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Google Sibling Sidewalk Labs Unveils ‘Smart City’ Plans For Toronto Waterfront

After a year and a half of public hearings and criticism, Google sibling company Sidewalk Labs just unveiled its master plan to redevelop a stretch of Toronto’s waterfront with “smart” features like snow-melting roadways, an underground delivery system and a slew of data-collecting sensors.

The 1,500-plus-page planning document, viewable in segments below, will go through a lengthy evaluation and public review process as the city decides whether to move forward.

Although Sidewalk Labs announced its ambitions to bid for Toronto’s redevelopment in 2017, this is the first document that fully lays out its ultimate vision, which includes proposals for two neighborhoods—Quayside and Villiers West—as well as a larger Innovative Development and Economic Acceleration (IDEA) district.

Dan Doctoroff, the CEO of the Alphabet subsidiary and a former deputy mayor of New York City, touted the plan as a “groundbreaking blueprint for the neighborhood of the future” that is environmentally friendly and built for people of all income levels.

Residential units make up 67% of the planned development in the main Quayside district, for example, with 40% at below-market prices, and Sidewalk promises 1,700 affordable housing units in all.

“We think it’s the first true articulation of what’s really possible when you combine cutting-edge innovation and forward-looking urban design to produce an inclusive community,” Doctoroff said during a briefing with reporters on Monday.

Meanwhile, concerns about privacy and data collection have been rife within the planning process. Several advisers from Waterfront Toronto, a government-appointed agency working with Sidewalk, resigned in the past year because of privacy concerns, and Toronto citizens have formed advocacy groups like the #BlockSidewalk campaign.

 

Sidewalk has stipulated the creation of an independent Civic Data Trust to handle digital governance issues and has also committed not to sell personal information, not to use personal information for advertising and not to disclose information to third parties without explicit consent.

Waterfront Toronto said in a statement that based on a read-through of the plans, it will require additional information to establish whether the initial proposals are in compliance with applicable laws and its own data principles.

Doctoroff said that Sidewalk would continue to work closely with the government and community groups to move its plan forward and described the process as “like a 50-sided Rubik’s cube.”

The master plan outlines a capital-intensive investment for Sidewalk, though also one that could potentially be incredibly lucrative. At this point, Alphabet’s subsidiary companies like Sidewalk, called its “Other Bets,” have generated very little revenue. In the company’s most recent quarterly earnings, the “Other Bets” reported losses of $868 million and $170 million in revenue.

Source: forbes

Stanford Commits to $4.7 Billion for Housing, Transit, Public Education

Stanford University is offering $3.4 billion in housing and $1.3 billion for transit and public education benefits as it faces pushback over a proposed 2.3 million-square-foot academic expansion over the next two decades.

The school said in a letter Monday to Santa Clara County that it would spend $3.4 billion to construct 575 affordable housing units and 1,597 market-rate housing units. All the affordable units and 1,015 of the market-rate units would be built first, before 25% of the academic buildings are constructed over the next 20 years.

At least 1,115 of the units and an additional 2,600 beds for student housing would be built on Stanford’s land.

But Joe Simitian, president of the Santa Clara County Board of Supervisors, which must approve the expansion, said the school’s proposal is inadequate.

“If something seems too good to be true, it probably is,” he said. “It doesn’t address the underlying concerns around traffic, housing and open space.”

Stanford’s expansion is expected to lead to 9,610 more people — including students, staff and faculty — on campus each day. Santa Clara County staff called on Stanford to build 2,172 housing units and 2,600 student beds on campus.

Simitian said Stanford’s proposal lacks enough housing in part because it includes the 650-unit Graduate Residences in Escondido Village, which is under construction and set to open in the fall. That development is meant to address existing demand, he said.

The county Planning Commission will consider the project on Thursday and will eventually make a recommendation to the Board of Supervisors, where a final vote could come in the fall.

Stanford said the benefits package is the largest in its history. It comes a week after Google committed to a $1 billion housing package in an effort to build 20,000 housing units. Major Bay Area employers including Facebook, Wells Fargo and Kaiser Permanente have also committed to invest in housing.

“The Stanford community is confronting the serious regional challenges of affordability, housing availability and traffic congestion, and we’re working to do our part to promote solutions that serve Stanford and our neighbors,” Stanford President Marc Tessier-Lavigne said in a statement. “This offer reflects our values as a residential university committed to sustainable development and service to the community.”

The school would also pay $30.3 million in funds for transit improvements and spend $1.1 billion on a transit program. Stanford committed an additional $138.4 million in economic benefits for the Palo Alto Unified School District, including a $15 million innovation space.

Stanford and the school district reached the agreement in April.

