[smably]

Lots of units are being held vacant, and I know this for a fact. I can even name buildings floors.

How do you square that with this?

Just 2,100 properties reported empty through Toronto’s new vacant homes tax

The results of the mandatory declaration — with responses from 96 per cent of owners — suggest Toronto is not a ‘ghost city’ of vacant units.

www.thestar.com

 

[Northern Light]

How do you square that with this?

Just 2,100 properties reported empty through Toronto’s new vacant homes tax

The results of the mandatory declaration — with responses from 96 per cent of owners — suggest Toronto is not a ‘ghost city’ of vacant units.

www.thestar.com

People Lie?

I can name one building (I won't, publicly) where no less than 40% of the units are currently vacant (over 100). I'm not suggesting this is typical of every property, I frankly don't have that information, but I doubt its a universal phenomenon.

But I could probably identify buildings containing over 2,000 vacant units total myself, and do so in fewer than 30 buildings.

Do I believe the 2,100 number? Absolutely not.

Do I know what the real number is? No.

I'd feel comfortable saying its more than 3x that.......but I couldn't say if its 4x, 5x, or more.

 

[smably]

People Lie?

You may be right, and do I hope that the city will audit homeowners based on water and hydro records. While I imagine that audits will turn up some undeclared vacant properties, I'm skeptical that there is any substantial volume relative to the scale of the housing crisis. I've heard plenty of anecdata about vacant units but very little hard evidence.

 

[Undead]

This is pretty much my point. Our current structure incentivizes real estate investment. I'd rather we had cheap housing and less of our economy was real estate.

Yes. We're addicted to housing.

buying to also make a profit, that's an extra mark-up built in to the pricing scheme.

Also yes. Mom and pop investors are no saints. Everyone wants to get rich. This desire is even further exarcarbated by the government setting up perverse incentives (because Big Biz commands them to, in my view).

Lots of units are being held vacant, and I know this for a fact. I can even name buildings floors.

Some investors, buying strictly for capital appreciation, often with cash, do not see any value in the hassle of renters, and the risk of damage to or depreciation of their unit.

Sure, but I think overall vacancy rates are rock bottom? Certainly, we have nothing like the "ghost cities" in Spain and China catering purely to artificial demand. Here, the demand is too real because the Feds keep pumping people into the country.

People sometimes forget our housing Hydra has two heads: excessive financialization (low interest rates) *and* excessive population growth. As far as I know, the latter wasn't as much, or at all, a factor in China and Spain (to name two prominent bubbles).

The government is currently permitting banks to re-set mortgages to 99 years in order to keep the market from collapsing with higher interest rates. That is utterly absurd. The market should crash, it will cause all sorts of pain, but it would also re-set prices at a more appropriate level; and it would also force government to address stagnating wages that are a huge part of the problem as well.

Yes, but those mortgages are resetting to normal 25 year lengths at renewal. So people are strung along for a short while with extreme term lengths to cope with higher payments. But the term lengths "snap back" at renewal time. And miraculously, it seems like most people are able to make the higher payments. Remember that variable rate variable cost mortgages were feeling the pain immediately and consistently. And they're the most sensitive, but haven't crashed.

There's probably enough "fat" in the system to tide us over. For example, people will have their kids go hungry, get rid of their second car and rent out a spare bedroom before they're forced to sell.

At this point.....its not impossible, but its highly improbable.

The sources I'm reading suggest a soft landing is becoming more viable as we go along. Seems like people will do anything to hang on to their property because it was so hard buying it in the first place.

 

[Northern Light]

You may be right, and do I hope that the city will audit homeowners based on water and hydro records.

That would be nice. I haven't heard of that being done, but perhaps that has slipped under my radar.

I'm skeptical that there is any substantial volume relative to the scale of the housing crisis. I've heard plenty of anecdata about vacant units but very little hard evidence.

Suppose, for argument's sake, we agree that the problem is 4x worse than stated (an admittedly made up number, but one that I think is within the bounds of credulity)

That would be 8, 400 units held vacant.

There are roughly 1, 250,000 housing units, in the City of Toronto.

The difference, between actual, and projected, would be equal to ~0.5% of housing stock.

That's not nothing; but no, its not particularly huge when we're at/near record low vacancy rates.

Even if that number was under by 1/2, you'd only be looking at a 1% bump.

So is it 'an issue', yes; is it 'the issue', no.

 

[Northern Light]

Sure, but I think overall vacancy rates are rock bottom? Certainly, we have nothing like the "ghost cities" in Spain and China catering purely to artificial demand. Here, the demand is too real because the Feds keep pumping people into the country.

