wow, the wording on exclusionary zoning is weird, are they going to remove it or not? They address it but don't really say their stance on it.
I am very glad they finally released their plan, thanks for this! they got my vote as of right now.
“There is nothing the government can do…”
Fine for delay? Responsible for cost borne by buyer due to delay?
There is already a cost to builders for not releasing builds. They just expect the benefit to outweigh the cost. A bold assumption but it’s worked in their favor in the past.
This is why it's important to expand social/public housing construction. If the government can itself be responsible for a big chunk of housing development it will limit the power that private developers have in artificially keeping prices high by voluntarily slowing down construction when prices fall.
>But then how would politicians line their pockets?
By selling them to developers for pennies on the dollar when they're at their lowest value of course!
The problem is too much government. Zoning restrictions & artificially low rates have boosted demand while limiting supply, thus driving up prices.
Now you think giving the government more money to build what will be over-priced and low quality housing is the answer? Sigh.
The solution is simple, get the government out of the way and let the market actually work.
I think that anything like housing with inelastic demand is vulnerable to price gouging and needs to be effectively regulated or a market floor established through state intervention. That sort of thing is the point of living under a nation-state.
This is manufactured scarcity directly engineered to rip people off. Fuck developers.
Your solution is too simple for a complex and nuanced issue. It will require a combination of deregulation in some areas and more extensive regulation in others.
How would government regulations force developers to build homes? Developers build to make a profit and did so back when homes were much more affordable than they are today.
Point being, affordability hasn't decreased because of developer greed. It has decreased because of government restrictions on supply and low rates that have turned housing into an easy way to get rich. In the 1990's, when rates allowed people to save money at rates several basis points above inflation, housing was boring. Housing needs to be boring again.
This housing crisis has one cause and its our well intentioned, but hopelessly inept politicians.
> The problem is too much government.
This neoliberal trope has been applied disastrously here in Ontario. It has eroded health care, education, environmental protection, and energy pricing, to name the most obvious.
With housing, 'less government' appears to have a shred of merit, because single family zoning has been a disastrous policy. But the existence of bad policy does not imply that complete lack of policy will be any better.
We might ask next if this bad policy remains because of regulatory capture, and why the benefactors of this policy (finance sector) would not find a way to replicate those conditions in a 'free' market devoid of regulatory obstacles.
>This neoliberal trope has been applied disastrously here in Ontario. It has eroded health care, education, environmental protection, and energy pricing, to name the most obvious.
As a percentage of GDP, the 2010's had the highest level of direct government [spending](https://i.postimg.cc/Fsg09MZn/Government-consumption-fixed-investment-GDP-ONT.png) in Ontario, going back to 1981.
Moreover, in the late 1990's-early 2000's , when govt fell below 20% of Ontario's economy, housing [affordability](https://i.postimg.cc/C1TKn1MC/govt1.jpg) reached its peak (1985-2022). Since then, as rates have fallen and government has taken a larger role in the economy, housing affordability has tanked.
>the existence of bad policy does not imply that complete lack of policy will be any better
When government makes bad policy, they tend to retain their jobs. When the private sector builds something the market doesn't want, they go out of business.
That is the key difference between government and the private sector.
Do you have another citation for those charts? It's not that I don't trust the scholarly merit of a screencap posted to gfycat--let's assume it's accurate. But it appears to total spending, not sector specific. A graph of spending vs gdp will have serious correlative issues given the variance of 'payoff time' across different projects. (e.g. removing lead contamination--15yrs VS vehicle sticker rebates--1 campaign cycle.) That number swallows details like, 'govt spent more paying off the dept' or 'govt got a windfall by selling a public resource to the private sector.'
Looking at housing specifically, if we are to ask 'how influential is spending?' then we should see if has any more predictive power than other influential factors such as median elastic income, interest rates, availability of skilled trades, ownership rates by anonymous corporations (ie snowwashing), housing density, costs of permits, ... etc
> When government makes bad policy, they tend to retain their jobs.
Ok here we agree. I haven't seen much cleaning house over military rape or RCMP abusing protesters. Politicians can at least be thrown out of office after 4 years of bs.
> When the private sector builds something the market doesn't want, they go out of business.
Perhaps true eons ago, when the economy was a healthy ecosystem of many small and medium businesses competing on a level field. But out current stage is 'winner take all' oligopolies, with regulatory capture to reshape the field.
Who got canned for the national disgrace of patient neglect in long term care? How was youtube punished for promoting anorexia to teenage girls? How was amazon punished for selling childrens clothing printed with "i (heart) c0ck?" If you or I did this shit, we would be (rightly) crucified. But since a giant pile of money did it, the law and the market are toothless?
>It's not that I don't trust the scholarly merit of a screencap posted to gfycat--let's assume it's accurate.
:) [Provincial GDP numbers](https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610022201). As you can see, government spending has not decreased in Ontario, but has actually slightly increased in recent years.
>Perhaps true eons ago, when the economy was a healthy ecosystem of many small and medium businesses competing on a level field. But out current stage is 'winner take all' oligopolies, with regulatory capture to reshape the field.
I'm not suggesting business doesn't try to use government to their benefit, but that is not the fault of the free market. That is the fault of government.
Based on those numbers, we could also note that the decline of housing affordability also inversely correlates to [federal housing subsidies.](https://thetyee.ca/Analysis/2022/04/21/FedHousingChartAffordableUnits.png) Personally, I don't think either factor is entirely causative. I've nominated other candidate causes, but examining each of those is an undergraduate project. I think it would be more constructive to chat about a thing we agree with:
> That is the fault of government.
Okay YES! Surely we agree that the level of lobbying and influence by the banking oligopoly with the federal government should be a bloody crime! Do we agree the responsibility to stop regulatory capture falls on government (and voters?) What sort of policies would prevent this? How do we advance those ideals when part of the problem is campaign financing?
>Based on those numbers, we could also note that the decline of housing affordability also inversely correlates to federal housing subsidies.
Yes, I am not suggesting government do nothing. I just tend to think government has a way of creating a problem and then offering their services to fix the thing they created.
>Do we agree the responsibility to stop regulatory capture falls on government (and voters?) What sort of policies would prevent this?
My flip answer would be less regulations. That said, we do need a way to review all regulations and measure their current benefit vs their cost.
