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Housing Inflation by the Numbers. A Case Study.

There is a house in our neighbourhood that currently stands vacant, and it is currently for sale.

It’s a prime example of speculation in the housing market.

The house was sold in 2011 when the original owner passed away. The selling price, as we understand, was about $500,000.

The house, a 3-bedroom bungalow built around 1940, sits on a 50-foot lot and is about 1,000 sq. ft.

For the next eight years, it was rented out by the owner to a number of different tenants until it was sold in 2019.

The selling price was $1,300,000 – 2-1/2 times what it sold for in 2011.  That represents a 17.5% annual growth rate in value.

The purchaser applied to the Committee of Adjustment to sever the property and build two oversized homes. The residents objected and the Committee of Adjustment agreed with their objections, unanimously refusing the application to sever.

The owners eventually put the house back on the market for $1.8 million.

In the brief time they have held the property, they are effectively expecting a 16.6% increase in value during which time they have done nothing to add value to the property. As noted in the opening paragraph, the house currently is vacant, so it is not generating any rental income to offset its carrying costs.

In the listing, the owners suggested to potential buyers that the property had potential to be severed and rebuilt.

Let’s look at this.

Assuming the sellers gets their $1.8 million, the cost per severed lot would be $900.000. Usually, in cases of severances, the builders try to build approximately 2,000 sq. ft. of house. At a conservative estimate of $350/sq. ft. to build, the builder would be investing another $700,000 into the property, bringing the total investment to $1,600,000.

Current MLS® stats indicate an average house price of $834,497 Long Branch. This represents houses of all sizes as well as condos. It also represents sales of newly built homes as well as resales of existing dwellings. So, the price for a 3- or 4-bedroom house with 2,000 sq. ft. of space would be significantly higher. According to the MLS®, averages for 4-bedroom homes in Long Branch are about $1,600,000 which, again, represents a mix of new builds and existing homes.

If we assume the average asking price in Long Branch for a 2,000 sq. ft. home is about $1.700,000, which would net the builder only a $100,000 profit assuming everything goes as planned.

But we haven’t factored in costs such as applying to the Committee of Adjustment for the necessary variances, the commission paid to a real estate agent to sell the property, land transfer taxes or interest to carry the property while it is under development. And these probably do not represent all the costs a builder might incur. If the application has to go through TLAB because either the builder or the neighbours appeal a Committee of Adjustment decision, that can easily add another $100,000 to the cost, for hiring a lawyer, a professional planner and an arborist.

Let’s assume this property is purchased by a family who wish to have a custom home built and so they do not plan on severing the property.

Using the property value of $1.79 million and another $700,000 for construction, the owners who wish to build instead of severing would have to ask in excess of $2.5 million for their 4-bedroom, 2000 sq. ft. home, should they decide to put it on the market. That’s well above the average of $1,700,000 for a comparable property in the neighbourhood. But it’s also likely the family would live in the home for several years.

It should be noted that, between 2011 and the present, no improvements have been made to the property we described by any of the owners. So, apart from trying to sever the property, the collective owners have done nothing to add value to this property. And yet they’re expecting something in excess of a 15% return on their investment.

In the meantime, the residents on this street have a house with no neighbours to interact with, that is not being maintained and no real expectation that this will change in the near future.

And it’s not an isolated example in Long Branch. There are several properties that were granted severance approval back as far as 2015 that still have the original homes. In other words, the owners got their severance but have done nothing since.

If everyone is so concerned about housing supply, why haven’t these properties been developed?

If this isn’t speculation in one of its worst forms, it probably is close.

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Record 17th Victory for LBNA at TLAB

On January 19, 2022, TLAB issued a decision on the proposed severance of 65 Fortieth Street, overturning the Committee of Adjustment’s approval in 2019 and thereby refusing the severance and the associated construction ot two oversized homes. . This was the first application in Long Branch that was subject to the Long Branch Neighbourhood Character Guidelines.

This represented the 17th straight victory for the LBNA in opposing severance activity in Long Branch since 2018. All the more impressive, given that the LBNA has advocated at TLAB on behalf of Long Branch residents without engaging a lawyer.

In her 19-page decision, TLAB presiding member Ms. Shaheynoor Talukder commented that the applicant’s team failed to prove that the lot frontage of the proposed dwellings will respect and reinforce the existing character of the neighbourhood.

