It seems like everybody has agreed that there is a price bubble in the Toronto residential real estate market. And all bubbles end (eventually). So, the next question should be: how to put your money where your mouth is? How to profit from this knowledge? The answers reveal a lot about real estate markets. Continue reading
Last Friday, the REHSA and Jeff Miller of Oxford Properties organized a tour though Milton, Mississauga and area showing off what is special about industrial properties. This property type attracts less attention than residential or office, which is either a mistake or an opportunity for somebody.
For example, did you know that the GTA is Continue reading
A couple of weeks ago, some of our students organized a competition for students across Canada. As much as I would like to think that everything educational happens only in a classroom, much learning happens outside of a classroom. Future leaders take advantage of the opportunities offered to them and show what they are capable of.
The Undergraduate Real Estate Case Competition (URECC) invited teams from universities across Canada to study a property for more than a month and pitch their ideas to a panel of judges drawn from the most senior level of the industry. The organizers, led by Sam Ives, Dan Adams, Sarah Reeve and Jill Brown, talked friends in the industry, such as the title sponsor Allied REIT, and raised about $40,000 to host the event at the Ritz Carleton in downtown Toronto. Continue reading
Last week, lots of media stories mentioned “sales” of residential properties as though they was a sign of some important change: e.g.
- “record-breaking February due to incredible sales volume”
- “Calgary home sales slide to decade low”
- “Toronto housing sales far outpace new listings”
followed by anecdotes and interviews with happy buyers and sellers. To most people, this news is something to talk about which means surprisingly little. Continue reading
The Ontario government has proposed to study the effects of converting some HOV lanes into HOT lanes, to reduce the costs of traffic congestion. Traffic congestion is an important issue for people interested in real estate because those costs affect both the market value of a property and its advantage relative to a competitor. It is a pity that the comments which followed were so predictable.
The immediate and loud response confirmed a basic rule of tax policy. It is never surprising to hear people complain about any “tax grab”: the basic rule states that a successful tax policy is not the one which “makes everybody happy” but is able to “pluck a live chicken while suffering as few bites as possible”.
With that perspective, most of the commentary was boring. Continue reading
Much of the value in land is based on its location and, in agricultural societies, that meant fertility. Now, places that are easy to get to and from are more valuable because it lowers costs or, more recently, because it encourages the flow of ideas. Usually, that means good roads or good public transit. It can also mean taxis.
Therefore, it is instructive to listen to the debate about how Uber (and others) is forcing the taxi industry to change. Mostly, the media focus on the convenience but that perspective is very short term and is not appropriate for an industry which thinks in terms of decades.
A recent article in the Globe and Mail reveals some lessons about the general problem of government regulation. The article invokes many ideas which are hard to recognize if you think too narrowly. For example,
• “Rent-seeking”: the pursuit of profit is generally a good thing, but not when the business tactics emphasize profit-by-redistribution;
• There are also interesting discussions of how to extend monopoly power to extract excess profits (a.k.a. “rents”) from related but seemingly competitive markets and the lengths to which people will go to hide the nature of their involvement;
• The licenses which allow somebody to operate a taxi are expensive to buy but, in an analysis of the social costs and benefit and especially when the policy applies broadly, economics costs such as the cost of time or gas should be treated differently than financial costs which vary with policy. As a simple question, one wonders why the government is not getting the financial benefit by selling more licenses.
The taxi industry has long been discussed as an example of the costs of restrictive government policy:     or from a pre-Uber time . The article asks whether applying a similar system to something else, such as corner stores would create value. If not then what makes the taxi industry different?
The article does not discuss the original intent of the policy, whether the policy has achieved that goal and whether new technology changes what the goal should be. For taxi licensing, the original goal is some assurance of quality or to ensure the uninformed visitors are not ripped off or to guarantee a minimum profit so that drivers will not economize on quality. Most of the Uber debate focuses on the current administration of the policy as a goal for its own sake.
Transportation is more costly than necessary (in downtown Toronto) which affects people’s behaviour. The inconvenience of using taxis encourages people to drive themselves, which may be good for the owners of parking lots but not a lot of other people.
(Uber’s policy of adapting to excess demand is not without its critics, but is a sign of market forces at work. There is also a new concern about whether consumers using Uber benefit from HST tax avoidance.)
This article may have two broader lessons. It may be a cautionary tale about the unintended consequences of interfering with market forces, especially after a technological change. Or, it may reinforce Deep Throat’s advice about trying to expose a mystery involving government: follow the money.
This post is a case study into the information on the state of the market for residential housing and, more specifically, about some of the differences between good information and what is seen in the popular media.
Consider the market for homes in the Toronto area. The Toronto Real Estate Board (TREB) offers very good information, with lots of details and insights based on de-averaging. (The data described below, come from the March 2015 report.)
Those details would bore most people, which is why there are researchers whose job is to pick it apart more carefully (and why students should be required to attend courses on “Research Methods” or “Market Analysis”.) For other people, the media fills the space with more interesting stories. Continue reading
Even if they aren’t making any more of it, we need to figure out how to use what we have. Some mixtures are better and some are worse.
This short message offers some reading for you to consider:
An old question: The Ontario government is reviewing the 10 year old policy on the Greenbelt and have lots of questions.
Between an old question and new ideas, maybe you can find innovative insights.
Today’s Globe and Mail has a very good article on the second question. It lays out many of the issues from the perspective of a builder and of an investor. The important (and sometimes overlooked) public policy question is whether constructing condominiums is a substitute for building purpose-built rental property.
After reading these and deciding that you want to rent, then you can start thinking about how to negotiate with an investor who is looking to rent to you.
Most people think that, when academics meet, they discuss obscure topics of interest to nobody else. If you are curious, you will be surprised at what you can learn. Academics have to be professionally curious, both in order to do worthwhile research and so that today’s students are prepared with ideas newer than those taught to their parents.
At a recent meeting of 11,000 of my best friends from around the world, there were lots of obscure discussions. One of the panel discussions focused on the use of administrative data for research purposes.
Administrative data is stuff which is collected as a by-product of a government implementing a policy, as opposed to the data collected by a statistical agency for statistical purposes ( ). The push for Open Data is the most obvious example whose benefits are starting to be realized as a way to keep governments accountable.
Administrative data has real advantages over a common alternative. Continue reading