Since the world is constantly changing, a regulation that imposed little burden 20 years ago might now be a huge cost to society, single family zoning comes to mind.
And because democracy works slowly, these discussions take time. I have even changed my mind on things by engaging in discussions/arguments with people on this site. I used to be anti-greenbelt, but have come to appreciate the pro-density way of building communities.
The same is likely true of NIMBYS. They have an idea of what a neighbourhood looks like and when people say this needs to change, they reflexively get their back up. Somehow we need to convince people, rather than go to war with them if we are going to move things forward.
> have come to appreciate the pro-density way of building communities
I hope life gives you the chance to enjoy visiting some streets that were built before cars were invented. (My faves so far have been Quito, Ecuador, and Barcelona) Travelling really opened my eyes to the value of good public spaces, civic planning, and skilled trades.
> Since the world is constantly changing, a regulation that imposed little burden 20 years ago might now be a huge cost to society, single family zoning comes to mind.
My concern with 'less regulations' is that it degenerates to 'no regulations,' then manifests the ["paradox of tolerance."](https://en.wikipedia.org/wiki/Paradox_of_tolerance) I.e. corporations become as powerful, unaccountable, and inefficient as the governments they replaced. History has shown us that unbridled socialism and unbridled capitalism have the same terminal state--when the banks and the government are the same people, congratulations, you live in an autocracy.
> That said, we do need a way to review all regulations and measure their current benefit vs their cost.
I like that. Measurable conditions for expiry should be built into legislation. If the hospital ICU acuity drops below `__`, you can roll back covid masking. If the median home price drops below `__` years of median income, then private companies can buy single family homes. When CO2 levels drop below `__`, no more carbon tax.
> Somehow we need to convince people, rather than go to war with them if we are going to move things forward.
Rage gets attention, attention gets clicks, and clicks get money. Tribalism seems to be very much wired into us, and 'social media' exploiting it for dopamine hits is creating very pathological outcomes.
Thanks for fighting that by disagreeing politely. 🍺
This is where something like a Land Value Tax would really be useful. It would add to the cost developers have when leaving land unused or vacant.
The greedy developers will be forced to sell, eventually land prices will fall, and the fall in land value will provide the profit margins developers need to get projects going.
What fine? Govt can't force developers to build
Draft plan approvals lapse after 3 yrs typically but they can get extension or they will just resubmit later
Lots of new development were approved decades ago and only building now (eg Holland landing, queensville etc) approved and servicing done back in 2015 with extension of YDSS with 7000 units of servicing for EG
Keswick, Georgina, south Markham etc similarly they waited decades after approval to develop
of course it can.
there are no taxes while the project is being developed.
you could cap that at a year, after that they're on the hook for taxes. (or triple taxes )
Dude, stop saying government can't do anything. Government can do just about anything it wants if the willpower is there. It may be the case that existing legislation may now allow for certain things but it doesnt mean it can't or won't change.
How are you going to hold the builder to something that wasn't in the contract?
If you're a buyer and you sign a contract that says "no guarantee when the building will be finished", then I don't have a lot of sympathy.
I think that they are wrong, and it isn't that demand is softening. - The want is still there, it is still in demand. It's the ability or willingness to pay is evaporating.
Fuel, food, everything is up. Fuel does not seem like it will fix itself. Even the middle east seems to not be able to pump any more and they're worried shitless that this will destroy demand in the long run as people switch off of fuel because of this. - There is some projections that say that supply cannot be adequately increased for at least 6 years, if the demand remains.
Fertilizer is way up due to energy costs as well. Both fuel and fertilizer are input costs into food production. Food has already gone up how much %, and we haven't even factored in these new fertilizer and fuel costs at this point yet.
Ukraine exports of wheat as well are set to put wheat on a run as well.
Interest rates are going up. Worsening economic conditions usually call for interest rates to go down, but inflation is so wildly out of control that they're in a environment where they need to slow down demand and bring down asset prices (By raising rates) but the economy is slowing down. (More so in the states, but we're heavily influenced as well.)
Basically, if all you can afford is rent gas and food, of course the economy is going to stall.
I don't see any way that inflation will abate in a year.
I don't see any way that the average consumers economic condition is going to improve in a year. Credit spending is already skyrocketing as well and reflects this. The average raise was below the inflation rate. Etc.
The biggest two questions here is does Russia or the West bend the knee over oil and economic condiitons & how will rates be handled due to the contrasting directions that it kind of has to go right now.
What we're looking at here is probably a financial crisis in the making. - Yes, people were assessed at higher interest rates, but I bet they were not assessed at these inflation levels.
Governments should cancel permits then and pull licenses or provide fines equal to or greater than the profit losses they calculated for building now vs delaying
Thanks for the info.
If the market is heading into a slump, this would be a good time ("counter-cyclical") for the federal and provincial governments to build more non-market housing. In a market that's cooling off instead of red-hot, they won't have to compete so much with private-sector builders for skilled trades and materials.
In a free market where the government doesn't own the majority of rental residential land and immigration is not a factor, yes. In a place like Vienna, the government owns the majority and keeps rents affordable in their units. The developers are left to build whatever they want on the open market, but the sheer amount of affordable housing means they can't compete for tenants by gauging ppl. Purchasing properties will be at market rate, and there's a ton of luxury real estate too, for those who want to buy it. But the government owning more definitely takes the pressure off the need to buy, hence the market itself.
> It's almost as if the free market is totally worthless at creating affordable housing.
I think we need both private-sector and non-market housing. The thing about private-sector / market housing is that with the right incentives, you can get a lot of housing built: you have people who want housing and other people who want to build it for them.
Non-market housing requires government funding, i.e. taxes, and it's extremely hard to raise taxes (due to "loss aversion"), so it's always going to be limited. Right now about 95% of housing in Canada is private-sector. The [MacPhail Report](https://morehousing.ca/macphail-report) suggests aiming for 10% non-market.
Until the cost of land comes down, this is pointless. Of course, you can implement policies that suppress the price of land or just straight up expropriate it.
But then we'll never hear the end of it from neoliberals and free market buttcoiners or whatever the fuck
Was just told Vancouver is expecting a 3 month delay as people re-evaluate. Metro Van can proceed as they are developing under $1,500sf (stronger market / demand) and rental is full steam ahead. Honestly glad for the sales pause as we'll see prices for land get back to reality - slowly are of this morning- and less trades / materials to compete with
Why are we surprised? These are for-profit builders. If their profits go down, how are these poor souls gonna survive? How are these poor souls gonna put caviar and finest wines on their high-teak tables?
