Saskatoon has one of the most generous condo conversion policies
It seems that Saskatoon has one of the most generous condo conversion policies, if you’re a landlord that is.
Saskatoon city administrators are working hard to bring about a policy change in the city of Saskatoon. They’ve recommended a number of changes that they say would protect tenants from being displaced at times when vacancy rates are exceptionally low.
Their research had them comparing the policies which exist in other Canadian municipalities that have experienced real estate booms in recent years and they found that in most areas it’s quite a bit tougher to convert apartments to condos when rental conditions are tight. Vancouver, Victoria, Ottawa, and Kelowna all prohibit conversions when vacancies fall below a minimum threshold which ranges from 2-4%. No such policy exists in Saskatoon.
The executive committee responsible for reviewing recommendations brought forward by city administrators has tabled discussion on the suggested policy changes until after a March 11 court challenge initiated by tenants of Saskatoon’s Milroy Apartments which was recently approved for conversion.
Read the Star Phoenix coverage here.
I’m always happy to answer your Saskatoon real estate questions. All of my contact info is here. Please feel free to call or email.
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Norm Fisher
Royal LePage Saskatoon Real Estate
27 comments so far. We'd love to hear your thoughts.
May 20th, 2009 at 9:00 AM
I’m glad the media is FIIIIIIIIINALLY getting into the grit of the way things are going. Thanks Norm for posting this.
I love how the people that benifit from these conversions or the city or the provincial gov’t love to cry foul if we want to put some restrictions on it, as if it will halt all growth to the province and cities…though didn’t really hamper vancouver or victoria now did it..
May 20th, 2009 at 9:01 AM
The rental companies also love the cities policies regarding Condo conversions. With the low vacancy rates, its a ticket for them to print money. Maybe I’m just bitter though, have just received yet another rent increase notice under my door this morning. Even though our building is falling into a worsening state of disrepair, the management seems to feel its justified in upping the rent every three months.
I am beginning to hate this city more and more. It went from being a place I loved and wanted to grow a future in to a place that I feel is doing everything in its power to squeeze individuals like those in my situation out of town. What happened to the city?
May 20th, 2009 at 9:09 AM
Jason,
I feel for you and I too can’t believe what’s happened to our city. I would sum it up in one word: greed.
May 20th, 2009 at 9:10 AM
Jesse: word.
The open-ended conversions policy plus the lack of restrictions on rent increases means that landlords can — and do — raise the rent four times a year.
I sound like a broken record, I know, but there need to be two policy changes: restrictions — not draconian but reasonable — on condo conversions. This would mean that developers would build new condos, adding to the housing stock instead of depleting it, and ensuring that purchasers are getting something of value, rather than an elderly building with no amenities.
There also need to be guidelines for rent increases on existing tenancies (see the Ontario Landlord & Tenant acts, which restricts increases to once a year, and limits them to a percentage, usually between 3 to 5 %, depending on the market). Most markets have these. These aren’t ‘rent controls’ in the old sense, since the landlord can raise the rent to whatever the market will bear when the unit becomes vacant — but they do prevent eviction by rent increase.
At the moment, I can rent a one bedroom for 600 a month, and the landlord can raise the rent to 1000 or 1200 within a month of my moving in, leaving me the choice of moving (again) or paying the new rent, which is now 40% or 50% more than I have budgeted for. Had the landlord put the unit on the market at 1000 or 1200 a month, that’s fair and reasonable. In a free market: I can choose to pay that rent if I think the unit is worth it, or look for a cheaper unit, or move out of Saskatoon altogether. But allowing unlimited, unregulated increases is a form of bait-and-switch.
As a tenant, you need some security of tenure. I’m not prepared to jump into a condo at 250,000 to 300,000, with no down-payment: that would be far worse, in the long run, than a series of evictions.
And yes, I think that single people who have the option will choose to leave: I have a good, not to say great, job at the university, so I’m really reluctant to think about leaving. But when a town tells you to get the F*ck out, it’s hard to stay.
May 20th, 2009 at 9:11 AM
Heather,
I hope Winnipeg will be quick to move to plug any holes as well. Again, the city hasn’t seen any of the steep increases across the board. You will see increases regardless, but not the likes of this.
I want to make sure that nobody else interprets that as “housing is affordable in Winnipeg”, because it isn’t. There is a lot that needs to be fixed across the country that still applies even to the “cheapest” markets.
Cheap by comparison doesn’t mean just.
Also, I will say that often businesses won’t test their luck as far here because they know the backlash is always waiting. For higher end consumer products, yeah. But housing? We still have people here whose veins pump blood and not oil and greed.