In addition, this property has a prominent White Fir . This was measured by the Applicant’s arborist to have a trunk diameter of 47 cm, so is of a size that the City’s Tree Protection regulations indicate should be protected. Ms Talukder commented that it is visually impressive and forms part of the character of the neighbourhood. The Applicant had proposed removing this tree, but Ms. Talukder did not feel they were taking sufficient measures to attempt to preserve it, as per the environmental policies in the Official Plan.

The White Fir at 65 Fortieth Street can be enjoyed as a feature tree on the Conifer Walk this summer as part of our series of Long Branch Tree Tours.

Christine Mercado, co-chair of the Long Branch Neighbourhood Association commented, saying, “This is a big win for our Neighbourhood. But it’s a joint effort. It starts with effective city policy, followed with an effective Neighbourhood Association, residents who are prepared to get actively involved and engagement with our Councillor and City Staff. The foundation this all sits on is engaged and active residents electing the right people, pushing for good policy and ensuring the City is enforcing those policies.”

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Severance of 90 Ash Cres. Refused at TLAB

An application to sever 90 Ash Crescent into two 25-foot lots, which had been approved by the Committee of Adjustment on May 9, 2019, was appealed and refused at the Toronto Local Appeal Body, TLAB.

In a 24-page decision dated August 12, 2021, the presiding member, Mr. Ted Yao, refused the severance application.

The hearing began on October 2, 2019; with a hiatus in 2020 due to the COVID-19 pandemic and, altogether, required 10 days of hearings.

This was a highly contentious dispute.

In his presentation to the Committee of Adjustment, the Planner representing the Applicant described the Long Branch Neighbourhood Association as NIMBY and described his clients’ actions as an ordeal requiring “A Herculean effort” to scale back their original proposal to one that City Planning and the Committee of Adjustment could consider approving.

For the residents of Ash Crescent, this application represented a tipping point. The City’s Official Plan requires that applications must be consistent with prevailing patterns of lot frontage, lot area, and density among other factors. At the time of this application, the number of 50-foot lots on Ash Crescent was roughly equal to the number of 25-foot lots. Approval of this application would mean that 25-foot frontages would become the prevailing frontage, which could lead to accelerated approvals of other lot severances on the street.

The Applicant called two witnesses – their Planner and an Arborist. The City, who changed their position mid-hearing from “Object” to “No Objections”, called only an Arborist. The residents’ team was led by the LBNA and involved 7 residents who testified. In addition, the LBNA summoned the City Planner who wrote the final report submitted to the Committee of Adjustment.

Prior to the Committee of Adjustment hearing, the Applicant revised their proposed FSI 3 times: from 1.04 to 0.92, to 0.67 and finally to 0.61. The bylaw standard for density in Long Branch is 0.35 FSI, so the applicant basically revised their density from 3 times the bylaw standard to 2 times the bylaw standard.

The Applicant pointed to a number of approved severances on Ash Crescent as part of the justification for their proposal for 90 Ash. However, 2 of these severances – at 56 and 58 Ash – have had no building activity since they were granted approval by the OMB in 2016. Both properties are owned by a Brampton-based developer who owns other properties in Long Branch.

Mr. Yao undertook some significant and detailed analysis of the data presented by both Applicant and Appellant and concluded that the proposed lot widths and FSIs did NOT reflect the character of the neighbourhood. The TLAB considers both the immediate context (the block or section of the street) and the broader context (a wider area around the subject property.)

We believe the active involvement of 7 residents contributed much to the outcome. And, once again, the LBNA was able to prevail against professional lawyers despite having no formally-trained legal person on the team.

To read the full text of the decision, please click here.

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Black Barn Maple on CBC News

CBC News ran a story on June 2nd about the initiative to try to save the “Black Barn Maple” in western Long Branch.

The Backstory

Phot of Black Barn Maple at rear of 95 James Street
Courtesy Robert Krbavac, CBC

The tree is located to the rear of the house at 95 James Street and is a Silver Maple reputedly 130 to 150 years old. The site where it is located is close to where the Eastwood family, who were instrumental in developing Long Branch as a village, had a black barn on their estate, hence its name.

The owner of the property originally applied to City Planning in May of 2018 to add a second story to the existing house and build a newer, larger home. At the time of application, the owners indicated the property was not subject to the Private Tree Bylaw, which protects trees 30 cm and greater in diameter.

The application was approved on September 20, 2019 by the Committee of Adjustment despite a August 21, 2018 memo from Urban Forestry advising there were two healthy mature trees on the property and recommending refusal of the application.

The Fallout

The approval was subsequently appealed by neighbours to the Toronto Local Appeal Body (TLAB).