“With an average per pupil allocation of $7,050, over the life of our deal, we believe we reached a mutually beneficial agreement through an interest-based bargaining approach. Stanford told us they would be true to their word and they have 100%,” said Don Austin, superintendent of the school district, in a statement.

In April, the county suspended negotiations with Stanford. The two sides have clashed over ordinances that require Stanford to pay affordable housing fees and build 16% of affordable housing in new buildings. The school wants the laws repealed and says it will still meet the requirements in the new proposal.

“So far, the university has not been inclined to fully mitigate the impact of its development,” said Simitian.

Source: sfchronicle

Minorities Struggle to Secure Homeownership

Information from the U.S. Census Bureau and the National Association of Home Builders (NAHB) found that homeownership rates for minorities fell to 64.2% in Q1 2019 from 64.8% in Q4 2018.

The “all minority” homeownership rate, which includes African American, Hispanic and “other households” (Asian, Native American, etc.), came in at 47.1% in Q1 2019—a slight year-over-year decrease from 48%, and a decline from 47.7% in Q4 2018.

Recent NAHB information revealed that the amount of newly-formed owner-occupied home grew in the first quarter. Expansion during Q1 2019, though, was slower than last year, indicating the decline of affordable housing due to elevated home prices.

First American’s Real Estate Sentiment Index (RESI) published last week found that while falling mortgage rates have given the housing market a boost, price remains a factor for potential buyers.

“According to 57% of title agents and real estate professionals surveyed, the unexpectedly low mortgage rates of 2019 have increased home buyer demand in their market. In fact, only 15% disagreed with this sentiment,” said Mark Fleming, chief economist at First American.

“However, despite lower mortgage rates boosting affordability and stimulating demand, 40% of survey respondents indicated that affordability is the primary obstacle to becoming a homeowner – this is not surprising as house prices nationally continue to grow, albeit at a slower pace in 2019.”

Fleming said the RESI found affordability to be the primary obstacle to homeownership, as those who found affordability to be an obstacle increased to 40% from 30.1% year-over-year.

According to the NAHB and the Census Bureau, homeownership rates fell for all minorities during Q1 2019, with the African American rate falling the most by 1.3% to 41.8%. Hispanic homeownership rates fell to 47.4%, while “other, non-hispanic” rates fell by just 0.7% to 56.3%.

Homeownership rates for African Americans have been on a steady decline, and have fallen from almost 50% in 2004 to the reported rate of 41.8%.

White, non-hispanic rates, however, grew by 0.7% to 73.2% during the first few months of 2019.

Source: themreport

24 billion tons of fertile land lost every year, warns UN chief on World Day to Combat Desertification

In a video message released in advance of the World Day to Combat Desertification and Drought, marked on Monday, UN Secretary-General António Guterres warned that the world loses 24 billion tons of fertile land every year, and that the degradation in land quality is responsible for a reduction in the national domestic product of up to eight per cent every year.

“Desertification, land degradation and drought are major threats affecting millions of people worldwide,” said the UN chief, “particularly women and children.” Mr. Guterres said that it is time to “urgently” change such trends, adding that protecting and restoring land can “reduce forced migration, improve food security and spur economic growth”, as well as helping to address the “global climate emergency”.

‘Let’s grow the future together’

The World Day, which raises awareness of international efforts to combat desertification, was established 25 years ago, along with the UN Convention to Combat Desertification, the sole legally binding international agreement linking environment and development to sustainable land management. Running under the slogan “Let’s grow the future together”, the 2019 World Day focuses on three key issues related to land: drought, human security and climate.

By 2025, says the UN, two-thirds of the world will be living under “water-stressed” conditions – when demand outstrips supply during certain periods – with 1.8 billion people experience absolute water scarcity, where a region’s natural water resources are inadequate to supply the demand. Migration is likely to increase as a result of desertification, with the UN estimating that, by 2045, it will be responsible for the displacement of some 135 million people.

 

Restoring the soil of degraded land, however, can be an important weapon in the fight against the climate crisis. With the land use sector representing almost 25 per cent of total global emissions, the restoration of degraded land has the potential to store up to 3 million tons of carbon annually.

The importance of ensuring that land is well-managed is noted in the UN’s 2030 Agenda for Sustainable Development, which declares that “we are determined to protect the planet from degradation, including through sustainable consumption and production, sustainably managing its natural resources and taking urgent action on climate change, so that it can support the needs of the present and future generations”. Specifically, Goal 15 states our resolve to halt and reverse land degradation.

What is desertification?

Desertification does not refer to the expansion of deserts, but rather the degradation of land in arid, semi-arid and dry sub-humid areas, primarily as a result of human activities and climatic variations. It happens areas of dry land are extremely vulnerable to over-exploitation and inappropriate land use. Poverty, political instability, deforestation, overgrazing and bad irrigation practices can all undermine the productivity of the land.