100% agree w/the above.; as I noted, units being held vacant is 'an issue' not 'the issue'.

Yes, but those mortgages are resetting to normal 25 year lengths at renewal. So people are strung along for a short while with extreme term lengths to cope with higher payments. But the term lengths "snaps back" at renewal time. And miraculously, it ses like most people are able to make the higher payments. Remember that variable rate variable cost mortgages were feeling the pain immediately and consistently. And they're the most sensitive, but haven't crashed.

The extended renewal permissions are relatively recent (last 12-15 months), I haven't seen good data on how these are turning over.

There's probably enough "fat" in the system to tide us over. For example, people will have their kids go hungry, get rid of their second car and rent out a spare bedroom before they're forced to sell.

Not so sure about that.

The sources I'm reading suggest a soft landing is becoming more viable as we go along. Seems like people will do anything to hang on to their property because it was so hard buying it in the first place.

I'd be happy to give your sources a read through, if you're not comfortable sharing publicly, please feel free to PM them.

 

[evandyk]

I have lived in condos pretty much my entire life, and there have never been many vacant units on my floors, but I imagine it has to be more than 1-2% for most buildings.

 

[TRONto]

I've provided a specific time period showing that the market functioned properly without investors, you have yet to counter that point.

I think I understand your point now. I was going to say how can we compare a time when condos didn't exist and had a different tax structure to today, but I think your point is that if condo rental is impossible we pretty much have the same apartment rental market which used to exist pre-2000s with a better assortment of units, etc. I can agree with that.
My point is that under our current structure mom and pop investors are being unrightly demonized. Preconstruction condos have been a terrible investment for over a decade where the only winner is the developer. Honestly, I'd say that mom and pop investor is getting suckered into a terrible investment.

Realistically, until immigration and the international student population is brought down to a reasonable level (whatever we had under the Chrétien government), housing affordability will continue to be a major issue.

 

[Northern Light]

I think I understand your point now. I was going to say how can we compare a time when condos didn't exist and had a different tax structure to today, but I think your point is that if condo rental is impossible we pretty much have the same apartment rental market which used to exist pre-2000s with a better assortment of units, etc. I can agree with that.

Agreed.

My point is that under our current structure mom and pop investors are being unrightly demonized.

I'm of mixed views on this; but to be clear, my opposition to pre-construction sales comes from a range of perspectives and is not solely targeted at 'mom and pop' investors.

I would hasten to add, nothing prevents such an investor from buying post-construction.

My concerns relate to this financing form making condos more attractive to build than purpose-built rentals; an adverse impact on overall market prices, including for ownership; and of course, the free reign of developers to engage
in 'bait and switch', because they have everyone's money before they're actually committed to a material pallet.

Preconstruction condos have been a terrible investment for over a decade where the only winner is the developer. Honestly, I'd say that mom and pop investor is getting suckered into a terrible investment.

I think this is a bit broad-stroke; it really depends on whether the investor:

a) Paid most/all cash for the units vs financed them

b) Sought to gain their money back through assignment in a time of significantly rising prices.

In the above scenarios, investors will, by and large, have made out well; in scenarios where they went debt-heavy and intended to recover that through rental income, the investments have been less successful on average.

Realistically, until immigration and the international student population is brought down to a reasonable level (whatever we had under the Chrétien government), housing affordability will continue to be a major issue.

Agreed.

 

[afransen]

Discussion of the potential impact of zoning reform/allowing plex housing on affordability.

 

[Sunnyside]

I really didn’t know what thread to put this in, so I’m placing this as a thought experiment so we can all bounce some ideas around:

What would be the viability of dredging new land for development into Lake Ontario? I’m thinking of a few key precedents that pop into my head, then I’ll follow up with my rationale:

1. The existing dredged ports/steel works in the Golden Horseshoe (Portlands, Hamilton Harbour, etc) and elsewhere

2. The Netherlands

3. Ports and suburban developments along the gulf coast/Florida

4. The UAE

Okay, and now for the reasons:

A) high land costs (+potential returns) should theoretically eventually make this model viable, as it has in the UAE and elsewhere.

B) Allows an opportunity to better leverage areas quite near to rapid transit/other infrastructure that are much closer in and can be built from scratch- it’s just underwater right now.

C) It may be better than sprawl, and in any case the costs of greenfield land will eventually rise quite high as the supply slowly tightens to almost-null- that means (A) will be inevitable for developers even in a post-bubble Canada.

