Housing Supply: Myth Busting and Providing Real Solutions￼
For too long, governments have accepted beliefs about the housing market which have led to policies that have not appropriately addressed the issue of housing unaffordability. These myths have been reinforced through mainstream and social media and are widely accepted as true. But are they?
Here we address two of these housing myths and examine two practical solutions that will help provide more housing and chart a return toward a more affordable housing market.
There is no doubt that foreign investment exists in the housing market (remember British Properties?), and for the foreseeable future, it will be there.
Over the past six years we have seen a steady reduction in foreign investment in the real estate and throughout that time prices have escalated at an unprecedented rate. Over the past year, the market value of foreign investment is only about 0.3 per cent.
It’s bad methodology to compare population growth and housing stock to conclude that we have been building enough housing. Demand for could far outpace housing stock, but if there isn’t enough housing then population could still stagnate, or even decrease.
Housing stock/new supply is a constraint on population growth – people can’t move/stay here if there’s nowhere to live. More than 100,000 people moved to BC in 2021, approximately 34 per cent from other provinces/territories and the rest from other countries (Source: Province of BC).
Here are some additional facts to consider:
- A report from CMHC said B.C. as a whole would require 570,000 new homes beyond what is usually built to achieve anything resembling affordability by 2030. That figure represents over 71,000 new units per year, every year between now and 2030, over and above currently projected housing growth.
- A recent Scotiabank housing report stated that Canada has the lowest number of housing units per 1,000 residents of any G7 country. The number of housing units per 1,000 Canadians has been falling since 2016 owing to the sharp rise in population growth. An extra 100,000 dwellings would have been required to keep the ratio of housing units to population stable since 2016—leaving us still well below the G7 average.
Average household size has been declining, so we need more housing stock. Most municipalities have not met their housing growth projections. In Metro Vancouver, only North Vancouver City has seen new housing completions above their projections from the Regional Growth Strategy. Metro Van as a whole is 6% below its own projection (Source: Homebuilders Association Vancouver).
Improving the new housing approval process
It takes too long to bring new housing from concept to market. For an apartment building, a five-year period from initial project proposal to occupation is not unusual. The public consultation model is broken – we need a better process for public hearings.
A solution is to strengthen the Official Community Plan (OCP) with zoning powers – new proposals compliant with the OCP should jump straight to the development permit stage. There is no need for a time-consuming rezoning and public hearing process for a development that adheres to pre-established community housing priorities.
A major benefit of this structure is that it would front-load the process for special interest groups to voice their opinion on community housing priorities during the development process of the municipal community plan. This is a better time for these voices to be heard and for communities to then make decisions and chart a path using their OCP. This change would maintain a democratic community development process while also eliminating the major development delays caused by additional community meetings. It would streamline processes significantly for the better.
The public consultation at OCP approval stage encourages public feedback on a community-wide, longer-term perspective, instead of a “single-property, short-term, how-does-this-impact-me” approach, which favours special interest groups intent upon slowing down or stopping new housing supply in their neighbourhood.
It is essential that any supply solution follow the advice of the provincial Development Approvals Process Review (DAPR) and the BC-Canada Expert Panel on the Future of Housing Supply and Affordability. Both studies identified the municipal approval process as a significant barrier to the ability for housing supply to respond to spikes in demand.
Allow more types of housing in more places
In most cities, the vast majority of residentially-zoned land only allows single detached homes – the most expensive form of housing.
Zoning reform can allow “multi-plex” missing middle housing (duplexes, triplexes, fourplexes with secondary suites and coach/laneway homes) on most single detached-zoned lots. This will allow for more ground-oriented, family-friendly homes. The ability to distribute the high cost of land amongst several housing units creates improved affordability.
Existing single-detached zoned neighbourhoods are near important infrastructure: schools, parks, recreation centres, libraries, retail/commercial districts and transit.
Many older single-detached zoned neighbourhoods are experiencing population stagnation. Allowing new, young families to move into these areas will generate more school enrollment and provide more support for the small, local retail/commercial businesses that populate local high streets.
With a streamlined approval system, the small-scale nature of these developments means that they can be built quickly, in more areas of our cities. Unlike large apartment projects, missing middle housing can be built by smaller contractors, much like single-family homes.
Smart design can create missing middle housing that is sympathetic to the scale and character of existing neighbourhoods, addressing the concerns of many who oppose this type of housing. Check out the Missing Middle Competition for some great examples of missing middle housing.
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Hong Kong Billionaire’s K. Wah Wins Shanghai Real Estate Bid, Sees “Excellent” Opportunity – Forbes
Hong Kong billionaire Lui Che-woo has been making successful investments in Shanghai real estate since the 1980s, such as K. Wah Center set along the city’s swank Huai Hai Road. A new project coming amid the country’s economically painful zero-Covid policies took a big step forward on Friday when his flagship K. Wah International Holdings said it had won a joint tender bid for HK$4.18 billion, or $532 million, to develop land on the city’s western side.
K. Wah, though a subsidiary, will hold 60% of a joint venture in partnership with two state-owned companies to develop residential and commercial property in an area planned for artificial intelligence and healthcare-related businesses, the announcement said.
K. Wah said the project “represents an excellent investment opportunity for the group to be engaged in a transit-oriented development to expand its presence in the Shanghai property market, replenish the group’s land bank and is in line with the group’s business development strategy and planning.”
The announcement comes after China’s overall GDP growth fell to 0.4% in the second quarter from a year earlier. In Shanghai, where millions experienced lockdowns of varying duration in the April-June period, GDP shrank by 5.7%. China’s relations with the United States and Europe have been strained by Beijing’s close ties with Russia and recent military exercises near Taiwan.
