How Development Charges Are Affecting The Missing Middle
Your hosts Daniel Foch and Nick Hill recently attended the OHBA (Ontario Home Builders’ Association) conference in Ottawa where they spoke with eight notable individuals. One of them being Dr. Mike Moffatt, who joined your co-hosts in today’s episode, as they discuss how the development charges are affecting the missing middle.
Key Takeaways:
Development charges for single-family homes have skyrocketed from $1,700 in 2000 to $117,000 today, marking a 9,000% increase which is a major factor driving up the cost of new homes, making housing less affordable.
Municipal governments now earn the most from the sale of new homes, surpassing developers.
Many people are unaware of the extent of these development charges and their impact on housing costs, but as people actively use social media platforms like TikTok and Instagram, they are helping raise awareness.
There's a "missing middle" in capital markets, with a gap between large institutional investors and small real estate investors, making it difficult to fund mid-scale housing projects.
Current housing policies emphasize building quadplexes and small apartment buildings, but access to financing remains a significant barrier.
Smaller investors face stricter underwriting criteria, making it difficult to secure financing for small-scale developments like quadplexes. This demonstrates the increased need for the Canada Mortgage and Housing Corporation (CMHC) to reform its programs to better support smaller developers and projects like quadplexes.
The aging baby boomer generation will lead to more homes becoming available, which could be converted into multi-family units, but this transition may take 10-20 years as the economy progresses.
Future housing demand will be significantly influenced by immigration policies and population growth, which are currently unpredictable.
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