5 Ways The Government Can Help Fix Housing

[00:00:00] Welcome to the Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate

[00:00:06] the market and provide the tools and insights to build your real estate portfolio.

[00:00:13] Welcome back to this show.

[00:00:14] Today we're going to be talking about a special type of blueprint.

[00:00:19] In traditional construction architecture engineering sense of the word, a blueprint is this two-dimensional

[00:00:25] set of drawings that provides a detailed visual representation of how an architect wants a

[00:00:30] building to look.

[00:00:32] They typically specify a building's dimension, construction materials and the exact placement

[00:00:38] of all of its components and mechanical features.

[00:00:40] I have no idea why it's blue, but I think you do know, Nick.

[00:00:42] It has to do with the color of the paper and the color of the ink that those good

[00:00:47] old architects used to use.

[00:00:48] And you may have been lucky enough to see pictures of architects with massive desks.

[00:00:55] Usually on a bit of an incline.

[00:00:56] Yeah, my brother has one on his drafting table.

[00:00:59] Drafting table.

[00:01:00] It's so cool, but they don't do that anymore.

[00:01:01] And just like the word blueprint has changed, it has come to me many different things.

[00:01:07] These days there's a lot of tech companies that use the word blueprint in their name.

[00:01:11] And of course, let's not forget about the great Jay-Z album, The Blueprint.

[00:01:17] Because nowadays the word blueprint simply means a guide for making something.

[00:01:23] It's a design pattern that can be followed.

[00:01:25] And traditionally you're right, Dan.

[00:01:26] It was used by architects, engineers and contractors to plan and execute building projects.

[00:01:32] But now people use the word blueprint to or they use blueprints, I should say, to

[00:01:38] shape their businesses, their lives and just about anything that requires a plan

[00:01:44] or a direction that should be followed.

[00:01:49] So our government or a group of consultants who advise our government took this to heart

[00:01:54] and they created their very own blueprint, which is probably far more relevant use of

[00:01:58] the word blueprint than Jay-Z's album as an example.

[00:02:02] It's called The Blueprint for More and Better Housing.

[00:02:05] And I will commend them on not saying The Blueprint for More Homes Built Faster, which

[00:02:09] seems to be the name of every other government thing.

[00:02:11] So thank you for that.

[00:02:13] Yeah, they really went off script here and The Blueprint for More and Better Housing.

[00:02:17] To be honest, that sounds pretty good to me because if there's one thing that Canada needs

[00:02:22] desperately right now, it is more and better housing.

[00:02:26] Exactly.

[00:02:27] And the people who put this together a very impressive team and many of whom are friends

[00:02:32] of the show, Richard Joy from the Urban Land Institute.

[00:02:34] I think Jen Keesmaats on there, Dr. Mike Moffitt and an array of talented individuals

[00:02:41] from the development and design community.

[00:02:43] Actually, Mike Moffitt's got a podcast now, Missing Middle Podcast, which is sweet.

[00:02:46] And he just had, was it, was it Sean Fraser we had on?

[00:02:48] It was somebody from the house.

[00:02:50] It was immigration minister.

[00:02:54] I'll look it up in the meantime before I speak improperly.

[00:02:58] But there's a few professors on there, policy makers and more.

[00:03:00] Great group of people qualified to discuss what we're going to be explaining to you today.

[00:03:05] Yeah, exactly, Dan.

[00:03:06] And it's cool.

[00:03:07] This group has banded together in almost a superhero-esque way to save Canada.

[00:03:14] And they've started the task force for housing and climate, which is basically

[00:03:20] Canada's version of the Avengers.

[00:03:21] So thank you for that.

[00:03:23] They plan on accomplishing their goals laid out in the blueprint through four main goals

[00:03:32] hit me with the first one, Dan.

[00:03:33] So yeah, before I do that, it was it was Mark Miller, the immigration minister

[00:03:37] or minister of immigration, refugees and citizenship of Canada.

[00:03:42] And it was their most recent episode came out in 27th of March, I think.

[00:03:45] Anyway, goal number one from this is make it low carbon, reduce Canada's housing

[00:03:51] related emissions to meet Canada's 2030 climate targets.

[00:03:56] Goal number two is to make it resilient.

[00:04:00] Every home built from 2025 onwards should stand up to worsening climate hazards

[00:04:05] and changing environmental conditions, supporting national adoption strategy goals.

[00:04:11] Goal number three is make it affordable.

[00:04:12] Cut the number of households spending more than 30% of their income on shelter

[00:04:16] costs to zero by 2031, which is very ambitious, very ambitious.

[00:04:21] Bold on that one.

[00:04:22] And the next one, which is again a very bold goal, you got to shoot for the stars

[00:04:26] year goal number four, make it scale.

[00:04:30] So increase the scale and productivity of the home building sector

[00:04:34] to accomplish the goal of building 5.8 million homes between 2022 and 2030.

[00:04:42] Now, the fifth goal here that is an honorary goal that I'm adding in is make it

[00:04:46] make sense. Dan, how do we do that?

[00:04:49] Because some of these goals are ambitious to say the least.

[00:04:53] Yeah, I mean, this is really going to be a balancing act of tradeoffs

[00:04:56] from my perspective. Like, you know, let's let's use the low carbon exit.

[00:05:00] I think I feel like you can get like two or three of these,

[00:05:03] but getting all four is going to be tough.

[00:05:05] So like, let's use low carbon as an example, right?

[00:05:07] Reduce housing related emissions to meet Canada's 2030 climate targets.

[00:05:12] I'm assuming like this a lot of this means we want to move away from

[00:05:16] consuming fossil fuels to heat houses of gas, natural gas, basically an oil.

[00:05:21] Oil being very popular on the on the East Coast.

[00:05:25] Oil furnaces where their natural gas pipelines don't even go out there.

[00:05:29] But Ontario uses a ton of natural gas.

[00:05:31] We know the prairies use a ton of natural gas.

[00:05:33] Heat pumps don't even really work that well below.

[00:05:35] I think I think it's like not that they don't work well period,

[00:05:38] but I think if it falls below minus 28 or something like that, some certain temperature.

[00:05:43] Guess when you need the most.

[00:05:44] Yeah, exactly. Then so and so the challenge is like you end up

[00:05:48] needing dual fuel. So you'd need like a pellet stove or

[00:05:52] which we have one in the studio here.

