[MichaelS]

• dramatically lower development levies (i.e. cost recovery on infrastructure and nothing more) and repeal of land transfer taxes. The lost revenue could be managed through payroll constraint

Singling out this one point to comment that, at least for Calgary, the development levies don't even cover the cost of the infrastructure. There is a myriad of reasons for this (including legal court rulings around the definition of "benefit") but levies don't cover 100% of the bill. They are meant to cover 100% of the attributed benefit.

Perhaps a better question would be, what do we actually need to levy for? Should we be charging levies for rec centres and libraries? They are very nice to have, and some would say essential to a higher quality of life. But, it is not like you can't live in a house if no library exists, but you definitely can't if no sewer main exists.

 

[jhappy77]

Look at sites like Westbrook, East Village, Vic Park, and all the parking lots downtown. The problem there is not zoning – these areas are primed and ready for high density. The problem is not a lack of govt subsidies – these areas should absolutely support market-rate housing on their own.

The problem is that the market incentives that exist today encourage speculation instead of building. If you build, you rack up a massive tax bill on your newly constructed improvements, but if you hold tight to your land and wait 20 years, you pay pennies on the dollar and you can make up for that with profits from parking lots. Then as you do nothing, your land slowly gets more and more valuable, the price of housing grows and grows, and when you finally build your profit margin is way higher. This isn’t malice, it’s just companies rationally responding to the market as it’s set up.

We need to decrease the taxes owed on improvements and increase the taxes owed on land. Do it right, and you can significantly change the equation on how long developers should wait before pursuing major projects.

 

[DougB]

Look at sites like Westbrook, East Village, Vic Park, and all the parking lots downtown. The problem there is not zoning – these areas are primed and ready for high density. The problem is not a lack of govt subsidies – these areas should absolutely support market-rate housing on their own.

The problem is that the market incentives that exist today encourage speculation instead of building. If you build, you rack up a massive tax bill on your newly constructed improvements, but if you hold tight to your land and wait 20 years, you pay pennies on the dollar and you can make up for that with profits from parking lots. Then as you do nothing, your land slowly gets more and more valuable, the price of housing grows and grows, and when you finally build your profit margin is way higher. This isn’t malice, it’s just companies rationally responding to the market as it’s set up.

We need to decrease the taxes owed on improvements and increase the taxes owed on land. Do it right, and you can significantly change the equation on how long developers should wait before pursuing major projects.

The market already compensates for this through valuation. If raw land speculation were truly more profitable, arbitrage would drive up the price of raw land.

Isn't the tax rate based on market value regardless of whether the site is built-up or empty land? If not, perhaps the valuation methodology needs to change.

 

[DougB]

Singling out this one point to comment that, at least for Calgary, the development levies don't even cover the cost of the infrastructure. There is a myriad of reasons for this (including legal court rulings around the definition of "benefit") but levies don't cover 100% of the bill. They are meant to cover 100% of the attributed benefit.

Perhaps a better question would be, what do we actually need to levy for? Should we be charging levies for rec centres and libraries? They are very nice to have, and some would say essential to a higher quality of life. But, it is not like you can't live in a house if no library exists, but you definitely can't if no sewer main exists.

Amenities like rec centers and libraries benefit the entire city and should be funded through fees or property taxes. This would attract the ire of taxpayers, which would be great as the City would be under non-stop intense pressure to find capex and opex savings. Pushing these types of costs disproportionately onto new homebuyers is akin to rent control.

 

[UrbanWarrior]

A few more numbers relating to housing starts so far in 2023. Not reflected in the numbers are May's numbers which are lower than April's for every city except Calgary. We'll see if it's just a seasonal blip or maybe the start of a trend. Hopefully higher interest rates isn't starting a trend to cut down the number of starts.

Toronto
18597
Vancouver
12990
Calgary
6867 (of which 3192 are apartment units, 1680 are rowhouse/duplex and 1995 are SFH)
Montreal
5019
Ottawa/Gatineau
4280
Edmonton
4112

View attachment 489636

Wild. The disparity for Montreal is insane.

 

[trtcttc]

Wild. The disparity for Montreal is insane.

To be fair, Montreal's housing is incredibly affordable for a large city. Cheaper than Calgary/Ottawa and only slightly more than Edmonton.

 

[darwink]

To be fair, Montreal's housing is incredibly affordable for a large city. Cheaper than Calgary/Ottawa and only slightly more than Edmonton.

Having most leases expire at once creates a good competitive environment - if landlords miss renting they could be out of luck for a full year! Plus most available units are available for comparison shopping.

It is an interesting regulatory thing that beyond causing difficulty hiring movers is very smart.

 

[trtcttc]

The only federal action should be to prioritize immigrants with scarce skillsets, like in the building trades, at the expense of family reunification candidates who consume housing but do little to resolve labor shortages. This would be highly unpopular with the federal Liberals as it could potentially hurt them in swing ridings around Toronto and Vancouver

I hear this prioritization on building trades a lot. Those jobs are already on the top tier of the express entry list, it's not the government denying those immigrants. One of the challenges is the largest source of immigration to Canada, India, China, Nigeria, Philippines, etc. , trade workers are typically less educated and earn significantly less than in Canada. However, they typically don't have the English language skills and financial buffer to spend a couple years getting certifications needed to do those trades in Canada. We have a lot of middle class, university educated immigrants, which pushes down our middle class salaries, especially compared to the US.

 

[Mountain Man]

How has Montreal not had the massive influx of investors we have seen here? Are there protectionist rules in their housing market? Montreal seems like it should attract at least as much investors as we have, if not significantly more...

 

[DougB]

Having most leases expire at once creates a good competitive environment - if landlords miss renting they could be out of luck for a full year! Plus most available units are available for comparison shopping.

It is an interesting regulatory thing that beyond causing difficulty hiring movers is very smart.

I view it as an unnecessary mess.

How has Montreal not had the massive influx of investors we have seen here?

-less favorable business climate due to left learning and potentially separatist government
-lower population growth
-lower incomes

 

[Stephen Ave]

How has Montreal not had the massive influx of investors we have seen here? Are there protectionist rules in their housing market? Montreal seems like it should attract at least as much investors as we have, if not significantly more...

Lower incomes. The average wage in Montreal is way lower than a Calgary, Ottawa or Edmonton. Even though the average price of a house is cheaper, the wages, being much lower, and the property taxes being higher, make it less affordable.
You also have the fact that immigration is driving housing and Montreal isn’t receiving a high rate of immigration relative to other cities like Toronto, Vancouver, or Calgary

 

[darwink]

Montreal seems like it should attract at least as much investors as we have, if not significantly more...

Average rents are lower iirc while construction costs are similar while rent control means at minimum you have to be assured to rent out at profitable rates in your completion year. No catching up later. Plus higher government risks (except maybe around REM stations).

 

[badc0ffee]

A big negative I don't think anyone has mentioned is the language issue. If people are going to put in the effort to learn a second language, they are probably going to prefer English over French.

 

[trtcttc]

Montreal is overbuilt for the population it has today. It was the corporate center of Canada in the 70s, 80s. Bank HQ, airlines, telecoms, etc. were all based in Montreal. As the city was building up, they built a lot of low rises, row houses and not SFHs. So there's lot of available housing. They all moved when Quebec was getting serious about separation. If all the energy companies suddenly relocated to Regina, Calgary housing would probably be in a prolonged slump as well. And as others have mentioned, less immigration.

 

[Mountain Man]

Interesting, thanks for the answers guys!