Does Gentle Density Require an Aggressive Approach?

By December 18, 2019 No Comments

The title of this post was a question posed at the first event of The Globe and Mail’s “National Housing Innovation Series” on December 6, 2019 in Toronto. The following is our Executive Director Cherise Burda’s presentation, which gives her answer to the question, accompanied by her slides. 

Does gentle density require an aggressive approach?

We need a careful and thoughtful approach, and I propose we need an aggressive rethink of how we deliver housing before we unlock the Missing Middle to a new frontier of speculation.

Because, if we can’t squeeze affordability out of hundreds of thousands of condo units over the past decade, how can we expect a different, gentler typology to be any more affordable?

Let’s look back at our condo experience. In the GTA, we are at a 30 year high record in condo construction. Toronto has more cranes in the sky than any other city in North America. The city of Toronto has well over 394,000 residential units proposed or in the development pipeline right now.

But we can’t seem to build our way to affordability. Condo prices have nearly doubled in just under a decade.

So what’s going on?

We know that real estate has become a stock, a commodity, in Toronto and other global cities, a safe haven to park money and grow wealth–increasingly so since the last financial crisis.

But this has a real impact on affordability, because more supply only serves to attract more investment and drive up prices. A recent analysis by Urbanation found that about half of all condo units that closed two years ago were rental investment properties–so, bought by investors.

But this figure only tracks condos that are rented…and rented on the public market. It does not account for vacant units, AirBnB, other private rentals or resales and assignments that can increase pre-sale prices by 155%.

It’s true that this secondary condo rental market supplies much-needed rental housing…because we are not building enough purpose-built rental. Between 2007 and 2016, rental condos provided 97% of new rental supply in the GTA. But again, more supply is not translating to greater affordability. While the average one-bedroom rental in the City has reached $2300 dollars per month, and the average one bedroom condo rental is almost $2900.

And what the condo market is delivering is mostly not suitable for families anyway? Only 38 percent of condo units in the pipeline in Toronto contain two or more bedrooms; the average unit is in a building of 26 stories, and in central Toronto, half the units in the pipeline are in buildings 36 stories and higher.

Families face a choice of squeezing into a condo in a tall building, coming up with well over $1.3+ million to buy the average house in the 416, or driving to qualify for a more attainable home a long commute away.

Regionally, even ten years after Ontario’s Greenbelt and Growth Plan were introduced, we continue consume 1,000 hectares a year of greenfield land in the suburban fringes to build more housing that is car-dependent, that contributes to congestion and pollution, and that consumes prime agricultural land critical for food security in the face of climate change.

This is not sustainable and we need to intensify rather than sprawl. Therefore, an important rationale for Missing Middle housing is a much-needed alternative to “tall and sprawl” development that dominates our region.

The “middle” that is missing represents the promise for lower scale multi-unit housing that fits into our residential urban neighbourhoods near transit, schools and services, and closer to our jobs.

With gentler types of buildings that can fit in with neighbourhoods, such as triplexes and quadraplexes and low-rise apartments.

Most of the high-rise condo development is happening on a relatively small area of land in concentrated centres of high growth. For instance, the Downtown and Central Waterfront Area accounts for only 3% of the City’s total land area, but contains 37% of all residential units in the development pipeline between 2014 and 2018.

By contrast, the majority of land in Toronto that is zoned as residential effectively restricts most development to single-detached and semi-detached houses. (This area is commonly called the Yellowbelt because it appears yellow on the City’s planning maps.)

Proponents for Missing Middle would like to see Yellowbelt restrictions relaxed to unlock this vast area of detached residential neighbourhoods to add more Missing Middle housing.

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In fact, in Toronto’s older Yellowbelt neighbourhoods, there is already quite a bit of this Missing Middle housing from decades ago, and this gentle density fits in really nicely.

I was on a recent bus tour organized by the Urban Land Institute that explored the Yellowbelt in seven Toronto wards, and I was surprised to see so much of this built form was already there. (Many of the photos on my slides are from this tour.)

