Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 449

Japan has a building typology known as machiya . They are found throughout Japan, but my understanding is that they are most closely associated with downtown Kyoto. The typical machiya consists of a long wooden home with a narrow street frontage, and at least one interior courtyard garden.

But perhaps the most interesting aspect of these townhouses is that, for the centuries that they have existed, they have always been mixed-used. The front of the building traditionally served as a kind of "shop space", and the private residential spaces were tucked behind it (though this line between public and private was fairly fluid).

And so for hundreds of years, the humble machiya became a flexible building typology that allowed shops, restaurants, and various other small businesses to flourish. This has changed over the years. People went off to work in offices and Western ideals around housing started to infiltrate Japan, among other reasons . But that doesn't mean that there aren't important lessons to be learned from Kyoto's machiya .

Here in Toronto, we remain deeply terrified of things like triplexes creeping into our single-family neighborhoods and we remain reticent to allow non-residential uses outside of their designated areas. Old habits die hard .

https://twitter.com/PlannerSean/status/1595877886740860931?s=20&t=e56R2T1MpmKjJti-9kKrjQ

But take a walk, cycle, or drive across one of our non-Avenue-designated arterial roads (which I did yesterday), and it's hard not to imagine something much better. My mind immediately goes to an improved streetscape with (1) less on-street parking, (2) a lot more homes (as-of-right), and (3) flexible ground floor permissions that allow for crazy things like a "shop space".

And then, what kind of city might we have if we had fewer barriers in the way of infill housing and if we allowed for low-cost spaces that could flex up and down based on the needs of small entrepreneurs? I'm pretty sure it would be a better one. And of course, it's been done before.

Photo by  Akira Deng  on  Unsplash

Sometimes I stop and think to myself, "my god, I've been writing my daily blog for over 9 years. That's a huge commitment. Should I stop? Is it really worth it?"

But of course I do think it is worth it, mostly because I enjoy writing, I enjoy thinking about things, and I enjoy connecting with people through this blog. I don't want to stop. It's perhaps also important for me to keep in mind that 9 years maybe isn't all that long.

I read this FT article today about investor Howard Marks. Marks is co-founder of Oaktree Capital Management, a person with billions of dollars, and the author of a popular investing memo (200,000+ subscribers) that I generally never miss. And after reading about his backstory, I now feel very much like a blogging baby:

He began writing the memos in 1990, initially sending them by post to Oaktree’s 50 or so clients. For the first 10 years, “I never had one response,” he says. And then, on January 2 2000, Marks distributed a memo called “bubble.com”, in which he made the “overwhelming” case for “an overheated, speculative market in technology, internet and telecommunications stocks”, similar to past manias such as the 18th-century South Sea Bubble. The memo “had two virtues”, says Marks. “It was right and it was right quickly.” The technology-heavy Nasdaq index slumped four-fifths from peak to trough between March 2000 and October 2002. “After 10 years, I became an overnight success.”

I have no particular end goal in mind for this blog. I have no need to become an overnight success. My plan is to just continue writing as an adjunct to all of the other things I do. However, I am attracted to the value of discipline, compounding consistency, and long-term thinking.

It's not easy doing something for a decade and having nobody respond. At least with this blog, I get the occasional heckler telling me that I'm a greedy developer out to destroy our cities.

P.S.: If you're into longish memos about investing, I would encourage you to check out Marks' latest memo about what really matters . In it, he talks about why short-term events -- such as, interest rates might do this -- are by far the least important thing to focus on.

Here is an interesting working paper that assesses the effect of new market-rate housing construction on the low-income housing market:

Increasing supply is frequently proposed as a solution to rising housing costs. However, there is little evidence on how new market-rate construction—which is typically expensive—affects the market for lower quality housing in the short run. I begin by using address history data to identify 52,000 residents of new multifamily buildings in large cities, their previous address, the current residents of those addresses, and so on. This sequence quickly adds lower-income neighborhoods, suggesting that strong migratory connections link the low-income market to new construction. Next, I combine the address histories with a simulation model to estimate that building 100 new market-rate units leads 45-70 and 17-39 people to move out of below-median and bottom-quintile income tracts, respectively, with almost all of the effect occurring within five years. This suggests that new construction reduces demand and loosens the housing market in low and middle-income areas, even in the short run.

This paper is not suggesting that everything will be fine so long as you build lots of new and expensive market-rate housing. But it is suggesting that a "filtering" of housing downward does oftentimes take place.

When you build new supply, you tend to free up some existing supply, and that generally has the opposite effect of what we recently spoke about here , which is an instance of housing filtering upward .