Zoning out

Sally and John paid handsomely to live on that street. Lined with trees planted when Canada was still a new nation and horse traffic was heavy, its big lots and character houses made for an enduring Leaver-it-to-Beaver vibe.

“Probably two-fifty,” Sal said when asked what the premium was to buy in that hood. At least. Homes a few clicks away of similar size and are a quarter million less. And it’s always been that way. People pay big for privacy, serenity, peace. Until, it seems, now.

One by one, neighbourhoods in Canada’s urban centres are facing transformation. Look at Calgary, currently the hottest real estate market in the nation. Despite more affordable prices (by Van or GTA standards) and groundbreaking office conversions, that city has just fallen down the higher-density rabbit hole, apparently against the wishes of its citizens.

Over seven hundred people and groups told local politicians in marathon meetings, overwhelmingly, they didn’t want residential exclusionary zoning to end. But council did it anyway, egged on by the federal government which is bribing local politicians Canada-wide in order to revolutionize and democratize housing.

The T2 gang put $4 billion into a pot and dangled it in front of cash-starved cities and towns, calling it the Housing Accelerator Fund. If the locals agreed to trash traditional hoods, allowing multiplexes, small apartment buildings, secondary suites and other forms of ‘gentle density’ to busy-up leafy streets like Sally and John chose, they’d get money. None of the funds would build houses, of course, but would go into municipal coffers, ostensibly for infrastructure. In return, zoning was nuked and a developmental free-for-all encouraged.

No results yet. It’s unknown if new triplexes or six-unit blocks will mushroom across the country, providing housing amidst what everyone is calling a crisis. But some consequences appear inevitable…

For example, this makes properties more expensive. Trashing land-use laws incentivizes turning single homes into multiple ones. That’s exactly the point of the Trudeau bucks. In urban areas where land is at a premium, this makes every foot of dirt more valuable. So a home worth $2 million can morph into four $1.2 million units. The developer/owner makes bank. Four families get to live there. Housing minister Sean Fraser puffs out, and an extra three, unaffordable, homes are created.

In other words, there’s no guarantee new units will be affordable. And lots of speculation few will be. After all, what’s ‘affordable’? No private developer will erect social or public housing without a direct government subsidy to cover costs – and none is being offered for infills and gentle densification. Already the country is becoming flooded with MLS resales and unsold new homes that people are simply not buying because of high rates. Why do we think nuking exclusive neighbourhoods will create housing for anyone earning less than $200,000?

Meanwhile the feds have trampled on provincial jurisdiction by directly seducing local governments. Ontario, for example, is kinda passed at this. Residential real estate has been the domain of the provinces forever. Now we have cities like Toronto happily sticking out their impoverished hands for ‘free’ federal dollars in return for changing land-use rules. In an age of wealth inequality when dumping on, taxing and disparaging successful people is all the rage, threatening their enclaves is, well, fun. And profitable.

None of these billions will actually erect anything. But they all add to the steamy pile of government debt which is Canada’s collective shame.

Also, let’s remember this is happening at a time when housing starts have cratered – down a third from last year and lower by up to 90% in some places (like Hamilton). In other words, the economics of real estate are negative these days. Buyers are on strike. People cannot afford to sell and move. Builders can’t afford the cost of financing. Families cannot roll with current mortgage rates. Until the cost of debt decreases, development fees are chopped, onerous land transfer charges tanked and building codes changed to allow modest starter homes, nothing gets better. And little gets built.

Finally, the feds don’t have $4 billion to give to cities. The cupboard is bare. We’re borrowing our way into oblivion, and governments at all levels need to spend less, not loan each more public debt. There’s currently no plan in Ottawa to balance the books – have expenditures match revenues – yet every budget, every economic statement and every announcement event brings more spending. Politicians must think Canadians are daft, financially illiterate, or just not paying attention.

Are they correct?

About the picture: “Hi Garth,” writes David from Nanaimo. “I came across this endearing scene outside Cafe Little Fee/on a recent visit to Hakodate, Japan.”

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