This was supposed to fix the housing crisis…

if you care about the housing crisis I have good news and bad news good news cities across North America are changing their zoning bylaws to allow for more housing in Seattle Victoria Vancouver Minneapolis and in States like Oregon and California and recently the province of British Columbia these places are legalizing missing middle housing like laneway houses multiplexes and row houses to add more density to single family neighborhoods these neighborhoods take up the vast majority of space in our cities but only allow for one house on every property with these new rule changes people are now allowed to build 2 3 four five and more units of housing on each property in these areas but the bad news in most cases these new rule changes haven't resulted in much new housing being built at all so what's going on here what's getting in the way of us actually building missing mle [Music] housing [Music] to understand this mystery let's start with the evidence California allowed up to four units in every property in 2022 and in that year there were a total of 53 development applications approved under this policy 53 for a state with 39 million people Minneapolis allowed duplexes and triplexes in 2020 and in the following 2 years just 62 duplexes and 17 triplexes were built across the city and vict allowed up to six units on single detached properties early this year but to date there have been three applications received under this policy this has been the case for most cities implementing missing middle housing policies a handful of new housing but not nearly as much as we need according to the cmhc Canada needs to build 5.8 million new homes by 2030 at this rate missing middle housing is poised to be less than a drop in the bucket so why is this happening well like many well-intentioned ideas it seems like the devil's in the details turns out cities are technically allowing more housing but many aren't changing the broader system of regulations that get in the way of more housing to understand let's put ourselves in the shoes of everyone's favorite person the housing [Music] developer let's say you have the good and increasingly unlikely Fortune of owning a house in a single family neighborhood your city just quadrupled the amount of housing you can have on your property from 1 to up to four units and you want to be the person to build it good for you but here's the problem you might run into several obstacles that keep that from happening and they roughly fall into three categories you're technically allowed to build more housing on your property but there's a catch you have to keep your building the same size as the single family houses next door yeah that's the case in California Bill sb9 legalized up to four dwellings in every detached property in the state but many municipalities only allowed them under the condition that they conform to the same rules around height and density as single detached houses in some cities the height limit for multiplexes is actually lower than that of single family homes but here's the problem not allowing these buildings to be bigger means that these new homes have to be much smaller let's say you live in a neighborhood where homes are allowed to be a maximum of 2,000 ft if you want to fit four units of housing into the same space each unit would have to be just 500 feet barely enough for a studio apartment that might work for a young professional ride out of school but would it be enough for a family with kids probably not so why would cities limit the size of these buildings well cities do want more housing but they're also often reluctant to disturb existing residents with too much change to the physical look and character of these neighborhoods you're technically allowed to build more homes on your property but that comes with extra requirements and costs for example in Vancouver building a multiplex with four or more units requires a density bonus zoning contribution that can add over $770,000 per unit and fees are just the tip of the iceberg one of the toughest challenges you might encounter are parking requirements say for example you're building in citm multiplexes are allowed there but for each unit you build you're required to create two new parking spaces that means that if you're building a 4unit multiplex you have to build eight parking spaces which realistically requires an underground parade and that would be an astronomical expense for a multiplex now extra fees and requirements are understandable to a certain extent new housing and growth does require more City infrastructure and there's a very important and complicated conversation to be had about how we pay for it all but at the end of the day these extra costs and requirements end up being a huge barrier to building missing middle housing especially for Homeowner developers these are average people like empty nesters multigenerational families and friend groups who might be interested in building this sort of housing but if the process becomes more complicated it's more likely that they'll just opt out now all of those obstacles are physically possible to overcome I mean you can build four small studio apartments with a parcade for eight cars if you want to but what ultimately matters here is whether that's financially viable the truth is unless you're the government or a charity almost nobody devel housing with the intention of losing money in fact to get a loan from A bank to build it in the first place you have to demonstrate that your project has a profit margin of at least 15 to 20% depending on interest rates and this brings us to one of the most significant challenges for missing middle housing the cost of land in single detached neighborhoods these neighborhoods are places where people are willing to spend a fortune to buy a home for themselves not necessarily to build a development in Metro Vancouver this competition between buyers has driven The Benchmark price for a detached home to $1.5 million in the Fraser Valley and almost $2 million around Vancouver let's put it all together as a property developer your entry fee into this Market could be nearly $2 million just to buy the land but you can only build four tiny studio apartments plus you have to pay extra development fees for each new unit and potentially build an underground parade adding your 15 to 20% profit margin and by my estimates those studio apartments are going to cost about a million dollar each yeah have we solved the housing crisis yet with all that said is it any wonder why people aren't building this type of housing but that doesn't mean that missing middle housing is a lost cause it's just a matter of allowing these developments to be large enough to justify the price of land without burdening it down with too many other fees and requirements if you get this formula right you might end up with something like Auckland New Zealand in 2016 the city allowed lots of new buildable density and over over 3/4 of its residential land area while reducing parking minimums and the result over 20,000 additional new dwellings over a 5-year period all that extra housing may be having a tangible impact on overall rents as well a study estimates that rents are 14 to 35% lower than what would have been anticipated without the implementation of upzoning reforms examples like aand showed that missing middle housing can play a huge role in adding more housing to our cities but in order for that to happen I think we have to embrace a few uncomfortable truths first we need to understand that building significant amounts of new housing will come with some real physical changes to our neighborhoods this is particularly true in areas with extremely high land values because there's a minimum amount of housing that needs to be built in order for the development to be financially viable some buildings need to be bigger and taller so that we can create housing that appeals to a wide range of people and their needs not just Studio Apartments second we need to make tradeoffs on what we're asking from new developments personally I think we should eliminate parking requirements and lower or eliminate development fees yes that might mean more competition for street parking or reassessing how we Finance infrastructure upgrades but maybe fixing the housing crisis is a tiny bit more important and at the end of the day we need to gear our housing policies towards what is actually practical to build from a financial perspective otherwise we risk building very little to no housing at all so those are some of the big picture ideas but there are many tactical solutions to help enable missing middle housing as well one solution is to allow a homeowner to convert their existing lot into two or more distinct properties through a process that's often called strata titling for example many cities now allow homeowners to build laneway houses in their backyard but only if they rent them out through strata titling homeowners would be allowed to sell their lanway house which would likely encourage more people to build them in in the first place this is one of many solutions that my partner for this video small housing BC is studying to help encourage more missing middle housing throughout our Province small housing is on a mission to accelerate the adoption of gentle density housing in communities across British Columbia it works with multiple stakeholders to advance policy and Regulatory tools best practices for Home Designs development performers and affordable housing models and build the capacity of the sector to increase Supply check out their Suite of resources at small housing.com at the end of the day the scale of our housing crisis is massive I'll remind you we need a projected 5.8 million new homes by 2030 according to the CC if we want to get anywhere near that number we need to start addressing the broader system of regulations that are preventing housing from being built it's promising that many cities are now technically legalizing missing middle housing on paper but if it isn't leading to significant amounts of new housing in practice people might start to wonder have we actually legalized missing middle housing or are we just paying lip service to [Music] it oh that's a be whoops ah I come in peace

Channel: About Here

Views: 731,998

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Id: DX_-UcC14xw

Length: 10min 21sec (621 seconds)

Published: Thu Nov 23 2023