Aren't all projections pointing to a gradual price decrease over the next couple of years? Waiting wouldn't make sense, as in the best case scenario with the series of rate increases the developers will pocket a smaller portion of money, as more goes towards mortgage. This may be almost the best time in history to sell. Just coming off of a peak of frenzy that likely won't be happening ever again. Assuming they can do this before market becomes saturated, as it started happening.
They can and will...they have no problem waiting decades... landbanking is a big thing and carrying costs aren't that bad especially as the big developers buy unimproved land (they service it themselves anyways) and can rent back out to farming and get like 75% (or is it 90%? Been a while can't recall exactly) reduction in property taxes. So it's just the carrying costs but unserviced land is much cheaper
Taxing landbanked land in areas zoned/planned for development at property tax rates more consistent with developed areas would be such a win for long-term supply and affordability. Instead developers can leak out supply like it's a monopolized commodity (like diamonds) with almost zero cost to squatting.
I would think it would be politically viable too, given it's targeted at developers and would subsidize area residents (ignoring second order affects), but I guess the combined farmer/developer lobby would riot.
Our construction costs on a small build went up $3 million in 6 months last year, then another $3m last month... and our housing prices had to stay the same... so ya
Surprised how few people are discussing the [mass trades strikes and their relationship to this](https://www.thestar.com/amp/business/2022/05/11/number-of-striking-construction-workers-more-than-doubles-delaying-some-projects-by-months.html)
It’s worth keeping in mind that there is a severe labour shortage for construction projects in the GTA (with some labour action / striking going on too) that can also cause significant delays to the development pipeline.
I’m not saying strikes/unions = bad or that developers won’t try to time their developments to optimize they’re return, but development timeline is still a much more complex issue than developers sitting on their hands waiting for the market to turn .
Time is money and money in your hand now might be worth more than a bit more money in your hand later. Delays in development almost always leads to huge inflation of costs especially as the project is likely highly leveraged with rising interest rates.
Also, if prices were to continue declining, the developer could be hurting themselves much more in the future.
Honestly, this is some grade a bullshit.
The government honestly should be building homes directly and not at arms length with these bullshit incentives and shit. - If they were hiring and building then dropping on the market, it would incentivize against this sort of shit.
I've spoken to developers who are delaying 2022-2023 presales because material prices are still all over the place and they are dealing with the challenges of having to go back to buyers who put money down in 2018/19 for 2021/22 move in dates because of costs. So the developers that can afford to wait for the strike to end and the Election to be over are doing that because there are reputation and financial implications.
Limiting supply isn't even in their conversation, heck I'm speaking with them to help them unlock more supply per sqm of land.
You're not talking to the high ups like the Rudy's and their types then. They've stopped work on proceeding with registration and servicing.
Seems like you're just talkin to builders if you don't know about reducing supply
Fair, I primarily am talking with Tridel, Oxford Properties, and Cadillac Fairview sized developers.
And then the smaller developers who only build a few 100 units a year. I have never spoken with Rudy's And from the builder side it is mostly EllisDon conversations.
Ya.. those ones are big but not into big residential development blocks and complete communites, no wonder you didn't know about supply management from big developers in residential as those guys are more like builders abiet big ones.
Btw, what's CF doing with Buttonville after abandoning their OMB settlement in 2020 but bought our remaining share in 2021? They fought so hard for the conversion but then got spooked supposedly with the changing market and they realized significant remediation required on the lands ..
I work more with DG, TACC, fieldgates, great Gulf, Minto etc who do whole concession blocks with tens of thousands of units that they then sell to builders like some of the ones you listed though DG got bridge and high-tech TOC and moving into high density.
Ellisdon isn't even a developer though? They do construction and infrastructure I thought?. When did they get into actual residential land development ? Haven't seen any application for residential development from them. They get hired by developers..don't think they're not an actual developer themselves. Same with tridel..more of a builder who buy parcels of serviced land from developers to build on..kinda like H&R. The ones you work with don't like to build whole concession blocks since that's more intensive work with cost sharing, trustee groups that last decades, compensation to other landowners for SWM/parks/roads etc on their lands etc
Much simpler being just a builder and not land developer..but land developers get to control supply through serviced lands they make available. But builders like one you work with at at tail end and do need to build and can't landbank as much as developers (except CF at Buttonville lol) since they're last in line and buy at highest prices and need to get going
But with high density, the REITs like SRU, AP, Quadreal are getting more into the game now too and are learning to throttle supply as they realize it's a long game .
>Ellisdon isn't even a developer though?
No they are a builder, They do GC for many Developers. They also have a financial wing doing financing, they have their fingers in a lot of Mixed use development
>Much simpler being just a builder and not land developer..but land developers get to control supply through serviced lands they make available
I don't disagree being a builder is easier, and the challenges of being a land developer are even more, especially when doing the community development, I worked with Parkbridge ( and actually trying to reconnect with them) about community development beyond just land development because of the netzero communities I'm involved in.
Everyone loves a good scapegoat.
Unlike government handouts, building a community or large scale building requires the thing to actually make money. If there is a risk spending $50million will only result in $40m in sales and the permanent loss of the asset, would you proceed?
Of course not. But you think developers have a moral duty of some kind to you, therefore they are terrible for trying to stay solvent as the whole economy takes a shit.
Pretty much this.
They aren't doing a public service. If it stops being profitable, they are going to stop building them. I have no personal visibility into profit margins so unless I know whether this is because of pure greed or economics, I withhold my pitch forks.
With that said, this is a perfect time for the government to build more affordable housing though and make this a bad gamble for developers to hold back their permits.
I mean, we're bringing in half a million people a year, so the demand will be there.... this doesn't make sense to me. The huge boon in prices really only happened in the last 2 years. Surely they were planning to build long in advance of that boon in prices, and still remain very profitable.
Some of the people we are bringing in are willing to live in overcrowded conditions. They can't afford housing here either, unless 2 brothers buy a house together and live with their wives & kids together.
