Welcome to this month’s instalment of Dear Urbaneer, where we tackle real estate queries put to us by our ever-inquisitive readers. This time I’m corresponding with a property owner who is being impacted by new development near her Hunstville, Ontario home and has concerns around what that might do to the values of her property and her neighbourhood.
Dear Urbaneer:
A developer is in the process of getting approvals on a large parcel of land beside my neighbourhood enclave to construct low and mid-density dwellings. I’m worried about a number of factors, including the impact it will have on the flora and fauna of the immediate environment as well as how my quality of life will be affected. I’ve also had several people comment that all this new development might drive the value of my property down. My neighbours and I intend to voice our concerns with the municipal government. Do you have any advice?
Signed,
New Housing, New Worries
Here’s my reply:
Dear Housing Worries:
With a scarcity of land in the Greater Toronto Area and beyond, as well as the flight from urban centres fueled by the pandemic, redevelopment of property for the construction to increase the supply of new residences – in addition to amenities to serve their residents – is not uncommon. This isn’t just limited to urban centres, but with population growth and the popularity of the work from home movement giving folks the freedom to work from anywhere, small towns and rural areas are also being affected.
It can seem overwhelming, especially if you purchased a property with a clear vision in your mind of how life would be whilst living in the said home in terms of sightlines, area amenities, local ecosystems, etc. There is also the disruption of quiet enjoyment living near several years of construction if the site requires clearing and blasting, the installation of infrastructures like sewers, road-paving, and utility services, in addition to the construction of the buildings themselves, that you may or may not have anticipated, which even if in the short term, can be inconvenient and messy.
Also of concern is the preservation and balance between development and the eco-systems it will impact, the existing residences surrounding it, and the competing interests of the developer, the municipality, and the community at large. In regards to your situation, and what is being proposed. Do you have access to an outline of the proposal being submitted by the developer as well as the information that states how it differs from what is currently allowed in regards to zoning? This may help you to anticipate the scope of what is to come, as well as determine what is allowed as-of-right and what may be within your sphere of influence to change.
For example, the site may already be zoned for a certain number of residences, or for specific uses, and the developer may be seeking to increase the number of units through height, massing, or by constructing a different type of dwelling (like a mid-rise building instead of townhomes). They may also be trying to change a designated use such as ‘senior’s rental housing’ into a ‘condominium geared towards retirement living’. Basically, developers will typically try to expand on what is already allowed in order to increase their profit margins. In return, they may agree to build a public park or add affordable housing, and the kinds of sweeteners that make politicians look good.
It can be helpful to get the counsel of an urban planner, familiar with the area zoning or an expert in your local ecosystem – or someone who can attest to how the proposed changes will destabilize the environment your homes are located on to support your arguments to the developer. It’s wise to keep watch on municipal councils as well to identify any interested parties that could support your endeavours at a level that could impact the outcome of proposed plans.
The Question Of Value
In regards to your concern about a drop in your home’s value, I don’t think the counsel you’re getting is entirely true, although it may be for the short term.
The best example I can provide is when a condominium unit for sale overlooks a parking lot next door which is being redeveloped into a new condo high-rise. Before the developer starts to dig the hole for the underground parking of the new project, the condo unit next door will usually sell even when buyers know a high-rise will inevitably be built. However, once they start to dig the hole to construct the new condo there will be hesitation by buyers to purchase the same condo unit because there is uncertainty on how the new high-rise project will impact the light, sightlines, and privacy.
Throughout the construction period, that unit may not sell, or it may have to sell for a discount, because of the change in the immediate surroundings of the condo unit for sale. However, the moment the new high-rise envelope is complete, the unit will subsequently sell – often for the original price or more depending on the performance of the market as a whole. Why? Because the buyer doesn’t know what the light, sightlines, or privacy of the condo unit was like before the new high-rise next door was built. They have no basis to compare and therefore evaluate what is different. There is also a perception of risk, imagined or not.