It’s interesting though: because many of Toronto’s residential neighbourhoods are stagnating or shrinking in population due to factors like aging demographics and smaller household sizes, multi-unit dwellings like rooming houses or apartments are being converted back to single-family homes.

A compelling study by the Canadian Centre for Economic Analysis found that there are 2.2 million empty bedrooms in Toronto’s residential neighbourhoods.

An objective of adding gentle density would be to reverse this trend, to convert detached houses into triplexes or quadraplexes or to add new low-rise multi-unit dwellings, like those old walk-up apartments that no one seems to build anymore.

Untapping this capacity, adding new neighbours, including younger families, could help keep schools open and local shops and restaurants in business, and be more inclusive. Provide the lifeblood for what we call complete communities.

But would this potential generate affordability? What evidence suggests that this typology would be more affordable than condos, than the status quo?

Award-winning Toronto architecture firm Studio JCI estimates that transitioning just 1% of houses in Toronto’s residential detached neighbourhoods into triplexes could create approximately 44,000 new housing units. Some quick math and this is equivalent to approximately 150 high rises.

This just begins to imagine the possibility for gentle density housing in our neighbourhoods.

But would this potential generate affordability? What evidence suggests that this typology would be more affordable than condos, than the status quo?

In fact the opposite might be true. More family friendly units in lower scale buildings nestled in walkable leafy neighbourhoods might be a more desirable product and command higher prices.

How do we make sure that unlocking the Yellowbelt doesn’t just open up an even more expensive, unattainable supply of housing?

Clearly there are no easy solutions.

Ratepayers in these neighbourhoods opposing new development are sometimes regarded as NIMBYs, but I have met some who warn of speculation already happening in these neighbourhoods, with bungalows torn down and replaced by monster homes, jacking up property values even more…some are vacant and have become AirBnBs.

Other properties are severed into two detached soldier houses, with front yards dominated by garages and driveways where there were once mature trees–fetching, I am told,  two million apiece. The biggest complaint is that these new developments don’t fit in with the character of the neighbourhood, which is sometimes a loaded word, and other times just means they are ugly.

Such a concept probably would never happen for big development sites that require a lot of upfront financing. But our residential neighbourhoods represent a final frontier to do things differently and get this right. The stakes are too high to get it wrong.

So the status quo is much maligned by residents and ratepayer groups–the bread and butter of municipal politics. But out of this opposition arrives a generational opportunity to do better.

Perhaps a solution lies in careful design guidelines that respect architectural character and provide space for creative innovations that can be scaled and replicated to create consistency and reduce costs.

This question of design is one that must be addressed. But so too must we answer questions of how to deliver affordability.

New townhomes and stacked townhouse developments–the modern versions of the Missing Middle walk-up–are popping up in our residential neighbourhoods throughout the city, breathing new life into beer-store parking lots, auto body shops and railway lands.

The design of these homes in most cases is beautiful, but they are not affordable. The cheapest suite in a new six-storey infill mid-rise in my neighbourhood starts at $950,000; new townhouses start at over $1 million for some developments; for others they start at $1.6 million. And higher.

How do we make sure Missing Middle doesn’t become Boutique Middle and gentle density isn’t expensive density? Or guard against other unintended consequences.

The market currently is not delivering affordability on its own, so we need policy and practice that can. The City of Toronto’s recent AirBnB regulations for income properties is a good example of this.

Should the City play a stronger role in ensuring that building the Missing Middle meets public policy objectives?

Should government or public agencies be more active players in the development of affordable gentle density? Could they develop programs to help homeowners convert their houses and provide access to private-sector expertise like architects or financing?

Or do we need a strong policy framework to build attainable gentle density housing for end users, not investors? Whereby any zoning or policy tools aimed at Missing Middle housing–for example, as-of-right zoning, alternative development charges, the development permit system or incentives–are crafted to target end users and affordability.

Such a concept probably would never happen for big development sites that require a lot of upfront financing. But our residential neighbourhoods represent a final frontier to do things differently and get this right. The stakes are too high to get it wrong.