‘It isn’t just about sand’

In his message, Ibrahim Thiaw, the Executive Secretary of the UN Convention, said there are only three things all people need to know about the World Day to Combat Desertification:

  1. It isn’t just about sand,
  2. It isn’t an isolated issue that will quietly disappear; and
  3. It isn’t someone else’s problem

“It’s about restoring and protecting the fragile layer of land which only covers a third of the Earth, but which can either alleviate or accelerate the double-edged crisis facing our biodiversity and our climate,” he said.

The international community, he continued, has acknowledged the central role our land plays in our lives and livelihoods, and since the creation of the Convention, some 196 countries, including Brazil, Indonesia, China and India, as well as the European Union, have signed up to coordinated actions for sustainable land management.

“However, there are even more stories about how poor land management has degraded an area twice the size of China and shaped a farming sector that contributes nearly a quarter of all greenhouse gases,” he said, stressing that there are even more stories about how half the people on the planet are affected by that damaged land or live in urban areas, consuming resources that require 200 times as much land as their towns and cities and generating 70 per cent of emissions.

 

“Yet, the world is determined that by 2030, we will switch from destroying the Earth to making it productive enough to grow a better future for everyone. If we take action to restore our degraded land, it will save $1.3 billion a day to invest in the education, equality and clean energy that can reduce poverty, conflict and environmental migration,” noted Mr. Thiaw.

And while, better land management does not hold all the answers, it offers a stepping stone to reach global goals by 2030 and then act as a natural multiplier of their benefits.

“So, for this World Day to Combat Desertification, I am calling on everyone to drive this change from the ground up; to make choices and take action, either privately or professionally, as producers or consumers, to protect and restore our land. Let’s grow the future together,” he said.

Source: UN News

Hong Kong Tops London as World’s Most Expensive Office Market

Nigeria rental prices remain stable, still highest in Africa
A new report from CBRE, says the rising cost of leasing prime office space accelerated across the globe due to continued economic growth, job gains and limited availability of prime space in certain markets. Of the 122 markets tracked by CBRE, 85 registered cost increases.

CBRE’s annual Global Prime Office Occupancy Costs Report found that average costs for leasing the best office space in each market’s best location increased by 3.6 percent globally in that 12-month period, outpacing the year-earlier gain of 2.4 percent.

According to CBRE, the 10 most expensive markets were the same markets as last year, though several have changed positions within the top category. Hong Kong Central ($322 per square feet per year) and London’s West End ($222.70) retained the top two spots, with the former widening the gap between itself and the field.

The biggest gainer within the top 10 was Midtown Manhattan ($196.89) in New York City, which climbed to the fourth most expensive market this year from the sixth last year as companies sought prime space in Midtown corridors and the new Hudson Yards mixed-use development.

CBRE defines Prime Office Occupancy Costs as the cost – rent, local taxes and service charges – to occupy the highest quality office space in each market’s highest-quality location. Prime real estate costs can be a gauge of a market’s high end – and sometimes of the broader market.

“The race to attract and retain talent by securing office environments of the highest quality lost no momentum despite slower economies in some regions and unpredictable trade discussions,” said Julie, CBRE Americas Head of Occupier Research. “In fact, the cost of occupying prime office space rose at a steeper rate as supply remained constrained in some coveted markets. Demand is notably strong from banking, finance, technology and coworking companies.”

Fifteen of the 122 markets analysed by CBRE posted double-digit percentage increases in prime office occupancy costs in the first quarter in comparison to a year earlier. Many share traits including a central location, modern infrastructure and transit options, prime social amenities, and a relative lack of available prime space.

In Nigeria office markets, the rentals of grade A office spaces have remained stable. While average rents for new commercial developments still hovers between $600-$700 per square metre.

The Chairman, Royal Institution of Chartered Surveyors (RICS), Nigeria chapter, Mr. Gbenga Ismail told The Guardian that “office rental has not increased in the last five years. The projected rent five years ago was $1000/$1,200 per square metre. Today it is averaging $650/$700 peak rate so it has come down. It is still relatively expensive.

“Compared to Africa it is very high. However, when compared to New York London, it is still reasonable.  It is not in the top 10 highest world office index.

“One factor why it is expensive is because of the investor yield. Investors expect a minimum yield and have set this target. Therefore rent has been pushed up to reflect this. Cost of building new offices remains very expensive and energy cost is a huge deterent, therefore return on investment will need to be high to reflect this.

“Currently, the economic situation has caused demand to drop which invariably has affected rental prices and put a downward pressure on owners. However because of the factors mentioned above the rents cannot go below a certain threshold,” Ismail said.