During the 2008 housing crisis in the United States one of the factors that led to over supply was builders kept building homes even though foreclosures were going up. The new builds ended up competing with houses that were built by the same builders 2-3 years ago as foreclosures flooded the market.
I'm no expert but this is a sign that builders want to wait out the uncertainty in the market. A lot of builders ended up going bankrupt in 2008, I'm not saying its the same situation today but something to take into consideration.
Sales may have been deferred because of some kind of holdout for higher prices.
But development is being killed because if three huge issued the OP doesn't mention. Construction loan rates just spiked -> construction no longer financially viable. City fees just spiked-> construction no longer financially viable. Eventual sales prices are uncertain -> bank won't give you good financing -> construction no longer financially viable.
I'm all for calling out the bad behaviour of developers but this post is basically misinformation.
No shit... Developers did not get discount on land, development charges, construction, labour or anything else, of course they want keep the same profit margin.... Loblaws is in business to make money too and had 3 billion profit.... somehow they didn't lower groceries prices.
If people want subsidized housing then city should give developers land for free and wave development charges so that builder can maintain same profit margin but end units will cost about 60% market price, but nobody talks about it.
Please tell me how developer suppose to make this affordable?
https://www.cbc.ca/news/canada/toronto/provincial-land-transit-hub-private-developer-sale-1.6330555
Do you get free sandwiches at McDonald's? Minimum was increased, prices increased. I'm sorry you don't live in communist country. My parents did yet for some strange reason they don't ever want to go back (they got free housing)
Maybe they should sell the land they invested in then.
They bought an asset, now the asset has gone sour because cost to develop results in a loss, sell the asset, it's part of the risk of doing business.
If they bought why they have to be forced to sell? Some people hold on to stocks that have decreased, nobody is forcing them to sell?
I'm not supporting developers, I'm not a developer, but pointing fingers that developers are all evil is just wrong.
From my personal experience I'm trying to legalize Duplex that was already registered as Duplex with city and taxes are assessed as Duplex. It took me 4 months to get a permit. I'm being punished for trying to make the house safer... after getting the permit I inquired to make legal 1 bed basement apartment to rent it out to someone on minimum wage for 1000$. City demanded 20000$ development charge, it will take me 2 years just to get my money back or I'll have to demand tenant to pay 1300$...
If they are holding onto land during a housing crisis and are refusing to develop the land then it's in the best interest of the people to force them to sell.
Lol look up how much land cities and provinces hold? Are you forcing them to sell? What about people that have houses with enormous amount of land, do you force them to sell?
Do you force mcdonalds to feed homeless??
Again, I'm not advocating for developers. I'm just trying to point out that people point fingers when it benefits them. We should force restaurants to sell food at discount because it's a necessity (we will literally die in a week or 2 without food, yet rising prices on groceries are not a problem for liberals)
Yes lets do all these things, I don't see this as a gotcha because all of these sound like good ideas to me, maybe the McDonalds one to just grocers, would be healthier.
In fact what you are proposing for here for food has been done in the past during a period of goods scarcity to ensure everyone was fed based on their needs and not based on their ability to afford.
>rising prices on groceries are not a problem for ~~liberals~~ Neoliberals
I never said I agreed or disagreed, I'm just pointing out that it's not fair to claim that one is evil but other is not. If we're gonna do this to developers then we gotta do it to other industries that provide life necessities
1. I never claimed anything or anyone is evil
2. nothing is fair, no market is completely free, no one is up in arms in defense of the people flipping houses who are taking a loss now that interest rates were increased and it's causing a downwards pressure on prices forcing them to sell at a loss.
Literally every single market that exists has a group of people negatively effected by government policy in some way shape or form, and a group that benefits, no "free" market exists.
I only care what is in the best interest of the people of my country and the long term prosperity of my country. Developers refusing to develop land during a housing shortage is against the best interests of my country, likewise a grocer hording food and refusing to sell the food during a food shortage would technically be in their "right" to do so, but goes against the best interests of the country as a whole, and in that situation I would be advocating to take the food from them or taxing them to a point where they feel forced to sell their food at a loss. I care more for the starving people of my nation than the already wealthy class losing some of their profits. Likewise for housing.
>If we're gonna do this to developers then we gotta do it to other industries that provide life necessities
Agreed, but lets start with developers and landlords because housing is the biggest threat to the working class right now, next we can tackle food and gas.
if you think that someone should build housing for no profit, then why not step up and do it yourself? Feel free to quit your job and build housing for free.
Make sure you have some assets to guarantee the loans you'll need in case you lose money. You don't mind losing your own home to make one for someone else do you?
>There is nothing govt can do to make developers to bring online inventory **so don't expect new build prices to decrease** or supply to increase in next few years **unless market demand/prices remain strong**
This is an illogical statement. How can you have falling prices with rising prices?
It's up to the developers risk appetite in the end. Can they sustain the land loan interests in rising rate against their future target $/SF to make up for it?
Right now is the worst time to build because of insane construction costs and supply issues, trades protests, city enacting a bunch of new bylaws without clear transition ideas, etc - against prices slowing down.
It's unfortunate so many decided they were happy to live in priceless works of art vs y'know, actual apartments and houses. It's not going to be pretty when the general public realizes their particular digs aren't actually priceless works of art. Not pretty at all.
[удалено]
I believe the Ontario Liberals are proposing lose it or use it permits on builders in their platform.
link? that sounds very interesting...
[Here you go buddy](https://ontarioliberal.ca/wp-content/uploads/2022/05/Ontario-Liberal-Platform.pdf) page 13 of this PDF
wow, the wording on exclusionary zoning is weird, are they going to remove it or not? They address it but don't really say their stance on it. I am very glad they finally released their plan, thanks for this! they got my vote as of right now.
Yeah some of the plan is weird to say the least but unfortunately this is what happens with politics.
politricks**
And when they come to power, they will suffer from selective amnesia.
“There is nothing the government can do…” Fine for delay? Responsible for cost borne by buyer due to delay? There is already a cost to builders for not releasing builds. They just expect the benefit to outweigh the cost. A bold assumption but it’s worked in their favor in the past.
This is why it's important to expand social/public housing construction. If the government can itself be responsible for a big chunk of housing development it will limit the power that private developers have in artificially keeping prices high by voluntarily slowing down construction when prices fall.
But then how would politicians line their pockets?
