that changed, so they can get housing money for granting permits that won't result in housing actually being built.

I can't see the downside of not paying people for a task they aren't doing.

 

[brihard]

Bubbles are easier to deal with the fallout of when they’re tulips, .com stocks, or Pokemon cards. It’s tougher when a years-long bubble results in not necessarily completed physical towers full of shoeboxes people cannot or will not live in, but that were purchased on spec. The early entrants to the leveraged condo portfolio AirBnB craze kicked off market dynamics they never would have imagined.

 

[IKnowNothing]

I can't see the downside of not paying people for a task they aren't doing.

That's because that's a gross mischaracterization of the issue.

More accurately- You can't see the downside of denying access to the infrastructure funding instituted to replace the development fees that the province legislatively barred municipalities from levying because of factors outside of the municipal control.

Municipalities don't build homes. Its not their role in the system, not their task to complete.

In broads strokes, They are tasked with, in pipeline order:

1. maintaining mandated levels of long term long term unserviced land inventories designated for future development
2. planning, investing in, and coordinating infrastructure growth to maintain capacity for and access to service for a sufficient amount of the above for the mid term
3. approving a sufficient proportion of projects via plan of subdivision to ensure enough inventory is progressing forward to the build phase
4. approving a sufficient number of sites via site plan approvals and building permits to ensure enough inventory can be built
5. inspecting active builds in a timely fashion such that they don't overly slow down the builds

At all of these tiers they are required to balance the overall velocity and volume of throughput with their responsibility to enforce provincial planning guidelines, regulatory/safety requirements, and the will of the democratically elected municipal government.

If they're executing and the throughput is there, inventories exist to support the home building but they're not getting built- the problem isn't with the municipalities. Binding resource allocation to outcomes outside of the control of the function you're resourcing is objectively stupid.


Downsides of them not getting the funding

1. They don't have the necessary money to properly do the above 2. the downstream funnel is impeded, inventories fall, problems made worse
2. They pull the money to do 2 from elsewhere in the budget, overall infrastructure and service quality falls
3. They raise the money via direct tax increase

Downsides of them having to try and find ways to influence things outside of their arc to not lose the funding

1. They take their eye off the ball and the throughput at their actual role in the pipeline falls
2. They take their eye off the ball and maintain throughput but at the cost of losing balance- inspections miss more, unsafe homes get built, projects with insufficient draingage get approved etc etc.
3. 1 and 2 at the same time
4. As @ Brad Sallows so aptly put it, they attempt to meddle with things outside of their arc and they "find new ways to fuck things up with unintended consequence"

 

[Colin Parkinson]

Municipalities are the peons of the Province, who are in turn the peons of the Feds. Each level looks at the other with some disdain and feel they are the ones holding things together and the others are getting in the way.

 

[Furniture]

They raise the money via direct tax increase

Aren't property taxes and development fees specifically intended to pay for infrastructure? Shouldn't they be set at a rate that allows for that to happen, rather than begging for more money for housing from other levels of government?

 

[Brad Sallows]

Aren't property taxes and development fees specifically intended to pay for infrastructure? Shouldn't they be set at a rate that allows for that to happen, rather than begging for more money for housing from other levels of government?

That would be ideal, but most of what government does is plagued by Cost Disease. If governments take the easy way out on compensation negotiations and bureaucratic bloat for long enough, eventually municipal government becomes "unsustainable" (meaning, the tax base can't keep up). This, of course, is the fault of people who refuse to live small.

 

[IKnowNothing]

Aren't property taxes and development fees specifically intended to pay for infrastructure? Shouldn't they be set at a rate that allows for that to happen, rather than begging for more money for housing from other levels of government?

Property taxes for existing, development fees for future. But in 2022 the Ontario government drastically reduced the amount of development fees that Municipalities could levy, committing to make up the difference- the funds in question.

 

[Furniture]

Property taxes for existing, development fees for future. But in 2022 the Ontario government drastically reduced the amount of development fees that Municipalities could levy, committing to make up the difference- the funds in question.