Here in Winnipeg, we are more of the opinion that if you are renting that you will want an apartment. That is what apartments are for after all. We have them in several different shapes, sizes, layouts, styles, heights and areas.
The lack of basement rentals is because if I’m buying my house, I’m living in it. Nobody else, that’s why I buy a house and not a condo.
I don’t get the house to go straight back to the “living with others” paradigm.
Now somehow, the investors don’t get this and seem to think it is perfectly acceptable to guilt people into feeling like it’s their job to make the stretch.
After all, they just have to make their money! They think it’s our job as the people buying to make sure we do everything in our power no matter how undesirable to fulfill their profits!
That’s one thing that I always had a chuckle at when working in Saskatoon. Everybody seemed to have their pet renters.
It is a nasty little pattern of assumptions to get into because the investors are offloading the accountability for unfounded price increases on the buyer. Not to mention the buyer’s family and lifestyle!
May 20th, 2009 at 9:22 AM
jrochest I completely agree. If they were just up front about things it would be a lot better for everyone involved. IT’s not like fishing where once you get a bite, they hook you and reel you in and then raise the rent again…to which it’s either pay the increased rent OR like me come up with the NEW damage deposit for say a $900 suite or apartment…sicne the other damage deposit takes about 30 days to get back to you, it leaves you with less choice.
Many young people will leave, the ones that are doign things on their own that is. The others will stay and fester in this province and make it an even colder province (not talking temperature)…and in a few years the good old province of sask will be what it has been in the past to ohter provinces, a have not province simply becuase it drove all the people out that COULD make this province great.
2 cents.
May 20th, 2009 at 9:46 AM
The low supply of residential units is root of the problem. Government needs to find ways to encourage builders to increase the supply. Stopping condo conversions and placing rent controls are only short-term fixes.
“[It] didn’t really hamper Vancouver or Victoria now did it” Exactly – it didn’t fix the problem.
I believe condo conversions are a good thing for the city. Could someone with experience in urban planning/sustainability shed some light on the issue?
David Suzuki vs. Urban Sprawl
http://www.davidsuzuki.org/Climate_Change/Solutions/Sprawl.asp
May 20th, 2009 at 10:05 AM
Right now, the incentive to build condos isn’t there: Meridian is the proud owner of a big hole with a fence around it, on Broadway. Why build when you can flip?
But why force developers to build rental housing? That makes even less economic sense. Conversion restrictions mean that developers build new condos, which make money in Toronto, Ottawa, London Ontario, Montreal, Vancouver, Victoria, and virtually every other city I know. If the need is really, desperately there, then the units will be built. And if I’m buying a condo, I’d much rather buy in a new building than an elderly, badly maintained walk-up that’s had a cosmetic wash and brush up.
In most cities where there aren’t the controls I mention, the eviction of tenants forces more people into the property market, raising prices even faster, and making for a lovely bubble (see Seattle). But lovely bubbles pop (see Phoenix, Florida, Las Vegas) and that’s not good for the community as a whole.
May 20th, 2009 at 10:13 AM
jrochest,
There have been hundreds of “condos” built in the city over the last few years. The primary problem is that in the current market condos deliver a far better, and faster return than apartments do. We need to come up with some ways to make building apartments more attractive. Perhaps that is achieved through cheap land opportunities or significant tax incentives which favour units intended to operate as rentals.
Rent controls? Man, this is a tough one. Who could disagree that tenants are getting the short end of the stick? There have been many cycles where property owners have to run with many vacant units and eat the losses. If you’re going to control their ability to take advantage of markets that favour them, don’t you really have to bail them out during markets that work against them? At the end of the day you have public housing.
Charles,
At a recent “affordable housing” conference in Saskatoon, I had the opportunity to hear Tim Stuart from the Planning department at City of Saskatoon speak.
They see the benefits of conversions being;
adds diversity to the resale housing market;
provides more opportunities for entry level buyers;
and improvements to buildings which are in need of repair (buildings must meet national building codes).
On the downside you obviously have disruption and displacement of tenants.
I certainly agree with your idea that “restrictions” have the potential to backfire, and for the most part I have some trouble supporting government intervention. On the other hand, what else can we do when the vacancy rates are nearly at zero? How do you tell someone with no place to live that the free market system will eventually work?
The city should be working overtime trying everything that they can to draw interest in building revenue property. You would think that it could easily become an attractive proposition given the changes in the rental market.
