Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 471

Matt Levine's latest Money Stuff column does a good job explaining why a lot of smart people are trying to figure out a market-making model for homes (see companies such as Opendoor ):

People want to apply the market-making model to homes. This makes sense. Buying or selling a home is a long slow uncertain annoying process. The value of immediacy is high, especially for a seller. If you decide to sell your house and go to a website and spend 10 minutes filling out a form and then someone wires you cash for the value of your house, that is much much much better than hiring a broker and listing the house and holding open houses and so forth. You’d be willing to pay a market maker a lot for that immediacy. (By selling your house to the market maker at a discount.) And if the market maker is good at acquiring houses, then it will have a lot of inventory, which will make it a good seller of houses. If you want to buy a house, you will naturally go to the market maker’s website, because it’s where the houses are.

Levine also explains why a market-making model is that much more difficult for homes compared to things like stocks. In a slowing/slumping housing market, it's pretty easy to lose money as a market maker. (That is, unless you can somehow accurately predict that a slump is coming.)

Last month, Opendoor lost money on 42% of its home transactions . This is a result of them buying homes from people when prices were X and then selling these homes many months later when prices were less than X.

However, I'm not so sure that this has to be an existential problem. Opendoor's primary value proposition is instant liquidity for homeowners. And this value proposition is at its strongest when the market is in fact slumping. Because the alternative -- selling with a broker -- is less attractive.

So the current environment may eventually turn out to be a boon for Opendoor. Of course, we won't know for a number of months.

Full disclosure: I am long $OPEN. And yes, it is painful right now.

There is, of course, part of me that admires what King Charles III has been trying to do in Poundbury (a small master-planned community on the outskirts of Dorchester, England). It is a community that has deliberately rejected the modern suburban in favor of traditional main-street urbanism. It is denser than you'd expect. It has a mix of uses. And it has been generally designed around people, rather than the car.

On the other hand, I could never ever live there :

To live here is to live under Charles’s rules (it is not clear whether William intends to be more flexible). Currently, Poundbury residents are embroiled in a debate about windows: The Duchy says that only wooden sash windows are permitted. Many residents would like to replace theirs with vinyl or fibreglass windows, which are easier to maintain and, crucially, more energy-efficient – and Poundbury is theoretically a ecologically advanced town. So far, the Duchy is not willing to budge.

The last thing I want in my life is someone telling me what kind of windows I can install and what kind of architectural styles are suitable. Messy and organic urbanism suits me just fine.

The latest issue of Designlines magazine is about how Toronto is -- finally -- embracing laneway life. And one of the featured homes is none other than Mackay Laneway House . Pictured above is architect Gabriel Fain sitting on the front steps.

As some of you will know, MLH took over a decade to get built. I first did a design for the house back in 2009. Laneway housing seemed like such an obvious opportunity, and so I designed a compact house that could fit neatly within the confines of my 25-foot-wide backyard.

Technically, it was perfectly workable. But I could tell I was too early. After speaking with city staff, I immediately got the impression that this thing was not going to get approved. At least not now. So I shelved the project until 2017.

By this time, it was clear that laneway housing was on its way to becoming a reality in Toronto. It was simply a matter of time. And so Gabriel Fain and I decided to come up with a new design and try our luck at the Committee of Adjustment (we needed, I think, over a dozen zoning variances).

But it turns out that we were still too early. The project was immediately refused. After the decision, I had a few planning lawyers reach and offer to help me with a pro bono appeal. But I decided to wait until the new laneway policies came into force and the home could be built without any variances.

And that's exactly what we did. In the fall of 2020 we submitted for a building permit, and about 6 weeks later it arrived. The home was then built that winter and it went up on the market for rent in March 2021. It rented right away, even in the midst of intermittent COVID lockdowns.

At this point, it's hard to imagine that this form of housing was once illegal. Hundreds of permits have already been issued and this number is only going to increase. In fact, I believe that the humble laneway house is destined to become a defining characteristic of Toronto's urban landscape.

Toronto is finally embracing laneway life.