Some thoughts on what is not working.
Doing this blog it’s easy to feel that we’re the only city that’s
1. facing a shortage of housing affordable to working people
2. failing to deal with its output of trash, and
3. coping with too many vehicles on its roads
But I read a lot, including many sources not connected with Montreal, and every western city is at grips with versions of these same problems.
Profit and the free market were supposed to fix everything, but it’s becoming clearer every day that they are not fixing any of these, because there’s basically no profit in it. But they have to be fixed. We have a mayor capable of seeing this, but the levels of government above the city aren’t interested, beyond issuing the occasional empty promise.
I have no raging insights here. Only it’s odd at times to live in a place where we’re mostly agreed it’s bad to profit from the misfortune of illness, but we can’t apply the idea to anything else.
Douglas 17:33 on 2020-01-24 Permalink
Housing is becoming unaffordable everywhere. In every country. LA, Toronto, Manhattan, Tokyo, Europe. Everywhere people want to live, there simply isn’t enough supply matching all the demand.
Construction costs have gone up a lot. Development costs go up, land prices have skyrocketed. The only profit is to build expensive condos / rentals.
Was reading an article the other day saying we need to overnight add 5000+ housing right now in the city so that there is a rebalancing in supply / demand.
The capitalist side of me thinks we need to allow more vertical construction basically everywhere. But I’m not sure how much a solution this is.
Kevin 20:46 on 2020-01-24 Permalink
The three problems you list are all symptoms of the same thing.
But no one agency can fix it because we have the silliest mess of organizations, each running their little patch of overlapping jurisdictions.
But who said profit and the free market were supposed to fix everything? They’re suited for some tasks, but definitely not suited for others.
Brett 22:29 on 2020-01-24 Permalink
From https://www.wsj.com/articles/what-housing-crisis-in-japan-home-prices-stay-flat-11554210002
“In the past two decades, home prices in some leading North American and European cities have skyrocketed. In Tokyo, however, they’ve flatlined.
So why no affordable-housing crisis in Japan? A big factor, experts say, is the country’s relatively deregulated housing policies, which have allowed housing supply to keep up with demand in the 21st century.”
Raymond Lutz 22:46 on 2020-01-24 Permalink
Eh! thanks for submitting a paywalled article as source… Sure enough, flat home prices don’t have ANY links with the Japanese “Lost 20 Years” . Oh and THIS:
“Unlike in other countries, Japanese homes gradually depreciate over time, becoming completely valueless within 20 or 30 years. When someone moves out of a home or dies, the house, unlike the land it sits on, has no resale value and is typically demolished. This scrap-and-build approach is a quirk of the Japanese housing market that can be explained variously by low-quality construction to quickly meet demand after the second world war, repeated building code revisions to improve earthquake resilience and a cycle of poor maintenance due to the lack of any incentive to make homes marketable for resale.” And you can read the whole article for free!
Regulation = bad; free markets = good. Yada Yada Yada…
Kate 09:58 on 2020-01-25 Permalink
Merci Raymond Lutz!!
david100 15:14 on 2020-01-25 Permalink
That Guardian article, as usual, sells a partial account as the whole story.
Here’s what’s really going on. Prices in Tokyo are rising just like elsewhere. Labor and materials costs are sky high in across the globe because of booming housing markets in dozens of cities. The housing markets are booming because of massive migration from inland to major economic centers – including a huge volume of transnational migration – and ultra cheap money in pretty much every major economy. Cheap money is flowing into housing development and fueling housing price inflation as above (driving up the cost of labor, land and materials), creating ever greater demand, and because of falling returns on more traditional investment vehicles (bonds are dead and buried, for instance).
The Japanese have a vision of housing that is fundamentally linked to their nationalized housing scheme.
Just like elsewhere, the Japanese capital has felt the pressures of the above, with speculation on land at a 30 year high. But, unlike in the western countries, there’s an upper limit to housing cost that still keeps apartments relatively affordable. That limit isn’t regulatory, it’s – you guessed it – the direct impact of the deregulated zoning, which does not protect the value of new housing stock.
Housing does not retain its value in Japan not because of some mysterious oriental aversion to old things or spirits or whatever bullshit they’re pimping these days at the Guardian. Housing does not retain its value in Japan because it is not an asset class that is protected by restrictions on supply. You can make money building and selling housing for people to live in, but you can’t make money buying and holding housing, counting on a finite supply and cheap money to push up the value of your asset.
If North American cities had this, it would radically and fundamentally change our entire economies and culture. The cities that exist when rest is cheap are 100,000x more interesting than the cities that exist when the rentier class rules.
david100 15:19 on 2020-01-25 Permalink
And just to make it clear – all the pressures pushing up the cost of housing across the North American continent – more often than not the North American cities are meeting those by . . . imposing more restrictions on housing, whether to fight gentrification, keep neighborhood character, or lock out new neighbors.
Zoning restrictions compound the problem of rising demand and higher construction costs. Unless we turn off the tap of immigration or make money more expensive, the only thing we control is zoning. And that’s controlled at a local level.
Kate – you were wondering about what power Mayor Plante really has, this is the power she has.
Mark Côté 19:14 on 2020-01-25 Permalink
Indeed, The Economist had an article about housing prices recently and mentioned Japan: “Tokyo has no property shortage; between 2013 and 2017 it put up 728,000 dwellings—more than England did—without destroying quality of life. The number of rough sleepers has dropped by 80% in the past 20 years.” Our whole approach to housing over here has caused major problems.
https://www.economist.com/leaders/2020/01/16/home-ownership-is-the-wests-biggest-economic-policy-mistake