Mainland-born Lui, worth $12.1 billion on the Forbes Real-Time Billionaires list today, moved to Hong Kong at age four. Possessing only an elementary school education, he helped his grandmother run a retail outfit that sold food staples in Hong Kong as a teenager. In the late 1940s he re-exported army surplus, and by 1950 was buying construction equipment from Japan and selling it to Southeast Asia. In 1964 his was the first private company to obtain quarrying rights in Hong Kong, thanks to a record bid.
After that, Lui started building undistinguished residential housing there. Lui was also an early investor in China, buying into a quarry in Shenzhen in 1980 and later acquiring a land bank in Guangzhou. K. Wah Center opened in Shanghai in April 2005; beside real estate, part of his fortune also comes from the Macau casino operator Galaxy Entertainment Group.
Another long-term Hong Kong success story in Shanghai property development, Shui On Land, led by billionaire Vincent Lo, noted in a filing last month China’s short-term business outlook faces uncertainties. “The Chinese economy faces considerable headwinds amid a highly uncertain geopolitical environment, tense U.S.-China relations, and tightening monetary policy in the advanced economies,” it said. “The property sector debt issue will take time to resolve. Still, the government has the policy means and experience to handle the developers’ debt restructuring process and address the suspended project issue.”
And yet Shui On, whose Shanghai projects include city’s iconic Xintiandi nightlife and shopping area, was nevertheless upbeat about the longer-term investment prospects there. “Although the immediate outlook is less than favorable, the impending market correction should enable us to acquire assets in prime locations at attractive prices during what could be a golden era for new investment,” it said.
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Real estate markets slow in most nearby communities – Calgary Herald
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Slowing demand and rising supply in outlying communities like Airdrie have set in along with cooler temperatures of late summer, recent data shows.
Calgary Real Estate Board statistics from last month show sales falling year over year in most communities while supply is rising.
“In all those markets, we’ve seen improvements in inventory,” says Ann-Marie Lurie, chief economist with CREB.
“Still these markets remain quite tight, but we are seeing some price adjustments and that’s because they came up so high during the pandemic.”
Airdrie is the largest and most in-demand market with the highest sales last month, 169 transactions, down almost eight per cent year over year. Still, the community saw inventory rise more than 10 per cent with now more than 1.69 months of supply, an increase of nearly 20 per cent from last year.
Other communities have also seen sales fall and supply rise. These include Cochrane, which had 75 sales, down about 17 per cent from August last year. Its supply is now more than two months, up about 26 per cent year over year.
Okotoks had 53 sales in August, down about 19 per cent year over year while supply grew to more than 1.8 months.
Despite falling demand and growing supply, prices still grew year over year in these communities. The benchmark price in Airdrie increased almost 19 per cent to $493,500. In Cochrane, the benchmark price grew by more than 16 per cent to $517,400 while the benchmark reached $549,300 in Okotoks, also an increase of more than 16 per cent.
Chestermere saw the biggest drop in sales year over year at more than 48 per cent.
Only High River experienced a slight increase in activity with sales last month up 2.5 per cent versus the same span last year.
Spotlight: Making sense of the current real estate market in Newmarket – NewmarketToday.ca
Buying a home at any time is a huge undertaking. It requires a lot of preparation, time and access to expertise.
Homeowners—and those who wish to become one for the first time—have it even harder right now, with conditions seeming to change from month to month.
REALTOR® Dave Starr specializes in home buying and selling in Newmarket and the surrounding areas. With over 35 years of experience in the real estate industry, he is happy to share what he’s learned with others.
Slowing things down
So how would he describe the current state of the market in Newmarket? “It’s finally more normal and realistic,” he says. “A prospective buyer has a little more breathing room to make sure that their financing is in place and they can also consider a home inspection.”
A seller will benefit by working with a more seasoned agent, he says, because they have had prior experience with similar markets. He likens the situation to a professional athlete who has played in the playoffs before or competed in a large-scale event like the Masters in golf.
Earlier in the year, the market was not realistic.
That tended to leave buyers, sellers and agents scrambling. “The end result can be a situation with buyer’s remorse, where the buyer no longer wants to close on their purchase. The banks sometimes struggle with appraisals, which can also result in a non-closure,” he says. “In the fast-paced market that took place earlier, some agents potentially made more mistakes, especially since they weren’t experienced enough to handle multiple offers.”
Home inspections and interest rates
While some homes may not require a home inspection, there are lots that definitely need one. “In an extremely busy market, buyers could potentially end up with an unwanted surprise—at a great expense,” says the REALTOR®.
He likens it to the necessity of having speed limits on our roadways. The faster you go, the more chances you have of getting into an accident.
“We are now facing an increased mortgage rate, which many would not like to see, but the truth is it will help balance the market overall. Lower interest rates basically were one of the reasons for the inflated house prices and homeowners were simply taking on larger mortgages than ever,” he says.
For years many homeowners would tell him the same thing: that mortgage money was cheap to them. His answer to that never varied: “You do know you have to pay it back at some point.” If the rate were guaranteed for a lifetime, it would be a different story, but of course that’s not the way it works.
The market over the summer was slower but typical; that has become the norm over the past few years.
The fall market is already starting to pick up, with increased activity, though the number of listings in Newmarket is quite low. Rental availability is both quite expensive and experiencing a shortage.
Says Starr, “The market moving forward should remain stable. Buyers and sellers will have more time to make the best educated decision for their needs and wants.”
Whether you’re a buyer or a seller, he welcomes any calls or emails.
Let Dave Starr Real Estate help you make your next move. Call 416-520-3231 and get the Starr treatment you deserve.
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