Here's the brass tacks on my project. I plan to do the development work, so there's no cost of an office, staff, project management fees, etc. - I don't have any of the crazy overhead these guys are talking about. But then again, I'm only trying to turn a half acre into 9 nice condos/rowhomes. Land/Development/Demolition of structures/Utilities/Driveway: 800,000 Permits/Misc. Fees: 100,000 Construction: 2,000,000 (hopefully only 1.7 or 1.8m, but you gotta have contingency) You know what the mortgage payment on 2.9m is? it's $16,579 - and that's only PI. Can't forget about insurance and taxes. My PITI on this project would be in the neighborhood of $20,000. Spread that number over 9 units and you get what? Yah... raise your hand if you can afford $2200 for RENT (pro-tip: $2200 could pay the mortgage on about $450k at 3%). and that's for my project to break even. If I ever have a vacancy... well, I better adjust the rent up to $2400 so I am building up some buffer... Now don't get me wrong - these are nice, 3 bedroom, 2 car garage, good looking condos... But forget about the families I know who struggle to even scrape up $800 for rent. And forget about the fact that the city just threw up an obstacle that made my engineer crap his pants. And so... back to the drawing board I go....
We were looking at developing a literal hole in the ground. Burned down in 2011. Were going to replace the charred remains of medical/dental with a 3-story medical-dental with a townhome on top. We're paying about $72/sf in TI just to build out an existing space and we're getting off cheap. Building the structure would have been about $300/sf... plus the land and all the rest.
The only long term solution to housing shortages is to build more housing. Gentrification is merely a byproduct of newcomers having nowhere else to go. Short of enacting segregation ordinances there is nothing that can be done to stop newcomers from moving into neighbourhoods in search of cheaper rent other than to build new, denser housing for them.
Did you... read the link? The difference between San Francisco and Vancouver is that Vancouver allowed developers to go up. Vancouver now has more insanely expensive housing than it did but no more cheaper housing. The issue is you can't knock down expensive low houses and build cheap condos; the act of building is in and of itself expensive. You cannot take a business center surrounded by water on three sides, wave a magic wand and make it affordable for new families. All you can do is make existing owners richer.
