Market urbanists such as myself tend to believe that if a place suffers from absurdly high housing prices, there is probably not enough new housing being built to accommodate rising demand.

A recent paper argues that inadequate supply is not a significant part of the problem in high-cost Vancouver, primarily because the number of housing units has kept up with the number of people (p. 11)   It seems to me, however, that this theory overlooks people priced out of Vancouver, thus understating demand.

To put the matter in hypothetical form: suppose that in 1991, Nimbytown had 20,000 people and 10,000 housing units.  In 2011, Nimbytown had 30,000 people and 15,000 housing units; however, 30,000 more people are priced out of Nimbytown.    Obviously, it would be silly to say that housing is keeping up with demand.

Vancouver is, to be fair, adding housing supply- but at about the same pace it did 20 years ago.  From 1991-95, Metro Vancouver added about 18,000 housing starts per year, ranging from just over 14,000 in 1991 to just over 21,000 in 1993.    Housing starts then nosedived, not reaching the 20,000 level until 2007.  Between 2007 and 2011, the region averaged about 16,000 housing starts per year, slightly fewer than in the 1990s. In a region with a stagnant population, this would be a strong performance.  But from 1991 to 2011, the number of Vancouver households grew by over 40 percent, from just over 600,000 to almost 900,000.  So should a region with 900,000 households have the same number of housing starts as one with 600,000?  I don’t think so.

The paper blames Chinese investors for Vancouver’s high housing prices- and logically, any increase in demand should, other things being equal, increase housing costs.  But the author of the paper has written elsewhere:

There is very little good, government-collected data on the question of foreign ownership. No one disagrees on this point. This is to the discredit of federal and provincial authorities, who for years resisted gathering rigorous data, even though Mark Carney, then governor of the Bank of Canada, warned quite clearly in 2011 that the Vancouver real estate market was being affected by money from East Asia.  The fact that five or six years could pass without any effort to collect data is stunning and can’t help but stimulate a tinge of conspiratorial thinking. 

But there seems to me to be a contradiction between arguing that (1) Vancouver is expensive because it is being overwhelmed by a tidal wave of foreign demand and (2) there really isn’t enough data to determine whether there’s a tidal wave of foreign demand.   So we really don’t know very much about the demand-side element of housing costs in Vancouver.

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The objective of the infill design guideline is to encourage the retention of existing buildings, but the guideline’s own side yard setback makes this nearly impossible. In practice, this means that the vast majority of developers of these lots demolish the existing building and construct a new duplex. (Many of these new duplexes look like character buildings, but in fact are built slab-on-grade, i.e. without basements, and without attics, much like the cheap Vancouver Specials that preceded them). This is the first irony.

The second irony is that many of the two-family zones in the City are meant to be heritage-friendly zones, which promote the preservation of character and heritage houses. Since it is largely impossible to build infill, and very costly to renovate or expand an older building, most developers will demolish the existing house, and then design the new duplex in a faux heritage style in order to get a density bonus that allows for greater floorspace. Result: character is being replaced with faux character.

The final irony is that these new duplexes are then required to have a two-car garage on the lane, a parking requirement that is meant to reduce crowding on the street. (Never mind that many duplex owners park on the street anyway, and use their garage for storage.) This required garage ends up being about the same size as the infill laneway house that the design guidelines originally prevented.

Even though Vancouver is, I believe, the only city in North America to allow any sort of laneway infill, I think it’s a very promising form. The District of Columbia, in particular could, desperately use it – strong demand has hit up against the limit of the Height Act downtown, and now that downtown is nearly built up to the absolute limit that Congress will allow, the gentrification line has hit the streetcar suburbs filled with rowhomes. Here people commonly see two options: don’t allow any more development, or allow the prewar rowhomes to be knocked down and replaced with mid- or high-rises.

But there is another option: Allow development in the alleyways! DC has tons of alleys, and in my neighborhood, Trinidad, some of the alleys are so wide that they show up as unmarked streets on Google Maps. In any other city they would had crammed at least one more row of houses. Most alleys are of course not that large, but any alley that currently has a garage could manage a small two-story house in its place. In Georgetown one alley was blessed by the intervention of Eastbanc, a developer with enough clout to have their way with the city planners, and is now one of the nicest places in Georgetown, but I don’t think any developer has managed to successfully persuade local community groups and city planners to allow that sort of redevelopment anywhere else.

If Washington and other cities across the US do some day deign to loosen their grip on development and allow laneway housing, they would do well to learn lessons from Vancouver – be flexible about where you allow the buildings, and for god’s sake, don’t mandate parking!