Then the fight should be to get development fees back to the right level, not a fight for handouts for pretending to fix a problem.

 

[lenaitch]

Municipalities are the peons of the Province, who are in turn the peons of the Feds. Each level looks at the other with some disdain and feel they are the ones holding things together and the others are getting in the way.

True, but at least the feds and provinces have some Constitutional lanes they can argue over. Municipalities, not so much. A province could cause a municipality to cease to exist tomorrow (or create one). Ontario has been dancing around doing that with school boards for a few years.

Someone once said that Canada is country held together by bribes; although most countries with sub-national governments do the same.

 

[IKnowNothing]

Then the fight should be to get development fees back to the right level, not a fight for handouts for pretending to fix a problem.

But development fees at the "right" level are oft (and arguably correctly) cited as one of the key drivers of both high build costs and slow development.

Using provincial funds to reduce development fees and try to stimulate development isnt an inherently bad idea. Tieing said funding to performance isnt inherently bad- if the performance being judged is actually in the perview of the funded party.

 

[YZT580]

But development fees at the "right" level are oft (and arguably correctly) cited as one of the key drivers of both high build costs and slow development.

Using provincial funds to reduce development fees and try to stimulate development isnt an inherently bad idea. Tieing said funding to performance isnt inherently bad- if the performance being judged is actually in the perview of the funded party.

but an action that needs careful implementation. China and their ghost cities is a good example of government intervention failing to match need. I also remember miles of empty streets, curbs, and street lights in rural Florida that sat that way until they were no longer useable that were built to entice Canadians to build a winter home. If the provincial or federal government offers money for infrastructure towns are going to grab it. They all have pet projects on the back burner that they can pull out as justification and without controls many will go back on the shelf until next time.

 

[mariomike]

Municipalities, not so much. A province could cause a municipality to cease to exist tomorrow (or create one).

The mayor of Canada's largest city put it this way, "being treated like a “little boy going up to Queen's Park in short pants” .

 

[suffolkowner]

But development fees at the "right" level are oft (and arguably correctly) cited as one of the key drivers of both high build costs and slow development.

Using provincial funds to reduce development fees and try to stimulate development isnt an inherently bad idea. Tieing said funding to performance isnt inherently bad- if the performance being judged is actually in the perview of the funded party.

i think the argument is that the development fees well exceed the cost of development and are being used to keep the property tax down.

 

[Eaglelord17]

but an action that needs careful implementation. China and their ghost cities is a good example of government intervention failing to match need. I also remember miles of empty streets, curbs, and street lights in rural Florida that sat that way until they were no longer useable that were built to entice Canadians to build a winter home. If the provincial or federal government offers money for infrastructure towns are going to grab it. They all have pet projects on the back burner that they can pull out as justification and without controls many will go back on the shelf until next time.

Like the private sector screwing up the housing market due to them producing way too small condos for actual usage and just treating it as a investment tool?

Governments can screw things up, but a well thought out and implemented plan can be successful as well. The problem usually is the government trying to hit the easy button and not actually solve the problem.

Singapore is a good example to look to for this. Their housing market is very successful and mainly government driven. It keeps the costs low and is part of what allows their economy to do so well.

 

[Colin Parkinson]

Like the private sector screwing up the housing market due to them producing way too small condos for actual usage and just treating it as a investment tool?

Governments can screw things up, but a well thought out and implemented plan can be successful as well. The problem usually is the government trying to hit the easy button and not actually solve the problem.

Singapore is a good example to look to for this. Their housing market is very successful and mainly government driven. It keeps the costs low and is part of what allows their economy to do so well.

"Costs low" in Singapore is relative. It is a very expensive place to live.

 

[Furniture]

Like the private sector screwing up the housing market due to them producing way too small condos for actual usage and just treating it as a investment tool?

In fairness to the market, the government incentivized homes as investments through their policies, so it was a twonsoded effort to get us to this dysfunctional housing market.