Toronto SmartCentres Eglinton West | ?m | 60s | SmartCentres | Turner Fleischer

[Northern Light]

I mean, subjectively I agree, I wish everyone had at least some vision, but at the end of the day, it's RioCan's land. Unless you're somehow going to change their thinking from the inside, there's not much we can do about it, unfortunately.

Well, PE, I think this would be better stated as ' There's nothing we can do about it under the current legislative framework'.

But we could change the framework.

There's nothing that precludes Ontario from outlawing pre-construction sales; that alone would be a big drive towards quality if you had to rent/sell based on the as-built product.

But we can do more than that.

We can prescriptively zone in certain respects, should we wish; it's done in cities around the world. Now, many here would understandably fear 'Planning's' worst impulses. I might argue that it's more reactive planning and the OLT that drive some of those worst impulses.

We can mandate that 'x' density can't be added without a supermarket present within 'x' distance.

We can mandate retail units have certain characteristics.

We can outlaw the endless replication of chain retail.

We can better describe and impose good pedestrian conditions at street level without being entirely inflexible.

We can impose minimum elevator ratios too!

We can also outlaw some of the cheapest, ugliest building materials, no low-grade pretend brick, no EIFS, we can even cap the over-use of mullions and spandrel.

Oh, and just to humour me, we can also set minimum sizes for parks! LOL

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I will freely concede that the current provincial government is unlikely to do any of the above; and that getting any provincial gov't to do much of the above......would require a great deal of pressure.

That said, it's not impossible.

 

[WislaHD]

There's nothing that precludes Ontario from outlawing pre-construction sales; that alone would be a big drive towards quality if you had to rent/sell based on the as-built product.

It would also drive new condo development to a screeching halt under current financial regulatory rules.

If the objective is to force new development to be purpose-built rental, then sure, but a majority of the new rental supply comes from investor-driven condo development being rented out on the secondary market. The total number of completions would plummet and asking rents would skyrocket exacerbating the unaffordability crisis. If this policy direction is chosen, it better be partnered with a serious policy-package eliminating government-related soft-costs, incentivizing purpose-built rental construction, and expediting planning approval times to make up for the loss supply from the condo market.

 

[ProjectEnd]

It would also drive new condo development to a screeching halt under current financial regulatory rules.

If the objective is to force new development to be purpose-built rental, then sure, but a majority of the new rental supply comes from investor-driven condo development being rented out on the secondary market. The total number of completions would plummet and asking rents would skyrocket exacerbating the unaffordability crisis. If this policy direction is chosen, it better be partnered with a serious policy-package eliminating government-related soft-costs, incentivizing purpose-built rental construction, and expediting planning approval times to make up for the loss supply from the condo market.

If it's the government you're looking to for answers, why not just force changes in our extremely conservative lending culture to eliminate the 70% sales requirement for new condo construction? You'd get better units because inexperienced folks aren't just buying off a plan but you'd still get to keep the owner inventory. Canada is unique in this respect, it's not something other countries require.

 

[Northern Light]

It would also drive new condo development to a screeching halt under current financial regulatory rules.

Sure; and send purpose-built rental skyrocketing. Different investment model; more in line w/the needs of the community.

 

[WislaHD]

If it's the government you're looking to for answers, why not just force changes in our extremely conservative lending culture to eliminate the 70% sales requirement for new condo construction? You'd get better units because inexperienced folks aren't just buying off a plan but you'd still get to keep the owner inventory. Canada is unique in this respect, it's not something other countries require.

My understanding is that these rules were put in place as a result of the early 90's real estate crash and to prevent condo projects from looking like a Harry Stinson-esque misadventure.

Canada is indeed a unique market, but the investor-friendly condo floorplates do actually sale well, and the investor-driven rush to reach 70% sold actually results in project financing and shovels in the ground typically within 18 months of launching. In a typical real estate market in the United States, condos with larger average unit sizes targeted at end-users can be selling for 6+ years before shovels are in the ground. Given just how supply-constrained we are in Toronto and how desperately we need new supply injected into the market, I think we shouldn't just regulate away these investor boxes from existence (though I sure as hell would want some reform here to increase livability of these buildings, e.g., ensuring adequate # of elevators per 100 units) but accept it as one part of the solution to rapidly increasing housing supply. Whether having that 70% sales requirement is an essential part of the equation, I am not sure.

There is also the other question if whether "more family-friendly" units is actually what the market wants. Households are getting increasingly smaller and the demand even on the purpose-built rental part of the market is for 1-bedroom units aimed at singles and couples, not family-sized units. I find that the planning and policy talk on that front unfortunately disconnected from demographic and market reality, even though I wish it weren't the case.

Sure; and send purpose-built rental skyrocketing. Different investment model; more in line w/the needs of the community.