The former Chairman of Nigerian Institution of Estate Surveyors and Valuers, Lagos branch, Pastor Stephen Jagun argued, “Our rates are among the highest because of the attended costs. Our service charge is also very high because of the cost of providing those essential services. These costs are increasing by the day with revenue not matching.”

Source: GuardianNg

India is investing more money in solar power than coal for first time

In India coal is king. It powers huge swathes of the country and its use is still rising. But there are signs that coal’s dominance might one day be challenged. India’s investments in renewable sources are now outpacing those in fossil fuels, according to a report by the International Energy Agency.

Image: IEA

Total renewable power investments topped those in fossil fuel-based power for the third year in a row. And spending on solar photovoltaics (PV), supported by government auctions, exceeded coal for the first time last year. The falling costs of bringing solar power online as well as favourable government policies have seen solar’s star rise in recent years.

Image: IEA

But that’s not to say the country’s hunger for coal is going away any time soon: it remains one of the world’s largest coal consumers. Investment in supply grew last year, supported by a policy favouring domestic production ahead of imports – although the fuel was still one of the country’s largest imports last year.

At a time when other nations are curbing coal use, India is bucking the trend and the vast majority of the country is still powered by fossil fuels, mostly coal.

Image: Inside Climate News

India’s energy future

India is still a relatively modest energy consumer, particularly in comparison to the United States, but demand is set to climb rapidly as its population gets richer. The country`s share of global energy demand will double by 2040, oil and gas giant BP estimates. And almost half of this new demand will be met by coal.

Although investments in renewables will continue to mount, the continued reliance on coal means greenhouse gas emissions by India – already one of the world’s biggest CO2 emitters – will climb substantially.

Image: IEA

Given its soaring demand for power, it is little surprise India was the fastest-growing investor in the energy sector last year, according to the IEA. Continuing to meet this demand will require serious investment.

The country spent more than $20 billion on its grid last year, and the Central Electricity Authority estimated an extra $40 billion of transmission spending – the cost of getting electricity from the power plant to the substation – would be needed in the next three years. That’s over half as much again as it is currently spending.

Prime Minister Narendra Modi announced massive solar energy investments in 2015, pledging to surpass targets in the Paris climate agreement. But there is no getting away from the fact that coal is perceived as a cheap source of energy to feed Indians’ increasing demand for power.

Source: Weforum

A Place the Entire Family Can Call Home

Every Thursday, Henk and Elly Oving take care of their young grandchildren. They don’t have to travel far. They just go downstairs.

The Ovings share a five-story home in Amsterdam — two apartments stacked on top of each other and joined by a central staircase — with their daughter Jantien and her husband, Auguste van Oppen.

“It’s two fully independent houses that are intertwined with one another,” said Mr. van Oppen, an architect who could just as easily be describing the 4,900-square-foot home’s two households.

The van Oppens and the Ovings are among a growing number of families sharing multigenerational residences. From Amsterdam to Australia, architects like Mr. van Oppen and his team at BETA, the local firm he co-founded with Evert Klinkenberg, are designing striking homes that make cross-generational care for aging baby boomers and overworked parents as easy as a walk down the hallway.

In a home in Amsterdam called the 3 Generation House, two apartments are joined by a central staircase.CreditOssip van Duivenbode
“It’s about being there together,” said Mr. van Oppen, who designed the home along with Mr. Klinkenberg. “It’s about being there for one another.”

The trick is coming up with designs that incorporate privacy, senior-friendly spaces and flexibility for the future. At the same time, the concept can help address one of today’s more stubborn issues — housing affordability.

Multigenerational homes allow family members to maintain their independence while benefiting from interdependence.

In the 3 Generation House, as it is called, the van Oppens opted for the 1,750-square-foot lower level to take advantage of direct access to the garden for the children, while the in-laws, retired and in their 60s, chose the 1,870-square-foot upper level with an elevator. “We wanted more privacy and the roof terrace,” Mr. Oving said.

Including subtle details like wider doorways and level, uninterrupted floors, their apartment has been designed to be senior-friendly — but discreetly so.

“It doesn’t look like a senior apartment, but it is,” Mr. van Oppen said.

Similarly, in Helsinki, the actors Vilma Melasniemi and Juho Milonoff built House M-M, a three-story home that includes a ground-floor apartment for Mrs. Melasniemi’s grandmother.

“We had long conversations about degrees of privacy,” said Tuomas Siitonen, who designed the timber-clad home, “so they could all live quite close to each other, and the grandparents could take care of their kids, and they could take care of the grandmother, but still everyone could live their own lives.”

The house is on land owned by Mrs. Melasniemi’s parents, who still live nearby in the 100-year-old home where she grew up.

