Month: November 2023

Are We Panicking About Housing?

November 27, 2023

Current headline news bombards us with titles like: “housing shortage”, “unaffordable housing”, and “people die on the streets for lack of housing”. These housing-related issues have materialized since 2015; we did not have these topics at that time.

However, all of these headlines spawn questions. For example, what is affordable housing? One metric the Central Mortgage and Housing Corporation (CMHC, the Canadian mortgage insurance company) uses is that no more than forty percent of after-tax family income should be used for housing. But does this metric apply today?

The median family income in Ottawa is just over $100,000 today, and the average house price is slightly over $600,000. The minimum downpayment is five percent for the first half million dollars, ten percent for the next half million, which translates into $35,000 for the average house in Ottawa. So, with this downpayment one needs a mortgage of $565,000 that would cost today circa $4.000 per month. The annual cost, $48,000, would therefore be over forty percent of the annual income of the average Ottawa family income. Which means housing is, in fact, unaffordable, unless one has a larger downpayment to reduce the monthly mortgage payment.

One way to look at housing issues is to identify factors creating demand for, and supply of, housing. Either decreasing demand, increasing the supply of housing, or doing both, would alleviate the current housing problem.

The major factors on the demand side are immigration and the entry of foreign students. Canada let in 430,000 immigrants and 550,000 foreign students in 2022. All of the housing demand can be attributed to these two classes of newcomers to Canada: there are 424 housing units per 1000 people in Canada, so the close to one million newcomers alone needed 400,000 units in 2022 when Canada builds only 250,000 units per annum (Census and CMHC statistics).

While the last two classes of newcomers are beneficial to Canada, they create a huge stress on the housing markets. They are beneficial in that Canadian fertility rates are below replacement rate, hence the rationale for increased immigration. Similarly, Canada is short of skilled construction workers, and therefore welcomes immigrants with such skills. And foreign students pay two or three times the university fees Canadian students pay and therefore contribute to the universities’ bottom line. But we must balance our priorities and perhaps providing housing is more important today than other objectives.

Most of the supply issues can be attributed to the shortage of skilled workers and the lack of land for development. Land is especially a major issue in some of our large cities. Vancouver is surrounded by water and mountains. Toronto’s expansion is limited on one side by water.

Densification has become the key word today to accommodate the increasing population. Densification requires rezoning by municipalities, that takes years. And vacant land development, where available, also takes years for approval.

Are there any solutions? On the demand side, the federal government could reduce the flow of immigration and the intake of foreign students to alleviate demand and pressure on housing. And municipalities could accelerate the approval process to increase the supply of housing.

The two levels of government, working in tandem, could alleviate the housing problem. However, both initiatives would also create negative consequences; Canada needs skilled people and universities favor foreign students. And an acceleration of municipal approvals may weaken environmental reviews and public engagement – both important review elements in the development process and expected by Canadians.  

The bottom line is that increased coordination between the different levels of government would go a long way to streamline the process of welcoming immigrants and foreign students entering Canada by making sure that housing is available.

The danger I see is that a panicky response today encouraging a hugely accelerated house construction program could result in an oversupply of housing in the next few years during which the federal government may change its priorities and reduce targets for immigration and the entry of foreign students.

Exploring the Art and Wine at Chateau La Coste

November 1, 2023

A jazz trio played forties tunes on the deck of a vineyard, where we sat down after a tiring bicycle ride in the finger-lakes area of New York State. We relaxed by sampling the wine and listening to the music. It was a fall afternoon with the sun going down, illuminating the vinifera below us. Before leaving, we bought some wine for the night to enjoy at our hotel. These are the type of situations my lasting memories are made of.

The first such memory was when I finished university and helped my younger brother learn to drive when he turned sixteen. When he passed the driving test, I convinced him to drive with me from Vancouver to California. I explained to him that he’d do the driving for practice, and I’d do some wine-tasting on the way. He did not need much convincing. And it was a memorable trip.

More recent memories were at vineyards in North Carolina, where after a warm welcome, the hosts offered lunch in addition to the tasting session. What I liked about these visits were driving into an attractive estate with lush vinifera surrounding us, entering an ornate Italianate building or a large historic mansion where the winemaking took place, and partaking in a guided tour of winemaking before sitting down for the tasting session.

