After countless hours of testimony, much of it nasty, brutish, ill formed, and disrespectful, Council approved the plan to change the basic land use that formerly allowed only single homes and/or semi detached homes, to continue to include those types, plus townhouses. This means that first donut around the core, much of it previously untouchable, can now be developed into housing decided much more by market forces, and much less by obsolete and arbitrary regulatory restriction. This unwinds a fair bit of that post war garden suburb planning doctrine that defined Calgary inner city, for basically all of our collective memory and experience living as Calgarians. And what does that first donut ring include? A lot of coveted and highly valued land, some of which is currently occupied by 1000 square foot bungalows on 6000 square foot plots built in the 1950’s. And what are the consequences of this likely to be? We can explore some key themes below;
land value hysterics - much ado about nothing here. land value uplift has already been priced into the market, the beneficiaries, long term property owners. In other words, the establishment. Pity the poor builders that have to buy in now to find a site to build on, they just enrich the seller and marginalize their own business. Never before have we witnessed a riskier time to buy land to develop.
process savings - the builder will no longer need to navigate a lengthy and costly process to change the land use from Rc2 or Rc1 to Rcg, basically this could chop some fees and holding costs off of many future projects. This is a good thing because little societal value was gained by the rezoning process, and it involved too much time waiting for a planning commission review, and a council meeting slot to have the full council vote on a tiny townhouse vote.
More product to sell that is smaller and more economical than the semi detached home market - definitions of affordability were flung like dung at the hearing, but the basic math is incontestable. townhouses cost much less than semi detached homes, and a fraction of new detached infill. New townhouses must be measured against what would otherwise be built. For example, new townhouse can easily be built and sold for 5-6-700k, depending on location. In an Rc1 area, the like for like replacement that was the only viable path to new housing would require a new build to sit on a land cost from 7-900k (or even vastly more - could be two million), making the finish product starting price around 1.5 million for a basic new single home.
Suites will continue to be built as the only truly affordable product offering not taxpayer funded - the suites appear to be the most contentious issue, because, when linked to a new townhouse, would not require a new parking stall. Many councillors and the general public attacked the existence of the suite, while decrying need for affordable housing. It does appear the only way the market can build affordable housing is to include suites within the townhouse. This is a good thing as a pressure release valve in a time of housing scarcity.
allowing a suite and a laneway house on one plot seems like a good and easily digestible idea to most people in the community - while nice to have, this will have almost no meaningful supply impact when a few laneway homes are added to new detached home builds in prestige communities.
it appears the planning staff in the key positions of influence over policy are on board and largely, if not unanimously, reject single home only replacement rules. I found the staff presentations and arguments compelling, others less so. This appears to be a memorable ‘changing of the guard’ moment in Calgary. There was also a large age/voting preference discrepancy on council.
Where are the opportunities? - my thoughts are that the formerly forebidden zones, the Rc1 areas, with the biggest lots and smallest old homes, offer the best opportunities. The market has yet to figure out the implications of increased development potential, after some expirementation, someone will guinea pig a new approach and it will catch on as the builders are inherent copycats. This will occur only at the pace that willing sellers enable it to.
little change in the Rc2 areas - these lands were already priced as if RCG was a foregone conclusion, because it was. I don’t see much added buying pressure here and most prices are already too high to even justify townhouse projects today, given the speculative land craze that has hit the market. if anything we could see small land value correction, this would be welcome.
As time passes, I view the new RCG zoning as a means of introducing some new population into areas that have declined via shrinkage in family size, and some new housing stock variety where previously only mansion replacement was permissible. Both of these features are good for society. Neither of these features will mean some sort of character assassination of established communities. If anything, those enclaves protected by the ‘never to expire restricted covenants’ will mostly benefit, as suddenly, single house only regulations are more scarce than townhouse friendly regulation. This is also a good thing. As the new rules are digested by the market, I am optimistic and grateful to see leadership shown by the Mayor and much of Council to modernize our infill development rules.
This chart was floating around X during the hearing. I found it to be quite a convincing display of the disparity in price of new single homes vs new townhouses. Note the semi detached market data is not shown, this is by intent to present both ends of the spectrum of new home cost in the most simple manner. Also note, there are few townhouse values shown over 800k, I am assuming this is based on assessed tax roll, and there are very few new single houses valued below 800k. If there was another chart showing semi detached values, 90% of the values would be cluster today from 800-999k. Is there a compelling argument against townhouses when viewed in this context?