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  • The greedy and the needy: lessons in unreal estate

    Gene Miller

    In the City of Victoria’s attempts to address the “missing middle,” is something missing? (Hint: densification and affordability are not spelled the same.)


    ALL THE TALK HERE in The Land That Thyme Forgot is about the “missing middle” in housing.

    It appears that the City is preparing a major zoning policy re-do in which significant swathes of now-single-family-zoned real estate will be opened up for duplexes, triplexes, even four-plexes. 

    Horrors! I mean, four-plex people are not like you and me, dear.

    So, at this moment of sky-high markets and land use changes, I thought it would be useful to point out that densification and affordability are not spelled the same, and shouldn’t be conflated.

    Drifting up from coffee conversations at Cook Street Village Moka House are snips of breathless gossip about the house next door on Howe or down the block on Linden or Moss that just sold for one-four, one-five, one-six. “Can you believe it?” delivered in that special Fairfield property-owner voice that simultaneously conveys censorious moral judgment and self-congratulation.

    How high is up? Why is high up?

    Wow, so last night I dreamed I sold a property for a million that I bought for $180,000 about six years ago….

    Wow, so last night I dreamed I was a real estate developer, and I bought a property for a million and redeveloped it as 6 townhouses which I sold for $1.3 each. And with my land, construction and other costs all figured, I made over $2 million….

    Wow, so last night I dreamed I bought a townhouse for a steal price of $1,300,000 and flipped it for $1,550,000 a month later….

    Market realities dance across every feature and factor of housing economics, and sprinkle their ironies over the housing blame-fest in which everything’s the fault of opportunistic developers, or parsimonious and slow-to-provide government, or location-crazy, want-it-all housing consumers, or take-forever bureaucracies, or property sellers who struck gold, or entrenched neighbourhoods that fight change, or the effing banks and mortgage lenders who hang you out to dry. 

    Oh, and every so often, us locals remember that everyone in Canada wants to move here, so basically it’s a high-pressure seller’s market that has sent prices stratospheric. And if the insanity mounts in the US and prospects there deteriorate, or the country cracks up and goes tribal (never say never), that’s a million Canada-bound refugees fleeing with money in their jeans.

    On top of all this, widespread concerns about housing are now refracted through the murderous threat of the COVID-19 pandemic, which has lowered all perceptions of safety anywhere, in any form. This adds further seasoning to the worry that our kids will never own because of high housing costs. Others hand-wring about the so-called “missing middle” in housing supply and home pricing. A surprising number of people live in their vehicles (cruise the Beacon Hill Park/Dallas Road perimeter early some morning). And all levels of government and a staggering number of social and philanthropic organizations wrestle (tenuously) with the challenges of housing the un-housed—a condition that hovers like the grim social danger it is. Homelessness, you remember, is not a government but a social problem.

    An October 2, 2021 Times Colonist piece quoted David Langlois, president of the Victoria Real Estate Board, saying: “In terms of the way…land is developed and treated, it’s taking on the idea that the single-family home preserve that occupies the vast majority of our land base needs to be altered…We need to allow for a mix of housing types in neighbourhoods that have traditionally been single-family homes.” The article added: “Langlois said it’s about opening up to the idea of adding duplexes and four-plexes in single-family-home neighbourhoods. ‘That’s the future and the quicker we choose to embrace the future, the happier we will be,’ he said.”

    I’m sorely tempted to get distracted by prescriptions for happiness, but, again, it’s very important to keep the ideas of housing availability and affordability away from each other here. The economic theorists in the room will disagree, claiming that if availability and choice multiply, prices will soften, housing will become more affordable.

    I say: true, if we’re talking about bars of soap or bags of peanuts. We all carry this set of market assumptions around with us, the Costco model, that more or a surplus of something should make it cheaper than less or a scarcity of something. But peanuts don’t push back. Peanuts are a straight-ahead retail event, but with housing and property, you have a diffuse counter-force: a market of owners who are totally invested in keeping prices as high as possible and, purchasers who are themselves believers in ever-higher prices. “Don’t delay” sing the real estate sales professionals, “because it’ll be higher tomorrow.”

    I’m steering us toward closer scrutiny of Langlois’ claim that “it’s about opening up to the idea of adding duplexes and four-plexes.” I don’t disagree with his social ideology; but the economics bear study. 



    An example of a multiplex from the City of Victoria’s “Missing Middle Housing Project: Phase 1, Early Engagement Summary”


    Remember: houses don’t subdivide in the middle of the night. They don’t grow extra bathrooms, kitchens and separate entrances. You want to turn a single-family home into a four-plex, or replace an existing house with a new four-plex? You are going to spend big dough—and expect a big reward. And even if you’re playing developer with your own property (I don’t recommend it), you have to think like a developer: market value of property as-is, plus costs of all new construction or renovation, and the cost of all fees, plans and so on (so-called soft costs), plus the cost of the money you borrow for the work, plus profit.

    Playing developer, let’s say you buy a property in some relatively modest-priced neighbourhood for $800,000, knock down the house if there is one (conversion costs not worth the iffy results), and build a new four-plex of 850-square-foot (sf) two-bedroom condos. Four times 850 is 3,400sf at a construction cost of about $300/sf, or $1,000,000, plus all soft costs (everything that isn’t construction) of about $90/sf, or $300,000. So, total cost (property+hard+soft) is $2,100,000. And you haven’t yet allowed for profit of, let’s say, 25 percent (you’re not doing this for fun). Total: $2,600,000 divided by four is $650,000—or roughly $800/sf—for a two-bedroom condo. (Rule of thumb: stuff in Victoria is currently selling for $800 to $1,000 per square foot.)

    You can quibble with my numbers, but you get the idea: not cheap. “Yes, but…but…I can buy a _____ in Langford for _____.” Go ahead. 

