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Money Development fees driving housing prices: report

07:45  17 may  2018
07:45  17 may  2018 Source:   msn.com

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U.K. housing . The organization's study also found regulations caused single-family home prices in Victoria to increase by about 4,000, Calgary costs to They are requiring developers to pay for the municipal infrastructure all up front and not over time, so that all gets loaded onto the sticker shock of

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a view of a city with a mountain in the background© Provided by thecanadianpress.com Buyers in Canada's most overheated real estate markets paid an average of $229,000 extra per home between 2007 and 2016 because of regulations making it difficult for builders to construct more single-family houses, said a new study.

Research from the C.D. Howe Institute released Tuesday revealed zoning regulations, development charges and housing limits in and around southern Ontario's Greenbelt have added around $168,000 to single-family houses in the Greater Toronto Area and about $644,000 to the cost of others in Vancouver — a number the non-profit research organization says draws comparisons with Manhattan and U.K. housing.

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But a new report from the Terner Center at U.C.–Berkeley shows that development fees —which pay not only for housing , but also for inspections The fees are one of many factors driving up the cost of buying or renting a home, including income inequality; restrictive zoning; high prices for land

California cities rely on development fees on new construction to fund infrastructure, transit, and other municipal needs that new construction may exacerbate. Meanwhile, market forces are also making it more expensive to create housing in California: “In 2017 alone, the price of construction materials

The organization's study also found regulations caused single-family home prices in Victoria to increase by about $264,000, Calgary costs to jump by $152,000 and Ottawa-Gatineau's to spike by about $112,000.

Benjamin Dachis, C.D. Howe's associate director of research and a co-author of the study, said development charges levelled by cities to fund the infrastructure needed for new housing are largely responsible for some of the increases.

"Most people can't afford to pay for their house all up front with cash, so they get a mortgage and pay for a house over time, but that is not what cities are requiring. They are requiring developers to pay for the municipal infrastructure all up front and not over time, so that all gets loaded onto the sticker shock of housing," he said.

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There are two City departments which are directly connected with the Development Impact Fees program. To determine your Service Area and your fee through the impact fee calculator, please click the link below to Planning and Development Services.

What has caused housing prices to increase so quickly over the past several decades and what would it take to moderate this trend? Aside from the cost of land, three factors determine developers ’ cost to build housing : labor, materials, and government fees .

Dachis said his study proves that the charges are "flawed" because they get passed on to buyers. He thinks cities should look to allow them to be paid over the course of a house's existence, rather than when it is built, to help mitigate skyrocketing prices.

He also said his research found that prices spike when it is difficult for developers to get permits based on intensification and densification targets and when they are contending with restrictions on development on land between urban growth boundaries and the Greenbelt — a 7,200 square-kilometre swath of land that borders the Greater Golden Horseshoe region around Lake Ontario and was protected from urban development by legislation in 2005.

The Greenbelt has become a hot topic in the leadup to the June 7 election after Progressive Conservative leader Doug Ford vowed to allow housing development on the Greenbelt only to backtrack later. His competitors, Liberal Premier Kathleen Wynne and NDP Leader Andrea Horwath, both slammed Ford's initial promise, extolling the need to protect the green space.

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The first, from independent think tank C.D. Howe Institute, says housing prices are being driven upward because of excessive government regulation. In Vancouver, the report authors say excessive regulation – such as zoning rules, taxes and development charges

LAST spring, as many housing developers despaired of hitting their price goals in an open market Similarly, in the suburbs, brokers report that condo developments untouched by auctions tend to Some sellers have recently begun adding a 3 percent "buyer's fee " to the sale price of apartments to

The C.D. Howe study found allowing development on land dedicated for the Greenbelt could reduce single-detached home prices by around $50,000 in Hamilton and between $25,000 and $30,000 in York and Halton regions alone.

Modestly increasing land availability for housing while cutting development and zoning costs would have an even larger affect. It would slash the cost of a single-detached house by more than $70,000 in Toronto, Peel and Durham regions, $90,000 in Halton Region, more than $100,000 in Hamilton and around $125,000 in York Region, the study said.

To reach such conclusions, Dachis and co-researcher Vincent Thivierge looked at two things — what financial challenges developers have to deal with and by how much they increase the cost of housing, and what the gap is between the cost of housing for a buyer and what it costs to build that housing.

They found Vancouver and Toronto, which are both experiencing "high" demand for housing, had construction costs around $350 per square foot in 2016.

The cost of development in Edmonton topped any other Canadian cities between 2007 and 2016 because competition for high-paying jobs in the nearby oil sands industry had driven up labour costs.

Abbotsford B.C., Kingston, Ont., and cities in New Brunswick fared much better, landing average construction costs of about $200 per square foot or less in the same time period.

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