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Soaring fees making housing unaffordable, builders say

JAMES RUSK

From Wednesday's Globe and Mail

Latest comment posted at 7:52 PM EDT 07/05/08

Opening shot fired in what promises to be a summer-long battle over development charges ...Read the full article

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  1. Trevor Fenton from Vancouver, Canada writes: Who else should pay for the capital cost of sprawl except those who want to live in it?
  2. J Hare from Saskatoon, Canada writes: Not sure I understand the problem. Isn't the fee supposed to cover the costs of expanding infurstrusture? I think we are all aware of the increase in comodity prices plus the shortage of trades and skilled labour so prices will go up no? Of course the prices for new building inside TO will be lower because the pipes and hydro lines and sidewalks are already inplace and the cost of connecting to them will be lower then building them from scratch? Increased density is now being market driven because the cost of expansion is expensive? Why should rate payers (I'll show my british roots here) have to subsidise the costs of private development? Just some thoughts.

    James Hare
  3. david b from ottawa, Canada writes: The article makes it sound like development chages are fixed per house. Perhaps development charges should be based more on the amount of new land used ($X per square meter) in order to shift the development charge burden from brownfield to greenfield developments.

    Also more revenue from greenfield development charges and less from property taxes would reflect the higher ongoing municipal operating costs associated with delivering services and infrastructure to sprawling greenfield developments.
  4. RD Lone from Vancouver, Canada writes: I think there is a typo, I think it should read: "soaring profits making housing unaffordable."

    Take Toronto for instance, the article cites around 11k in fees. Given a super modest 300k house at 5% appreciation (lower than what it was last year), that's 15k - enough to cover the entire fee. Of course the fee maybe increased 10% or something, or 1-2k maximum. Where does the rest of the money go? Unless you believe in the money eating monster, the answer is the bottom line.

    Some will point out higher costs, but 1) some commodities are going up while others are going down (ie, lumber). 2) The construction industry is also constantly improving (like every other business); productivity gains is supposed to lower prices over time. Notice how other physical goods have gone down in price? Want to buy a TV? A fridge? A couch? Costs are DOWN or FLAT (certainly not going up as fast as RE). Don't buy the spin.
  5. Jay Dubya from Toronto, Canada writes: What about the developer profits? Please give us all the details from land cost, materials, labour, etc to decide what is driving housing prices.

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