[00:05:53] Got a nice smells like campfire. It's fantastic.

[00:05:56] Pellet stoves are great.

[00:05:57] But anyway, so this is like from my perspective and I'm actually a big fan of electrification.

[00:06:04] I think it's great for landlords.

[00:06:05] Like I think it's a really easy way to cut up your utilities rather than having

[00:06:08] three utility bills that go between your units.

[00:06:12] So you know they're heating it with gas, but they're consuming electricity with their outlets.

[00:06:15] If you put a mini split, an electric tankless hot water heater or an electric hot water tank

[00:06:22] and maybe some in floor heating, electric in floor heating or electric baseboards as well.

[00:06:27] Now all of a sudden all of the consumption of that unit is on electricity.

[00:06:32] And so if you're to just put an inline meter that there's many different solutions to do this,

[00:06:37] you can sub meter that unit.

[00:06:39] So if you have a triplex and you want to capitalize those utility costs onto the tenants,

[00:06:44] hopefully with the objective of making it lower carbon because they see their bills

[00:06:47] and they're like, oh, I should consume less electricity or whatever.

[00:06:49] Right. You can do that a lot easier with electricity than you can with gas.

[00:06:52] Well, because gas you would need three separate meters from average, which is great point.

[00:06:56] We've we I mean, we've executed some of that stuff where, you know, we're doing our part for ESG,

[00:07:02] but it's also your big ESG guy.

[00:07:05] We don't even have to pretend that we like it because because I remember that episode of

[00:07:10] Braden and Samoa on the Canadian investor podcast talking about ESG.

[00:07:14] So there's like, ah, it sounds like a bunch of bogus.

[00:07:17] Yeah. I mean, look, it's it's every major corporation has huge ESG initiatives.

[00:07:21] Luckily, we're not a major corporation, Dan.

[00:07:23] So we don't really have to.

[00:07:25] But from doing our part like, you know, for me, it's like, OK, well,

[00:07:29] that puts money back in our pockets.

[00:07:30] It makes it easier for the tenants and actually helps deals pencil out a bit better

[00:07:35] if you can not only reduce your costs on on that side of things,

[00:07:40] but but then put them back onto the tenant.

[00:07:43] So yeah, I think that like obviously, regardless of what you think of the carbon tax,

[00:07:48] obviously their incentive or their objective of putting it in was to make people use less

[00:07:52] natural gas as an example.

[00:07:54] And so now all of a sudden, you know, it's April 2nd, they just increased the carbon tax

[00:07:58] yesterday, April 1st, April Fool's Day.

[00:08:01] There was a bunch of protests, a bunch of other people were supporting it.

[00:08:04] You know, it actually seems like kind of one of those wedge issues where people are divided.

[00:08:07] I honestly am not smart enough to really think about this.

[00:08:09] But what I do know is my gas bill is a lot higher right now.

[00:08:12] And that increases my potential incentive to want to figure out a way to heat my house or heat

[00:08:18] my rental properties with electricity, whether or not I think that I'm going to eventually,

[00:08:24] you know, if there's a political shift that that'll change, that the tax does get axed by,

[00:08:29] you know, somebody else who might be running on that platform.

[00:08:33] It doesn't really matter because in present day, like it serves two purposes.

[00:08:38] I can electrify these suites, capitalize those costs, not have to get multiple gas meters.

[00:08:43] And I can save a little bit of money in the process.

[00:08:45] So, and so like there's this, I think it's Adam Smith actually who came out this

[00:08:49] in Economist, but the pursuit of like selfishness, like pursuing your own selfish desires

[00:08:53] actually ends up being one of the best things that people can do for like society and in

[00:08:57] the economy.

[00:08:58] Actually, Dawkins talks about this in like more biological perspective, the selfish gene.

[00:09:03] There's a book about that.

[00:09:03] It's an advancement of the theory.

[00:09:05] Very interesting.

[00:09:06] Anyway, point being save a little bit of costs and you get some ESG points anyways.

[00:09:12] So, there you go.

[00:09:12] Karma points and ESG points and deal points.

[00:09:15] Yeah.

[00:09:16] Center points on your deals.

[00:09:17] So, three point way right there.

[00:09:19] Yeah.

[00:09:20] So, so the only way from my perspective that we really see meaningful changes if we have

[00:09:25] cooperation, collaboration and buy-in from all three levels of government.

[00:09:29] And this is something I mentioned at the OHBA thing that I was speaking at,

[00:09:35] the federal and provincial government have come a long way on taxes, removing GST, HST

[00:09:39] on purpose but rentals.

[00:09:40] Municipal governments still kind of sit there with their handout on those development charges.

[00:09:43] But anyway, Nick, give me a quick refresher on what these three levels of government

[00:09:49] actually do and actually are responsible for when it comes to housing.

[00:09:54] Yeah, for sure.

[00:09:55] Well, unfortunately, I'm not going to be talking about housing.

[00:09:58] I'm going to be talking about what these government levels of government are traditionally

[00:10:02] is responsible for.

[00:10:03] So, the federal government which we all know and think of what is the government of Canada,

[00:10:08] they oversee things that affect the entire country.

[00:10:11] You might be thinking yes, housing but traditionally it's like the Postal Service,

[00:10:15] National Defense, Supreme Court, your passports, federal income tax and employment

[00:10:22] insurance and a few other things.

[00:10:24] Now, moving down that legislative ladder, we look at the provincial government that's

[00:10:30] responsible for issues that affect the province.

[00:10:32] So, wherever you are listening to this from your province, you have a provincial government

[00:10:38] and they are responsible for education, healthcare, environment, agriculture, highways within

[00:10:45] that province.

[00:10:45] And then all the way down if you are listening in a town or a smaller city, you've got municipal

[00:10:53] governments.

[00:10:53] You've got federal at the top, provincial in the middle and municipal governments.

[00:10:58] Municipal governments are responsible for such things like parks, community water, local police,

[00:11:03] roadways and parkways.

[00:11:05] And they receive authority in a lot of these areas from the provincial government.

[00:11:12] So, that's all great but you probably didn't hear me mention anything on housing or who's

[00:11:19] responsible for it.

[00:11:19] So, what level of government is responsible for housing?

[00:11:24] Yeah, so it turns out that municipalities are very much responsible for housing.

