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Costly construction isn’t the culprit behind unaffordable housing

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8 minute read

From the Frontier Centre for Public Policy

By Wendell Cox

Land restriction creates what amount to land cartels. A now smaller number of landowners gain windfall profits, which, of course, encourages speculation

The latest Demographia report on housing affordability in Canada, which I produce for the Frontier Centre for Public Policy, reveals that over half of the 46 Canadian housing markets we assess are severely unaffordable. In fact, Vancouver and Toronto rank as third and 10th least affordable, respectively, among the 94 major global markets included in our latest international housing affordability study.

To evaluate housing costs, we utilize the “median multiple,” which divides the median house price within a given market (census metropolitan area) by its median household income. A multiple equal to or less than 3.0 is categorized as “affordable,” while anything exceeding 5.0 is labelled “severely unaffordable.”

Among the major Canadian housing markets, Vancouver (with a median multiple of 12), Toronto (9.5), Montreal (5.4), and Ottawa-Gatineau (5.2) fall into the severely unaffordable category. Vancouver has maintained a high median multiple for several decades, while Toronto has been in this range for approximately two decades. The increased prevalence of telecommuting has recently contributed to Montreal and Ottawa-Gatineau’s affordability challenges, leading to a surge in demand for larger homes and properties in more distant suburbs. In contrast, housing in Edmonton (4.0) and Calgary (4.3) remains comparatively affordable.

In Toronto and Vancouver, the implementation of international urban planning principles, particularly those promoting anti-sprawl measures like greenbelts and agricultural preserves, has led to unprecedented price hikes. This “urban containment” approach has consistently driven up land values where it has been adopted. And high land values rather than increased construction costs are what explain the substantial disparity between severely unaffordable and more budget-friendly markets.

Land restriction creates what amount to land cartels. A now smaller number of landowners gain windfall profits, which, of course, encourages speculation. Maintaining or restoring affordability requires eliminating windfall profits by ensuring a competitive market for land.

Another issue arises from urban planners’ preference for higher-density housing, such as high-rise condos. Some households may prefer high-rise living, but families with children typically seek housing with more land, whether detached or semi-detached. When they’re priced out of good housing markets, their quality of life suffers and they may even fall into poverty.

The troubling paradox is that unaffordable housing is far more common in markets like Vancouver and Toronto, which have embraced the planning orthodoxy — which is supposed to produce affordable housing. The same applies to international markets like Sydney, Auckland, London and San Francisco, where urban containment and unaffordable housing have gone hand in hand.

What’s the solution? Give up on urban containment and make more land available for housing. But wouldn’t that threaten the natural environment, as critics of Ontario’s recent attempt to allow development of a sliver of its greenbelt argued?

Not at all. It’s true that land under cultivation in Canada has been declining steadily over the years. But the culprit is improved agricultural productivity, not urban expansion. According to Statistics Canada, between 2001 and 2021, agricultural land shrank 53,000 square kilometres. That’s about equal to the land area of Nova Scotia. And it’s about triple all the area urbanized since European settlement began. Even in Ontario and B.C. where most of the severely unaffordable markets are concentrated, urban expansion from 2016 to 2021 took up less than one-quarter of the agricultural loss over that period. Urban expansion is not squeezing out agricultural land.

Given all this, what should we do about affordability? In my view, three things:

First, it’s essential to acknowledge that Canadians are already addressing the issue by relocating from pricier to more affordable regions. Housing is more affordable in the Atlantic and Prairie provinces and areas in Quebec east of Montreal. So it’s not surprising there is now a net influx of people to smaller, typically more affordable, locations. In the past five years, markets with populations exceeding 100,000 have collectively witnessed over 250,000 people moving to smaller markets.

Second, make more land available for development in increasingly unaffordable markets like B.C., southern Ontario, and the Montreal-Ottawa corridor. One way is with “housing opportunity enclaves” (HOEs), in which traditional, i.e., not high-density, housing regulations would apply, but essential environmental and safety regulations would. The aim would be to provide middle-income housing at the price-to-income ratios that were typical before urban containment came along and housing across the country was largely affordable.