I’d argue (A) is both true today with our specific circumstances, and as (C) indicates, eventually we are going to run out of whitebelt land; we are going to have to undertake some sort of “lands needs assessment” that does not involve repealing the greenbelt one day.

This is all off the top of my head, but I hope to understand the reasons why this likely isn’t an option most of the time.

 

[Northern Light]

I really didn’t know what thread to put this in, so I’m placing this as a thought experiment so we can all bounce some ideas around:

What would be the viability of dredging new land for development into Lake Ontario? I’m thinking of a few key precedents that pop into my head, then I’ll follow up with my rationale:

1. The existing dredged ports/steel works in the Golden Horseshoe (Portlands, Hamilton Harbour, etc) and elsewhere

2. The Netherlands

3. Ports and suburban developments along the gulf coast/Florida

4. The UAE

Okay, and now for the reasons:

A) high land costs (+potential returns) should theoretically eventually make this model viable, as it has in the UAE and elsewhere.

B) Allows an opportunity to better leverage areas quite near to rapid transit/other infrastructure that are much closer in and can be built from scratch- it’s just underwater right now.

C) It may be better than sprawl, and in any case the costs of greenfield land will eventually rise quite high as the supply slowly tightens to almost-null- that means (A) will be inevitable for developers even in a post-bubble Canada.

I’d argue (A) is both true today with our specific circumstances, and as (C) indicates, eventually we are going to run out of whitebelt land; we are going to have to undertake some sort of “lands needs assessment” that does not involve repealing the greenbelt one day.

This is all off the top of my head, but I hope to understand the reasons why this likely isn’t an option most of the time.

To answer this question in a serious way, you would need to peg a spot where you think this might work.

I say that, because the economic returns are different close to downtown that they would be out in eastern Scarborough.

But also because the environmental costs vary, the recreational impacts vary, and a variety of other issues may be in play (ie. viability of Billy Bishop, viability of shipping/port services) etc.

An example of ecological impacts you might not think of.........the creation/extension of the Leslie Spit, interrupted the flow of sand that naturally occurred from the foot of the Scarborough Bluffs to replenish the Toronto Islands.

I offer that as a case, where you now have the perpetual cost of adding back sand to the Islands or they would slowly disappear.

You also need to consider recreational impacts, building a new island or peninsula in front of a working beach isn't just an issue of impairing the view, its an issue that would affect tides, water circulation, and water quality.

***

It the idea do-able? Potentially yes; but it carries many and varied challenges depending on the location chosen.

You also have to connect to existing City services, and one thing you may or may not know is that the City sewer system is almost entirely gravity-based. The lowest point is the sewers near the lake, nearest the sewage plants, so everything flows there without the use of pumps.

This creates a problem if you build south of the current waterfront, because you would either need a pump-based system, or you would have to make the land in the lake higher than the current waterfront...

 

[Sunnyside]

Ok

To answer this question in a serious way, you would need to peg a spot where you think this might work.

I say that, because the economic returns are different close to downtown that they would be out in eastern Scarborough.

But also because the environmental costs vary, the recreational impacts vary, and a variety of other issues may be in play (ie. viability of Billy Bishop, viability of shipping/port services) etc.

An example of ecological impacts you might not think of.........the creation/extension of the Leslie Spit, interrupted the flow of sand that naturally occurred from the foot of the Scarborough Bluffs to replenish the Toronto Islands.

I offer that as a case, where you now have the perpetual cost of adding back sand to the Islands or they would slowly disappear.

You also need to consider recreational impacts, building a new island or peninsula in front of a working beach isn't just an issue of impairing the view, its an issue that would affect tides, water circulation, and water quality.

***

It the idea do-able? Potentially yes; but it carries many and varied challenges depending on the location chosen.

You also have to connect to existing City services, and one thing you may or may not know is that the City sewer system is almost entirely gravity-based. The lowest point is the sewers near the lake, nearest the sewage plants, so everything flows there without the use of pumps.

This creates a problem if you build south of the current waterfront, because you would either need a pump-based system, or you would have to make the land in the lake higher than the current waterfront...

Ok, if it helps here are some locations I had in mind:

Port credit:

Near Ontario Place (can be moved to avoid Billy Bishop air impacts)

And somewhere in this vicinity leveraging the sandbar perhaps:

 

[Sunnyside]

A bonus idea:

 

[Northern Light]

A bonus idea: View attachment 501778

The others, assuming I can muster an intelligent analysis, will have to wait; the last one is a non-starter.

You're right on top of Toronto's brand new sewage outfall, and its venting system. For that reason alone it would be a no. You're also intercepting sand that moves from the bluffs area to the Spit currently, which may have erosion issues that result.