Time To Profit From Small Scale Intensification

If you're a middle income home buyer looking at the available options for purchase, you likely have two:

Option 1: A high-rise condo unit.

Option 2: A single family home out in the burbs.

Even the latter option is becoming increasingly out of reach. And forget the single family detached home within an hour of the city. No one can afford that. (1)

This is certainly the case here in Toronto, and increasing rings true in cities across Ontario with a population of more than a hundred thousand.

In between these two options are "gentle densification" strategies being implemented across a wider landscape. The idea is that instead of using exclusively core locations for high rise condo development, affordable housing units should be spread across the cities more evenly, with an attempt to preserve neighbourhood characteristics as much as possible.

This is needed to address the limited single family home development due to greenbelt legislation and policies trending towards density. Supply is further constrained with continued immigration, foreign investment and simple affordability.

What Do These Properties Look Like?

"Gentle densification" options may include:

  • Secondary suites
  • Duplexes, triplexes and 4-plex conversions and new-builds
  • Townhouse developments (stacked and full)
  • Low-rise apartment buildings (4 storeys and lower)

These types of developments are ideal in single family neighbourhoods that are not in the core to the city, but just slightly outside of it, easily accessible by public transportation, with great infrastructure.

We have many developed areas built fifty to sixty years ago complete with efficient segregated sewer systems and well built electrical, water and gas services.

Originally built as thriving neighbourhoods with an excellent community feel, these Boomer-generation raised homes often housed a lot more people than the average home today.(2)

This means services are underutilized, school enrollment is down, and property taxes are up in order to to support aging infrastructure. It's time for new life to breathe into these areas with the small scale densification options listed above.

Furthermore, there is a great deal of support from most interested parties. This includes:

  • Homebuyers and renters who need more affordable housing
  • The private sector who needs a greater return on their investments
  • Local businesses who need to generate more revenue, and
  • Policy makers themselves who need to provide housing options
  • Cities that need to increase tax revenue

Two Big Headwinds For Progress

What we've said so far makes total sense right? Indeed, it does. Unfortunately there are two very strong forces against this type of development.

The first one is outdated official plans and zoning by-laws that make it difficult. Many of these were written with a clear separation of detached single-family neighborhoods and higher density mixed-use areas, but are very irrelevant for today's world and needs to be revised quickly.

Take for example the City of Toronto, which has zoning based on the individual cities before amalgamation and zoning for the "megacity". Both of them apply. This is also the case in Hamilton, and adds a lot of confusion.

Even in areas zoned to allow high-density housing such as duplexes and triplexes, associated fees such as development charges, parkland fees, and school board fees make them prohibitively expensive to embark on by homeowners.

The second force (and I've discussed this on numerous occasions) are existing residents who oppose this type of development (google "NIMBY"). These folks have a lot of power, especially when they get in groups and show up at committee and council meetings. Even well intending council members who want sensible development have no choice but to comply with their demands in order to secure votes at the next election.

Not to worry Mr. NIMBY, this low-rise building on the site of the old gas station and strip plaza is not going to turn your neighborhood into a slum. - Photo: Toronto Star

Not to worry Mr. NIMBY, this low-rise building on the site of the old gas station and strip plaza is not going to turn your neighborhood into a slum. - Photo: Toronto Star

While it's undoubtedly great for these folks who may be mortgage free or got in the market a long time ago, it's not very nice to kick the ladder out once you're already in (apologies for the crass example).

I myself was fortunate enough to get into the market in a nice single family neighbourhood at a good time, and was able to invest into property which really helped me a lot. Unfortunately not a lot of folks have this option in this market. It would be hypocritical for me to kick the proverbial ladder, and not welcome density within my area. Of course, I would expect all projects to be permitted, safe and properly built.

The Good News

Even though it's a challenging process, the good news is that slowly but surely things are changing in the right direction. Many cities are coming to realize that their zoning by-laws are extremely outdated and need to be revised.

For instance, many cities have exempted development charges for additional units to properties, such as when changing a duplex to a triplex.

Generally when variances have to be made before a committee of adjustments, they will lean towards the side of density. I've had some success with this recently in the City of Hamilton, with a committee stating that what we were doing with a secondary suite being, "....consistent with the policies that focus on growth in settlement areas, as the proposal is an efficient use of the lands and is appropriate for the available infrastructure." That was nice.

A Continued Battle

Ultimately, this will benefit everyone regardless if you are a single property homeowner, or an investor with multiple doors. It will also provide greater options for renters.

Making changes to official plans and zoning by-law is an arduous process, and I am prepared to continue pushing for what I personally believe in. To me, it really seems like a no-brainer to provide these types of housing options, and ultimately bring back life and community to these once thriving neighbourhoods.

If this is something you believe in and wish to profit from as well, I'll need your help. You can help by involving yourself in the small scale density housing projects described above. Work with Realtors, designers, architects, builders, planning consultants to push these projects.

It's not easy but when you articulate a very clear and logical message for the benefits of these housing options, it's difficult for them to ignore or argue against you.

Here's a midtown single family home that was converted into a legal triplex - no sloppy tenants will be living here - Photo: Dwell.com

Here's a midtown single family home that was converted into a legal triplex - no sloppy tenants will be living here - Photo: Dwell.com

Of course, if it's smaller scale projects like secondary suites, duplexes and triplexes, I can help you!

I've put a lot of thought into this post, and I would greatly appreciate if you can leave a comment below on what you think, and if you feel these strategies discussed are feasible. Thanks!