With rental housing vacancy rates below 1% in large cities in Canada, access to housing is becoming even more dire, especially for younger families. Rental Rates continue to escalate with increasing interest rates, making it difficult to find a space to live, let alone buy a home.
Imagine what it would be like to have 8-10% Vacancy across all major rental housing categories. If this were reality, finding a place to live would be easier and come with access to a variety of realistic options. How can real estate and development professionals transform this ideal into reality?
Canadian municipalities currently approach rezoning and development approval with significant political risk and industry friction. In contrast, we see international markets experience success by removing zoning and only applying building bylaws to the building permit approval process. To better understand the approach taken within other markets, we must look outside our Canadian borders and draw inspiration from those around us. One great example of this, would be an analysis of Houston, Texas.
Could Canadians support the elimination of zoning and switch to a prescribed development bylaw that allows new housing projects to be granted building permits within 90 days?
Without any zoning throughout the entire city, Houston manages to operate successfully and without the same crisis being experienced in Canada. Without zoning regulations, one might expect to see a hodgepodge of buildings spread out into complete and total chaos. Instead, what we see looks strikingly similar to every other city that uses a lengthy zoning approval process, with clusters of similar building types and transitional neighbourhoods.
Identifying the Pain Points
Driven by developers’ adhering to public sentiment and what the market of occupants are willing to accept, project production tends to be very reminiscent of what we see everywhere else with restricting zoning regulations. It is surprising to see a place with a perfectly balanced supply and demand of housing, especially when compared to the 2-4 year approval process for projects in Canada. Even though Canada has the second largest land area of any country in the world, Canadians face greater constraints on land use.
Following the implementation of rural protection areas like the “Green Belt” around Toronto and the Agricultural Land Reserve surrounding Vancouver, these major cities have now reached their limits. Developers now need to approve as many higher-density housing projects as possible to catch up with the demand-supply gap that seems to be growing wider each month. Rather than rolling back the green zone protections, if we eliminate the rezoning process for already developed areas, and instead have a prescriptive set of bylaws by building type, the market can then do what it does best and answer greater demand with greater supply. In effect, there could be a “zone with no zoning”.
Houston, We have a Solution
Political leaders have been looking at options to improve the process for obtaining development permits but dealing with the volume of approvals needed is still limited by the time and resources of municipal staff. Houston’s solution of eliminating the zoning approval process while providing a prescriptive rule book of building criteria is a great strategy to facilitate a large volume of new housing starts.
With housing availability being a national crisis, it is time that the federal government provided a framework for municipalities to follow that could open up a path for reduced friction. If the federal government can very quickly mobilize for a pandemic-related health crisis, then they can certainly mobilize solutions for a housing crisis.
Whether the Canadian government can remove zoning entirely is uncertain, but what is shown by a much faster project approval process is that supply can catch up to demand. If real estate professionals can speed up the development permitting process, getting it down to 6 months in most areas, there will be fewer staff resources and council meetings required. By removing these steps and following international inspiration, Canadian professionals could start to believe in a future where the housing industry matches housing starts with demand and ultimately provides enough housing for everyone.
Written by Adam Gant
Adam Gant is an entrepreneurial enthusiast with an interest in housing finance systems and real estate development. A curious and inventive mind paired with an interest in architecture and engineering made a career in real estate a natural fit for Adam. He has a passion for real estate which can be traced back to his very early years.