Why the Exurbs Are Poised to Take Off

[canuck]

Toronto has a sprawl wall around it. Its called the Greenbelt.

The province passed a law, a number of years back, drawing the line beyond which 'urban' boundaries could not grow. Reserving the greenbelt to farms, nature, limited industry [[quarries) and grandfathered uses.

A link to the maps/area here:

http://www.greenbelt.ca/maps

On the whole, it has worked well, and is very popular.

The limitations are that the area isn't so large that developers can't leapfrog it in places. [[and are), as well as those who question the role this is having in Toronto's ever spiraling house prices [[up 33% in the last year).

However, it should be noted, Toronto still has lots of whitebelt [[areas not yet developed, but zoned for literally more than 100,000 acres of single family homes. So I think that's a pretty specious linkage.

I think you are in the business of selling real estate are you not?

Don't you think that a one year 33% raise in home prices is insane?

This wannabe Vancouver style overheat was unleashed again to profit developers. Everybody is out for himself and damn the consequences. The consequences are that builders can profit from selling property at a high premium and also build expensive rentals across your region to a sizable population of not so upwardly mobile renters.

Mind you, it is not a very complicated game. It is the old idea that one squeezes the most out of them that one can.

[Canadian Visitor]

I think you are in the business of selling real estate are you not?

Don't you think that a one year 33% raise in home prices is insane?

This wannabe Vancouver style overheat was unleashed again to profit developers. Everybody is out for himself and damn the consequences. The consequences are that builders can profit from selling property at a high premium and also build expensive rentals across your region to a sizable population of not so upwardly mobile renters.

Mind you, it is not a very complicated game. It is the old idea that one squeezes the most out of them that one can.

Yes, 33% is insane.

No, I am not in real estate, LOL

My point was not that Toronto was not overvalued..... which is rather off topic for the thread....

Rather in correcting a previous poster I was simply chastising his proclivity for utter hyperbole.

He was implying comparable properties, adjusted for currency were different by a factor of five. [[Metro Detroit vs Greater Toronto).

That simply isn't the case, as I noted. Depending on area and home, one could make a case for a factor difference of 2x and at the extremes 3x.

That takes nothing away from Toronto [[and Vancouver) being in a bubble-ish, frothy and over-valued state.

But perhaps, back to the point of the thread which was a more general argument about ex-urbia, its merits and costs and secular trends towards or against it.

[professorscott]

But perhaps, back to the point of the thread which was a more general argument about ex-urbia, its merits and costs and secular trends towards or against it.

OK, if we are going to get back to the point [[and you see how difficult this is), let me throw in my $0.02.

Exurbia exists because it is subsidized. Developers can buy inexpensive farmland and build subdivisions with hundreds or, cumulatively, thousands of houses. Then in response to this, exurban communities, or the counties in which they exist, have to scramble to provide adequate access roads, upgrade water delivery systems and sewage treatment plants, and so on, and at least in states like Michigan [[and this is absolutely fucking insane) cannot put the developers on the hook for any of these exorbitant costs.

That is why there is exurbia and why the trends have been what they have been, and if you want to fix it, you have to somehow inject sanity into the equation. In Michigan, with its idiotic "home rule" constitutional provisions, this has proven impossible.

[Canadian Visitor]

OK, if we are going to get back to the point [[and you see how difficult this is), let me throw in my $0.02.

Exurbia exists because it is subsidized. Developers can buy inexpensive farmland and build subdivisions with hundreds or, cumulatively, thousands of houses. Then in response to this, exurban communities, or the counties in which they exist, have to scramble to provide adequate access roads, upgrade water delivery systems and sewage treatment plants, and so on, and at least in states like Michigan [[and this is absolutely fucking insane) cannot put the developers on the hook for any of these exorbitant costs.

That is why there is exurbia and why the trends have been what they have been, and if you want to fix it, you have to somehow inject sanity into the equation. In Michigan, with its idiotic "home rule" constitutional provisions, this has proven impossible.

Once again, Professor, I am in your debt for your thoughtful response.

I was unaware that 'development charges' are not a thing in Michigan.

For comparison, the fastest developing [[sprawling) suburb of Toronto is Brampton...