By the way, Demographia (housing affordability advocates) believes that the “urban sprawl” argument is directly responsible for deteriorating affordability around the world. Their annual survey is worth reading.
http://www.teamfisher.com/blogs/norm_fisher/archive/2008/01/26/new-study-shows-housing-affordability-in-saskatoon-on-a-serious-slide-demographia.aspx
May 20th, 2009 at 10:13 AM
Hi Norm –
Yes, there have been units built — but if there are enough new builds, why is there a need for 1,500 rental units to be converted to condos? Those 1,500 units aren’t being *added* to housing stock: they’re being removed from one column and added to another.
My point is that encouraging new condo construction — say, in some of those parking lots downtown? — will add to the total housing stock. I’d expect, if prices fall, as they probably will, some will become rental units. But more stock is always good.
Second, the system Toronto has (and most places I’ve lived have) is market-driven: the landlord can charge whatever they like for the apartment or townhouse, when it’s vacant and they’re advertising. The market sets the rents — it’s just that once you’ve accepted the tenant, your rent remains the same, with a yearly rent increase equivalent to or over inflation, usually. Given that most units turn over in two years or so, this isn’t onerous for the landlord, and rents do rise: it protects the tenant from massive and unexpected rent increases, and such fun games as “I’ll fix the toilet/the heat/the broken window, but I’ll have to up the rent…”
May 20th, 2009 at 10:20 AM
There’s a great movie about urban sprawl called Radiant City. It’s a semi-fiction family but plays like a documentary. Lots of interesting viewpoints.
May 20th, 2009 at 10:27 AM
Norm,
“…provides more opportunities for entry level buyers;”
This statement is entirely disconnected from reality in an attempt to push both the points of good prices and increased opportunities at the same time. Truly it is a well conceived half-truth. A statement that attempts to solve two problems by addressing one.
Yes, the condos are there, no they are not a pick for entry level buyers. Far from it. I wish the government layers would get the game straight and stop addressing half the issue in any given moment!
Just who is an entry level buyer and who are we kidding here?! I’d like to know because I’m under the impression that people are starting to accept the notion that some people were just never cut out for ownership!
As for the urban sprawl, I say that the expansion of suburbs is how you offset the burden of increased prices. It’s ugly, oh yes, but this is how you distract the attention away from fixing up an old house to be what is desired: and instead onto allowing people to buy a ready to live in home *today!*…
May 20th, 2009 at 10:27 AM
Very good points, I also wonder who the entry level buyer is too…I mean what i find is that anytime the city or any city ‘helps’ to fund ‘affordable housing’ it is located in the ‘hoods’ and full of shall we say “non work force” or single moms with kids…though i must say i wouldn’t have any problem living in a complex if it had ALL single moms simply beucase i know i’m not going to be robbed or beaten etc..
Is the entry level now up so high that their requirement is 2 incomes of 2 people that make say 30,000 a year each? I would love to see this ‘catagory’ clearly defined to know where a person sits in the market.
I agree these buildings should be brought up to code and that renovating is a good thing but i completely agree with the person above in saying they can do that BETWEEN tennants and raise rents accordingly between tennants.
May 20th, 2009 at 10:28 AM
It is the same as any other problem we face in these times of disingenuous economic beliefs and policies:
Unfounded cost increases are a great way to get paid more.
There is ZERO accountability because our country has forgotten what it means to be accountable.
May 20th, 2009 at 10:28 AM
An “entry level” buyer would be anyone who would find themselves living in something like this either subject to uncontrolled rents and the whims of the landlord, or as an “owner” with a fairly stable payment from one month to the next and the absolute assurance that they may continue to occupy as long as they wish to.
While I can agree that this may not be an ideal home for many people, it may beat the alternatives for some and it can provide a degree of certainty and stability that is clearly not available to today’s renter.
May 20th, 2009 at 10:29 AM
Apparently my husband and I, both educated, good jobs, and in our late 20′s/early 30′s are “entry level” buyers! We want to start a family next year… I never dreamed I’d be raising kids in a friggin apartment, that’s just gross. But that’s what it WILL come down to for a LOT of people that thought they were on the “right track”. Since my parents were married they have lived in two houses. BOTH were built new, their jobs were modest in pay, AND my mom was able to stay at home for 8 years with me and my brother. How things have changed… for the worst!
Alex,
This city doesn’t even know the meaning of accountability! I think Winnipeg’s saving grace will be that it is further away from AB, not as many people moved from MB to AB, and so far there isn’t as much oil potential as there is in SK.
This is a great discussion going on here, very interesting points. I think it would be wise to offer some tax cuts to bring incentive to landlords of rental units. The city has to act fast though, stop talking and start doing SOMETHING!
