Last week Nicole and I sat down to record some video content about the recent changes made to the CMHC Multi-Unit Loan Insurance Program.
I’m a big believer in the power of video these days.
Especially the short-format type reels.
More and more people are consuming content this way.
Myself included.
The said… I absolutely hate recording videos.
In fact, the only thing I dislike more than recording video content is watching myself in video content.
Most recently Nicole and I tried to record a conversation between the two of us, discussing various mortgage and real estate topics.
Something we do all the time in our office (without an iPhone recoding it) .
And the conversation was going great, right up until she hit the record button, lol.
The picture above, is me, very uncomfortable with being recorded, lol. The conversation wasn’t a funny one, but apparently I smile and laugh when I’m uncomfortable.
I haven’t watched any of the video yet as Nicole is in the process of editing it — no small task, lol.
I asked her how it turned out, and her response was — “it’s not terrible.”
Nonetheless, I’m a big believer in getting comfortable with the uncomfortable, and in the power of sharing video content, so this is something we will continue.
Stay tuned for more video on our socials and perhaps even in this newsletter…. and go easy on me!
A few weeks ago I wrote about our Prime Minister’s Freudian slip — where he said “we need to maintain current house prices. It’s a huge part of people’s potential for retirement and future nest egg.”
This, at time when most new policies that are being rolled out, are to help achieve “affordable housing.”
So how do you actually achieve affordability if you can’t bring down house prices?
In my simple mind, the only way is for a) incomes to go up, or b) slow down housing appreciation by building a lot of new inventory.
And I really believe that is the Liberal government’s gameplan — have income growth exceed the pace of growth in house prices.
We can discuss the income growth another time, but for now let’s focus in on the part about building more units, to slow down the pace of appreciation.
A key component of this strategy is to encourage cities and provinces to remove red tape, and to start building more — allow 4-plex on single family lots, support and promote high-density projects etc.
Many recent policies and announcements, from the government, are in-line with this.
But back in October, a Toronto Developer, Matt Young, put a thread out on Twitter where he showed all the development fees and taxes for a particular high-density development he was working on.
Those development fees worked out to approximately 24% of the cost of the project.
So when the government recently started campaigning hard on affordability, naturally, many believed that development fees and taxes would decrease.
Seems logical, right.
Well, Matt was back on Twitter this past week, and shows that the opposite is true.
Instead of going down, Toronto’s development costs are up 21% as of May 2024.
And they are expected go up again in June.
They are up 42% on the year, which equates to $15k for a one-bedroom and $24K for a two-bedroom.
And guess who ultimately pays for these costs? Homebuyers! Every single dollar of it.
So why are development costs up?
Bill 185.
What’s Bill 185?
It’s called the Cut the Red Tape to Build More Housing Act 2024.
So they cut the red tape, but they increase the fees to do so? How does this make sense?
And if the development costs are increasing, then how does this not make housing more expensive.
It does!
In a nutshell here’s what happening… federal and provincial governments are monetarily incentivizing cities and municipalities to “remove the red tape” (i.e. build more density, faster).
And many cities and municipalities are saying sure we will do that.
Then they are turning around and hiking the development costs for those projects so much, that the project is not economically feasible for the developer.
So in the end, the city gets the money from the Feds or the province, for removing the red tape, but yet there is very little increased new housing stock actually being developed.
So although many of these new policies sound good, the reality is that there needs to be 100% buy-in at all levels of government in order for the policy to be effective.
Personally, I’m not overly confident in the abilities of all levels of government to work together… especially on this issue.
So while people are looking at government to fix the affordable housing problem… please keep in mind… they are the ones that created this problem, and in reality, are making it worse.
This is just one big vicious cycle that does not seem to have a happy ending end in sight. Not anytime soon, anyways.
Well, that’s my rant for today.
I promise…in most aspects of my life I’m a very positive guy…
But if I sound negative and frustrated… well, when it comes to this kind of stuff… I am!
Until Next Time,
Vince