The fully accessible 270-square-foot ground-floor apartment, which was financed by Mrs. Melasniemi’s parents, includes its own entrance and sheltered outdoor space. There is also a common garden area that can be shared by all members of the family.

“When we were building the house, I asked my father to draw the line on paper: Which is the land that we pay for, which is our common space and which is the land of their house,” Mrs. Melasniemi said. “I liked that he made it, as he knows the garden and he knows what he likes to think is their space.”

Mrs. Melasniemi’s grandmother, who was 91 when she moved in, has since died.

“My father got the opportunity to visit and talk to his mother every day,” said Mrs. Melasniemi, who has two children.

But the home is already being used for another phase in its planned long life.

“We discussed the kind of life span of the house,” Mr. Siitonen said. “We thought of how they could use the space when the kids move out, and then when the grandmother passes away. And of course, in the future the parents, one or both of them, might move in there. So it was kind of like we thought of things in five years and 10 years and 50 years.”

As with the 3 Generation House, which was designed to allow for expansions and conversions as the family evolves, House M-M was designed so that the children’s rooms, on the second floor, could be combined. Mrs. Melasniemi and Mr. Milonoff could then move down and turn the spaces on the upper floor into a studio. “And then maybe one of the kids could move into the apartment where the grandmother used to live,” Mr. Siitonen said. “Now it’s rented.”

In Kent, England, Caring Wood is another multigenerational home built with the future in mind. Commissioned by the in-laws of the architect James Macdonald Wright, of London-based Macdonald Wright Architects, it was designed by Mr. Wright and Niall Maxwell, of the firm Rural Office for Architecture, as a country house for the 70-year-old couple and the family’s three daughters and seven grandchildren. “There’s 15 of us,” Mr. Wright said. “The idea really was that we would all spend as much time as possible there.”

Set on 84 wooded acres, the family home takes a pinwheel shape with four corner apartments, one per family.

These are connected to the home’s common spaces, including a central inner courtyard where a family tree cast in glass by the artist Colin Reid sits in the center of the courtyard’s shallow pond.

The shared courtyard of Caring Wood, designed by James Macdonald Wright and Niall Maxwell, of the firm Rural Office for Architecture.
“Internal walls are all partitions, so they can be reconfigured,” Mr. Wright said. In terms of lifetime use, he said, “there is a lift that gives access to all levels of the house.”

While privacy is built in, Mr. Wright said the children, ages 3 to 17, have no qualms about breaking it down. “They kind of just charge in between all of the individual apartments,” he said.

In Torekov, Sweden, a coastal village north of Malmo, the firm Maka Arkitektur designed a multigenerational weekend home for a mother and the families of her three children, currently including three grandchildren.

“Torekov has always been a kind of generational meeting point for the entire extended family,” said Daniel Hedner, the home’s architect along with Ylva der Hagopian.

In Torekov, Sweden, the firm Maka Arkitektur designed a multigenerational weekend home for a mother and the families of her three children. It has a main building with two wings and a semi-detached guesthouse set around a shared courtyard.

In Torekov, Sweden, the firm Maka Arkitektur designed a multigenerational weekend home for a mother and the families of her three children. It has a main building with two wings and a semi-detached guesthouse set around a shared courtyard.

Forming an outdoor courtyard that serves as a connecting social space for the family, the 1,740-square-foot home comprises a main building with two wings.

A slightly detached 280-square-foot guesthouse has its own kitchenette and bathroom.

“Access to separate rooms, nooks and corners for privacy are essential in multigenerational houses,” said Ms. der Hagopian, Mr. Hedner’s associate, “as well as generous social space that can gather a lot of people.”

Though large families living together is not a new idea, and mother-in-law apartments are common in many places, purpose-built multigenerational homes are largely “a new phenomena in Western society,” Mr. van Oppen said. But they have a strong tradition in Asian society.

That figured into the thinking of a couple with Asian roots who commissioned Charles House, a multigenerational home in Melbourne, Australia. “For them it was kind of a natural way to have a house,” said Andrew Maynard, whose firm, Austin Maynard Architects, designed it.

For this project, Mr. Maynard turned the traditional Australian “granny flat” (normally akin to a shed out back) on its head by incorporating it into Charles House as an adaptable space on the ground level. Although multigenerational homes are not typically part of Australian culture, Mr. Maynard said the country could certainly benefit from them.

“Sydney and Melbourne are among the top 10 of the most unaffordable cities to own a home in the world. And there’s a whole generation of younger people, millennials, who just can’t even buy into the market,” he said.

Source: nytimes

Foreign Money Still Driving B.C. Housing Market Despite Ownership Data: Expert

Most homeowners in British Columbia’s hot housing market live in the province, but one expert says that doesn’t mean foreign money isn’t to blame for high prices and speculation.

