Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 187

Back in 2022, Altus Group did a municipal benchmarking study where they looked at approval timelines, development charges, and a host of other factors that could be impacting housing affordability in Canadian cities. I blogged about it then and spoke specifically about its benchmarking of approval timelines . But I revisited it this morning after seeing Mike Moffatt tweet about it and I came across the below chart.

Also, approval timelines are less of a concern today. There are lots of zoned sites that are ready to go, but can't because of the market. Instead, what the below charge does is compare municipal charges on a per square foot basis for low-rise and high-rise housing. What's interesting is that in most cases, but in all cases in Ontario and BC, the charges are higher for high-rise housing.

Example: If you bought an 800 sf condominium in Toronto and the fees were based on the numbers in this report, you'd be paying $125 psf x 800 sf = $100,000 in municipal charges alone. Once again, I am of the opinion that our industry should find a way to transparently itemize these charges so that people/purchasers can see where their money is going.

Now, part of this has to do with higher land values for higher-density housing and municipal fees that are calculated based on appraised land value. But it's also driven by suite sizes becoming smaller (to make the end price more affordable for buyers and renters).

Here in Toronto, it doesn't matter if you're building an 800 sf two-bedroom or an 8,000 sf two-bedroom apartment, the development charge fee would be the same. And so it is perhaps not surprising that as suite sizes have come down and charges have gone up, so too did the costs on a per square foot basis.

But it raises an important and obvious question: Is this what we want? I mean, aren't we trying to encourage more infill housing in places where people don't need to drive and we can leverage existing services? Yes, that's what we are saying. Unfortunately, our charges suggest the opposite.

If you'd like to download a copy of the report, you can do that over here . Please keep in mind that this is data from 2022 and there have been changes since then. In many cases the fees are now higher, but in some cases, like in the City of Vaughan , the fees are now lower.

Cover photo by Scott Webb on Unsplash

Here's an excerpt from a recent post by Scott Galloway talking about LA's devastating wildfires:

The question isn’t whether to rebuild, but where. Pacific Palisades is a wonderful place to live, but those amazing views of beautiful topography of foothills, mountains, canyons, and ridgelines are located in fire zones. Early estimates put the total cost of the wildfires at $250 to $275 billion . The property insurance bill is expected to easily top $20 billion . California’s insurance market was already in crisis, as leading insurers had done the math and decided to leave the state or not renew policies in fire-prone areas. California’s state-backed FAIR Plan is the insurer of last resort in these areas. Statewide, the number of FAIR Plan policies in 2024 increased 40% from 2023, and 85% in Pacific Palisades . Continuing to underwrite wood-built craftsman homes in Altadena (median home value: $1.3 million ) and mansions along PCH is a wealth transfer from California’s taxpayers to some of its wealthiest people.

This isn’t unique to California; 10 states across the political spectrum, including Florida and Texas, sued a federal flood insurance program after it adjusted premiums to better reflect climate realities. As one meme put it: You may not believe in climate change, but your insurance company does.

He's not wrong, though I'm sure that the impacts of the deadliest and most destructive wildfires in California's history were felt by a broad cross section of people. And, no matter how much money you have, losing your home is going to be traumatizing. My mom's house in New Brunswick burnt down when she was a young girl and she remembers it vividly. You lose things that are priceless. Still, the questions of where and how to rebuild are important ones. Living in a high-risk area has costs associated with it. I do think it's only fair to ask who will be underwriting these costs.

Here's some unsurprising but important news via Urbanation :

• New condominium apartment sales last year totalled 4,590 homes. This is a 78% decline compared to the latest 10-year average of 20,835 homes, and the slowest year for new condo sales in the Greater Toronto and Hamilton Area (GHTA) since 1996. See above chart.

• Only 802 new condominium apartments were sold in Q4-2024.

• Six projects launched in Q4-2024, totalling 1,829 homes, of which only 10% were sold. A total of 1,506 new condominium apartments started construction during this same quarter.

• A total of 29,800 condominium homes were completed in 2024 -- a record. This year, 30,793 homes are expected to complete, which if it happens, will create another new record.

• In total, 78,742 new condominium homes are currently under construction across the GTHA, as of Q4-2024.

This may seem like a lot. But 30k of these homes are expected to complete and occupy this year. That leaves around 48k under construction, plus whatever new starts end up happening in 2025. So as Shaun Hildebrand points out in the above release, at some point around 2026-2027, we are going to see a dramatic fall off in completions and new housing supply.

Even if starts magically ramped up this year (which would be unexpected), there would still be a period of relatively low completions that would need to work its way through the system. Development is, by nature, excruciatingly slow to respond to changes in demand. There's always a lag. So overall housing supply is something we're paying close attention to right now as we execute on our real estate strategies.

Chart via Urbanation