[00:11:29] So, in Ontario the Provincial Policy Statement, PPS, states that municipalities planning departments

[00:11:36] are responsible for providing an appropriate range and mix of housing options and densities

[00:11:40] to meet projected market-based and affordable housing needs of current and future residents

[00:11:46] of the regional market area.

[00:11:47] So, provinces kind of trickle this down in municipalities.

[00:11:50] In Ontario we have the Places to Grow Act which kind of sets out these different targets.

[00:11:54] That actually I think the green belt came from there as well but this means that the PPS

[00:11:59] must be applied when making land use planning decisions.

[00:12:02] I guess that's how Bill 23 kind of moved through there as well.

[00:12:04] So, every planning situation must be examined in light of relevant PPS policies and it

[00:12:11] includes direction on matters such as managing growth, new development, housing,

[00:12:15] economic development, natural heritage, agricultural all the way to mineral

[00:12:19] aggregate, water and natural and human made hazards.

[00:12:23] And each municipality has to have its own plan and strategy to execute on those goals.

[00:12:29] Yeah, so this is where we start to see things get a bit disconnected, right?

[00:12:32] Each municipality is trying to do its own thing but let's talk about the province's role.

[00:12:36] And we'll use Ontario as an example here.

[00:12:38] So, going back to the most recent initialism introduced on the show, the PPS, that's

[00:12:44] the Provincial Policy Statement.

[00:12:47] Planning authorities shall provide an appropriate range and mix of housing options

[00:12:52] and different densities to meet projected market based and affordable housing needs

[00:12:58] of the current and future residents of that market by establishing and implementing

[00:13:06] minimum targets of housing for affordable to low to moderate income households

[00:13:11] which align with applicable housing for those plans.

[00:13:15] Now, that's the provincial.

[00:13:17] Now when you look at what the federal, the government of Canada's role,

[00:13:22] then we start to talk about our good old friends at CMHC, the Canadian Mortgage

[00:13:26] and Housing Corporation, which is responsible for implementing Canada's National Housing Act.

[00:13:31] And if you're listening to the show, you know that we've done a whole episode

[00:13:34] only a few weeks ago on the National Housing Act and its contents and its plan.

[00:13:39] Now, remember CMHC is a federal crown corporation that provides mortgage insurance, sets rules for

[00:13:47] who can qualify for said mortgage insurance and does a lot of great data collection on housing

[00:13:53] and mortgages and more.

[00:13:55] Now, CMHC says it exists for one single reason to make housing affordable for everyone in Canada.

[00:14:05] Hell of a mission statement there.

[00:14:07] Yeah, it definitely is.

[00:14:10] And the question remains, how can CMHC, the federal, provincial, municipal governments

[00:14:17] ensure that we actually build the 5.8 million homes that are affordable, low-carbon and resilient

[00:14:24] and whatever the other goal in there was scalable?

[00:14:27] I mean, I guess the 5.8 million is the scale.

[00:14:30] Okay, cool. That makes sense.

[00:14:31] So federal and provincial and municipal governments have a huge role to play in achieving these goals.

[00:14:37] So the blueprint for more and better housing, great name again, provides governments with clear

[00:14:43] recommendations and practical policy actions to do it.

[00:14:46] So it offers 10 recommendations across all orders of government supported by 50 specific

[00:14:51] policy actions for the federal government, 50 for the provincial government and 40 for

[00:14:56] municipal governments. And emerging from the numerous important takeaways,

[00:15:00] there's some key game changers that they outlined there.

[00:15:04] These are policy moves that if they were coordinated across all these different levels

[00:15:07] of government could transform Canada's housing landscape and go a long way toward delivering

[00:15:13] the more and better homes that Canadians deserve according to the report.

[00:15:17] So Nick, why don't you kick me off with the first four things here?

[00:15:22] Yeah, for sure. You don't want to do all 140 of them?

[00:15:25] I would be down, but I don't know if our listeners have that much of an attention span.

[00:15:29] But if you do, send us a message to the show and Nick and I'll record an audio book of us

[00:15:33] just reading this report to you. You can listen to it before you go to sleep that night.

[00:15:38] Perfect. Yeah, so the first four things here, Dan, the first is legalized density.

[00:15:45] So focus on housing growth in cities and communities where there is existing infrastructure like

[00:15:51] roads, water lines, faster, less costly and lower carbon and more resilient.

[00:15:56] So this means that we want to build where there's already stuff being built.

[00:16:04] Right? We're not going to go out and start a new city in the middle of nowhere,

[00:16:06] except for the Greenbelt, of course. It is funny though, because there is like

[00:16:10] water, like there is water and sewer running right through the Greenbelt.

[00:16:12] There was this article that came up the other day that Southlake Hospital is now having

[00:16:16] a hard time finding a new site because one of the sites that got, so yeah, I know.

[00:16:20] Come on.

[00:16:21] I know. That's going to be the poster child for this.

[00:16:24] Is that it was like a cow farm too, you know, which like environmentalists hate.

[00:16:28] It's like, okay, anyway, setting that piece aside because I don't want to get into the whole

[00:16:33] politics of the Greenbelt.

[00:16:34] You have to hold it for an episode.

[00:16:35] And like just probably not a safe place for me to go on this show.

[00:16:39] But I just think the heading that says legalized density reminds me of like,

[00:16:43] do you remember those circa like t-shirts that have said like legalized skateboarding?

[00:16:49] Do you remember that?

[00:16:49] Like do you remember that movement from the real age?

[00:16:51] Yeah, like 90s, early 2000s.

[00:16:53] It was like a legalized skateboarding.

[00:16:55] Maybe we all thought we were like fighting the good fight.

[00:16:58] Oh yeah, man.

[00:17:00] And anyway, same vibe.

[00:17:04] We should make similar shirts.

[00:17:05] Legalized density.

[00:17:06] Legalized density shirts.

[00:17:07] We find those.

[00:17:08] We're going to redo the whole merch shop by the way.

[00:17:10] This will be one of the shirts on there.

[00:17:13] Okay, so legalized density, the first one, that makes a ton of sense, right?

[00:17:16] We want to go where the infrastructure already is because quite simply,

[00:17:21] it's a hell of a lot faster to do that and it is way cheaper instead of bringing new services to

[00:17:27] what is known as completely raw on service land.