Of the 2,156,920 residential properties in B.C, 5.5 per cent were owned by foreign individuals or foreign non-individuals such as non-individual a corporation, trust or state-owned entity, according to the Canadian Housing Statistics Program from Statistics Canada.

Josh Gordon with the Simon Fraser University School of Public Policy says the study only looks at someone’s residency, not where they got the money to buy the property.

“The CHSP data looks at the stock of housing, not necessarily the flow of housing market participation,” Gordon said. “There’s been a misuse of the word domestic (speculation) because the data is about residency. If a resident is using foreign money, then that can’t be chalked up to domestic factors.”

He said even those B.C. residents who are speculating on housing may be relying on foreign participation in the market.

“Are they speculating on the arrival of substantial amounts of foreign money and ownership? If that’s the case, then just because there are a lot of domestic speculations does not change the fact that the overall market is being driven by the impact of outside money.

Gordon says if that’s the case, then foreign money could still be driving the market even though only five per cent of homes are officially owned by foreigners.

“If that’s the case, then just because there are a lot of domestic speculators, does not change the fact that the overall market is being driven by the impact of outside money.”

He points to the slow down in the housing market, particularly in the Vancouver-area as the province introduces policies to curtail the flow of foreign money and as capital controls are controlling the money arriving from China.

“Policy has been on the right track on the provincial level,” he said. “The market has slowed down and prices are starting to fall as we would expect if we thought the major issue was foreign ownership.

Source: citynews1130

Hey, Middle Class, the Housing Crisis is Coming for You Next

Charlotte, North Carolina, one of the Southeast’s biggest cities, is short 34,000 affordable housing units. A booming job market has attracted 100,000 new households to the city since 2000, and supply hasn’t kept up with demand.

In Salt Lake City, Utah, there are more families than available places to live, a shortage of about 54,000 units. It’s the most severe manifestation of pricing pressure in a state where housing costs can run higher than both Las Vegas and Phoenix. This deficit comes after a year when Salt Lake City led the nation in homebuilding.

In Columbus, Ohio, the housing market has cooled after ever-higher prices exhausted buyers who simply can’t keep up with rising costs.

“The sweet spots are still a challenge, but there’s no sweet spot in the high end,” Andrew Show, a local realtor, told the Columbus Dispatch.

Three of the nation’s fastest-growing cities, all far from the craziness of real estate in coastal markets, all building at a relatively speedy clip, and all with popular neighborhoods, boasting year after year of rising prices, have become too expensive for a greater number of potential owners and renters.

When policymakers and pundits talk about the nation’s affordable housing crisis, they usually talk about the forces that deny low-income Americans reliable and accessible housing near better jobs and educational opportunity. And they should; it’s not just a national crisis and widespread policy failure, but a moral crisis for the world’s richest nation.

But new research shows that the shocking realities of the nation’s affordability crisis—8 million renters pay more than half their income on rent, and the country is short 7.2 million affordable housing units, according to the National Low-Income Housing Coalition—have begun to metastasize and impact the middle class.

A new paper by Jenny Schuetz, a housing policy fellow at the Brookings Institution’s Metropolitan Policy Program, found that some of the severe affordability issues impacting low-income Americans have crept into the lower-middle class and, without action, will get worse.

In “Cost, crowding, or commuting? Housing stress on the middle class,” Schuetz looked at census data to find the impact of a decade when housing costs rose faster than average incomes.

Her nuanced conclusions suggest that, on an aggregate national level, there isn’t a middle-class housing crisis. High-cost metros like Seattle and San Francisco unquestionably have challenges, and, of course, low-income households are stretched like crazy. But it depends on how you look at the data.

If you break down the nation into five income groups, the crises faced by the fifth group—or the lowest-income—are increasingly being seen within the fourth group, the lower-middle class. The fifth of the country with the lowest income spends 60 percent of their money on housing, while the next-lowest fifth spends 40 percent, both significantly higher than the 30 percent recommended by economists.

“The issues facing low-income Americans are now showing up in lower-middle-income Americans, and I think that’s something we should worry about,” says Schuetz. “It’s a national pattern. That group is spending more money on rent everywhere, in Cleveland and not just in California.”

Other studies point to a similar kind of strain. Research from Berkadia, a Berkshire Hathaway company, found that the lower-middle income bracket, which it qualified as earning $35,000 to $49,999 between 2012 and 2017, has been hit hard, with 6 percent growth in rent-stressed families during that time period. Cities like Tulsa, Oklahoma, and Omaha, Nebraska, have become challenging for renters, with 40 percent or more of families identifying as rent-burdened.

It’s easier to focus on the extremes of the housing shortage, both the rising levels of poverty and homelessness and the seven-figure spec mansions of the tech jet set. But the creeping cost of housing is pinching a middle class already struggling with flat wages, rising child care costs, and the skyrocketing price tag of a four-year college degree.