Market-driven development would be ensured by relying on the private sector to provide housing, land, and infrastructure, a model that has been successful in Colorado and Texas. Current residents would maintain their property rights but could sell to private parties and First Nations for development.

HOEs would be situated far enough outside major centres to take advantage of low-priced land, prioritizing areas with the largest recent agricultural land reductions. Communities likely would resemble Waverly West in Winnipeg or The Woodlands in Houston, with ample housing space and yards for families with children.

These new communities would attract people working at least partly from home. Jobs would naturally follow, creating self-contained communities where most commutes occurred within the HOE. To ensure a competitive market and prevent land cost escalation, HOEs must have ample land available.

Third, public authorities should allocate an ample amount of suburban land to safeguard reasonable land values in the Prairie and Atlantic provinces, as well as in Quebec east of Montreal. This would allow currently more affordable markets such as Quebec City, Calgary, Edmonton, Winnipeg, Moncton and Halifax to accommodate interprovincial migrants without jeopardizing their affordability.

Provincial and local governments would need to monitor housing affordability multiples on at least a five-year cycle, and legislatures, land use authorities and city councils would have to allow enough low-cost land development to maintain price-to-income stability.

It’s not enough just to provide enough building lots to meet projected demand. The goal should be to enable builders to provide housing at prices middle-income households can afford. The key to that is affordable land.

Wendell Cox is a Senior Fellow at the Frontier Centre for Public Policy. He is the author of 2023 Edition Of Demographia Housing Affordability In Canada and has been featured on Leaders on the Frontier – Cost of Living Under Crisis With Charles Blain.

Business

Saudis evict locals with lethal force to build ‘green’ city in line with globalist goals: report

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From LifeSiteNews

By Anthony Murdoch

One villager who refused to relinquish his property reportedly was killed and 47 who wouldn’t leave have been arrested during the building of ‘The Line.’

Saudi Arabian officials have reportedly allowed the use of lethal force against local villagers to clear land to construct the “green” city named ‘The Line’ that is being built in conformity with globalist agenda-linked 2030 green plans with help from Western-based construction firms.

As per a recent BBC report, former Saudi Arabia intelligence officer Col Rabih Alenezi, who is now in exile in the United Kingdom for fear of his security, noted he was given orders to evict villagers from a local tribe to clear land for the ‘The Line’ project.

Reportedly, one person was shot and killed after refusing to leave the area. Abdul Rahim al-Huwaiti refused to let a land registry committee value his property and was shot by Saudi authorities one day later, when the clearance mission to evict the villagers was taking place. It was reported that he had posted videos on social media protesting the evictions.

As noted by the BBC, the Saudi state security at the time claimed that al-Huwaiti fired on security and that he was then shot in retaliation. However, human rights groups have said he was killed for refusing to leave the area and comply with eviction orders.

While the BBC noted that it was not able to “independently verify Col Alenezi’s comments about lethal force,” it said a “source” who was familiar with the inner workings of Saudi intelligence told them that Alenezi’s testimony about the clearance mission, as well as the details about it, were accurate in terms of that such clearance missions entail.

Another 47 villagers have been arrested for not going along with evictions, many of them being leveled terrorism-related charges.

Alenezi noted that he does not regret his decision to ignore his clearance orders for the project, saying, “Mohamed Bin Salman will let nothing stand in the way of the building of Neom.”

“I started to become more worried about what I might be asked to do to my own people,” he noted.

‘The Line’ is the flagship “green” project of what is known as Neom, a $1.5 trillion development on the area’s Red Sea. It is being built as part of Saudia Arabia’s 2030 strategy, which looks to move the kingdom’s economy away from oil and its vast reserves.

The reduction and eventual elimination of the use of so-called “fossil fuels” and a transition to unreliable “green” energy has been pushed by the World Economic Forum (WEF), the globalist group behind the socialist “Great Reset” agenda that also promotes population control.

“The Line’ itself is a 170-kilometer-long “car-free” city that is in the northwest of the Gulf country, according to renderings. It will “run into the Red Sea,” where an extension of its structure will serve as a port for ships.