[00:17:30] That is the first main point.

[00:17:32] Dan, hit me with the second one.

[00:17:34] Okay, before I do that, because somebody's going to say it, it was Shorty's who came up with

[00:17:38] the, you remember Shorty's skateboarding?

[00:17:39] That's who it was, legalized skateboarding.

[00:17:41] Anyway, number two, implement better building codes.

[00:17:44] This is something I've like, I'm actually so grateful that we ended up getting sort of like

[00:17:48] accidentally immersed in this OHBA, CHBA world.

[00:17:52] OHBA is the Ontario Home Builders Association by the way for anyone who doesn't know.

[00:17:56] And we're going to have a group of people over there.

[00:17:57] Yeah, they are.

[00:17:58] They're awesome.

[00:17:58] And so, and this is one of those things that I talk to everybody.

[00:18:02] I love being in that room full of people and just talking to people who are way smarter

[00:18:07] than me about building code and like what's achievable, what's not.

[00:18:10] Conrad Speckert another amazing one of the guests on the show.

[00:18:12] And a speaker at the event as well.

[00:18:14] Yeah.

[00:18:15] And just like listening to these are people who have done the research down to like the

[00:18:19] stair, like if you removed one stair, not actually it's a staircase, but like they probably

[00:18:24] have done that.

[00:18:25] Conrad has for sure.

[00:18:25] Yeah, for sure.

[00:18:26] He's like, yeah, what if we could just shrink?

[00:18:28] Yeah.

[00:18:28] Yeah.

[00:18:29] Anyway, it's a fascinating world.

[00:18:31] So we're going to start having a lot of those people on the show because we're

[00:18:35] getting into, we're getting to the point we've said that we forecasted this like

[00:18:38] when we first started the show and I don't want to be like, oh, we told you so,

[00:18:41] but it's just to so that you can trust us a little bit.

[00:18:44] We said that this was going to happen.

[00:18:46] Now it's actually happening and now we want to give you the tools to actually

[00:18:49] capitalize on it.

[00:18:50] And so we're going to have a lot of experts on here from garden suites to single

[00:18:54] stair to, you know, building code changes.

[00:18:57] How come we as investors see these changes and use them to provide more housing?

[00:19:03] Because that's like if you're solving a problem, you're always going to have

[00:19:09] business.

[00:19:09] And if you're solving that, that's just the most accessible place to make money as an

[00:19:13] investor right now is providing housing for people because it's a real need.

[00:19:17] Yeah.

[00:19:17] I mean, going back to so many times we've said this, we said in the course

[00:19:20] you get paid in proportion to the size of the problem that you solve.

[00:19:24] And Canada has a national housing crisis, big problem to solve there.

[00:19:29] And number three attempts at doing that as well.

[00:19:32] And this is again where we're going to see a lot of construction or,

[00:19:37] you know, new technology in construction take a much more front seat to maybe even a

[00:19:43] driver seat possibly to use the vehicle to get out of this housing crisis.

[00:19:47] The third point being invest in factory built housing and factory built housing

[00:19:52] and other process and material innovations can speed up construction,

[00:19:56] reduce costs and systematize energy efficient and climate resilient features.

[00:20:02] This one is huge.

[00:20:03] I don't want to spend too much time on it because it comes back up and we've

[00:20:06] brought it up in several other, I mean even Sam from Cushman and Wakefield

[00:20:10] when we had her on there.

[00:20:11] We've identified this numerous times again.

[00:20:12] We've been talking about the lack of labor that we need to build these,

[00:20:16] you know, call it six million homes at this point.

[00:20:19] We don't have the people to do it.

[00:20:20] So do we have the machines and the technology to do that?

[00:20:24] Can we do that by prefab and modular and, you know, using some of those

[00:20:29] building practices to increase the speed at which we can do this.

[00:20:34] And that goes hand in hand with number two,

[00:20:35] which is the changes in building codes.

[00:20:38] So big fans of all three of these so far.

[00:20:41] Yeah, number four is it stands out pretty simply.

[00:20:44] It just says don't build in high risk areas.

[00:20:47] The most expensive home is the one you need to rebuild after an extreme weather event.

[00:20:51] And like I didn't know that we kind of had a lot of this in Canada,

[00:20:55] but like wildfires starting to happen and all that stuff.

[00:20:57] Remember a few years ago wildfires?

[00:20:58] It was insane.

[00:20:59] Yeah, so yeah, I mean if your house is in a forest that's having a wildfire,

[00:21:05] probably not going to last very long.

[00:21:06] A lot of flooding is starting to happen as well, east coast, etc.

[00:21:09] Well, and if you know we always just say look to the states, right?

[00:21:12] I mean like there's literally places in the states, California, Nevada,

[00:21:17] places along the eastern seaboard that whether it's fires or water,

[00:21:23] you can't get insurance for some of these houses now.

[00:21:24] Yeah, yeah.

[00:21:25] Well your share is astronomical.

[00:21:27] Yeah, Florida, like I mean coast to coast we're seeing it.

[00:21:30] Yeah, I guess a lot of areas in Tampa,

[00:21:32] like if you're in the flood plain and a lot.

[00:21:34] So this is interesting because like I'm not a huge fan of conservation

[00:21:38] authorities and it's not because I have anything against conservation by the way.

[00:21:40] Like I'm like obsessed with nature.

[00:21:42] Yeah, that's a very if you're new to that, don't get it twisted.

[00:21:45] The guy loves nature but there's a difference here.

[00:21:48] Well like so here's an example like I don't know if anybody like I think

[00:21:53] I mentioned this a couple of times but I'm putting a basement apartment in a new house

[00:21:57] and that the conservation authority permit is still open like because

[00:22:01] it's a brand new subdivision so it hasn't even been closed yet because they haven't

[00:22:04] occupied the subdivision and so I went to apply for building permits to put

[00:22:08] a basement apartment in this basement of this brand new house

[00:22:12] and the conservation authority is like no we need like a $600 fee and we need to do a review

[00:22:16] and blah blah blah and I was like no absolutely not and I had to really really push back.