This “middle-class squeeze,” as a 2014 report by the Center for American Progress illuminated, was about new constraints, and how “the costs of key elements of middle-class security rose by more than $10,000 in the 12 years from 2000 to 2012, at a time when this family’s income was stagnant.”

Housing unaffordability isn’t the cause of the crisis, per se. But with the cost of everything else rising, it’s not surprising that formerly stable families feel squeezed by even slight increases in housing costs, and that overall growth is hampered by a middle class barely able to pay the bills and put their kids through school.

Aren’t we already in a crisis?

Middle-class Californians, many of whom have recently moved to other, more affordable, areas in the West, like Boise, Idaho, and most new homebuyers looking to buy in the nation’s largest cities, would probably tell you there’s long been an affordability crisis across the income spectrum.

And it’s an issue that’s grown over decades: According to a 2017 report done by the St. Louis Federal Reserve Bank, the median price of single-family housing in the U.S. outgrew the rise in median household income by 390 percent between January 1986 and July 2017.

Schuetz’s analysis for Brookings found that lower-middle-income renters and homeowners continue to be forced to make the traditional trade-offs, sacrificing a combination of cost, commute time, and home size for proximity to big-city job markets. It’s all part of the agglomeration crisis, the clustering of jobs and opportunities in specific metros.

What Schuetz has identified as a newer aspect of the problem is the decision by city governments to cut back on housing production via restrictive codes and zoning, which only drives up land prices (the Lincoln Institute of Land Policy found that the cost of land skyrocketed by 76 percent from 2000 to 2016). Big, productive, and progressive cities have hampered their housing supply with very deliberate policy choices.

“Waving our hands and saying we can’t do anything to fix it gives a pass to local government who have made very bad decisions,” says Schuetz. “As the cost burden of housing keeps inching its way up the income spectrum, if we don’t see that as a problem and change the housing delivery system, it will become a middle-income crisis in more widespread terms.”

If this is what the housing market can produce in a good economy, what will happen to homebuilding if we fall into a recession? A report from the Kansas City Federal Reserve Bank found that during the last 10 years of economic expansion the annual rate of single-family home starts was 25 percent below ’90s levels. The current rate of construction relative to the number of households is at its lowest levels since the ’50s, the earliest date at which this kind of reliable nationwide data is available.

Schuetz believes cities need to ramp up affordable housing production. Will newly rising metros like Denver, Austin, and Nashville act in time to stem rampant price inflation? Or will they fall into the same trap as other, larger metros?

There are also increased calls for state-level intervention, to overrule failed policies at the local level. The repeated, and so far unrealized, push for SB 50, California’s transit-oriented zoning bill, as well as the successful passage of statewide rent control in Oregon, demonstrate the public’s hunger to have governors and state legislatures step in and use the tools at their disposal to put pressure on local governments.

“Local governments have no incentive to change, and actually have incentive to dig in their heels on these issues, so ultimately, I think that’s going to require probably state intervention, like withholding funds,” says Schuetz.

Without some kind of relief on the horizon, the middle class will be locked out of many areas due to housing strain. And like all Americans suffering from the affordability crisis, they’ll lose out—a loss for the entire country.

“The highest-opportunity neighborhoods have become gated communities, and you can’t move in unless you’re a millionaire,” says Schuetz. “To the extent that high housing costs discourage anybody from moving to a place to find a job, have new ideas, and contribute to a society, we should worry about that. That’s fundamentally damaging to opportunity, and that’s going to hurt the vitality of our most productive regions.”

Source: curbed

Debt Blamed in Credit Crisis Could Help Canada With Housing Risk

The type of securities blamed for triggering a credit crisis in the U.S. a decade ago could now be part of the solution in Canada, where a cooling housing market is a key risk to its $1.7 trillion economy.

The Bank of Canada is discussing ways to encourage a more robust market for residential mortgage-backed securities with potential investors. Only about C$1.5 billion ($1.1 billion) of Canadian uninsured mortgages have been pooled in RMBS deals, or about 0.1% of the country’s mortgage debt, according to rating company DBRS Ltd.

No lender has widely marketed such a deal since September, when private lender MCAP sold C$254 million of the notes.

While previous efforts to kick-start an RMBS market have borne little fruit, this time may be different as Canadian home prices are rising at the slowest pace this decade amid higher interest rates, regulatory changes and tax increases designed to reign in surging prices, particularly in Toronto and Vancouver.

“While lenders are very well equipped to manage normal market risks, I suspect they are rather unwilling to take on the additional risk of future government intervention in the housing markets,” said Andrey Pavlov, a professor of finance at Beedie School of Business of Simon Fraser University in Greater Vancouver.