(By the way, here’s another good blog about development in Vancouver, this one by developer Michael Geller.)

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2. Lydia DePillis with an example of some abhorrent NIMBYism from DC.

3. Anti-laneway housing propaganda from Vancouver. It looks like some are bucking the requirement that you have one parking spot per lot and are “putting in large windows and heated flooring in the garage of their laneway homes.”

4. A Toronto developer on “podiumism,” or skyscraper form that zoning rules force architects to build. New York City’s first zoning code in 1916 had setbacks that had a similar effect, though it formed more of a ziggurat – a much bulkier shape than is allowed today.

5. The Overhead Wire and The Transport Politic criticize new surburban-oriented low-ridership American commuter rail lines.

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2. New York state lawmakers want to ban using a phone or listening to headphones while crossing streets. Unfortunately for us pedestrians, there are very few limited access, grade-separated walkways, so in essence this would criminalize listening to an iPod while walking.

3. An interesting article about transportation in Singapore, with an emphasis on congestion pricing and other ways of recouping the enormous opportunity costs of urban roads.

4. I’ve been aware of this for a while, but it still shocks me every time (emphasis mine):

We know New Yorkers are being injured and killed just about every day. (Like the 35-year-old woman who was run over by a dump truck on the Upper East Side Monday while legally crossing the street. Did you hear about that one? The dump truck driver stayed at the scene and wasn’t drunk, so it was basically a freebie for him — a clean, legal kill as far as the NYPD is concerned. Can you imagine if she were your wife or sister or colleague? Anyway… back to those damned bikes, right?…)

5. Yet another example of why I don’t think the Texas Transportation Institute’s congestion metrics are useful.

6. As if we needed any more proof: Big cities are inherently green.

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2. What does it cost in bribes to get an 11-story hotel built in Park Slope? $9,850 to Marty Markowitz and 400-space public garage. The developer called the garage a “magnificent cake,” and Irene Lo Re of the Fifth Ave. BID says, “We can’t turn our backs on 400 spaces.” The commenters are throwing a lot of scorn at the developer for the garage, but it looks to me like it’s the fault of Irene Lo Re and the parking-obsessed neighbors.

3. Vancouver considers easing up on “social housing requirement” for developer (for the first time ever?!) if they’ll give the city a few parcels of land.

4. New (again) California Governor Jerry Brown proposes elimination of redevelopment agencies.

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1. The automobile may officially in decline (very good article!).

2. Interesting parallels between China and its HSR intellectual property disputes and post-WWII Japan and Korea. More here.

3. Fred Barnes writes a stupid article for the Weekly Standard (“The road to hell is paved with bike baths”), and Jarrett Walker responds with a treatise on “coercion” (“We are the libertarians!”).

4. I forget that although rent control has been thoroughly discredited in the real world, NYC developers are still grappling with it. Vornado and another developer had to shell out tens of millions to break the rent control grip on a Central Park South building they bought, with 15 rent controlled tenants receiving payouts of around $1.5 million each.

5. Vancouver is loosening its grip on the street food market, while Stephen Goldberg is trying to create a one-stop shop for getting NYC restaurant permits/licenses/certificates/inspections.

6. The market-defying schemes that liberals come up with would be amusing if they weren’t so horrifying. Read here as they puzzle over why excess luxury condos built in NYC during the boom couldn’t easily be used as affordable housing (Vancouver redux), and watch out for the part on the third page where an organization called “Right to the City” advocates “using eminent domain to seize vacant residential buildings and turn them into affordable housing.”

7. Niagara Falls’ decades-long megaproject failures. The article ends on a positive note, citing federal money for a new train station and grants for a wine bar and a concert hall, but I wonder if anyone in Niagara Falls ever bothered trying to loosen up the parking restrictions and maybe upzone a few blocks.

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Development of the Cambie corridor is being “paralyzed” because the City of Vancouver is taking too much of the profits resulting from property rezonings, the Urban Development Institute says.

Paul Sullivan, chair of the UDI taxation committee, said at least three potential developments along the new Canada Line have fallen apart because the city is being too aggressive in seeking community amenity contributions when rezonings take place.

The city uses the money — an average of 75 per cent of the profits resulting from rezonings — for community amenities like parks and seniors’ centres.

It’s interesting that the city openly admits to taking the vast majority of the upshot from the rezonings. One could interpret this as a marginal tax rate on dense development of 75% – I’m not sure that you could find a single politician or economist who would support a such a tax bracket on income, but I guess developers are viewed as less productive and more easy to leech off of than even the ultra-rich.