[00:22:21] It might have included a couple of tweets to the to the conservation authority

[00:22:25] and I eventually got it, it was made clear because a bunch of planners,

[00:22:29] I asked the question anyway, I didn't actually I wasn't trying to push back publicly but I was

[00:22:33] asking a question like is this right because if I was wrong I would have been publicly fine with

[00:22:38] being wrong and I would have paid them the money and let them do the thing but everyone's like no

[00:22:42] it's a brand new house the thing should still be open so anyway my point is here that would have

[00:22:48] increased the time for me to get permits by substantially and so building in high risk

[00:22:54] areas is what the conservation authorities are there to to avoid they're like hey you're

[00:22:59] trying to build a house in a floodplain don't do that right and but above and beyond that like

[00:23:05] these incremental changes it should be outside of the scope of what they should be involved in

[00:23:09] because that one they already said to the builder hey you can build a house here all I'm asking to

[00:23:12] do is put another house inside the house. Yeah you're essentially like can I renovate

[00:23:16] can I renovate an untouched portion of this brand new property that you already approved of

[00:23:20] right a couple months ago or a reason enough that that there's still construction happening

[00:23:25] yeah so in around that property yeah and so I like the clarification it's like don't build

[00:23:29] in high risk areas okay so it's like floodplain's gone right let's just get rid of those but then

[00:23:34] and it's almost clarifying the role of like it's a binary thing it's like yes or no with

[00:23:38] with these conservation authorities because I think there's been a lot of like there's too

[00:23:42] many cooks in the kitchen in the planning process and that's what that's where I want I

[00:23:45] want to see that like refined anyway I hope that's clear because I don't want to say

[00:23:49] I have anything against conservation authorities because I don't some of my favorite people in

[00:23:52] the development space work for the conservation authorities actually with respect Lake Simcoe

[00:23:57] Regional Conservation Authority fastest emails you'll ever if you ask them for a map within 24

[00:24:01] hours nobody else in the development space will email you even acknowledge that your email was

[00:24:05] sent no offense to the rest of you but that quickly to be fair the report goes on to say

[00:24:13] when it comes to building 5.8 million homes that are affordable low carbon and resilient

[00:24:17] there are five deciding factors so number one is where we built focusing on new housing in

[00:24:23] cities and communities where the existing infrastructure so what they mean by this is

[00:24:27] the pipe that poop goes through the pipe that water goes through electricity lines gas lines

[00:24:33] these the fact that you don't have to install these again new can cut housing costs speed up

[00:24:38] construction times reduce carbon pollution as well as like reduce ripping up the ground and all of

[00:24:43] this other stuff prevent catastrophic loss due to climate threats like wildfire or flooding

[00:24:48] where you're going into these new uncharted territories this makes where and and this really

[00:24:54] circles back to the key tenant of real estate location location location this is the single

[00:24:58] most powerful opportunity for building more and better housing as such they are calling on

[00:25:03] governments to legalize density including eliminating unit maximums abolishing parking

[00:25:07] minimums and adopting ambitious density rules near transit lines I like the abolishing parking

[00:25:12] minimums same the most here because if we're actually saying like oh you know and like

[00:25:17] again whatever like some people in certain political areas will be like oh you're talking

[00:25:23] about like a black mirror episode and stuff but like someday teslas are like automated cars are

[00:25:27] going to be driving everybody everywhere so like why are we really thinking about parking

[00:25:30] so much right just my thought there so and they also want to ensure that housing is built

[00:25:34] in areas or not built in areas at high risk of worsening climate hazards like wildfires floods

[00:25:40] floodplain etc for sure Dan so again that was where we build which is a primary focus the

[00:25:47] second major deciding factor is what we build so the form of a building the materials used and the

[00:25:56] design requirements all affect a home's construction and operating cost its resilience to

[00:26:02] extreme weather events its carbon footprint and of course the ability to build at scale

[00:26:09] which is extremely important and the blueprint calls on governments to adopt the highest

[00:26:15] tiers of the national building codes while also urgently revising those codes to incorporate

[00:26:21] climate resilience features to legalize more efficient use of building space so I'm hearing

[00:26:26] a resounding theme here which is density no matter what we build or where we build it it

[00:26:32] seems that we need to increase the density and I think that's probably what you're going to

[00:26:36] talk about here in the next point Dan yeah it is funny though because you get like there's

[00:26:40] this huge pushback on like the 15 minute cities thing and stuff like that like which but I

[00:26:44] think it's a it's a funny thing because the reality is like I think at the end of the day

[00:26:50] people vote with their dollars right like and they'll communicate whether or not they want this and

[00:26:54] like it seems like young people especially if they're you know not having kids right like I

[00:26:59] think there's a huge we're at the lowest birth rate we've ever been in Canada our generation

[00:27:04] not having kids nearly as much as the ones before us like or like living in urban areas is

[00:27:09] just it seems like how people are so I think a lot of people want to be angry at politicians

[00:27:13] but it's like you should be and not that you should be angry at anyone but you should be

[00:27:17] really looking more at like what the market is communicating to you because if there's people

[00:27:20] lining up to consume these small dwellings in dense urban areas then it's their fault not

[00:27:26] the politicians or anyone else right it's not their fault but it's like people should be allowed

[00:27:30] to occupy the houses they want seems to be what's kind of taking place so anyway number three

[00:27:35] so you said how we are you said what we build I said where we build and now I'm going to

[00:27:39] say how we build which is what the report says and it talks about how we're not going to be able

[00:27:43] to achieve housing goals by building homes the same way and this is where because you had just kind of

[00:27:48] mentioned a bunch of things that I'm thinking this everything you're saying sounds expensive

[00:27:52] how do we offset that while they're calling on governments to increase productivity speed up

[00:27:56] building times deliver crucial climate benefits by increasing factory built housing modular

[00:28:01] offsite accelerating innovations in better building materials like mass timber

[00:28:06] low carbon concrete rebalancing immigration strategy to cultivate and attract skilled labor

[00:28:11] that's needed for the construction space huge if only there was a podcast that was advising

[00:28:16] people to do this for that had been saying this for a long time yeah I mean this this one is is

[00:28:21] big right like we know what we need to do but the way the traditional path on how to get there

[00:28:30] doesn't make sense anymore well and everything else on this list can exist

[00:28:34] on its own except for like number two like you can't build all of these really expensive state of

[00:28:39] the art super environmentally efficient houses without it becoming more expensive unless you do

[00:28:43] this exactly exactly so new new rules for a for a new plan for a new world right so