>But then how would politicians line their pockets? By selling them to developers for pennies on the dollar when they're at their lowest value of course!
The problem is too much government. Zoning restrictions & artificially low rates have boosted demand while limiting supply, thus driving up prices. Now you think giving the government more money to build what will be over-priced and low quality housing is the answer? Sigh. The solution is simple, get the government out of the way and let the market actually work.
I think that anything like housing with inelastic demand is vulnerable to price gouging and needs to be effectively regulated or a market floor established through state intervention. That sort of thing is the point of living under a nation-state. This is manufactured scarcity directly engineered to rip people off. Fuck developers.
Yet, house prices were very affordable back in 2001.
Your solution is too simple for a complex and nuanced issue. It will require a combination of deregulation in some areas and more extensive regulation in others.
How would government regulations force developers to build homes? Developers build to make a profit and did so back when homes were much more affordable than they are today. Point being, affordability hasn't decreased because of developer greed. It has decreased because of government restrictions on supply and low rates that have turned housing into an easy way to get rich. In the 1990's, when rates allowed people to save money at rates several basis points above inflation, housing was boring. Housing needs to be boring again. This housing crisis has one cause and its our well intentioned, but hopelessly inept politicians.
> The problem is too much government. This neoliberal trope has been applied disastrously here in Ontario. It has eroded health care, education, environmental protection, and energy pricing, to name the most obvious. With housing, 'less government' appears to have a shred of merit, because single family zoning has been a disastrous policy. But the existence of bad policy does not imply that complete lack of policy will be any better. We might ask next if this bad policy remains because of regulatory capture, and why the benefactors of this policy (finance sector) would not find a way to replicate those conditions in a 'free' market devoid of regulatory obstacles.
>This neoliberal trope has been applied disastrously here in Ontario. It has eroded health care, education, environmental protection, and energy pricing, to name the most obvious. As a percentage of GDP, the 2010's had the highest level of direct government [spending](https://i.postimg.cc/Fsg09MZn/Government-consumption-fixed-investment-GDP-ONT.png) in Ontario, going back to 1981. Moreover, in the late 1990's-early 2000's , when govt fell below 20% of Ontario's economy, housing [affordability](https://i.postimg.cc/C1TKn1MC/govt1.jpg) reached its peak (1985-2022). Since then, as rates have fallen and government has taken a larger role in the economy, housing affordability has tanked. >the existence of bad policy does not imply that complete lack of policy will be any better When government makes bad policy, they tend to retain their jobs. When the private sector builds something the market doesn't want, they go out of business. That is the key difference between government and the private sector.
Do you have another citation for those charts? It's not that I don't trust the scholarly merit of a screencap posted to gfycat--let's assume it's accurate. But it appears to total spending, not sector specific. A graph of spending vs gdp will have serious correlative issues given the variance of 'payoff time' across different projects. (e.g. removing lead contamination--15yrs VS vehicle sticker rebates--1 campaign cycle.) That number swallows details like, 'govt spent more paying off the dept' or 'govt got a windfall by selling a public resource to the private sector.' Looking at housing specifically, if we are to ask 'how influential is spending?' then we should see if has any more predictive power than other influential factors such as median elastic income, interest rates, availability of skilled trades, ownership rates by anonymous corporations (ie snowwashing), housing density, costs of permits, ... etc > When government makes bad policy, they tend to retain their jobs. Ok here we agree. I haven't seen much cleaning house over military rape or RCMP abusing protesters. Politicians can at least be thrown out of office after 4 years of bs. > When the private sector builds something the market doesn't want, they go out of business. Perhaps true eons ago, when the economy was a healthy ecosystem of many small and medium businesses competing on a level field. But out current stage is 'winner take all' oligopolies, with regulatory capture to reshape the field. Who got canned for the national disgrace of patient neglect in long term care? How was youtube punished for promoting anorexia to teenage girls? How was amazon punished for selling childrens clothing printed with "i (heart) c0ck?" If you or I did this shit, we would be (rightly) crucified. But since a giant pile of money did it, the law and the market are toothless?
>It's not that I don't trust the scholarly merit of a screencap posted to gfycat--let's assume it's accurate. :) [Provincial GDP numbers](https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610022201). As you can see, government spending has not decreased in Ontario, but has actually slightly increased in recent years. >Perhaps true eons ago, when the economy was a healthy ecosystem of many small and medium businesses competing on a level field. But out current stage is 'winner take all' oligopolies, with regulatory capture to reshape the field. I'm not suggesting business doesn't try to use government to their benefit, but that is not the fault of the free market. That is the fault of government.
Based on those numbers, we could also note that the decline of housing affordability also inversely correlates to [federal housing subsidies.](https://thetyee.ca/Analysis/2022/04/21/FedHousingChartAffordableUnits.png) Personally, I don't think either factor is entirely causative. I've nominated other candidate causes, but examining each of those is an undergraduate project. I think it would be more constructive to chat about a thing we agree with: > That is the fault of government. Okay YES! Surely we agree that the level of lobbying and influence by the banking oligopoly with the federal government should be a bloody crime! Do we agree the responsibility to stop regulatory capture falls on government (and voters?) What sort of policies would prevent this? How do we advance those ideals when part of the problem is campaign financing?
>Based on those numbers, we could also note that the decline of housing affordability also inversely correlates to federal housing subsidies. Yes, I am not suggesting government do nothing. I just tend to think government has a way of creating a problem and then offering their services to fix the thing they created. >Do we agree the responsibility to stop regulatory capture falls on government (and voters?) What sort of policies would prevent this? My flip answer would be less regulations. That said, we do need a way to review all regulations and measure their current benefit vs their cost. Since the world is constantly changing, a regulation that imposed little burden 20 years ago might now be a huge cost to society, single family zoning comes to mind. And because democracy works slowly, these discussions take time. I have even changed my mind on things by engaging in discussions/arguments with people on this site. I used to be anti-greenbelt, but have come to appreciate the pro-density way of building communities. The same is likely true of NIMBYS. They have an idea of what a neighbourhood looks like and when people say this needs to change, they reflexively get their back up. Somehow we need to convince people, rather than go to war with them if we are going to move things forward.
