Those are just some ideas I had, Curious for the thoughts of those that know land economics and infill development Better than me to explain these issues
This
@CBBarnett, Holding costs are very low, especially on surface parking lots and there are a lot of folks that have so much money that got into land flipping, and are so bullish on the calgary market they are willing to wait decades and decades for there payday. Crank up the costs of holding unproductive land (surface parking) and watch things turn over.
It's definitely a part of the problem, but it's more of a symptom. Here's my experience as someone in the industry, who is also passionate about thriving communities.
It's fun to see new things get built, but the design decisions we critique are often near the end of a long development process. When people want to build anything, they borrow money.
The investor wants an acceptable rate-of-return; everyone wants to make money on their investments. They buy land, hire an architect, set a budget to ensure that rate-of-return, and together they figure out what they can build in order to make money. During this process, we realize a bunch of things:
- Relative to other costs, material is cheap.
- Labour is really expensive.
- It's really hard to sell a unit above market $/sqft.
- Finishes provide returns.
- Holding land while you figure it out is easy.
The takeaway is this: there's a ceiling on what you can sell units for, and there's a floor on what you can build them for.
In Calgary specifically, units are cheap and labour is expensive, which makes the window of productive investment in housing is much narrower compared to other places. Overall, the difference in labour costs and unit selling prices will show you how much development happens.
Do we tax based on land value to spur development? No, taxing your way out of an affordability crisis is not a great long term solution. Although I'd concede holding taxes would certainly help in the near term.
What is the solution? We need an organization that is okay with building housing without requiring a monetary return on investment. There actually used to be one that most people over the age of 45 benefitted from, that built tens of thousands of units in Alberta for people to live in, and kept housing affordable*. Then, once those people got their cheap homes, they stopped building them and relied on the "free market" to build them instead. Now we are here - where housing is unaffordable for most people not already wealthy, and the only way to increase supply to to give wealthy people more money.
We need a strong public housing policy to return, and it's not a right-vs-left wing idea, it's just math.
Go vote today.
*I can find statistics to back all of this up, but it's not being peer reviewed, and I post anonymously, so that's too much effort when I should be working.
