In this episode of Mortgage 101 with Clinton Wilkins and Todd Veinotte, as heard on…
In this episode of Mortgage 101 with Clinton Wilkins and Todd Veinotte, as heard on News 95.7, the guys talk about affordable housing in an open market, programs that are already in place (but aren’t working) and what the government and developers can do to get us out of the housing crisis.
Mortgage 101 with Clinton Wilkins & Todd Veinotte – June 2021 – Part 3
Don’t feel like watching the video? Check out the transcript below.
Government in the real estate business?
Todd Veinotte: [00:00:00:01] There are a lot of serious things to talk about surrounding housing and affordable housing is one of them. This is a big issue, right? There’s a couple of reports recently the NDP have talked a lot about affordable housing.
This is a, it’s so complex because some people say, well, the government should get into the procurement of old properties. And I’ve heard, I chatted with Lisa Roberts while hosting the Rick Howe Show about this. NDP housing spokesperson, and she said that the government should procure some of these old buildings.
And I don’t think that they understand how complex procurement is in buying these properties. And then what do you do with it? You’ve got to refurbish it and all of that. It’s extremely complex. What are your thoughts?
Clinton Wilkins: [00:00:41:29] I think it’s very, very complex. And, you know, I don’t know if the government’s really in business for owning real estate. You know, I think there is a little bit of economics around, you know, owning real estate, but likely private owners will do it better than the government.
You know, I think if anything, governments not just here in Nova Scotia, but across the country are really trying to divest some of their assets. They don’t want to be owners. They want to be the ones that are doing the legislation and dealing with taxation and all these things. But they really want to implore, I think, owners to help with the affordable housing.
Current government incentives and programs for affordable housing
And I know there are some programs that have been put out by different levels of government around creating so many affordable housing suites when they’re doing developments, which I think is really cool.
And, you know, I think that’s important. And I can tell you here in our province, you know, they put in a rent cap, temporary, and that’s going to come off here in 2022 or when the state of emergency ends, whichever I think comes first. And housing will continue to be a challenge.
You know, there’s more demand than there is supply. Rentals are at a one, two per cent vacancy, which is very, very low. And, you know, we’re not building enough new homes or new rentals or enough affordable housing suites.
Affordable housing in an open market
Todd Veinotte: [00:02:14:07] But how do you deal with the affordable housing situation and an open market in which developers can purchase on the open market properties?
And we’ve been talking about this, right? You know this as well as anybody. It’s an open free market. It’s capitalism. It’s getting as much bang for your buck as you can and maximizing profit.
So how in that environment, which we all cleave to that open market industry, how do you then balance affordable housing in that? How does that work?
Clinton Wilkins: [00:02:45:16] Well, I think it’s the government programs that incentivize the builders to own them and develop them and hold them.
Todd Veinotte: [00:02:51:28] Subsidized then?
Clinton Wilkins: [00:02:52:05] Subsidize. And it could be HST tax credit transfers. It could be funding for these units. I don’t think and I don’t think I’m a person that’s personally a supporter of the government owning affordable housing. I think it needs to be privately owned. But I have no problem with the government supporting it with programs.
Todd Veinotte: [00:03:15:16] That hasn’t worked.
Clinton Wilkins: [00:03:17:10] I think that it has worked. I think that there certainly have been some developments that have had, you know, components of low income housing.
Todd Veinotte: [00:03:24:12] I know there have been some. But clearly, and we just cited these couple,
Current affordability programs not working
Clinton Wilkins: [00:03:28:08] Maybe these programs haven’t solved the problem. And I think part of it is mortgage funds are very inexpensive now, even for commercial lenders. So, you know, for developers to be incentivized, it needs to be better for them than going to borrow the money from the bank. And right now, it’s cheaper for developers to go and get a mortgage and do a regular type construction than it is to access some of these programs, and that’s one thing the government never really had the foresight on.
They didn’t really think about the economics of the programs, but I think that to get any of these programs done by private owners, private developers, they need to have a level of incentive and the incentive needs to be on par with what type of profit level they would get on some of these free market type developments. So, you know, I think the government has a step further that they need to take this.
And I think they need to get the feedback from industry. You know, I think they need to get the feedback from the developers. I think they need to get the feedback maybe from mortgage lenders, maybe the Canadian Mortgage and Housing Corporation and, you know, take that and then tweak the programs to be a better fit for developers and get them onside to create more of these units.
What are your thoughts on blend housing incentives?
Todd Veinotte: [00:04:53:11] Do you think that there’s potentially the opportunity when zoning or building applications are submitted by large investors here, the developers, that you could say, okay, you want to develop this type of property, you then have to have some type of blended housing as well. What are your thoughts?
Clinton Wilkins: [00:05:10:17] I love that. And I’ll tell you, one of the major issues here in urban Halifax is the height restrictions. I can tell you, I’ve seen so many proposals that developers have put through that have been shot down at HRM due to maybe either centre planner, or prior to centre plan, in terms of the height restrictions.
We need construction in Halifax. In the late 90s and early 2000s, we had a moratorium on building and now guess what, 20 years later, we are in a crisis. So the government of the day 20 years ago has dealt the people of 2020 and 2021 a bad hand because you couldn’t get a building permit.