The CBC News story examines the controversy about residents’ efforts to try to retain the Silver Maple.

The LBNA sought to have the Black Barn Maple, given its age, Heritage Tree status that would ensure it could not be cut down. However, this would require the consent of the property owner, who of course refused. A letter from one of the applicant’s lawyers disputed the age and historic significance of the tree.

Counsel representing the applicant at TLAB argued that the tree was located in an area in which the owner had a right to be able to cut down the tree. Their argument was based on a concept that is not defined in pertinent legislation such as The Planning Act, The Official Plan or the Bylaws.

An ad hoc group of Long Branch residents banded together to try to raise awareness about the tree and the issues surrounding its proposed removal. They have created a website, lawn signs and letter-writing campaigns.

To see the story in the CBC’s website, click here.

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Severance of 80 Thirty Ninth Refused at TLAB

Over the course of a 12-day hearing, the TLAB heard evidence from the Applicant, the City and Long Branch residents about a proposal to sever 80 Thirty Ninth Street into two 7.62 meter (25-foot) lots and to construct two oversized homes.

The hearing was chaired by TLAB member Stanley Makuch and was conducted through a mix of in-person and virtual sessions, the latter being required due to COVID-19 measures.

Mr. Makuch’s 10-page decision to refuse the application to sever the property at 80 Thirty Ninth was based on the scale of the homes relative to the proposed lot sizes and preservation of trees that exist on the property and along the property line on the south side of the property.

He states the ”… frontages do not maintain the intent of policy 4.5.1 of the Official Plan” and, combined with the scale of the proposed homes, ”… will give the appearance of an overdevelopment of the lots.”

He further states that it was ”… clear that no attempt was made to design the development in a manner to preserve and enhance the urban forest in a neighbourhood where the forest and canopy are part of its character.”

He had high praise for all parties involved in the hearing, including the LBNA, who formally represented the residents during the hearing.

To read the full text of the decision, click here.

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Severance of 27 Thirty Ninth Street Refused at TLAB

The proposed severance of 27 Thirty Ninth Street was refused in a May 5, 2021 decision issued by the Toronto Local Appeal Body (TLAB)

The proposal sought to sever a 15.24 meter (50-foot) lot into two undersized lots. The homes the Applicant sought to build were large in scale, coming in at a Floor Space Index of 0.62 versus a bylaw standard of 0.35 for the Neighbourhood of Long Branch. FSI is a term used to define the density of a home on its lot, and is the ratio of the gross floor area to the area of the lot.

The decision was rendered by former Chair of TLAB Ian Lord in a very thorough and meticulously detailed 101-page written decision.

The hearing, which took 6 days to complete, started on January 8, 2020 but did not conclude until March 12, 2021 due to a lengthy adjournment due to COVID-19 restrictions. The first 3 days were conducted in person while the final 3 days were virtual.

Since the City officially adopted Official Plan Amendment 320 and City Council unanimously passed the Long Branch Neighbourhood Character Guidelines, the TLAB has refused 10 severance applications with the LBNA officially participating on behalf of the Neighbourhood in all but one. Another 3 are currently still being reviewed at TLAB.

In the case of 27 Thirty Ninth, six neighbours participated in giving evidence at the hearing. They were praised by Mr. Lord for providing hard fact-based evidence in the absence of a professional planner who could provide expert opinion evidence.

“On these Applications, neighbourhood concern is evident not only in the witnesses and their evidence and presentation efforts, but also in the history of their engagement at the COA and in fulfilling the somewhat onerous Rules of the TLAB that require early and definitive disclosure, in writing, of positions.”

Key Success Factors

The successful outcomes on all of these TLAB appeals would not have been possible without the following:

  • Active Resident Involvement. In this case, one family elected to get involved as what is termed a Party to the appeal. Doing so gave them the right to call witnesses and to be included in all discussions regarding the application.
  • Active Resident Participation. As noted above, 6 neighbours provided testimony at the hearing for 27 Thirty Ninth. We have seen more than that and somewhat fewer than that at other hearings, but what is common is that multiple residents chose to have a say and were granted that opportunity by TLAB.
  • Factual Evidence. Residents amassed the type of data professional planners use to analyze and justify their clients’ development proposals. They studied other decisions from the OMB and TLAB to learn why previous applications had been approved or refused. They dove into the Official Plan, the Bylaws and Provincial policies to see just how well the applicants’ proposals did or did not conform to regulations.

To read the full text of the decision, click here.

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