The Neom project is being built by dozens of global construction companies, many of them Western based. According to an analysis conducted by the BBC, satellite images show that three villages’ schools, and hospitals have been demolished to make way for the project.

Future of ‘Dystopian’ project in doubt

‘The Line’ project is being built based on the Saudi Arabian legal system, which is mostly based on Muslim sharia law that criminalizes anyone who “challenges, either directly or indirectly, the religion or justice of the King or Crown Prince. According to Amnesty International, two of 81 men executed by the Saudi Arabian government in 2022 were “convicted of crimes related to their participation in violent anti-government protests.”

When plans for ‘The Line’ were revealed, its promo video noted, “For too long, humanity has existed within dysfunctional and polluted cities that ignore nature. Now, a revolution in civilization is taking place.”

However, the future of the 170-kilometer-long project remains in doubt.

As per a recent Bloomberg report, it appears that only a 2.4-kilometer portion will be completed by 2030, according to a source familiar with the project.

Plans to have 1.5 million residents living in ‘The Line’ will not pan out as planned, sources said, and it is expected there will be less than 300,000 when the project finally comes online.

Some commentators slammed the project as “dystopian,” with one describing it as a “blatant greenwashing PR exercise by the heads of this rotten regime,” pointing out that “it’s an attempted distracting cop-out” since “Saudi Arabia is still at the very bottom for human rights (just pick next to women, any minority).”

Tech blog Engadget has raised concerns that The Line “is expected to be loaded with countless sensors, cameras, and facial recognition technology that in such a confined space could push government surveillance to almost unthinkable levels.”

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Automotive

New Analysis Shows Just How Bad Electric Trucks Are For Business

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From the Daily Caller News Foundation

By WILL KESSLER

 

Converting America’s medium- and heavy-duty trucks to electric vehicles (EV) in accordance with goals from the Biden administration would add massive costs to commercial truckingaccording to a new analysis released Wednesday.

The cost to switch over to light-duty EVs like a transit van would equate to a 5% increase in costs per year while switching over medium- and heavy-duty trucks would add up to 114% in costs per year to already struggling businesses, according to a report from transportation and logistics company Ryder Systems. The Biden administration, in an effort to facilitate a transition to EVs, finalized new emission standards in March that would require a huge number of heavy-duty vehicles to be electric or zero-emission by 2032 and has created a plan to roll out charging infrastructure across the country.

“There are specific applications where EV adoption makes sense today, but the use cases are still limited,” Karen Jones, executive vice president at Ryder, said in an accompanying press release. “Yet we’re facing regulations aimed at accelerating broader EV adoption when the technology and infrastructure are still developing. Until the gap in TCT for heavier-duty vehicles is narrowed or closed, we cannot expect many companies to make the transition, and, if required to convert in today’s market, we face more supply chain disruptions, transportation cost increases, and additional inflationary pressure.”

Due to the increase in costs for businesses, the potential inflationary impact on the entire economy per year is between 0.5% and 1%, according to the report. Inflation is already elevated, measuring 3.5% year-over-year in March, far from the Federal Reserve’s 2% target.

Increased expense projections differ by state, with class 8 heavy-duty trucks costing 94% more per year in California compared to traditional trucks, due largely to a 501% increase in equipment costs, while cost savings on fuel only amounted to 52%. In Georgia, costs would be 114% higher due to higher equipment costs, labor costs, a smaller payload capacity and more.

The EPA also recently finalized rules mandating that 67% of all light-duty vehicles sold after 2032 be electric or hybrid. Around $1 billion from the Inflation Reduction Act has already been designated to be used by subnational governments in the U.S. to replace some heavy-duty vehicles with EVs, like delivery trucks or school buses.

The Biden administration has also had trouble expanding EV charging infrastructure across the country, despite allotting $7.5 billion for chargers in 2021. Current charging infrastructure frequently has issues operating properly, adding to fears of “range anxiety,” where EV owners worry they will become stranded without a charger.

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