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发表于 2021-5-31 03:24 PM
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https://i1.wp.com/betterdwelling ... 721%2C480&ssl=1 721w, Running out of land is as Canadian as hockey, maple syrup, or laundering money for global crime networks. In fact, Canadians love running out of land so much, they do it every few years.
Many are currently justifying high home prices by claiming a lack of land in Canada. This isn’t just something people have come to conclude themselves. It’s supported by politicians, (some) academics, and real estate developers. It doesn’t matter where either. From Vancouver to Toronto, and even into smaller cities like Halifax.
People are convinced this is the last chance to buy a house because the country is running out of land. Those who buy a condo now will live like the Barons and Baroness of the past. Forever their space in the country will be secured. Those who don’t will toile in the code mines. Hacking away at bits for Microzon, a conglomerate that owns everything. I’m pessimistic, but not even I am that pessimistic.
It turns out Canadians feel this way at the top of every real estate bubble though. Going through newspaper archives all the way back to the 1930s, we can find a whack of examples. It’s always the last year people will be able to buy. There’s no more land. Everyone will be childless and stacked in human worker pods. Psh… the last one is only partially true.
Today we’re going to go through a sample of the many times Canada ran out of land. Before that, let’s quickly dive into the land scarcity narrative.
The “Running Out Of Land” Narrative
Before we get to all of the times this has come up, let’s talk about land scarcity. When home prices are rapidly rising, people tend to entertain this as an explanation. The seller of the land wants buyers to accept that their goods are more valuable due to scarcity. The buyer wants to justify why they’re paying so much for something they really want. Most of the people perpetuating that claim make a buttload by doing so. It’s much more profitable.
Let’s look at one of the most densely populated places in the world — Hong Kong. People from Vancouver constantly use this as an example, saying it has no land. The Greater Vancouver region will obviously be the next Hong Kong, right?
Hong Kong land is so scarce, they are currently considering a plan to build an artificial island. Politicians from the region argue this would help with housing affordability. All they need to do is spend billions of tax dollars to build more land, for developers to develop.
A Hong Kong Urban Studies prof has a different take. Prof Mee Kam Ng crunched the numbers, and found 24% of the region’s land is developed. Most people assume the rest is protected land, but it turns out that’s not the case. Only 46% of the land is actually legally protected. That leaves 30% of Hong Kong with development potential, not currently used. Obviously, she thinks this should be used before disrupting marine life.
Even one of the most densely populated regions in the world has a s**t ton of land. Acknowledging that point would squeeze a lot of profit though. The preferred narrative has the government giving developers a buttload of subsidized land.
Greater Toronto Can Build Two New Torontos Before 2030, And Land Would Still Not Be Scarce
Sure, but that’s Hong Kong. It’s a wide-open landmass, unlike the tiny Caribbean island of Toronto. Surely Toronto’s Greater region has run out of land, right? Well, that’s not what researchers that have actually crunched the numbers say.
Neptis found the Greater Golden Horseshoe (GGH) has plenty of land for development. The GGH, the economic region with Toronto at the center, has a whack of land. It doesn’t even need to touch the Greenbelt-protected region. It just needs to start using the land that’s being hoarded.
The GGH has 125,600 hectares of land available for development, according to the study. Of that land, 103,200 hectares are designated greenfield. Greenfield is untouched and raw land, often used for development. This land should cover more than enough land for housing and development until at least 2031. They actually say it could last much longer, if effectively used.
https://i0.wp.com/betterdwelling ... 721%2C353&ssl=1 721w, https://i0.wp.com/betterdwelling ... 768%2C377&ssl=1 768w, https://i0.wp.com/betterdwelling ... =102%2C50&ssl=1 102w, https://i0.wp.com/betterdwelling ... 210%2C103&ssl=1 210w, https://i0.wp.com/betterdwelling ... =140%2C69&ssl=1 140w" data-lazy-loaded="1" sizes="(max-width:2560px) 100vw, 2560px" style="box-sizing: inherit; border-width: 0px; border-style: initial; vertical-align: middle; height: auto; max-width: 100%; border-radius: inherit;">Source: Neptis.
For context, the City of Toronto is 63,020 hectares large. The GGH can build the equivalent of almost two Torontos without redeveloping anything. Since redevelopment also occurs to improve densification, it’s hard to argue a shortage. At least not in your lifetime.
“The total inventory of land is sizable, and any future proposals for boundary expansions should take into account the amount of land already available for development,” says the researchers.
In other words, all of those people saying the Greenbelt is why home prices are expensive? Most of these campaigns are developers looking for cheap and subsidized government land. They’re supported by people that have been convinced to give it away and that is how they will be able to buy a home. Because, you know… people buy homes from developers, thinking the more they buy, the lower prices get.