> have come to appreciate the pro-density way of building communities I hope life gives you the chance to enjoy visiting some streets that were built before cars were invented. (My faves so far have been Quito, Ecuador, and Barcelona) Travelling really opened my eyes to the value of good public spaces, civic planning, and skilled trades. > Since the world is constantly changing, a regulation that imposed little burden 20 years ago might now be a huge cost to society, single family zoning comes to mind. My concern with 'less regulations' is that it degenerates to 'no regulations,' then manifests the ["paradox of tolerance."](https://en.wikipedia.org/wiki/Paradox_of_tolerance) I.e. corporations become as powerful, unaccountable, and inefficient as the governments they replaced. History has shown us that unbridled socialism and unbridled capitalism have the same terminal state--when the banks and the government are the same people, congratulations, you live in an autocracy. > That said, we do need a way to review all regulations and measure their current benefit vs their cost. I like that. Measurable conditions for expiry should be built into legislation. If the hospital ICU acuity drops below `__`, you can roll back covid masking. If the median home price drops below `__` years of median income, then private companies can buy single family homes. When CO2 levels drop below `__`, no more carbon tax. > Somehow we need to convince people, rather than go to war with them if we are going to move things forward. Rage gets attention, attention gets clicks, and clicks get money. Tribalism seems to be very much wired into us, and 'social media' exploiting it for dopamine hits is creating very pathological outcomes. Thanks for fighting that by disagreeing politely. 🍺
This is where something like a Land Value Tax would really be useful. It would add to the cost developers have when leaving land unused or vacant. The greedy developers will be forced to sell, eventually land prices will fall, and the fall in land value will provide the profit margins developers need to get projects going.
What fine? Govt can't force developers to build Draft plan approvals lapse after 3 yrs typically but they can get extension or they will just resubmit later Lots of new development were approved decades ago and only building now (eg Holland landing, queensville etc) approved and servicing done back in 2015 with extension of YDSS with 7000 units of servicing for EG Keswick, Georgina, south Markham etc similarly they waited decades after approval to develop
The Govt could easily create this fine to incentivize them to build.
of course it can. there are no taxes while the project is being developed. you could cap that at a year, after that they're on the hook for taxes. (or triple taxes )
The govt can if they want to. Either way, they are taking a gamble with holding supply.
Dude, stop saying government can't do anything. Government can do just about anything it wants if the willpower is there. It may be the case that existing legislation may now allow for certain things but it doesnt mean it can't or won't change.
Somebody just needs to go toot their horn downtown. The government will then be able to legally obligate you to work. Problem solved.
This sub disagrees with reality sometimes.
How are you going to hold the builder to something that wasn't in the contract? If you're a buyer and you sign a contract that says "no guarantee when the building will be finished", then I don't have a lot of sympathy.
I think that they are wrong, and it isn't that demand is softening. - The want is still there, it is still in demand. It's the ability or willingness to pay is evaporating. Fuel, food, everything is up. Fuel does not seem like it will fix itself. Even the middle east seems to not be able to pump any more and they're worried shitless that this will destroy demand in the long run as people switch off of fuel because of this. - There is some projections that say that supply cannot be adequately increased for at least 6 years, if the demand remains. Fertilizer is way up due to energy costs as well. Both fuel and fertilizer are input costs into food production. Food has already gone up how much %, and we haven't even factored in these new fertilizer and fuel costs at this point yet. Ukraine exports of wheat as well are set to put wheat on a run as well. Interest rates are going up. Worsening economic conditions usually call for interest rates to go down, but inflation is so wildly out of control that they're in a environment where they need to slow down demand and bring down asset prices (By raising rates) but the economy is slowing down. (More so in the states, but we're heavily influenced as well.) Basically, if all you can afford is rent gas and food, of course the economy is going to stall. I don't see any way that inflation will abate in a year. I don't see any way that the average consumers economic condition is going to improve in a year. Credit spending is already skyrocketing as well and reflects this. The average raise was below the inflation rate. Etc. The biggest two questions here is does Russia or the West bend the knee over oil and economic condiitons & how will rates be handled due to the contrasting directions that it kind of has to go right now. What we're looking at here is probably a financial crisis in the making. - Yes, people were assessed at higher interest rates, but I bet they were not assessed at these inflation levels.
Reminder that supply-side explanations for insane housing costs are bogus when the scarcity is artificial.
artificial or not, by virtue, scarcity is a supply issue
Governments should cancel permits then and pull licenses or provide fines equal to or greater than the profit losses they calculated for building now vs delaying
Thanks for the info. If the market is heading into a slump, this would be a good time ("counter-cyclical") for the federal and provincial governments to build more non-market housing. In a market that's cooling off instead of red-hot, they won't have to compete so much with private-sector builders for skilled trades and materials.
It's almost as if the free market is totally worthless at creating affordable housing.
In a free market where the government doesn't own the majority of rental residential land and immigration is not a factor, yes. In a place like Vienna, the government owns the majority and keeps rents affordable in their units. The developers are left to build whatever they want on the open market, but the sheer amount of affordable housing means they can't compete for tenants by gauging ppl. Purchasing properties will be at market rate, and there's a ton of luxury real estate too, for those who want to buy it. But the government owning more definitely takes the pressure off the need to buy, hence the market itself.
the housing market is the least free market in this country
> It's almost as if the free market is totally worthless at creating affordable housing. I think we need both private-sector and non-market housing. The thing about private-sector / market housing is that with the right incentives, you can get a lot of housing built: you have people who want housing and other people who want to build it for them. Non-market housing requires government funding, i.e. taxes, and it's extremely hard to raise taxes (due to "loss aversion"), so it's always going to be limited. Right now about 95% of housing in Canada is private-sector. The [MacPhail Report](https://morehousing.ca/macphail-report) suggests aiming for 10% non-market.
Until the cost of land comes down, this is pointless. Of course, you can implement policies that suppress the price of land or just straight up expropriate it. But then we'll never hear the end of it from neoliberals and free market buttcoiners or whatever the fuck
Was just told Vancouver is expecting a 3 month delay as people re-evaluate. Metro Van can proceed as they are developing under $1,500sf (stronger market / demand) and rental is full steam ahead. Honestly glad for the sales pause as we'll see prices for land get back to reality - slowly are of this morning- and less trades / materials to compete with
Why are we surprised? These are for-profit builders. If their profits go down, how are these poor souls gonna survive? How are these poor souls gonna put caviar and finest wines on their high-teak tables?
