Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1012

The Guardian recently published this reminder that the real population growth in the world today is happening in Asia and Africa. The article is called, “The 100 million city: is 21st century urbanisation out of control?” Much of the data is from this 2016 paper by Daniel Hoornweg and Kevin Pope, which projected the populations of the world’s biggest cities by 2100.

The standout example is that of Lagos, Nigeria , which went from under 200,000 people in the 1960s to an estimated 20 million people today. Though, I would imagine that the ubiquity of informal settlements makes it difficult to come up with an accurate number.

Still, it is one of the world’s top 10 largest cities and, by 2100, it may be the largest city in the world. The Guardian described the population as young, fertile, and increasingly urban. The median age in Nigeria is 18 and the fertility rate for the content is 4.4 births per woman.

I am mentioning all of this today because I think it grants some perspective. This is an immense city building challenge, not only because of the unprecedented growth rate, but also because it remains largely poor. Lagos, a city, may add more than 2.2x the population of Canada, a country, during the balance of this century.

In an effort to curb the much talked-about and much debated empty home situation in Vancouver (supposedly the number is ~20k vacant homes ), the city, as many of you know, implemented an Empty Homes Tax.

To enforce this, the City of Vancouver now requires that every year, every owner of residential property must file a status declaration . If you don’t file this by the deadline, the property is automatically deemed vacant and the tax (1% of assessed taxable value) and a penalty ($250) are applied.

Last month, 11 days before the 2017 deadline, the city published the below heat map showing the concentration of Vancouver property owners who hadn’t yet made their declaration. There were just under 4,000 undeclared properties.

But as Jens von Bergmann points out on his blog, Mountain Doodles (great data-driven blog), this was really just a map of where people live. Because if you also create a map of residential properties subject to the tax, which he did , it looks pretty similar to above.

February data (2018) for the new home market in the Greater Toronto Area was released this past week by BILD and Altus. I seem to have gotten into the habit of writing about this every month.

The benchmark price for new low-rise single-family housing was down slightly from January to $1,219,874, but still up 12.8% from a year prior.

The benchmark price for new high-rise housing was up a whopping 39.5% year-over-year to $729,735. But part of this is being driven by an equally dramatic increase in average unit sizes.

Here is the relevant graph:

The story continues to be about tight supply, historically low developer inventories, and a lack of affordable low-rise product. 

As I have argued many times before on this blog, I believe these factors — and in particular the last one — are, at least partly, driving this recent pop in high-rise pricing. People are priced out and now searching for substitutes.

So my prediction continues to be that we will see a convergence (i.e. diminishing spread) between new low-rise and high-rise pricing.

That will also bring about design and product changes on the high-rise side.