History Does Not Repeat Itself, But It… Okay, It Repeats
At the peak of every real estate bubble, people buy into this narrative of land scarcity. No one ever seems to think values can extend beyond fundamentals. People are perfectly rational, and never make mistakes or get excited beyond reality. If they aren’t, the government, through sheer political will, will make it so. All they have to do is price out subsequent generations, right?
Historically, that’s never been the case. But don’t take my word for it. Let’s go through some old newspaper articles, and see what we can learn about Canadian real estate. We’ll start with the most recent epic bubble pop, in the late ’80s and early ’90s.
The Late ’80s And Early ’90s Canadian Property Bubble
That Time Toronto Had No More Frontage Land, So Prices Soared
The first article is “Easing The Housing Squeeze” (May 28, 1988; Toronto Star). In it, experts explain a lack of land drove prices higher, and now frontage is rare. Frontage, the street-facing length of land, became so rare, it hit $3,000 per foot. For the late 1980s, that’s a lot of cash.
The typical 40 ft lot would cost around $120,000 ($240,000 in 2021 dollars). The cost of an average home fell until 1996, hitting $190,000. That included the land frontage as well, so sadly Toronto hadn’t run out of frontage.
That Time The Toronto Suburb of Markham Ran Out of Land
In an article titled “Will The Trend Turn Toward Smaller Homes?” (Jun 10, 1989; Toronto Star), the author asked experts about trends in the marketplace. Experts predicted single-family home sales would be over. All future buyers could only afford condo apartments from now on.
“The days of the $300,000 new home in the Greater Metro area are numbered. Planners and politicians are beginning to see the writing on the wall — that demand for that kind of up-scale housing is waning,” the piece opens.
For context, about half of homes sold in the Greater Toronto resale market are detached units. The region still hasn’t hit the condo apartment apocalypse, 32 years later.
That Time Toronto Real Estate Developers Ran Out of Land… Excluding Their Landbanks
In the article “DBRS Lowers CP Rating” (May 25, 1991; Globe and Mail), Toronto developers were running out of land. “They’ve got to sell land each year to show positive cash flow, but they’re running out of land,” said the author.
Just a few paragraphs before explaining the developers own “the best land banks” in the City. For those unaware, land banks are land bought for future development. They often just sit empty while values appreciate. At the perfect cycle peak, developers then use them. In other words, they had a lot of land. They just didn’t get the amount of zoning they wanted, to maximize profits.
The author argues they needed more zoning because there was not enough housing in the area. As a result, home prices would continue to rise due to a lack of development space. Prices dropped just a few months after, for nearly 5 years. I guess they found more land.
That Time Toronto Didn’t Even Have Enough Room For The Dead
In the early 90s, Toronto land was thought to become so scarce the dead would no longer be welcome in the City. An article titled “Toronto Losing Ground In Cemetery Business” (May 25, 1991; Globe and Mail), explained people can no longer be buried in the city. Land prices had become so high, they would need to soon be banished to the suburbs… like an oversized SUV.
“Burial space is running so short in Metro Toronto that the dead may soon be commuting to the suburbs for their final resting places,” said the author.
https://i1.wp.com/betterdwelling ... =150%2C41&ssl=1 150w, https://i1.wp.com/betterdwelling ... =210%2C57&ssl=1 210w, https://i1.wp.com/betterdwelling ... =140%2C38&ssl=1 140w" data-lazy-loaded="1" sizes="(max-width:2560px) 100vw, 2560px" style="box-sizing: inherit; border-width: 0px; border-style: initial; vertical-align: middle; height: auto; max-width: 100%; border-radius: inherit;">Source: Globe and Mail.
And no one ever died in Toronto again, because it was too expensive, is my understanding.
The Late ’70s And Early ’80s Canadian Property Bubble
That Time Halifax Ran Out of Land In The 1970s
In a piece titled “No Land In Halifax So Dartmouth Gets Plants, Jobs” (Jun 17, 1976) we find out Halifax ran out of land too. The land was so scarce, they couldn’t even build new factories. The city’s politicians told companies to build across the water instead. Who needs jobs? People owned real estate, right?
“Industrial land is so scarce in Halifax that top city officials are telling industries to look elsewhere in the vicinity for sites to build new plants,” said the author. A little before explaining, “to acquire larger sites in Halifax it would likely mean buying up an existing site and redeveloping it.”
In other words, there was plenty of land. Just not enough to give away cheaply to a company looking to build a new industrial plant in the region. Maybe instead of running out of land, we should say “running out of land the government will give us on the cheap?”
That Time A Lack of Land Caused Toronto To Become Childless Apartment Dwellers
In “Metro Housing Land Could Become Scarce” (Sep 27, 1977; Globe and Mail) we learn Toronto will live in apartments. “However, in terms of new housing, Metropolitan Toronto is looked upon as mainly apartment land, and the external area is primarily used for low-density housing,” said the author.
Further adding, “… there would be sociological disadvantages because of the tendency for apartment occupancy to be more geared towards non-family households, childless families and the two ends of the adult age range.”
