North Saanich: Council rejects subdivision of a 23,000 square foot lot
Land where you can build another house is worth much more than a larger yard
Senior stymied in effort to split half-acre North Saanich property in two. Roxanne Egan-Elliott, Victoria Times-Colonist.
Barbara Tolmie is hoping to subdivide her almost half-acre property at 8511 Bexley Terr., just off the Patricia Bay Highway, into two equal-size lots of 10,700 square feet (1,000 square metres).
She would remain in her home on one lot and her son Barry Tolmie, currently living in Saskatchewan, would build a home on the other, where he could retire and support Tolmie as she ages.
“There’s nowhere in North Saanich to go. There are no small lots to build on. There’s no retirement home,” she said. “I do not want to leave my community at my age. Now to pick up and move to a new community and make new friends at my age. It’s just too much. I can’t handle that.”
Tolmie applied last year for an amendment to the Official Community Plan and zoning bylaws to divide her property into two lots. But in a vote that her family says is indicative of an anti-development attitude in North Saanich, her application was rejected in July.
Glaeser and Gyourko: Restricting land use has high costs
The impact of zoning on housing affordability. Edward Glaeser and Joseph Gyourko, 2002.
They note that in most places in the US, house prices are close to the cost of new construction, which acts as a ceiling on the price of housing. There’s Rust Belt cities where house prices are far below the cost of construction. And finally there’s places in California and on the East Coast where prices are far above the cost of construction.
What is it that creates places where the cost of housing is so much higher than the physical construction costs? We offer two basic views. First, there is the classic economics approach which argues that houses are expensive because land is expensive. According to this view, there is a great deal of demand for certain areas, and land, by its very nature, is limited in supply. As such, the price of housing must rise.
Our alternative hypothesis is that homes are expensive in high cost areas primarily because of government regulation, i.e. zoning. According to this view, housing is expensive because of artificial limits on construction created by the regulation of new housing. This view argues that there is plenty of land in high cost areas, and in principle new construction might be able to push the cost of houses down to physical construction costs. However, the barriers to building create a potentially massive wedge between prices and building costs.
They observe that in high-cost areas, the value of land that you can build a house on is much greater than the value of land that’s used for a yard or a garden. To estimate the latter:
Compare the price of comparable homes situated on lots of different sizes. With these comparisons, we are, in principle, able to back out the value that consumers place on larger lots.
They find that it’s only about 10% of the value of land that you can build a house on. In other words, requiring land to be left empty, as in the case of the half-acre North Saanich lot, is sacrificing a huge amount of potential value.
A second observation:
Our second empirical approach is to look at crowding in high cost areas. The neoclassical approach tells us that if these are areas with a high cost of land, then individuals should be consuming less land. The regulation approach argues that highly regulated areas will have both large lots and high prices. Our evidence suggests that there is little connection across areas between high prices and density. This again suggests the critical role of regulation.
They conclude:
The evidence suggests that zoning is responsible for high housing costs and, to us, this means that if we are thinking about lowering housing prices, we should begin with reforming the barriers to new construction in the private sector.
Estimates of the cost of zoning
A subsequent paper by Gyourko and Jacob Grimmel estimates the cost of regulation (“zoning tax”). The Impact of Local Residential Land Use Restrictions on Land Values Across and Within Single Family Housing Markets, July 2021.
Jens von Bergmann and Nathan Lauster have a detailed analysis applying Gyourko and Krimmel’s methodology to the city of Vancouver. Lots of Opportunity: Estimating the Zoning Tax in Vancouver, July 2021.
The zoning tax that’s preventing RS lots from getting subdivided in half stands at 37% of current land value. Aggregated over all residential RS lots in the City of Vancouver the zoning tax comes out at $46bn.
They also consider the impact of a policy allowing a 33x122 lot (4000 square feet) to be subdivided into four 16x60 lots (1000 square feet):
Comparing our current zoning to one that allows for this “quadruple subdivision” on standard lots yields a zoning tax of $146bn, substantially more than our initial estimate.
This kind of subdivision has the potential, if fully realized, to have a sizable number of lots around $500k, while currently the entry price for a buildable lot in the City of Vancouver sits around $1M.
More
Jonathan Berk on Twitter, May 2024: “Austin City Council has voted 9-2 to lower the minimum lot size needed to build a home from 5,750 square feet to 1,800sf citywide. About half of the communities in Greater Boston zone more than 50% of their land to require 1 acre minimum lot sizes to build a home, or 43,560 sf.”
Audrey McGlinchy, KUT 90.5: Austin cuts minimum lot size by more than half, requiring less land to build a home.