    Local markets move in uniformity. They’re intuitive. They listen to each other. They resonate. Plus, carpenters don’t charge one price for an hour’s work in Langford, another in Victoria. Under the headline, “Langford launches fund to help young families buy condos,” the T-C recently quoted the mayor: “It’s tough for young families to get into the market, even in Langford,” said Young, noting the average sale price of a single-family home in Langford is nearly $900,000, while it’s over $1 million in the core. “A lot of people say they feel their opportunity to get in is now gone.”

    Within certain limits, a developer, if so motivated, can manage the cost of housing through some combination of finding cheaper sites (less desirable locations/areas, which can be zero sum because of lower sales price/rental rates), rezoning properties to greater densities, thus reducing the land cost per door, negotiating parking relaxations (less structure, less required property, or both), reducing unit sizes, reducing building amenities, securing government funding tied to affordability, negotiating with municipalities during the development approval process to meet various (largely symbolic) affordability conditions in return for density goodies.

    You note, of course, that I didn’t add “reducing developer profit” to this list. The reason is that the entire financial machinery that supports development is rigorously organized to require demonstration—proof, within reason—of project viability. No proof, no dough from lenders, investors, anyone. Any developer who attempts outright philanthropy within the financial architecture of a project is a one-project developer.

    I would temper reader expectation that innovative land use policy contributes much to affordability. So, what can we do to aid housing affordability and improve offerings for the missing middle? 

    Duncan today, gone tomorrow.

    Founder of Open Space, founding publisher of Monday Magazine, originator of the seven Gaining Ground urban sustainability conferences, Gene Miller is currently promoting ASH, an innovative affordable housing concept, and writing “Futurecide,” a book that argues that catastrophe is ecological.

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    You're right, Mr. Miller: fourplex people are not like me. They don't mind having a bunch of people on the other side of their wall, instead of a tree. They don't mind noise. They don't mind listening to other people's plumbing in the night. They don't mind having their comings & goings clocked. They don't mind having no place to park, and leaving their crowded building every morning for the pleasure of jamming into a crowded bus. I want a backyard so I can keep being a NIMBY, which means Nature In My Back Yard. Under densification, the "missing middle" will be the green space between houses.


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    Sitting on the City of Victoria's Renters Advisory Committee, it's driven me nuts that the planning dept keeps taking time at our meetings to discuss the 'missing middle' project. They acknowledge that no rental housing would be feasible in any of these projects unless subisidies are available. It seems to me that the planners are having a fun time making plans like they learned to do at planning school and creating homes they'd like to live in.

    Meanwhile, what planning has the city done in relation to the people who live outside and aren't permitted (by the city (per the city's own bylaw and as a term in their Memorandum of Understanding with BC Housing) to keep tents erected in designated night time 'camping' spots from 7 am to 7 pm?

    I've seen posters and promotions for the missing middle project for months on end that appear to have a significant price tag. What has the city planning department done to let tenants know that a Rental Housing Standard of Maintenance was passed almost a year ago? Well, a notice was posted on facebook the day the standard went into effect - last Jan 31 and despite numerous requests from members of the Renters Advisory that tenants be informed that rental housing should be heated, free of mold, have potable water, etc. - it seems there isn't a budget for communications about the standard.

    Maybe the planning dept doesn't want to explain to tenants that the new Standards Bylaw won't be enforced by city bylaw enforcement officers nor will inspections secured from the city. Tenants who want enforcement of a city bylaw will have to pay the BC Residential Tenancy Branch $100 to apply for a hearing where they will need to provide their own evidence, expert witnesses and any representation they might require to get the heat turned on or the mold removed.

    The bylaw enforcement officers are too busy seizing the tents and belongings of people without homes who can't get their tents taken down and their belongings packed up by 7 am - in the cold, the dark and the rain.


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    If we don't have enough homes for everybody, then why do we invite 400,000 new Canadians every year?  We don't even know who are those future citizens yet but we're making room and subsidizing new homes and calling it a crisis.

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    Just read Patrick Condon’s piece on “missing middle” housing and re-read Ken Roueche’s and my own (above).

    While many informative points are made/raised in all three pieces, none (though Ken’s comes closest) really explains with the force it deserves that missing middle is tantamount to a social revolution. While it doesn’t prohibit continued single-family home ownership/occupancy, it challenges (and threatens) the idea of single-family neighbourhoods; that is, it rejects the idea that any zone in the city protects the exclusivity of single-family living and social entitlements—that I may, with confidence, stand in my front yard and wave to my fellow single-family home owners flanking and surrounding me.

    I use dramatic words like “challenge” and “threaten” and “social revolution,” but, of course, it’s all a matter of perspective. There are endless streets in Victoria where former single-family homes have been converted to suites (just count mailboxes) and it appears that the world hasn’t ended for adjacent single-family dwellers. And while Ken Roueche may be technically correct about possible allowable suite sizes and building heights, do a walk or drive past 417 Vancouver Street, a relatively new eight-plex that stays low, parks all of its cars on-site, and does no visual damage to the street.

    I think, though, that Roueche is invoking technical features as code for the transformation of a street’s or neighbourhood’s tone and feel; and it’s my point in this note to raise this matter to the surface. I don’t take a position, but only wish to give the reader a clear sense of the potential profound transformation in the social characteristics of our neighbourhoods. 

    Missing middle is nothing more (or less) than a strategy for distributed density. Given the monstrosities that are springing up around Downtown, I’m inclined to feel that MM comes too late. Regarding affordability, I’m entirely with Patrick Condon, and believe that affordability comes from one place only: government policy and funding. The market will never deliver affordable housing to anyone who can’t ‘afford’ to pay market rates.

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