[00:28:51] number four I'll do number four Dan you hit number five and then we'll keep going number four is

[00:28:56] why we build so why are we even doing this and we're doing it because everyone in Canada has

[00:29:02] the right to live somewhere and they have the right to do that in security peace and dignity

[00:29:07] these are fundamentals for building the kinds of homes that Canadians need and deserve and

[00:29:15] governments non-for-profits and the private sector all have a role to play in driving a

[00:29:21] historic surge in the supply of affordable attainable and non-market and below market

[00:29:30] housing for both new construction as well as innovation acquisition approaches for existing

[00:29:36] housing stock then they finally go on to say that no single order of government can fix our

[00:29:42] housing crisis on its own we need a national approach across Canada a framework for housing

[00:29:47] growth with better data publicly available climate hazard mapping and specific housing

[00:29:52] growth targets for every government yeah and on that note you know specific target

[00:29:57] for for each government right we in an episode I can't remember several ago we talked about some of

[00:30:03] the municipalities in Ontario hitting those or even just getting close to those those targets

[00:30:11] those housing targets and getting big paydays for it so likely to see a lot more of that now

[00:30:16] I know that this this one this episode here has been a bit beefy but there's a lot to go through

[00:30:22] through here so this next part is a bit heavy as well it summarizes the major takeaways from each

[00:30:27] level of government and that's federal provincial municipal and the actions that they should or

[00:30:34] need to be taking to make this stuff happen Dan why don't you start me off with the

[00:30:40] federal government and what they should be doing yeah so this one's interesting

[00:30:45] this they start by saying they the federal government should tie all federal infrastructure

[00:30:48] transit and housing funding to provincial and municipal adoption of pro density legalization

[00:30:54] reforms so and including a bunch of things that they listed earlier unit maximums parking

[00:30:59] minimums etc but the part I find interesting here is like Pierre Paulie ever ran on this and

[00:31:05] then the federal or has been saying that he would do this to fix housing and then the existing

[00:31:10] federal government basically went to try and do the same thing but and there's this kind

[00:31:13] of back and forth so at the OHBA the shadow housing minister was speaking and he was saying well

[00:31:18] what we would do different is you know it seems like the current government is kind of paying for

[00:31:22] promises which is true like they're giving the money before or they're committing the money

[00:31:26] before like you know the city of Toronto is like we promise we're going to build a bunch of houses

[00:31:29] and they're go here's like a hundred million bucks I like that's you know I don't think that's

[00:31:33] what they're talking about here is all I'm saying and so it does seem like both and

[00:31:38] the reason we talk about politics and policy like this on the show is because it these are

[00:31:42] important leading indicators on what's going to happen and so if you're starting to get governments

[00:31:46] that are set that if two levels of government the two only people who could likely end up

[00:31:52] prime minister in 2025 are both committing to this path and it's this is a trend that you can

[00:31:58] rely on becoming part of your investment thesis so as a real estate investor you need to know

[00:32:03] that kind of stuff to be proactive and not reactive for when inevitably some of this

[00:32:08] stuff starts to happen it would be the difference between buying something in you know deciding okay

[00:32:13] dollar for dollar I could buy if you know we were saying Toronto is going to probably up zone to

[00:32:18] four plexus this was the writing was on the wall three four years ago with e-hon when it first came

[00:32:22] out Toronto is probably gonna up zone to four plexus and in the same you could have bought

[00:32:26] a house in Toronto or Vaughn as an example at the same time for the same amount of money

[00:32:30] three four years ago beginning of COVID whatever and you bought one in Vaughn not not that I

[00:32:34] have anything against Vaughn but it's going to stay much more single family they're kind of

[00:32:38] protective of that single family and then they have their their big condos in the bottom metropolitan

[00:32:42] center you know now all of a sudden you just got a four unit output increase in the city of Toronto

[00:32:46] as an example so this is where like this is basically your insider trading opportunity

[00:32:50] in real estate it's like the only industry in which insider trading and I'm not saying there's

[00:32:54] public knowledge but it is like you can go get if you can out research somebody if you can

[00:32:58] out know and and determine the policy direction there's huge amounts of opportunity to be created

[00:33:03] by just paying attention to what policymakers do right and you look at like Elon Musk just did this

[00:33:10] with like Tesla wouldn't have survived without EV grants follow what the government's doing

[00:33:15] like seriously no whether you like them or not their policies are what's going to determine

[00:33:19] whether or not you have the ability to to or whether or not your business is viable

[00:33:24] garden suites you know like what just happened with Airbnb versus what's going to happen with

[00:33:28] garden suites right yeah adopt your thesis to what is happening in reality for sure so the next piece

[00:33:34] is developing a robust innovation strategy and it's a bunch of different things but they talk about

[00:33:39] going from different innovations like modular low carbon panelization other factory built housing

[00:33:44] but it should also come down to tax reforms many of which have already been implemented actually

[00:33:49] that one like Mike Moffett definitely won he was the one pushing for this the most and the

[00:33:54] government did it I think the municipalities need to step up as well on on that and I think that

[00:33:59] I think that municipalities have the unique ability to compete here where the ones who do

[00:34:03] waive development charges for purpose built rent those built rental are going to get rental

[00:34:08] built pretty simple like if you make the numbers work people will make people like hey come and

[00:34:12] do business with us here yeah it's it's hard to argue because they don't pencil out in a lot

[00:34:17] of other places yeah they talk about rebalancing the immigration strategy which we discussed financing

[00:34:21] strategy that is low cost and long-term fixed rate financing for municipalities to facilitate land

[00:34:26] acquisition financing to scale the not-for-profit housing sector this is actually not a recommendation

[00:34:32] I'm a fan of I don't think the government should touch housing not because I have any

[00:34:35] issues with it but everybody who's always like in our comments on on Instagram or whatever

[00:34:39] and it's like landlords are parasites and we hate them all and whatever go take a look at the

[00:34:44] worst landlords in the country the majority of them are public sector landlords no offense to

[00:34:48] actually offense intended they shouldn't be doing they're not they don't listen to the podcast anyway

[00:34:52] yeah but no but but the like not-for-profit public sector they're just not it's an easy way

[00:34:59] for them to overpay for a bunch of stuff and do a bad job at us and and they're going to do a

[00:35:04] bad job at it like they just aren't doing a good job at it so and yeah and taxpayers pay for it

