Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 165

If you recall , the largest buyer of single-family houses in the US last year was Opendoor . This is according to SFR Analytics . Opendoor is a so-called iBuyer, meaning they provide cash offers to sellers, close quickly, and then turnaround and sell each home for — hopefully — a profit. They also collect commissions, and make money in other ways (such as through home loans).

This process seemed to be working reasonably well up until 2022, but then the market turned. They then quickly discovered that they couldn't sell their homes for a profit and so they ramped down acquisitions. Here's a chart from another post by SFR Analytics showing the fall off in purchase volume in the second half of 2022:

The worst performing market at this time was Phoenix, which apparently accounted for around 50% of the company's losses. In some cases, their gross margins were -$60,000 per property. But once they recalibrated their models (I'm just assuming this is what they did), they were able to regain positive unit economics. Here's Phoenix starting from their January 2023 cohort:

Opendoor has not done well as a public company. But it is the biggest buyer of single-family houses and it seems to be back to positive gross margins. Maybe that's something.

Charts from SFR Analytics ; cover photo by Chris Tingom on Unsplash

This past Sunday, Paris voted in favor of greening and pedestrianizing an additional 500 streets in the capital (5-8 per neighborhood). This will add to the 300 or so streets that have already received this treatment since Mayor Hidalgo started her second term in 2020. And as a result of this expansion, it is estimated that about 10,000 on-street parking spaces will be removed, which represents about 10% of the city's total inventory.

Exciting. But who voted for this? Of the Parisians who voted, 66% voted in favor of the initiative . And it carried in 14 of 17 arrondissements (with the 1st, 2nd, 3rd, and 4th counted as one). But similar to prior referendums, voter turnout was extremely low: only 4.06% of eligible voters showed up (approximately 56,500 people). And this is after the voting age was lowered to 16 years old for the first time.

For context, when Paris voted on whether electric scooters should be banned , 7.46% of voters showed up. So while low, this situation is not entirely unique. Though it does, once again, raise the question of whether the outcome of this referendum truly reflects public opinion. My outsider view is that it probably does. Because I take the apathy to mean some level of support, or at the very least, an absence of strong aversion.

Think, for example, about who shows up at community meetings for new development projects. The vast majority of people in attendance have concerns they would like to air. It's very rare for someone to show up and say, "I didn't have much going on tonight so I decided to come by and see everyone. I have no real concerns. Project looks cool. Carry on as you were."

If you agree with this logic, well then it suggests that many/most Parisians do generally support more pedestrianized streets, even if it means the removal of parking. That's an accomplishment in my books.

Cover photo by Maximilian Bungart on Unsplash

This is an important chart taken from this recent article by Steve Lafleur talking about the need for Canada to "bulk up." What it obviously shows is that housing completions and population growth have generally been diverging in Canada since the 1970s.

Back then, we were building about 200,000 homes a year and, today, we're building slightly under that. Of course, our population has also grown dramatically during this time period, as has the number of people who move to Canada each year. The result is that the Canada Mortgage Housing Corporation estimates that we'll have a housing shortage of approximately 3.5 million homes by 2030 .

But we already knew this. Big numbers are often thrown around in studies. I think the more important question is: How do we reconcile this massive shortage with the fact that, in cities like Toronto, we have lots of zoned land ready for the construction of new housing (but that isn't financially feasible) and lots of unsold homes that aren't selling right now?

Do we really have a shortage?

Well, Toronto is just one specific market, and I can't speak to all the dynamics playing out across the country and the world. But it strikes me that what's missing from the above chart, and this discussion in general, are considerations around (1) housing type and (2) affordability. And by type, I'm largely thinking about size, as it's closely linked to affordability.

If what we're building is too expensive for most people and unsuitable for their household needs, then yes, I guess that would mean we have a shortage of housing.

Cover photo by Matt Wang on Unsplash