Another odd aspect of the story is that the rules are in fact not even formalized:

Sullivan, a real estate appraiser by trade, said the city could solve the problem by establishing a set amount for CACs that developers can factor into their purchase prices. “What we need is certainty in the policy, not just in the density but in the lift so that land can get priced fairly,” he said. “If you don’t have that it makes it very hard to get a grip on this problem.”

Vision Vancouver Coun. Raymond Louie disagrees.

“I am not sure that a blunt instrument [like set fees] would best serve our citizens. I think a finer-grain discussion or negotiation on what’s appropriate based on what the local needs [are] and what the individual property generates in profit is more appropriate,” he said.

My first reaction was that this is very bad, because it adds an element to uncertainty to development. But my next reaction was: If it weren’t for the ad hoc nature of the program, we might never have known its cost. In the US, where affordable housing mandates are known before developers start making their pitches, it can be difficult to see when the law is having a deleterious effect, because proposals simply won’t be made, and even sophisticated statistical analyses haven’t yielded definitive data on the effects of things like affordable housing and other community benefits. In Vancouver, though, we can see the tangible effect: “at least three potential developments along the new Canada Line have fallen apart.” But who only knows how many were never even proposed.

Anyone know of anything similar happening in other cities? Or maybe someone’s found more convincing evidence than I could about the tangible effects of things like this?

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1. Vancouver’s laneway housing program (which we discussed earlier) has been off to a brisk start, and though planners are looking to liberalize sewer rules, they’re also considering only allowing one-story houses as-of-right, and limiting the amount of new laneway houses per block.

2. Former Market Urbanism contributer Sandy Ikeda writes about the urban origins of liberty at the Freeman.

3. The Dukakis Center has released a report suggesting that the gentrification caused by new light rail lines might cause driving to increase, defeating the purpose of TOD. Megan McArdle has also been discussing gentrification. Hopefully I’ll write something about this and gentrification more generally soon, but I wanted to post this in case I don’t get around to it. Any thoughts from the commenters on why this is and how it can be avoided?

4. North Korea “declare[s] war” on its version of the jitney, the “servi-cha.”

5. LA is the only big city in America whose fire department mandates that all skyscrapers have flat roofs so as to allow helicopters to land, but this may be changing (Curbed, parts 1 and 2).

6. Disabled riders file a class-action lawsuit against NYC’s MTA “for not spending a federally mandated 20% of [subway] station rehabilitation budgets on improvements like elevators and ramps.” The ADA’s impact on mass transit and urbanism is something that I’d eventually like to discuss more in depth, but I haven’t seen much research or even many anecdotes about it – perhaps our commenters have some insight?

7. Delhi is getting 345 km of new BRT lanes, although they seem to be coming at the expense of private buses, which were taken out of service as a test during the Commonwealth Games in a move that will now become permanent. The most common complaint appears to be safety, and though the private Blueline buses are going to be replaced in the short-run by private contracted service, it looks like the city is seeking to socialize mass transit in the long-run. This seems to echo the pattern seen in many developing countries of municipalizing transit service, with examples both recent (Santiago, Chile, now and then) and from America’s own past. Some dense Asian cities bucked the trend, but they seem to be the exception rather than the rule.  Mass transit, perhaps more than any other industry, has escaped the recent global trend towards privatization.

8. Developers working on a large new affordable housing development in Brooklyn claim that it wouldn’t have been possible if it weren’t for a “mayoral override of the parking requirement,” which allowed them to not build a single parking space. I’m happy that they were granted the exemption, but I wonder how many smaller or less politically-connected developers are oversupplying parking or deciding to not build at all because of the requirements.

Might a "Don't steal from highways to fund mass transit" sign be in our future?

9. Sam Staley suggests that the Tea Party movement might get involved in local land use decisions. But given their wishy-washy libertarianism and overwhelming suburban/rural orientation, I doubt they’d break out of the standard pro-car NIMBY mold and advocate for a true market in land use and transportation.

10. “Development specialists” have convinced Cambodia to privatize its interurban passenger and freight rail service, though land title issues for settlements that have sprung near tracks may pose difficulties.

11. New York City passes a pedicab regulation bill, which Meredith Sladek criticizes for giving local community boards the power to restrict pedicabs from operating in their neighborhoods, as well as for its outright ban on motors (which have at most half the power of a lawnmower) to assist the cyclist.

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