Okay, so this wasn’t totally off. Just about 30+ years too soon. Except for the fact, detached housing is still the largest home resale segment.
That Time Toronto Ran Out of Land, And No Luxury Hotels Could Be Built
In “Work Begins On King Edward To Bring Landmark Up To Snuff” (Sep 28, 1979; Toronto Star) we find out downtown Toronto ran out of land. Consequently, there would be no more luxury hotels in the Downtown region.
“The location in downtown Toronto will attract the business clientele and there’s limited opportunity to develop competitive luxury hotels in this area because there is no land available and because of the high cost of construction and financing,” an expert told the reporter.
And 1979 was the last time a luxury hotel was built in downtown Toronto. Not really. I can think of 3 that are currently under construction off the top of my head. There were also many built between 1979 and 2021.
That Time Toronto Only Had Land To Build Vacant Homes For Wealthy People
In “Brand New Homes About In Metro — For The Wealthy” (May 29, 1976) we find out Toronto’s lack of land only impacted the poor. “Undeveloped land is rare in Metro now and almost non-existent outside of Scarborough,” says the author.
Though the author seems not totally convinced by the development narrative. She points out 17,000 new luxury homes that are built, and sit vacant. “Brand new and unoccupied, they prove the argument that there is no housing shortage in Metro, only a shortage of housing people can afford,” she finds.
Only 17,000 vacant homes? Those are rookie numbers. You gotta pump those numbers up.
What’s interesting here is in 1976, the housing bubble was just starting to form in Greater Toronto. The vacant homes helped apply a squeeze and panic that would send prices soaring shortly after. The market would crash in the early 1980s.
That Time Vancouver Ran Out of Land, And It Would Only Last 20 Years
In “Vancouver may tackle density limits for further growth” (Apr 20, 1981; Globe and Mail), we find out Vancouver can no longer have single-family homes. Experts argue the city needs rapid densification, and people shouldn’t be opposed to it.
“Increased purchases of Vancouver houses by absentee owners — whether foreign investors or local speculators also should lessen neighborhoods’ resistance,” said one expert in the article.
“The Greater Vancouver area is considered to have enough land for 20 years of residential development,” said another city official.
Oh, so that’s why nothing was built in Vancouver after 2000. Makes sense.
The 1960s Canadian Property Bubble
That Time Developers Bought Land and Held It Vacant, Resulting In A “Shortage”
It turns out in the 1960s, developers began banking land for future development. You see, the government was going to ramp up immigration, and there would be a need for a lot of housing. With low property taxes, it just made sense to buy the land and hold it vacant, and watch it appreciate. In an op-ed titled “Land Speculation” (Sep 9, 1967; Globe and Mail) someone suggests a vacant land tax.
“I would like to see the following idea seriously studied. All vacant land within suitable areas near Metro, should have its yearly taxes greatly increased to the point where it would be unprofitable to hold it vacant any longer,” said the author.
Adding, “An owner of such land would thus be forced into one of two courses. He would either have to develop the land himself immediately in order to create revenues to offset these taxes, or he would have to sell his land.”
Henry George couldn’t have said it better himself.
That Time Academics Concluded Real Estate Developers Can’t Cause Bubbles
Don’t worry, academics concluded the above strategy did nothing to prices. A decade later, “Study Holds Soaring Land Prices Were Not Caused By Realty Firms” (Oct 27, 1978) was published. The article concludes the development industry couldn’t cause higher prices during the 60s.
The article actually completely dismisses the buying can contribute to home prices. “Real estate companies can in no way affect the general level of land prices because they have bought land steadily over the past decade so that inventories are now high compared to current consumption levels,” said the author.
The 1930s Canadian Property Bubble
That Time Saskatchewan Ran Out of Land
In a piece titled “Land Is Growing Scarce,” (Aug 11, 1931; Globe and Mail), we found out Saskatchewan ran out of land. I’ll wait for everyone from Saskatchewan to finish laughing before proceeding. Done? Still? Fine, I’m starting without you.
In a legislative session, the Premier of Saskatchewan declared land had become scarce. Even the unattributed author found this to be rich. They wrote, “a glance at the map does not reconcile so large an area with a relatively small population.”
https://i2.wp.com/betterdwelling ... =113%2C50&ssl=1 113w, https://i2.wp.com/betterdwelling ... =210%2C93&ssl=1 210w, https://i2.wp.com/betterdwelling ... =140%2C62&ssl=1 140w" data-lazy-loaded="1" sizes="(max-width:2560px) 100vw, 2560px" style="box-sizing: inherit; border-width: 0px; border-style: initial; vertical-align: middle; height: auto; max-width: 100%; border-radius: inherit;">Source: Globe and Mail.
They added, “the West is still a ‘vast open space,’ capable of maintaining many millions of people.”
I think you probably get the point by now. Now if you’ll excuse me, the internet is running out of space.