May 20th, 2009 at 10:29 AM
While I read your definition of an entry level buyer, it still doesn’t explain who is exactly elligible to BE an entry level buyer. Just stating that it’s anyone who is in the situation to buy is falling short by a long shot. (sorry no offense it sounds rude but is totally not meant to be)
What i meant (and i don’t expect an exact answer from the board here) was that okay I grew up, went to school, got post secondary and am priced out of the market. I mean sure entry level buyer means obviously someone that can afford to buy in the entry level of the time…but what exactly does one have to have in order to. When my mom and dad bought thier house, it was my dad’s single salary that purchased it, let us go on summer holidays each year, kept us clothed and fed (3 plus mom) and other things…and i get paid as much as he does now.
Does a person NEED to be in a couple? Do they NEED 2 steady high powered high paying jobs? if one isn’t in a couple, do they need 50 grand downpayment….do they need stocks, i guess what i’d be curious to see, is what ‘profiles’ of these entry level buyers are (in full honestly, not the i did it myself! and u find out later their parents paid for it and they are paying them back because they work at a sub shop)
*i need a drink*
May 20th, 2009 at 10:31 AM
Hi Jesse,
I’m sorry. I didn’t mean to be flippant. My response was directed more towards Alex’s suggestion that these types of homes are somehow below a buyer, even an “entry level” buyer.
He and I think a fair bit differently on some of these issues. I am the kind of guy that would attempt to make the best of my situation regardless of what life was dealing me and I can tell you truthfully that I have lived in much worse than a two-bedroom apartment. When my wife and I were first married, man, many years ago
we rented a house which we soon found uninhabitable. After we moved out it was condemned and torn down. I know what it’s like to have few options and I place a bit of value on a warm clean home.
We are all aware that whether you’re a renter, or a prospective buyer that we have few choices in this market. While the situation is bleak for buyers, it’s equally bad for renters, maybe even worse. Given the options that the typical renter has today, some may find these condos to be attractive alternatives. At least they can provide a way out of the rental market for some. That’s all.
There is no definition for an entry level buyer. It usually is just a reference to someone who is getting into ownership for the first time, and is buying at the “more affordable,” or if you wish, cheaper end of the market.
What do you need to enter? You need to have sufficient income so that 30% of your gross annual income can service your mortgage payment, heating cost and property taxes on whatever property you choose to buy. You need enough cash down to make that happen. That’s really the long and short of it.
No question that things have changed significantly and I’m with you when it comes to the negative implications of that. Of course, I’m as powerless to stop it as you are and i hardly know what to suggest.
Being a couple certainly helps in terms of increasing the overall income and the amount of dollars that can realistically be made available for housing expenses.
May 20th, 2009 at 10:31 AM
Maybe a glimmer of hope…
Anyone catch the story on the last page of section A in the Star Phoenix? It talked about a bulider who had already made a fortune and has since taken up building hones for families below market value so that they would have a place to raise a family. Maybe someone should send a copy to the builders around here. I have no problem with people making money. At some point though, I wouldn’t be able to look at myself if I had millions in the bank and people were in the circumstances they are in. Guess that is why I am not in business. Not sure if there is a link to it or if anyone would be interested in typing it out.
May 20th, 2009 at 10:31 AM
Thanks Jedi,
I caught this story and hope to write something about it yet. Very interesting indeed. Hopefully the guy is for real.
Mean time, here’s a link to the SP story – http://tinyurl.com/2dejl2
Also, to continue the discussion on the condo story, you might get a kick out of Randy Burton’s column today. The story is called “Fighting for her home” and it features an image of senior citizen Shirley Rusch in her wheel chair. Kinda makes you think twice about a free market opinion on this one.
http://tinyurl.com/27j9zg
May 20th, 2009 at 10:32 AM
Jedi,
Murray Prokosch has been extremely generous, I’m sure he’s been a godsend to many people in AB. Many builders here in Saskatoon have raised their prices drastically because they can, labour and materials only account for a small portion of the increase. If a person asks what incentives would a business have to NOT gouge their customers? Well one (which not many seem to care about) is having a good conscience to what you are charging for your services. But more importantly, the people who have been burned with high prices will make sure to tell everyone they meet how much of a rip-off the company is. When demand decreases the builders that had fairer prices will get more projects than the gougers. I know I will be spreading the word! My friends, my family, my coworkers will ALL know who NOT to build with for YEARS to come. :’)
Norm,
By talking about the impact this is having on our community it can start a ripple effect. The more others know about what’s happening the more people power we have, and that will help to create change.
May 20th, 2009 at 10:33 AM
Heather,
One thing I’ve really struggled with because it defies the simplicity of supply/demand economics is the idea that demand and activity dictate everything.