You couldn’t build new homes, because they were trying to, you know, change that supply issue. They were trying to, there was too much supply in the market at that point. But guess what, 20 years later, it’s a problem, so everything kind of happens in cycles, but I definitely think the supply issue of affordable, normal rentals, you know, condos for purchase, single family homes and all kinds of different mix type of real estate is going to be important.
And I think we need to implore our governments to work together. Really the province needs to work with the municipality. I think that’s really the first step in creating the HST tax credits to incentivize developers to be developing. And they need to increase the density and we need to build up in Halifax.
Affordable housing and property values
Todd Veinotte: [00:06:41:24] What about property value? Because somebody some might say, look, I’ve got my value, my property is what it is and I’m not interested in affordable housing developments. There are some out there that would have that attitude for good or for bad, just the reality of it. What are your thoughts on that?
Clinton Wilkins: [00:07:01:07] You know what? I think that is a tough one. And, you know, I guess it depends on, you know, there’s so many different factors, but we have some huge building lots ready to go in downtown Halifax alone that have been vacant for 10 years, 20 years.
Todd Veinotte: [00:07:21:23] Why are they vacant?
Clinton Wilkins: [00:07:23:08] Because the economics of the projects don’t make sense due to, you know, what the city in the center plan have, you know, in play. You know, there’s been a couple of really big developments in Halifax in the last few years. We have a lot of cranes in the sky.
When we think about, you know, Southwest Properties. They’ve built a bunch of rentals. They built condos. You know, The Roy, you know, there has been The Trillium. There’s been quite a few new buildings built downtown, but it’s all been premium housing, whether that’s premium rentals, premium condos. But there is a lot of construction in the north end of Halifax and there’s certainly land in the North End of Halifax.
Todd Veinotte: [00:08:10:28] Dutch Village Road, that area.
Clinton Wilkins: [00:08:12:10] Dutch Village Road. What about Young Street by the superstore? There are huge construction sites ready to go. I’m really keeping my eye on the Bloomfield development. I think that’s going to be really interesting.
That’s in the North End. It’s where the Bloomfield School was. So there’s a mixed use development in the works there and plans and approvals, you know, in the forthcoming.
Affordable housing and socioeconomic challenges
Todd Veinotte: [00:08:35:16] So again, to that, you’re talking about developers that want to maximize profit, and that’s fine in an open market. And housing and the value of their properties are what they are.
If you put affordable housing in the mix, then they may push back and say, look, this is not working for what we want to do here. We want to put up a certain type of building or a certain type of atmosphere.
I’m just being realistic here. This might not sit well with some, but this is the mindset of people in an open market. So how do you regulate, legislate, whatever that?
Clinton Wilkins: [00:09:13:27] You know what, I don’t know. And I don’t know about balancing out the socioeconomic challenges, I don’t know.
Todd Veinotte: [00:09:21:20] But that’s a part of this problem.
Clinton Wilkins: [00:09:23:16] Yeah. I think it’s definitely a challenge. And is it palatable to developers to say, yes, every development you have to have a certain percentage of affordable housing? No. But can the developers be incentivized to want to do it? Obviously, the programs aren’t having enough uptick. Because the cost of funds are so low.
So there needs to be further incentives or benefits to the developer to create these, you know, affordable housing units. And I think that’s definitely a challenge for the municipality and for the province. And, you know, is housing Nova Scotia working, you know, in terms of the affordable housing that they have already? You know, I think the condition of those properties are probably not as good as properties that are owned by private owners.
What are your thoughts on the long-term scope of affordable housing?
Todd Veinotte: [00:10:16:03] So what are your thoughts, long-term scope on affordable housing here in our region?
Clinton Wilkins: [00:10:20:17] You know, I think that there’s certainly some work to do. And I think there’s work to do everywhere around affordable housing.
Housing is such an important topic and I think we haven’t really talked enough about housing and it’s really been brought to the forefront of a lot of people’s conversations. It’s been in the news. And, you know, there’s been, you know, a lot of challenges.
But I think it’s just because of the demand in the market. Now, we’re starting to talk about it. No one talked about housing five years ago. No one talked about housing ten years ago. It wasn’t even a conversation
So I think having these conversations, listeners that are listening to our show, talking about some of these issues and, you know, I think our leaders of today and probably our leaders of tomorrow are listening to our show.
So hopefully, you know, there’s some good takeaways and we’re certainly willing to continue having the conversation. It’s important.
Next time, we’re talking cottages
Todd Veinotte: [00:11:14:12] And hopefully people talk and want to continue to listen for the last segment, right?
Clinton Wilkins: [00:11:18:00] Tune in. There’s going to be, I think we’re going to talk a little bit, obviously, more about cottages. I think it’s certainly very seasonally appropriate for cottages. And now that the province has opened up that you can now go to your cottage this week. I think people are definitely getting very excited and lots of good optimism in the air.
Todd Veinotte: [00:11:38:12] You got it. Clinton Wilkins my name is Todd Veinotte. It’s Mortgage 101 Your Guide to Homeownership on News 95.7. We’ll be right back.
If you have any questions, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.