“Therefore, lenders are likely more interested today than they have ever been in hedging their residential real estate exposure, and mortgage backed securities would be a good way to do so.”

Lenders create mortgage-backed notes by packaging property loans into securities of varying risk and returns — too much risk it turned out during the U.S. financial crisis when shady loans made it into MBS tranches.

There’s been little evidence risky mortgages have become a feature in Canada. In addition, mortgages are “full recourse” in most of the country, meaning lenders can pursue borrowers even after they’ve walked away from the property.

On top of raising funds, the sellers of the underlying assets can reduce the regulatory capital they have to set aside to cover eventual losses should they meet certain conditions, including selling significant portions of the lower rated, higher risk bond tranches.

Longer Term

The notes are repaid as borrowers pay down debt. The legal duration of the bonds could be significantly longer than the expected repayment rate suggests.

This could be a useful tool for lenders to offer longer-term mortgages in a country where most of the home loans have a 5-year term. The repayment of the bonds can be adapted to the repayment of the underlying collateral.

Up until 2016, Canadian lenders relied heavily on Canada Mortgage & Housing Corp., the country’s national housing agency to insure mortgages with down payments of less than 20% and then packaged those loans into mortgage-backed securities to fund obligations.

But as part of its efforts to curb taxpayer exposure to the housing market, the government made it more difficult to get insurance. The market for uninsured mortgages took off — MBS based on the debt less so.

“There’s an ongoing education job around investors just to highlight the difference between that product and the CMHC product, and we are investing in that so that the market grows over time,” Bank of Montreal Chief Financial Officer Tom Flynn said in an interview last week. The RMBS “market is not nearly as developed as the CMHC mortgage bond market is. I would say our hope is over time that market will grow, and the banks generally I believe are interested in issuing that product.”

Mortgage Market Shifts

Uninsured mortgages represent almost 60% of all home-loans extended by the country’s large banks

The Canadian Fixed-Income Forum, a Bank of Canada-led group made up of participants in the bond market, has been working since at least last year to analyze the conditions and incentives that would be required to expand interest in the asset class, according to the minutes of their meetings.

It conducted a focus group last month with mostly buy side institutions about the disclosure on the underlying collateral and other features they may require. The group, known as CFIF, was scheduled to discuss the issue again at a June 4 meeting.

Data Portal

One way to bolster investors’ confidence in deals would be by setting up a public database of mortgages used in securitization deals including anonymized details of the borrower, property and loan performance, Bank of Canada governor Stephen Poloz said last month. A similar project was supported by the European Central Bank in a bid to re-start sales of asset-backed securities after investors shunned hard-to-value assets following the seizure of the U.S. mortgage securitization market in 2007.

“A loan level data portal is a great idea,” said Imran Chaudhry, a senior portfolio manager at Forresters Asset Management Inc., which manages about C$8.5 billion of assets and has invested in Canadian securitizations. “Issuing public RMBS deals would provide a larger investor base to the issuers and help establish a diversified funding source for them over a longer term.”

The starting point of RMBS as a funding tool isn’t the most attractive for banks as investors may demand an extra yield of 20 to 30 basis points over their senior bail-in debt in a stable market situation, said Chaudhry, who is part of the CFIF. Yet, once a market develops the spreads will tighten and it will make economic sense for the lenders to issue, he said.

Uninsured Surge

All these efforts are occurring at a time when the household debt-to-disposable income ratio in Canada at the end of 2018 hit a record high of 175%, up from 136% in 2006. By contrast, U.S. household debt to disposable income ended last year at 98%, the lowest since 2001, according to data compiled by Bloomberg.

“A key domestic risk is a sharp correction in the housing market,” officials at International Monetary Fund said in May 21 statement about the state of the Canadian economy. To be sure strong immigration, underlying strength in the economy and an unemployment rate near historic lows argues against such a scenario.

Lenders’ exposure to an eventual downturn may be increasing. According to the Office of the Superintendent of Financial Institutions, the Canadian bank regulator, the ratio of uninsured over insured mortgages has jumped to the highest since 1997.

At the end of March, the volume of uninsured mortgages surged 14% from a year ago, accounting for about 59% of the C$1.17 trillion of home loans at Canada’s federally regulated banks, while insured home loans fell 7.8% from a year ago, according to data from OSFI. On Tuesday, the regulator announced it was increasing a domestic stability buffer for systemically important banks to 2% of their risk weighted assets from 1.75%, effective Oct. 31, citing vulnerabilities that include household indebtedness.

“To be clear, the system is not broken—it has served Canadians and financial institutions well,” said Poloz in a May 6 speech in Winnipeg. “We should not stop looking for improvement.”

Source: Bloomberg

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