In other words, if your property were to decrease in value, it would be for the time period the projects nearby are under construction because of the uncertainty over what they will look like or how they will impact your property, and the other properties surrounding it.
In fact, as more of the area is developed, the new development may offer more amenities (which often are created in tandem with new housing) that your buyer is seeking – like retail, cafes, and services that are convenient and deemed value-added. In this respect, you may see your property flat-line in value while the immediate area undergoes construction but otherwise, it should resume and potentially increase more or faster depending on your target buying profile.
One other mitigating factor is whether any current owners in your complex decide to sell because of the proposed project surrounding yours, as the value of your home is dependent on how desperate they are to sell. If someone panics, tries to make a quick exit, and sells for a significant discount, it will drag everybody else’s property value down.
I actually witnessed this after the COVID-19 pandemic arrived and Toronto went into lockdown in March 2020, which coincided with the City of Toronto implementing a policy just prior preventing owners from renting condos on Airbnb that they didn’t personally live in (here’s my post –> Dear Urbaneer: So Why Are There New Airbnb Regulations For Toronto?). Suddenly there was a massive supply of vacant condos no longer allowed to be rented on Airbnb and dried up demand because of border closures, stay-at-home orders, universities moving their course load online because foreign students couldn’t come to Canada for further education, and a lot of occupations employing younger people (who typically rented small units) like restaurants, tourism, and the arts being shut down. Because of this, by October 2020 some condos had decreased in value by upwards of ten per cent as owners bailed to extricate themselves from their high-rise purchases, which had fewer buyers (in part because of the fear they were more likely to contract Covid in a high-rise than they would having their own exterior front door).
It’s worth noting that there were some buildings where owners refused to drop their values and held out for higher prices, or they took their units off the market, such that those buildings didn’t see a drop in value. In other words, the decrease in values was ultimately dependent on the owners and their motivation to sell. Incidentally, once the vaccine was announced, the condo market rebounded and those buildings that had dropped in value quickly regained their losses, while those that had never dropped in value still sold but for similar prices as they had pre-pandemic. I think there are some interesting parallels here to your situation, in that a lot of how we determine ‘value’ is subjective and in ‘the moment’. It is as much about ‘perception’ as it is about actual market conditions.
Incidentally, for years I’ve been advising my clients that a condominium being constructed in proximity to your freehold dwelling may increase the value of your property, as long as it’s not situated where it directly impacts your natural light, privacy, or quiet enjoyment. This is because the more density that is concentrated in a location, the more people there will be using local retailers and amenities which helps create vibrant safe engaging communities. I always tell my clients that “The more people standing on their balconies looking at the freehold housing stock in their sightline below, the more those houses are going up in value, as they’re coveted for being terra firma with its own parcel of land”.
This addresses concerns about what to do if you encounter re-zoning or new development as a current homeowner. But how should these concerns factor into your dwell hunt?
Due Diligence – At Home & Beyond
When purchasing a property, it’s wise to do your due diligence beyond the edifice of the home itself. In addition to doing your property inspection (check out my past post –> Dear Urbaneer: What Is And Isn’t Covered In A Home Inspection?) The potential of new development is a reality of homeownership, no matter where you live. Arming yourself with as much information as you can in advance of purchase will help you to anticipate what changes might be in the future.
So beyond your home, how do you mitigate your risk beyond the area that you actually own? It’s wise to inquire with the appropriate governing bodies and offices (i.e. municipal and provincial) about development applications, zoning, rules and regulations that may influence commercial and residential development around your home.
How are area parcels of lands zoned? Are they residential, commercial, industrial? This can help you to gauge the likely use of any nearby land. Let’s say that you’ve purchased a suburban home or rural home with forested areas, because you coveted having no rear neighbours, only to find out that privacy was short-lived as a new development rolls in. You should also consult with the city regarding bigger developments (i.e. large condominium developments) and longer-term plans.