Its residential development charges for a single-family dwelling or semi are

$84,044.29

The full breakdown is here:

http://www.brampton.ca/EN/Business/p...ded-Rates.aspx

If you want 'urban' services in Ontario, you typically have to pay for them. [[towns/cities have some wiggle room in how much they choose to charge)

[Bham1982]

Once again, Professor, I am in your debt for your thoughtful response.

I was unaware that 'development charges' are not a thing in Michigan.

This website is like the Breitbart of urban planning sometimes. An echo chamber of utter nonsense.

Should I post to a million and one articles showing that new developments in MI pay their own assessments, or is it a waste of time? I doubt there's even one McMansion owner or RE industry professional on DYes.

[Canadian Visitor]

This website is like the Breitbart of urban planning sometimes. An echo chamber of utter nonsense.

Should I post to a million and one articles showing that new developments in MI pay their own assessments, or is it a waste of time? I doubt there's even one McMansion owner or RE industry professional on DYes.

If you have information to offer, different from another poster, I would certainly welcome that; just lose the inflammatory rhetoric please.

Your clearly capable of making intelligent, thoughtful posts.

But your predisposition for exaggeration, hyperbole, and snarkyness are rather off-putting.

As is your predilection for assuming you are right w/o supporting evidence.

You needn't offer 40 citations. But one or two credible ones could actually be quite helpful.

*[[I noticed you offer over 1,000,000, funny, on google I can only find 370,000 links w/those words) ....

[Wesley Mouch]

...snip...
For comparison, the fastest developing [[sprawling) suburb of Toronto is Brampton...

Its residential development charges for a single-family dwelling or semi are

$84,044.29

...snip...

CV, it may be worth elaborating on the Canadian idea of Development Cost Charges. Yes, they charge developers for the costs of servicing the lots.

Does this idea not exist at all in the States? Or just not in Michigan?

There are also differences in the way that Canada deals with taxation and municipal debt. I'd like to hear more here. Learning how its done south of Windsor may help us understand that there are other ways.

I believe that in the US, communities typically rely on future tax revenues [[and then issue bonds if they need to for financing current infrastructure improvements.) Where in Canada, I don't think they like to rely as much on debt, and prefer to charge the developers up front. This, of course, would negatively affect affordability. I think the affordability crusade is folly, but if you believe in it, charging current developers cash only hurts new construction by increasing costs. If you want more homes to be built... which Canada clearly needs in T-Town and V-Town to be sure, then perhaps they should pay the developers to build, rather than turning them into cash registers to collect money from purchasers.

I'm not well-informed here, so please correct my poor understanding and weak knowledge.

[Canadian Visitor]

CV, it may be worth elaborating on the Canadian idea of Development Cost Charges. Yes, they charge developers for the costs of servicing the lots.

Does this idea not exist at all in the States? Or just not in Michigan?

There are also differences in the way that Canada deals with taxation and municipal debt. I'd like to hear more here. Learning how its done south of Windsor may help us understand that there are other ways.

I believe that in the US, communities typically rely on future tax revenues [[and then issue bonds if they need to for financing current infrastructure improvements.) Where in Canada, I don't think they like to rely as much on debt, and prefer to charge the developers up front. This, of course, would negatively affect affordability. I think the affordability crusade is folly, but if you believe in it, charging current developers cash only hurts new construction by increasing costs. If you want more homes to be built... which Canada clearly needs in T-Town and V-Town to be sure, then perhaps they should pay the developers to build, rather than turning them into cash registers to collect money from purchasers.

I'm not well-informed here, so please correct my poor understanding and weak knowledge.

My knowledge is mostly limited to Ontario. In Canada, overall, however, cities [[municipalities) are considered 'creatures of the province' so they exist, and have rules which apply them at the discretion of each province.

In respect of Ontario, municipalities are expressly permitted to have development charges, some have provincial formulas, while others are set as limits that a City/Region may charge up to.

In respect of municipal debt, the province imposes that:

a) municipalities may NOT borrow for operating costs, only for capital
b) municipalities may not accrue debt where this will result in a service cost greater than 25% of their operating budget.