[00:35:09] anyway last piece procurement strategy for homes in CMHC's pre-approved catalog including guaranteed

[00:35:15] minimum mortars this is kind of along the lines of that that wartime housing thing again I don't

[00:35:21] really see this being a huge thing and this is what that kind of kind of goes into national

[00:35:26] building codes harmonizing requirements making it easier so that you can you can you can build

[00:35:31] the same house coast to coast without having to like make these tiny incremental changes

[00:35:35] which cost a lot to have an engineer you know go back to the drawing board literal drawing board

[00:35:39] let's go back to the drawing board make these kind of changes I think that it's funny because they're

[00:35:44] like they're acting like this catalog of houses is going to solve we've discussed this one already

[00:35:47] but like if only somebody thought of building the same house hundreds of thousands of times

[00:35:52] coast to coast like I wish I wish Mademy came up with that I remember when this first came

[00:35:57] up and never like people were posting about my college I was like dude haven't developers

[00:36:01] just been doing this right isn't this like the just what every subdivision is it's like hey choose

[00:36:05] one of these four places and there's two two one of these two tiles that go in your bathroom and

[00:36:11] but no this is different because the government did it now speaking to the government I'm just

[00:36:14] going to finish off the last three points here of um the uh what the federal government

[00:36:19] should be doing uh this is an interesting one because we talk a lot about data here on the

[00:36:23] show and it's increased coordination and evidence-based decision making by providing detailed

[00:36:29] things like annual population forecasts policy developments changes in immigration targets

[00:36:36] and using that information to better understand and base housing targets and affordability

[00:36:44] and different metrics so what they're basically saying here is create more and better data

[00:36:50] to create more and better housing which I know that we are fans of because we use a lot of the

[00:36:54] data put out by great organizations like sats canada and cmhc and so on and so forth so yes more data

[00:37:01] always helps and it's kind of hard to change anything if you don't understand what the data

[00:37:05] is in the first place so once data is monitored it's a lot easier to start changing things

[00:37:10] manipulating it and watching it change after you've implemented those things the next piece

[00:37:14] here is to collaborate with first nations may tee in Inuit people to enable indigenous led

[00:37:20] housing developments now we've actually started to see a lot of this happen across the country

[00:37:24] I was just in Winnipeg one of our developer friends out there has some great partnerships

[00:37:28] with some first nations people in Winnipeg we're actually funding some stuff in none of it that is

[00:37:33] also tied to first nations and I know several other projects across the country where this

[00:37:39] is happening so love to see that and the final thing here is the federal government should

[00:37:45] be working with provinces and municipalities to improve the mapping of climate impacts so we've

[00:37:51] talked enough about that but again this just goes back to more and better data that can be used for

[00:37:58] you know going back to those things like where do we build how do we build it and what do we

[00:38:03] build so all of those points are taken from the task force here that's taken from their

[00:38:09] blueprint on what the federal government the government of canada what they should be doing

[00:38:15] to help achieve the goals of building more housing now dan let's talk about provincial

[00:38:21] governments hit me with the first couple points here on what a provincial government should be

[00:38:26] doing yeah so they say and this is the same as what they're going to recommend for the

[00:38:30] municipal governments but they say that provincial government should legalize density in existing

[00:38:35] communities by eliminating unit maximums and on all forms of residential housing as well as

[00:38:40] abolishing parking minimum so that one's also in municipal but also create a more permissive land

[00:38:45] use planning and approval systems for housing including repealing municipal or overriding

[00:38:51] municipal policies zoning or plans that prioritize preservation of physical character so you're

[00:38:55] going to hear the getting rid of this elimination of like neighborhood character and stuff like

[00:38:59] that and then getting rid of like angular planes shadows shadow studies all of these different

[00:39:05] all the line items that are so hard to all these very preventative and restrictive design

[00:39:11] things like when you hear red tape this is this is it this is the red tape yeah yeah and it's you

[00:39:16] know you've always heard in the history red versus blue you want a blueprint you can't have any red

[00:39:20] tape that's it right there's also red tape on the ribbon cuttings of new businesses we're

[00:39:25] going to cut this red tape with a big pair of gold scissors all right it is funny well man

[00:39:30] politicians love ribbon cuttings and getting we just need to rebrand this as a ribbon cutting

[00:39:35] but the red tape that they're cutting anyways yeah bad joke let's keep going it's not what it

[00:39:41] is that not what it is I guess it's just a ribbon it should be red tape we should bring them we should

[00:39:45] usually red ribbons we're gonna do we're gonna get rolls of red tape and we're gonna sell them

[00:39:50] in the merch store and we're gonna send them to people and say rather than scissors yeah that's

[00:39:54] actually pretty funny it's a good idea accelerate innovation at home building we already saw this

[00:39:59] factory building etc etc create the conditions to speed up and scale up housing construction by

[00:40:04] eliminating pst on purpose built rental construction Ontario did this a lot of other municipalities

[00:40:09] are going to follow suit I think I think a lot of this stuff is already taking place so but again

[00:40:13] really worth paying attention to give me the last three on this one then we'll move over to

[00:40:16] municipalities I think we got to wrap up here too we're getting pretty yeah winded yeah the

[00:40:21] increase conditions and evidence-based decision making by setting annual housing targets for

[00:40:26] municipalities by providing incentives for municipalities to hit those targets so this

[00:40:31] is what the provincial government is doing on a municipal basis again make publicly accessible

[00:40:37] and regularly updated climate information available so really choosing where we should build

[00:40:45] and here's an interesting interesting one adopt the highest tiers of the national

[00:40:49] model building codes well revising building codes to support repeatable designs

[00:40:55] so they even say adopt Sweden's single egress rules for buildings up to 16 stories now that's

[00:41:02] your single stairs that's the single stairs now this may come as a surprise to a lot of people

[00:41:07] but that is one of the major challenges in building a lot of this higher density stuff

[00:41:13] is that you need multiple means of egress which means you need at least two staircases on buildings

[00:41:19] over four stories then is it over three or four stories it's over four yeah

[00:41:24] or over three over four and up oh yeah so so essentially that changes the footprint that changes

[00:41:31] what you are able to do inside of that of that building footprint and our friend Conrad can go

[00:41:38] on and on about this and actually about here another great content creator in the real estate