So, when we visited Provence in France a month ago and discovered that Chateau La Coste, a well-known vineyard was on our route, I jumped at the opportunity to visit it and bought entry tickets. Chateau La Coste is famous for art, architecture, and wine. The owner, Paddy McKillen, an Irishman, who bought the estate in 2001, commissioned artists to create artwork in the garden and hired world-famous architects to design the buildings (Frank Gehry, Oscar Niemeyer, and others). So my expectations were high only to be disappointed after the visit. Let me explain.

We approached the Chateau driving through fields of vinifera only to arrive at a large, open, unpaved parking lot, with recently planted trees. By talking to other tourists and asking questions, we found our way to the building where our tour started. Nobody welcomed us, nobody provided directions. It was not a promising beginning.

Our group of eleven people was taken on a guided tour of the wine-making plant. Well, production took place in a building that looked like half a barrel on its side, with interesting finishes, mostly aluminum, but nothing else (designed by Jean Nouvel). To me, it looked like any commercial building, like a Quonset hut, huge, but still only a simple shape, a half-barrel sitting on its side. Is this good architecture? The shape conjured up winemaking barrels, was that the idea?

We pondered the front of the building, listening to the guide, standing on a gravelly field, next to a massive excavation, which, I gathered, was going to be the location for a hotel. The surrounding for the hotel and the plant was not what I expected to be a campus-like atmosphere with attractive landscaping.

Once inside the half-barrel, though, the guide gave a detailed tour of the wine-making process and equipment. Surprising to me were the huge metal barrels holding the fermenting wine; I had seen wooden barrels in other vineyards previously (although, admittedly, the other vineyards were smaller than this one).

Wine tasting, the event we all looked forward to, was next and we entered a small nondescript building. We gathered around a U-shaped table, sitting on bar stools. At the open end of the U was the guide and at the bottom of the U were six bottles of the Chateaus brand.

Talking about the qualities of the first bottle, the guide poured a couple of ounces of wine into a wine glass placed in front of each of us. If you did not like it, you could pour it into a tumbler sitting next to the wine glass. The purpose of the tumbler became more obvious as we tasted the next few wines and became a bit tipsy. I began to pour half of my samples into the tumbler, I wanted to walk out at the end, although I did not drive, Kathy drove in Provence.

The two young Australian couples facing us across the U loved their wine and peppered the guide with questions. The three Israeli tourists next to us enjoyed their wine quietly. The two young women from New  York City talked to each other about the wines. Kathy and I practiced our wine-tasting skills by swirling the wine around the glass, smelling it, and observing the prominence of legs in the samples indicating alcoholic content.

During our discussion with the guide, we learned that Le Chateau produces excellent roses because of the soil in the area. And the wines are not scored for sweetness like we do in Canada. We also found out that of the million liters of wine produced annually, a third goes to North America, a third to Europe, and a third is sold domestically. The guide even mentioned some of the best years for each sample we tasted, should we decide to purchase some.

When we discovered, after sampling all six wines, that the fourth was the most expensive, many of us looked ruefully into the tumbler into which we poured some of it; we were all becoming a bit mellow after tasting four samples. But the sampling was a success indicated by how our conversation had become loud and animated, and as a result, in the end, we all tipped the guide. On the way out I bought a bottle of wine that we liked during the tasting, to enjoy at night at the hotel.

By now it was getting late in the afternoon, and we had to drive to Aix-en-Provence for our accommodation that night. We felt it prudent to eat before driving after consuming so much wine and tried one of the restaurants, set in a lovely garden. We were not disappointed with the quality of the food.

On leaving, we went by the gardens and noticed some of the artwork in the distance. When we tried to walk closer, a guard snapped at us and asked for our tickets. We did not know that we had to pay, we saw nothing indicating that on the way in and assumed that our wine-tasting ticket covered the whole vineyard. It was too late to go back to the entrance to buy tickets, so we left without seeing all the artwork. I understood it would take a few hours to see the artwork and the buildings designed by renowned architects, spread across the large estate. I was disappointed; we had seen parts of the vineyard, much of it under development but missed some of the finished areas with the work of famous artists and architects. Next time we come by, I’ll make sure we have sufficient time to fully explore Chateau La Coste.