Generally speaking, there is always the possibility of re-zoning for different uses. There may be limitations on that, depending on specific areas and regulations, but the more information you can gather about an area, the more you can make an educated decision about where you’ll purchase. There are, of course, rules around protecting heritage buildings and the environment when engaging in new development. You can also research what rules and by-laws are in place in a given area about the type, size and characteristics are allowed with urban infill.
Sidebar – I navigated the world of the Committee of Adjustment and Building Permits myself during my Tennis Crescent renovation. I chronicle the journey in my Tales from Tennis Crescent series.
Homeowner Activism
Big or small, new developments can certainly have an impact on your future as a homeowner. And if, despite all of your research before you buy, something emerges that concerns you, as it did with you, you always have the opportunity to voice your concern as a member of the affected community, through raising awareness.
Sometimes it’s not even about stopping development altogether, but in encouraging a dialogue that allows the community to be more engaged in the process.
Canada Square & Oxford Properties
It goes without saying that living in a neighbourhood that has been under the throes of transformation can be overwhelming for a long-term resident. One only has to witness the changes that Yonge & Eglinton has undergone over the past 20 years to see how dramatically different (and dense) this neighbourhood has become.
Oxford’s Properties rezoning application for the redevelopment of Canada Square and the TTC bus barns site incorporates 3 million square feet of mixed-use development space, and five tall buildings that will shoot up 60 storeys or more, It’s unquestionably the hub of midtown. The site covers a huge 9.2-acre site area.
*Image courtesy of Oxford Properties via UrbanToronto, with thanks.
There is a benefit in terms of growth and value in creating this hub, but at what cost to the lifestyle of the residents?
Check out these articles: A snapshot of Yonge and Eglington in the 1950s, Throwback Thursday: Yonge and Eglinton – and – Yonge and Eg-normous: Canada Square is the largest development to hit midtown Toronto that shares how the application was initially generally well-received by the community, as there is an emphasis on the community and on including public spaces. However, later on down the road, it seems that when Oxford Properties went to file the application, these public spaces were not as plentiful as promised as the community was led to believe, which has created controversy. Check out Resident says Yonge and Eglinton plan is a ‘slap in the face’.
The community has pushed back with suggestions on how to better develop the area with an eye to the residential community at the beginning of the summer and the process is ongoing, Click here to read “Midtown Residents Say Canada Square Should Be Redeveloped As A ‘Town Centre’.
Community Halts Demolition At The Dominion Foundry
With the age of many of Toronto’s buildings, the question of historical preservation is a common issue. Recently, a community group rallied against development in the Distillery District that would have seen the destruction of heritage buildings in favour of new development.
The province had planned to demolish the Dominion Foundry in favour of creating affordable residential housing. In October 2020, a Ministerial Zoning Order was issued by the province that permitted construction crews to override municipal planning regulations to begin demolishing the buildings. This demolition was to begin in January 2021, but the crews were met with community protestors. The community filed an injunction to halt the demolition, which was successful. Not long after, the Ontario government launched a public consultation period for the Foundry site, in response to the public outcry.
The result was a new plan that tried to find a compromise between the two sides of the argument. Two of the four buildings in question will now be protected. Two will be demolished for redevelopment including three towers that will be 43, 34, and 18 storeys in height. This will result in a total of 1,045 residential units, of which 30% will be affordable.
There was an agreement that any future purchasers of the would maintain the Foundry building facades and interiors. If the property is sold to a private owner down the road, the City can opt to officially designate it under the Ontario Heritage Act, protecting the buildings. For background on this, read “Province Agrees To Not Entirely Tear Down Toronto’s Historic Foundry Site – and – “Deal Reached To Save The Foundry Buildings… Well, Half of Them – and – “Opinion: Heritage & Housing, The Balance We Just Can’t Seem To Strike In The GTA“.
This is an interesting story – because it demonstrates how the public and governing bodies can work together. You can fight City Hall!
At Urbaneer, we favour research, patience and data when on a house hunt. We are here to advise you on the best property purchase for your needs today and in the context of the future as well. We’re here to help!
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Thanks for reading!
-The Urbaneer Team
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage – (416) 322-800
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