[00:41:44] space just did a really great video so go check out about here on his youtube about why single

[00:41:51] staircases would mean massive changes for canadian real estate in the way that things are built

[00:41:59] okay dan let's get down to the bottom here municipal governments what should they be doing

[00:42:05] yeah so same as provincial governments legalized density create a more permissive land use

[00:42:10] planning and approval system including by repealing policies zoning or plans that prioritize preservation

[00:42:16] of the physical character of a neighborhood again this is where you're seeing and and anyone I know

[00:42:21] who's doing stuff in the garden suite or wants to do four plexes or whatever they're like their

[00:42:25] plan is to use the same model over and over and over again so they're trying to build boil down

[00:42:29] what is the most efficient model that we can possibly build here revise and update zoning laws to

[00:42:34] allow the establishment of small scale retail spaces in residential areas i love this idea

[00:42:39] so much man same that's like why don't we have that yeah yeah i mean in europe like you see it

[00:42:44] everywhere everywhere and even in like history is way better life it's quite a way to run out

[00:42:48] neighborhoods where you see those little like corner cafes or some of the coolest like bars

[00:42:52] and patios literally so i'm in trinity bellwoods area and several blocks away in a very very

[00:42:57] residential area i turn the corner i go on mental health walks and i get a lot of great

[00:43:01] thinking done and i turn the corner and there's a little pizza spot a little sandwich shop

[00:43:05] and a little cafe all within like these these two buildings in this random

[00:43:10] like pure residential neighborhood and i was like wow this is really cool the people in this

[00:43:15] neighborhood must love these things these are these are like locations that you don't find

[00:43:22] anywhere else and i know it's just really cool i think it really increases the lifestyle of

[00:43:27] anyone that lives in and around those areas yeah for sure um i think that's everything on mine

[00:43:33] again accelerate innovation in home building by encouraging collaboration between all of these

[00:43:37] and it really does have to start with municipalities because they're the ones

[00:43:40] approving these building permits so you know be comfortable saying yes to modular etc panelized

[00:43:47] stuff so give me the rest of these and we'll wrap up yeah the the only ones that aren't

[00:43:51] essentially repeated are worth mentioning here are to create conditions to scale up home building

[00:43:55] by prioritizing the use of existing municipally owned land and public funding by identifying

[00:44:01] and allocating suitable municipal land for development so again going back to that location

[00:44:07] the fact that there could be existing services and infrastructure etc this is actually a really

[00:44:11] really good one from my perspective when we're starting to get developers

[00:44:15] more and more involved in the creation of rental housing potential for land leases like if you can

[00:44:20] make a developer's land or builders land land cost zero and you give them a piece of

[00:44:24] pre-zoned like hey we've already we've already decided this is the best use of land and one

[00:44:28] of the guys in our course is approaching municipalities to do this but they're all

[00:44:31] too backward thinking right and actually shout out to Jeremy who's he does a lot of this

[00:44:37] panelized construction innovation stuff like that and the point is if you could if municipalities

[00:44:44] are able to be forward thinking by offering land leases to developers and I know because

[00:44:49] I'm on a committee with some people at the city of Toronto in kind of like trailblazing

[00:44:53] in this missing middle space and a lot of them are asking me do you think develop do you

[00:44:59] think that we'll be able to get developers interested in building something or builders

[00:45:03] interested in building something where they're just leasing the land and they get to build

[00:45:07] the building and I'm like as long as the numbers make sense if their land cost is

[00:45:10] functionally zero or if they can take the land cost and spread it out over infinity

[00:45:14] 50 years or 99 years because it's a land lease even now all of a sudden you've

[00:45:18] you've got like that what that's really compelling we're just switching over from people thinking

[00:45:24] about real estate as a speculative build for sale asset where you pawn it off on the consumer and

[00:45:29] they you know they they're buying like this stock off of you that goes up in value whereas

[00:45:35] what we're going to be moving to is this people buying the cash flow yeah and that and so people

[00:45:41] are buying they're buying a cash flowing asset it could be you could be buying a business because

[00:45:45] it cash flows or but in this case you're buying a real estate asset because of cash flows and so if

[00:45:49] if you're buying the the present value this future the stream of future cash flows that's what

[00:45:54] a discounted cash flow model is by the way like when people you hear people talk about a model

[00:45:59] that's what they're buying and so if you're the financial model all you're doing is is is

[00:46:04] vending your if you're the municipality giving somebody a land lease you're vending yourself

[00:46:08] into the into the future cash flows by giving them the land on a long-term basis as a lease

[00:46:14] last piece of ad because this is a real example that i'm talking about if you are either a municipality

[00:46:20] who's looking to do this kind of deal or be a builder who would be interested in that kind of

[00:46:24] deal send me a message to the show and i'll i'm happy to connect you with other people that

[00:46:29] i'm speaking with in the space because we're actually like kind of trying to innovate

[00:46:32] around this right now i'm on a couple of different committees consulting on this being

[00:46:37] another phase of solving the housing problem because municipalities have so much excess land

[00:46:42] and they don't know how to how to push it to the next level they need builder partners to do it and

[00:46:47] they need to build their partners who are willing to get into this kind of land lease scenario to do

[00:46:50] it with 100% yeah this is where the like public private partnerships make more sense than ever

[00:46:55] right we need public buy-in public being government but we need private private being

[00:47:02] developers investors etc we need them to come in and actually do the work so very early

[00:47:08] days on a lot of this really great in-depth report i know it was a beefy episode but we really only took

[00:47:14] some of the main main highlights from this again make it low carbon make it resilient make it

[00:47:19] affordable and make its scale that is how the task force here plans on more and better

[00:47:28] housing and achieving that almost six million homes that we need by 2030 hope you got a ton

[00:47:34] of value out of this episode for more episodes go and listen to all them on on apple on google on

[00:47:42] spotify leave us a review thank you so much for listening we'll see you on the next one

[00:47:47] the canadian real estate investor podcast is for entertainment purposes only and it is not

[00:47:53] financial advice nick hill is a mortgage agent with premier mortgage center and a partner in

[00:47:59] the g and h mortgage group license number 10317 agent license m21004037 daniel foch is a real estate

[00:48:11] broker licensed with rare real estate a member of the canadian real estate association the

[00:48:17] toronto real estate board and the ontario real estate association