[Admiral Beez]

No, much simpler. Government merely allows such development as of right. A developer buys a property at market rates or maybe two adjacent properties, and submits a building application for a multiplex. No lawsuits, no public consultation.

And what if the developer buys two 4,000 sqft McMansions and builds one big one.

 

[Midtown Urbanist]

But how do you develop land covered in SFH homes? At $1 million a piece market value, expropriating one subdivision would cost taxpayers billions.

Easy. We let the private sector pay for it.

They are already gobbling up $1 million homes to land assemblies in fringe areas of the Yellowbelt that they believe can be rezoned to higher densities. Remove the policy constraints and they will go after the Yellowbelt.

The homeowners themselves would also be set up to capitalize on their land equity and be a part of this process.

 

[afransen]

And what if the developer buys two 4,000 sqft McMansions and builds one big one.

Smaller units seem to be more lucrative and absorb more quickly. That's what we see in the condo market. I don't see this being a problem, beyond the fact that it's already happening because the only permitted intensification is to replace post-war bungalows with gaudy McMansions.

 

[Admiral Beez]

We'll see. There seems to be a lot of wishful thinking here.

 

[Midtown Urbanist]

You can very easily prohibit the assembly of two lots to create larger McMansions through policy too.

 

[afransen]

We'll see. There seems to be a lot of wishful thinking here.

Why? We see developers assembling lots for midrise and highrise today.

 

[slickpete83]

maybe we will get a break and we will see a 1989 to 2001 scenario in home prices

 

[Admiral Beez]

Why? We see developers assembling lots for midrise and highrise today.

Perhaps, but returning to the topic at hand, how is this driven by Covid?

 

[Undead]

Perhaps, but returning to the topic at hand, how is this driven by Covid?

The government dropped interest rates in response to covid which stimulates real estate development.

 

[Admiral Beez]

The government dropped interest rates in response to covid which stimulates real estate development.

Ah. But won’t they need to come back due to record inflation?

 

[Undead]

Ah. But won’t they need to come back due to record inflation?

Yup, we're getting 3-4 hikes this year and possibly the same next year. The last time rates went up this much this fast was in 2017.

Detached house prices declined by about 15% on average between spring 2017 and summer 2018. It took until just before COVID for them to "recover."

Condos, however, didn't even flinch. Both these trends are illustrated nicely in Pete's post above.

So I think rates will remain low enough and immigration high enough for high density residential to remain attractive/viable for developers.

Higher rates will also force potential buyers out of detached/semi/townhouses and into condos as the last remaining "affordable" segment.