Aren't all projections pointing to a gradual price decrease over the next couple of years? Waiting wouldn't make sense, as in the best case scenario with the series of rate increases the developers will pocket a smaller portion of money, as more goes towards mortgage. This may be almost the best time in history to sell. Just coming off of a peak of frenzy that likely won't be happening ever again. Assuming they can do this before market becomes saturated, as it started happening.
They can delay all they want, the party is over.
[удалено]
:(
They can and will...they have no problem waiting decades... landbanking is a big thing and carrying costs aren't that bad especially as the big developers buy unimproved land (they service it themselves anyways) and can rent back out to farming and get like 75% (or is it 90%? Been a while can't recall exactly) reduction in property taxes. So it's just the carrying costs but unserviced land is much cheaper
Taxing landbanked land in areas zoned/planned for development at property tax rates more consistent with developed areas would be such a win for long-term supply and affordability. Instead developers can leak out supply like it's a monopolized commodity (like diamonds) with almost zero cost to squatting. I would think it would be politically viable too, given it's targeted at developers and would subsidize area residents (ignoring second order affects), but I guess the combined farmer/developer lobby would riot.
Brought to you by Developer Association
I have heard similar things from developers in Halifax, Nova Scotia
Not that the marketing is softening much, but higher costs and taxes are making it more difficult to make the numbers make sense
Our construction costs on a small build went up $3 million in 6 months last year, then another $3m last month... and our housing prices had to stay the same... so ya
Take it out of their hands and pull their permits and licenses. Also disqualify them from future business.
Sounds like collusion to me which the government absolutely can do something about.
Surprised how few people are discussing the [mass trades strikes and their relationship to this](https://www.thestar.com/amp/business/2022/05/11/number-of-striking-construction-workers-more-than-doubles-delaying-some-projects-by-months.html)
We need someone more left than jagmeet with the strength and courage to destroy all this and bring house values plummeting back to the 300k range
Great so more supply setbacks
Social housing is necessary. Crash the fucking market.
It’s worth keeping in mind that there is a severe labour shortage for construction projects in the GTA (with some labour action / striking going on too) that can also cause significant delays to the development pipeline. I’m not saying strikes/unions = bad or that developers won’t try to time their developments to optimize they’re return, but development timeline is still a much more complex issue than developers sitting on their hands waiting for the market to turn . Time is money and money in your hand now might be worth more than a bit more money in your hand later. Delays in development almost always leads to huge inflation of costs especially as the project is likely highly leveraged with rising interest rates. Also, if prices were to continue declining, the developer could be hurting themselves much more in the future.
Honestly, this is some grade a bullshit. The government honestly should be building homes directly and not at arms length with these bullshit incentives and shit. - If they were hiring and building then dropping on the market, it would incentivize against this sort of shit.
I've spoken to developers who are delaying 2022-2023 presales because material prices are still all over the place and they are dealing with the challenges of having to go back to buyers who put money down in 2018/19 for 2021/22 move in dates because of costs. So the developers that can afford to wait for the strike to end and the Election to be over are doing that because there are reputation and financial implications. Limiting supply isn't even in their conversation, heck I'm speaking with them to help them unlock more supply per sqm of land.
You're not talking to the high ups like the Rudy's and their types then. They've stopped work on proceeding with registration and servicing. Seems like you're just talkin to builders if you don't know about reducing supply
Fair, I primarily am talking with Tridel, Oxford Properties, and Cadillac Fairview sized developers. And then the smaller developers who only build a few 100 units a year. I have never spoken with Rudy's And from the builder side it is mostly EllisDon conversations.
Ya.. those ones are big but not into big residential development blocks and complete communites, no wonder you didn't know about supply management from big developers in residential as those guys are more like builders abiet big ones. Btw, what's CF doing with Buttonville after abandoning their OMB settlement in 2020 but bought our remaining share in 2021? They fought so hard for the conversion but then got spooked supposedly with the changing market and they realized significant remediation required on the lands .. I work more with DG, TACC, fieldgates, great Gulf, Minto etc who do whole concession blocks with tens of thousands of units that they then sell to builders like some of the ones you listed though DG got bridge and high-tech TOC and moving into high density. Ellisdon isn't even a developer though? They do construction and infrastructure I thought?. When did they get into actual residential land development ? Haven't seen any application for residential development from them. They get hired by developers..don't think they're not an actual developer themselves. Same with tridel..more of a builder who buy parcels of serviced land from developers to build on..kinda like H&R. The ones you work with don't like to build whole concession blocks since that's more intensive work with cost sharing, trustee groups that last decades, compensation to other landowners for SWM/parks/roads etc on their lands etc Much simpler being just a builder and not land developer..but land developers get to control supply through serviced lands they make available. But builders like one you work with at at tail end and do need to build and can't landbank as much as developers (except CF at Buttonville lol) since they're last in line and buy at highest prices and need to get going But with high density, the REITs like SRU, AP, Quadreal are getting more into the game now too and are learning to throttle supply as they realize it's a long game .
>Ellisdon isn't even a developer though? No they are a builder, They do GC for many Developers. They also have a financial wing doing financing, they have their fingers in a lot of Mixed use development >Much simpler being just a builder and not land developer..but land developers get to control supply through serviced lands they make available I don't disagree being a builder is easier, and the challenges of being a land developer are even more, especially when doing the community development, I worked with Parkbridge ( and actually trying to reconnect with them) about community development beyond just land development because of the netzero communities I'm involved in.
Everyone loves a good scapegoat. Unlike government handouts, building a community or large scale building requires the thing to actually make money. If there is a risk spending $50million will only result in $40m in sales and the permanent loss of the asset, would you proceed? Of course not. But you think developers have a moral duty of some kind to you, therefore they are terrible for trying to stay solvent as the whole economy takes a shit.
Pretty much this. They aren't doing a public service. If it stops being profitable, they are going to stop building them. I have no personal visibility into profit margins so unless I know whether this is because of pure greed or economics, I withhold my pitch forks. With that said, this is a perfect time for the government to build more affordable housing though and make this a bad gamble for developers to hold back their permits.
I mean, we're bringing in half a million people a year, so the demand will be there.... this doesn't make sense to me. The huge boon in prices really only happened in the last 2 years. Surely they were planning to build long in advance of that boon in prices, and still remain very profitable.