Toronto has its own guideline, of 15% [[self-imposed)

***

In terms of charges, those you could see in the link I provided were:

City level charges
Region level charges [[hard and soft services
Education Charges [[building new schools)
GO Transit [[regional transit)

That doesn't include agency fees as best I can tell [[Conservation Authority)

Nor does it include legislative compliance. [[ie. a development typically has to set aside land area for a park, that's not a development charge, but is a requirement. If the developer were unable to comply, then they would be assessed a cash-in-lieu charge. This typically occurs w/small sites [[condos or a few townhomes where the % of land allocated would not be functional). Cash-in-lieu is typically assessed at the market-value of the land that would have been provided.

****

The general premise here is that local government does not subsidize development and passes through its costs to developers.

Though Cities can and do wave/rebate fees for non-profit developments or those that may be highly prized [[think a large factory).

****

Charges here have been the way of things for a long time, so its difficult to draw a direct correlation to affordability. Though they have risen faster than inflation during the boom years. In part this is legitimate cost recovery due to higher real estate and construction costs, but its also 'easy money' for cities during a 'boom'.

****

I can't speak to how these things are done elsewhere at any length, though a cursory examination shows similar charges in Vancouver, though somewhat lower and calculated per sq ft.

In California the comparable item is called 'development impact fees'. I wasn't able to gain a clear picture in a few minutes of clicking on how high these are typically.

[Bham1982]

Exurbia exists because it is subsidized. Developers can buy inexpensive farmland and build subdivisions with hundreds or, cumulatively, thousands of houses. Then in response to this, exurban communities, or the counties in which they exist, have to scramble to provide adequate access roads, upgrade water delivery systems and sewage treatment plants, and so on, and at least in states like Michigan [[and this is absolutely fucking insane) cannot put the developers on the hook for any of these exorbitant costs.

No, this scenario doesn't exist.

New subdivisions in MI cover the cost of everything you mention. They pay special assessments for sewer, water, road. The new residents pay elevated tax rates, far above those of longtime residents in the same community. Their roads are private, their services are covered. And developers pay the bill until they have buyers.

The idea that a new subdivision in Lyon Twp or Oakland Twp somehow harms someone in Madison Heights or Redford is just nonsense. New McMansions have very high tax bills, as they should.

[Hermod]

No, this scenario doesn't exist.

New subdivisions in MI cover the cost of everything you mention. They pay special assessments for sewer, water, road. The new residents pay elevated tax rates, far above those of longtime residents in the same community. Their roads are private, their services are covered. And developers pay the bill until they have buyers.

The idea that a new subdivision in Lyon Twp or Oakland Twp somehow harms someone in Madison Heights or Redford is just nonsense. New McMansions have very high tax bills, as they should.

You are correct in that the developers pay the direct costs that you list. You are
wrong in the sense that the government then has to pick up the indirect costs of the new subdivisions to include paving/expansion of the roads feeding the subdivision roads due to the increased traffic, expanding the capacity of the sewer and water systems to meet the increased capacity, and expanding the schools to take in the increased number of students. Here in Florida, the developer can be hit in his zoning application with "impact fees" which partially offset these costs. These fees are then spliced into the cost of the homes in the new subdivision.

[canuck]

Yes, 33% is insane.

No, I am not in real estate, LOL

My point was not that Toronto was not overvalued..... which is rather off topic for the thread....

Rather in correcting a previous poster I was simply chastising his proclivity for utter hyperbole.

He was implying comparable properties, adjusted for currency were different by a factor of five. [[Metro Detroit vs Greater Toronto).

That simply isn't the case, as I noted. Depending on area and home, one could make a case for a factor difference of 2x and at the extremes 3x.

That takes nothing away from Toronto [[and Vancouver) being in a bubble-ish, frothy and over-valued state.

But perhaps, back to the point of the thread which was a more general argument about ex-urbia, its merits and costs and secular trends towards or against it.

Just one of many articles on the reaaons for overvaluation in Van and T.O. of late. Incidentally, no amount of government measures can bring down property values since these are perceived as sacrosanct. The latest increases due to abnormal market conditions are punishing potential first time buyers but greasing owners, speculators and lenders. Good times ahead.

http://www.financialpost.com/m/wp/ne...ate=2017-05-08