Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 1371

Earlier this week the Globe and Mail reported that the average price of a house in Toronto has risen to $613,933 and that the average price of a detached house has risen to $1,042,405. Those are a big numbers.

Low interest rates are a big part of this story. But there’s also a supply story at play here. The low-rise housing market in this city is heavily supply constrained and so we have an environment where people with more money simply outbid those with less money.

The high-rise side of the market, on the other hand, is creating lots of new supply. And in my opinion that’s why its price growth has been more moderate in recent years and why the pricing spread between low-rise and high-rise housing continues to widen.

Assuming these trends continue, one of the things I’ve thought about and written about in the past is whether we’ll eventually seeing a point where high-rise housing actually becomes a more affordable option for families. Because right now, if you’re in the market for a 3 bedroom home, a low-rise house is likely your most affordable option.

Here’s a quick comparison that I did up this morning between a detached house and a high-rise condo:

For the detached house, I assumed 1,800 square feet at a price of $1,042,405. That’s the average price mentioned above. 

For the condo, I assumed a 1,500 square foot 3 bedroom home. I priced it at $650 per square foot (which would be above average for the city) and then added $40,000 for a parking spot. Here you have a slightly smaller condo, but it’s also priced slightly less.

I then compared operating/maintenance costs. For the condo, I assumed a maintenance fee of $0.59 per square foot (which I think is reasonable) and then added $100 per month for electricity. Typically electricity is billed outside of maintenance fees.

For the detached house, I tried to create a similar living situation. I assumed that the owner wouldn’t be cutting their own grass or shovelling their own snow. I assumed that money would be put away each month as a capital reserve for future house expenses (similar to the reserve fund in a condo). And I assumed a gym membership since most condos have a gym. I ignored property taxes and insurance.

The detached house still works out to be a less expensive to operate in this scenario, but not by much. Overall, the two appear quite comparable. Which is why I wouldn’t be surprised if we see a tipping point in the future where all of a sudden families start finally adopting the mythical 3 bedroom condo.

I have published my spreadsheet to the web in case you disagree with my assumptions and want to create your own.

My good friends over at Distl here in Toronto have recently published their first Insight Report. It’s called, Make This City: The State of Urban Manufacturing, and it’s available via free download here . I like the title ;)

The report is 39 pages and is really well put together. There’s research, case studies spanning San Francisco to Toronto, and some great takeaways for city builders.

Since the internet likes listicles, here’s a preview of some of those takeaways – 10 ways that cities can take advantage of the urban manufacturing revival: 

1. Preserve urban industrial areas

2. Focus on the niche

3. Public investment is a good investment

4. Think mixed-use

5. Diversify learning

6. Redefine industrial assets

7. Connect supplier & retailer

8. Leverage your city’s brand

9. Form supportive organizations

10. Leverage partnerships with both the private and public sectors

But it’s definitely worth a complete read and I plan to do exactly that this weekend. Click here to download Make This City.

Image:  Financial District, Downtown Toronto, Canada by Yeonju SEONG on 500px

Today I learned about something new called 2030 Districts . They are: “designated urban areas committed to meeting the energy, water, and transportation emissions reduction targets of the 2030 Challenge for Planning.”

Toronto’s new 2030 District is downtown, which is bound by the lake in the south, Bathurst Street in the west, Dupont Street and Rosedale Valley in the north, and the Don Valley in the east. 

It’s the first district outside of the US. The other established districts are in Seattle, Pittsburgh, Los Angeles, Denver, Stamford, San Francisco, and Dallas.

The goals for Toronto’s district are as follows (quoted from 2030 Districts ):

• To cut district-wide emissions in half, including zero-emissions from new buildings by 2030.
  

• Support a better understanding of where and why energy use, water use, and GHG emissions occur across the District.
  

• Work in partnership with building owners, service providers and conservation groups to accelerate the adoption of best practices for building design and management.
  

• Facilitate broad stakeholder dialogues to uncover and overcome systemic barriers to long term reductions in energy use, water use and GHG emissions.
  

I’m looking forward to following and learning more about this initiative. I think many of us can agree that producing less, not more, GHG emissions in the future would be preferable. And we know that the bulk of it comes from both buildings and transportation.