I am all for purpose-built rental housing. I am however concerned of forcing drastic policy and regulatory change without taking into account how it may affect the overall quantity of supply coming online. Like it or not, most new rental housing is from the secondary condo market. If this source was eliminated and the current regulatory regime were to continue in-place, then the result would be only very deep-pocketed builders and institutional capital (REITs and pensions) working on longer-term investment time horizons being able pencil new housing supply at a time when we need a drastic increase in housing starts. The result would be skyrocketing rents. Then the next government comes in with promises of rent controls or worse at the behest of the public, and even those institutional developers begin to stall their projects or divest into other jurisdictions.

 

[Northern Light]

I am all for purpose-built rental housing. I am however concerned of forcing drastic policy and regulatory change without taking into account how it may affect the overall quantity of supply coming online. Like it or not, most new rental housing is from the secondary condo market. If this source was eliminated and the current regulatory regime were to continue in-place, then the result would be only very deep-pocketed builders and institutional capital (REITs and pensions) working on longer-term investment time horizons being able pencil new housing supply at a time when we need a drastic increase in housing starts. The result would be skyrocketing rents. Then the next government comes in with promises of rent controls or worse at the behest of the public, and even those institutional developers begin to stall their projects or divest into other jurisdictions.

I simply don't agree; I see lots of housing markets globally that meet demand w/o investor box condos. Local builders and banks would simply have to adapt.

There are different ways to achieve the same thing. But, for instance, minimum unit sizes so that housing doesn't look like SRO everywhere and slightly better decorated prison cells....... would do something similar to the market.

In the current model, if you said you can't sell suites that aren't at least 600ft2 period; 1 bdrms can't be under 750, 2 bdrms can't be under 900, 3 bdrms can't under 1,100ft2 then you'd absolutely send condo prices through the roof; which forces the market and the state to adopt the other solutions necessary to alleviate a crisis, instead of growing it, which is what's happened under the current market formula for the last decade and a 1/2.

We have too much demand which must be curtailed with fewer foreign students and fewer TFWs and modest reductions in conventional immigration.

We have too little income per person, we need labour shortages to drive up productivity and wage growth and higher minimum wages as well.,

We also need social benefits to be significantly higher, and we need far more gov't and non-profit built housing and proportionately less from the for-profit sector.

The status quo will not create a better situation, it simply extends what we're already doing, which is actively making things worse.

 

[Undead]

Making units livable is not just about area, but also layouts and higher ceilings. A good layout and 9-foot ceiling will do absolute wonders even with 600-700 sq.ft.

I used to live in a 1,000+ sq.ft. two bedroom. It felt cramped because the ceiling was 7'10'' and the layout could have been better. The living room was stupidly oversized: you could easily have repurposed 80-90 sq.ft. from the open space dining room into a third bedroom/den.

Now I'm in an even larger two bedroom and the living room is even more stupidly oversized. Meanwhile, the ceilings are only 2-3 inches higher, but it makes a difference.

 

[rbt]

If it's the government you're looking to for answers, why not just force changes in our extremely conservative lending culture to eliminate the 70% sales requirement for new condo construction?

You can't force a bank to give a loan, especially foreign banks and less-regulated funding sources which finance a surprising number of projects. CMHC could guarantee the loan though via an insurance plan which would derisk it and reduce requirements.

Regarding better layouts, I'm not convinced what Pinnacle puts out is better than the others despite their higher than typical sales after project registration.

 

[Northern Light]

You can't force a bank to give a loan, especially foreign banks and less-regulated funding sources which finance a surprising number of projects.

You can, indeed force banks to do anything you want, that's within constitutional bounds, just like you can force citizens to anything.

You have to meet the POGG test in Canada, Peace, Order and Good Government; you have to show a link between ends and means.......but in Canada there is no constitutional right to private property.

This makes it very clear that you can regulate/tax any behavior out of or into existence.

That does not mean the government ought to do so recklessly or without regard to potential market distortion or trade/investment issues w/international partners.

Still.......for all intents and purposes 'forcing' is possible........ ..the U.S. has compelled minimal levels of loans to minorities or to those in low-income areas; and they have far greater constitutional protections of private property than we do.

Its desirability is a different question and one I think ought to be treated w/nuance.

CMHC could guarantee the loan though via an insurance plan which would derisk it and reduce requirements.

Regarding better layouts, I'm not convinced what Pinnacle puts out is better than the others despite their higher than typical sales after project registration.

CMHC already backs mortgages w/less than 20% down.

We heavily intervene in the market and clearly tilt it.

I would argue we tilt it in correctly.

Facilitating ownership by people who can only afford 5% down does little to assist, and those people are at very high risk given that we allow variable interest rate mortages ( many countries do not ). What this tends to do is inflate demand for ownership based housing, which in turn inflates the price and the value of the land.​

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I would argue for having CMHC back out of subsidizing anything in the for-profit model, and instead devote its considerable resources to:​

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1) The non-profit, RGI, Co-op model​

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2) For profit, purpose-built-rental, net new housing that includes a material affordable component.​

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[xy3]

Plenty of housing was built in the GTA in the 90s when interest rates were higher/normal. I don't buy that excuse.

The problem is exhorbitant development charges. Scrapping development charges & community consultations would be a start.