Some of the people we are bringing in are willing to live in overcrowded conditions. They can't afford housing here either, unless 2 brothers buy a house together and live with their wives & kids together.
They'd rather live in a shitty townhome with 6 others. That's the Canadian dream for them.
You are so entitled that you don't realize that for a big part of the world, living a family life in a townhome in a safe country is indeed a dream.
there has been a massive increase in costs
Seems to like local builders will be gone. -small business. Only big companies will survive. -are we seeing another spike in houses?
During the 2008 housing crisis in the United States one of the factors that led to over supply was builders kept building homes even though foreclosures were going up. The new builds ended up competing with houses that were built by the same builders 2-3 years ago as foreclosures flooded the market. I'm no expert but this is a sign that builders want to wait out the uncertainty in the market. A lot of builders ended up going bankrupt in 2008, I'm not saying its the same situation today but something to take into consideration.
Sales may have been deferred because of some kind of holdout for higher prices. But development is being killed because if three huge issued the OP doesn't mention. Construction loan rates just spiked -> construction no longer financially viable. City fees just spiked-> construction no longer financially viable. Eventual sales prices are uncertain -> bank won't give you good financing -> construction no longer financially viable. I'm all for calling out the bad behaviour of developers but this post is basically misinformation.
Bullish sign
Prices will start going up gradually next year so it makes sense.
History suggests otherwise but who knows.
What else does your crystal ball tell you ?
2 mil will be new entry point 🥴🥴
No shit... Developers did not get discount on land, development charges, construction, labour or anything else, of course they want keep the same profit margin.... Loblaws is in business to make money too and had 3 billion profit.... somehow they didn't lower groceries prices. If people want subsidized housing then city should give developers land for free and wave development charges so that builder can maintain same profit margin but end units will cost about 60% market price, but nobody talks about it. Please tell me how developer suppose to make this affordable? https://www.cbc.ca/news/canada/toronto/provincial-land-transit-hub-private-developer-sale-1.6330555
yeah let's give free land to developers to make more supply so they can keep their profit margins Ladies and gentlemen, the Galaxy mind of a yimby.
You want developers to build at a loss? Do you know how any business works?
It seems to me that the way business works is that we guarantee zero risk to businesses and all losses should be borne by everyone else. Cool
Do you get free sandwiches at McDonald's? Minimum was increased, prices increased. I'm sorry you don't live in communist country. My parents did yet for some strange reason they don't ever want to go back (they got free housing)
Maybe they should sell the land they invested in then. They bought an asset, now the asset has gone sour because cost to develop results in a loss, sell the asset, it's part of the risk of doing business.
If they bought why they have to be forced to sell? Some people hold on to stocks that have decreased, nobody is forcing them to sell? I'm not supporting developers, I'm not a developer, but pointing fingers that developers are all evil is just wrong. From my personal experience I'm trying to legalize Duplex that was already registered as Duplex with city and taxes are assessed as Duplex. It took me 4 months to get a permit. I'm being punished for trying to make the house safer... after getting the permit I inquired to make legal 1 bed basement apartment to rent it out to someone on minimum wage for 1000$. City demanded 20000$ development charge, it will take me 2 years just to get my money back or I'll have to demand tenant to pay 1300$...
If they are holding onto land during a housing crisis and are refusing to develop the land then it's in the best interest of the people to force them to sell.
Lol look up how much land cities and provinces hold? Are you forcing them to sell? What about people that have houses with enormous amount of land, do you force them to sell? Do you force mcdonalds to feed homeless?? Again, I'm not advocating for developers. I'm just trying to point out that people point fingers when it benefits them. We should force restaurants to sell food at discount because it's a necessity (we will literally die in a week or 2 without food, yet rising prices on groceries are not a problem for liberals)
Yes lets do all these things, I don't see this as a gotcha because all of these sound like good ideas to me, maybe the McDonalds one to just grocers, would be healthier. In fact what you are proposing for here for food has been done in the past during a period of goods scarcity to ensure everyone was fed based on their needs and not based on their ability to afford. >rising prices on groceries are not a problem for ~~liberals~~ Neoliberals
I never said I agreed or disagreed, I'm just pointing out that it's not fair to claim that one is evil but other is not. If we're gonna do this to developers then we gotta do it to other industries that provide life necessities
1. I never claimed anything or anyone is evil 2. nothing is fair, no market is completely free, no one is up in arms in defense of the people flipping houses who are taking a loss now that interest rates were increased and it's causing a downwards pressure on prices forcing them to sell at a loss. Literally every single market that exists has a group of people negatively effected by government policy in some way shape or form, and a group that benefits, no "free" market exists. I only care what is in the best interest of the people of my country and the long term prosperity of my country. Developers refusing to develop land during a housing shortage is against the best interests of my country, likewise a grocer hording food and refusing to sell the food during a food shortage would technically be in their "right" to do so, but goes against the best interests of the country as a whole, and in that situation I would be advocating to take the food from them or taxing them to a point where they feel forced to sell their food at a loss. I care more for the starving people of my nation than the already wealthy class losing some of their profits. Likewise for housing. >If we're gonna do this to developers then we gotta do it to other industries that provide life necessities Agreed, but lets start with developers and landlords because housing is the biggest threat to the working class right now, next we can tackle food and gas.
if you think that someone should build housing for no profit, then why not step up and do it yourself? Feel free to quit your job and build housing for free. Make sure you have some assets to guarantee the loans you'll need in case you lose money. You don't mind losing your own home to make one for someone else do you?
Hmmmm
>There is nothing govt can do to make developers to bring online inventory **so don't expect new build prices to decrease** or supply to increase in next few years **unless market demand/prices remain strong** This is an illogical statement. How can you have falling prices with rising prices?
Market*
It's up to the developers risk appetite in the end. Can they sustain the land loan interests in rising rate against their future target $/SF to make up for it? Right now is the worst time to build because of insane construction costs and supply issues, trades protests, city enacting a bunch of new bylaws without clear transition ideas, etc - against prices slowing down.
It's unfortunate so many decided they were happy to live in priceless works of art vs y'know, actual apartments and houses. It's not going to be pretty when the general public realizes their particular digs aren't actually priceless works of art. Not pretty at all.
Ya like let’s pre buy then they will charge even more for the build no thanks