At CMHC’s recent Housing Outlook Conference, cautionary notes were sounded with respect to overbuilding in Montreal and Toronto. For its part, Halifax was cited as being “at increased risk of overbuilding.” Little was made of it and no questions were raised. But what if overbuilding in Halifax is actually a bigger problem than CMHC’s market analysts have acknowledged? What’s clear is that, almost at random, neighbourhoods across the city are under attack from spot-rezoning applications seeking density increases that are well beyond what’s permitted. Meanwhile, the stability of our neighbourhoods and the affordability of our existing stock of privately owned rental housing are threatened. We’ve been losing older, modest apartment buildings to extreme makeovers, condo conversions, and demolition and replacement.
Ironically, the city’s current real estate “cascade” has its sights set on upper-middle- and high-income earners for purpose-built apartments and condominiums. Why ironically? Well, for starters, a quick pass through CMHC’s Fall 2014 Rental Market Report on the Halifax Census Metropolitan Area confirms that 60% of Halifax’s vacant 2-bedroom units are at the high end of the rent scale (on average, $1,034–$1,408 per month, depending on the location). By contrast, just 21% of Halifax’s vacant 2-bedroom units are at the lower end of the rent scale (on average, $789–$837 per month). We may not yet be “overbuilt” but vacancy rates are increasing and downsizing homeowners have been “slow to take up” increasing numbers of units offered at bonus rates with lots of perks. In other words, it seems that opportunity and not demand is driving Halifax’s hyper-active spot-rezoning and development processes.
In 2013, 2,000 units were added to Halifax’s rental housing universe. CMHC estimates that’s about 2-1/2 years supply, well above the 800 units that are needed each year. Take-up is slow and will only get slower. Can things get worse? We believe so. A month ago, we downloaded a copy of Halifax’s Active Planning Applications, limiting our count to Halifax Centre and excluding single-family dwellings and suburban subdivision approvals. In seven pages it documented over 5,000 rental and condo units: either in process, approved, or under construction. 5,000 units is 6.25 years of supply. So even though Halifax isn’t overbuilt yet, we’re already facing significant numbers of vacant, high-end rental and condo units whose “take up” has been “slow.” And they are soon to be joined by the 5,000+ units that are in the application process or recently approved. The market just isn’t there, so where’s the sense in that? Is it too late for the developers who have been caught up in our current real estate “cascade” to back away? And what about the thousands of Halifax households whose shelter costs already devour more than 50% of their gross household income, and are about to be side-swiped by our testosterone-fed development industry?
So, they’re telling us we’re not “overbuilt” (not yet, anyway) and that we may never achieve “BUBBLE” status. Whatever. It’s too big to ignore and it’s going to be around for a very long time, so we’ll still have to give it a name.
19 March 2015