There was a time where I certainly would have bought into that style of thinking, but I’ve come to learn that it doesn’t always work out that way…
Somehow, prices still manage to increase in spite of consumer disapproval. This means that while the frustration of the consumers may be partially manifested in buying habits, it doesn’t always tell the whole story.
I use gas prices as partial evidence of this although it is a necessity. Another good example might be say the difference between shopping for groceries and eating all your meals at McDonald’s. Why do people continue to shop in spite of McDonalds being able to undercut home cooking all together in time and cost?
The simple fact of the matter is that supply and demand thinking is still a macro tool in understanding economies. It is not an understanding that functions at the smallest atomic level.
This means that builders are charging more simply because the attitude in the industry permits that increase. The focus is enough to effect price increases.
I still say that factual observations need to be made on all industries to asses what their costs really are and how spending compares. If a company increases its fees (whatever they do), do they in fact allocate that revenue to increased costs, or better salaries?
I think we can determine that at least one of those items is a big “NO!”.
For the frequency that people see increased costs these days, we sure don’t see much in the ways of improvements or even continuation of decent service.
We appear to have created an economy of contributing and supporting the notion that we should pay more for things to get worse. Either by cost or by quality.
The only thing supply and demand tells me is who *accepts* businesses that gouge the people and who doesn’t.
Perhaps you can add to that in better ways than me!
May 20th, 2009 at 10:34 AM
Alex,
How would you explain dropping prices in the US? How would you explain that one year house prices rise 3%, and another year they rise 45%?
May 20th, 2009 at 10:34 AM
Alex,
What you’re talking about is in what economics terms is refered to as price elasticity. For most goods and services, demand is elastic such that as prices increase, demand decreases. For some products and services demand is inelastic such that as prices increase, demand continues to remain at the same levels (gas for example).
You can’t confuse utility with demand though. For inelastic demand, consumers may not be happy with higher prices but they still keep on buying for whatever reason. In the case of cars, we don’t like higher priced gas but people can’t (won’t?) give up their cars so demand stays the same.
Elasticity is given a numeric value so products have varying degrees of price elasticity. Maybe its because housing is such a fundemental need that it seems to be somewhat inelastic to price increases.
May 20th, 2009 at 10:36 AM
Owning your home is one of the pillars of accomplishment in our society today.
I think people are determined to have property because it is so valuable (even beyond precious metals!). It is useful and also always desirable.
We also know that we only have so much of it, and to paint a better picture, so much that is actually desired.
Why then are we knowingly forcing ourselves to claw at each other for something we know fully well is in limited supply? Cities should grow to increase this supply and existing homes can be used to introduce newcomers to the market.
Norm,
Better still (and I think this covers both your points), will the reduction in demand (3%) result in prices going sharply below prior markets?
Unlikely.
Once a shred of interest is shown again, the market rebounds back to new all time highs (45%).
Moreover, because not everyone becomes poor in the US, this creates an opportunity for those in better situations to muscle in while the rest of the populace is licking its wounds.
We have to look at buying habits, but not at so large a scale that we lose sight of the real issues behind the activity.
Consumer attitudes and habits are a whole other discussion – related and crucial for sure – but another discussion in which I think I can be brought to admitting people are generally very difficult to please.
While I myself may not be like that, the nature for people to want more could afford to be treated just as much as the greed.
Without getting too far into it, I also think it has a lot to do with why community spirit is dwindling and people stand up for themselves much less.
May 20th, 2009 at 10:43 AM
I think people (buyers) just feel like they don’t have a whole bunch of options. Renting has been a living hell for most people over the last 18 months. If you’re not getting the boot for a conversion or a sale, you’re living with atrocious rent increases on a quarterly basis. People probably feel some sense of control with a purchase, even if it is a small apartment. They can assess the worst case scenario, bite the bullet once and live with it.
Just the same, there’s little question in my mind that the dynamics would change substantially if there were a better balance between supply and demand. I recently read a blog by a Phoenix agent who was discussing a property that had just come on the market. The list price was similar to the price that he marketed the home at a few years earlier. High supply and low demand definitely impacts what buyers are wiling to pay, and it should.
I agree with your point about expanding opportunities through faster development.
May 20th, 2009 at 10:43 AM
Heather,
I was stunned to see that the average price of a new home has risen 6% nationally, and so much more here. Someone familiar with the industry pointed out that some builders are hoarding lots for fear that they won’t be able to get more when they need them. They then end up financing them for extraordinary periods of time which adds to the cost of building. If thy purchase for $100K and then don’t start building for a year, it doesn’t take long to crank up $15,000 in additional costs. There’s no question though that the builders are making a pretty good profit margin.