Norquay Densification

With population growth coupled with environmental issues, urban densification seems to be a hot issue around.

Densification carries with it both positives and negatives. On one hand it can help the environment because having locations closer together can lead to lower car use (in turn lower car usage means less carbon emissions). Increasing densification can also lead to lower housing costs. By definition having something that is denser indicates being more closely compacted together which means being able to put more housing units together. More housing units, like increased supply, should lead to lower prices. It can also lead to a more diverse and lively neighborhood.

However, there are also negatives to densification. In fact, an article in The Province highlights just that.

On April 7, 2013 The Province released an article showing concern over the densification of the Norquay area[1].

The Norquay neighborhood in Vancouver goes from East 41st Avenue to East 28th Avenue and from Gladstone to Killarney Street. The issue at hand is zoning changes that will allow increased housing units (and thus more people) in the area.

With more housing one would think that homeownership would become more affordable. Basic economics does dictate that more supply means lower prices. Metro Vancouver released a report on increasing housing density in single detached neighborhoods as a way lessen housing price increases[2]. Wealthier homeowners usually do not reside in that area of Vancouver but if they did, it would raise their wealth since lower housing costs means they get to save more from their disposable income. However, from various courses I have learned that when poorer, my marginal utility is higher and I am losing more when I am giving away money. Thus the distributional effect of this policy then benefits the less affluent residents. It should make homeownership or renting more affordable for these residents. Lower home-costs then should benefit all but more for the less wealthy.

The question is now how effective this rezoning of Norquay is going to be, and not only in terms of its effect on housing prices.

In my opinion the hardest thing about densification is what happens if something is already dense? What happens when a limited amount of space has already too many people?

(I will not consider the difficult political issues. A building that is rezoned for development requires the developer to pay the community some kind of cash payment that I will not go into detail on. There are issues of an inadequate amount going back to the community that goes beyond the scope of densification3).

“Despite all the promises made along the way, almost all that the ‘planning’ has done for Norquay so far is to dump additional density on top of existing density”[3].

If this is the case then higher densities will not be effective and will in fact produce the opposite effect. In fact, most of the positive effects of densification are never seen.

Densification is supposed to help reduce carbon emissions by having fewer cars around. Wendell Cox argues that taking a car is more efficient than taking public transport[4]. If that is the case then increasing housing units means adding more families that also means more cars. The positive gain of a lower carbon footprint is not met with densification in this case.

Further, a study should be conducted to verify if adding more units would lower housing prices. Results from a study on Vancouver Housing Density and Property Values suggested found that more densification did not lead to lower housing prices. They further found that it could be the case that those with more income could be the driver for higher housing prices[5]. If then the demand for these homes increases by young professionals with increasing buying power, the opposite effect might occur and the less affluent would greatly be affected by the policy and it will create a regressive effect.

Strictly speaking about densification issues could arise if pushed too far. If a finite space is already filled, negative effects will occur. If this were the case, (I’m not saying it is), then development of Norquay would be a bad idea (again, other political stuff aside).

I am not saying that the development on Norquay is necessarily a bad thing but it should be important to note that if the current density situation is not examined correctly, the negative effects are going to make things worse than they already are.

 

 



[1] Frank Luba http://www.theprovince.com/Norquay+development+proposal+raises+alarms+about+densification+east+Vancouver+neighbourhood/8208400/story.html

[2] Coriolis Consulting Corp. http://www.metrovancouver.org/planning/development/housingdiversity/AffordableHousingWorkshopDocs/IncreasingHousingDensityinSingleDetachedNeig.pdf

[3] Eye on Norquay

http://eyeonnorquay.wordpress.com/

[4] Wendell Cox

http://www.macdonaldlaurier.ca/files/pdf/Mobility-and-Prosperity-in-the-City-of-the-Future-Commentary-May-2012.pdf

[5] http://blogs.ubc.ca/vancouverhousingdensification/conclusion/

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3 Responses to Norquay Densification

  1. lisatam says:

    If housing prices are lowered initially, I wonder if that would play a part in attracting certain groups of people into the city. Before prices shoot up, lowered prices would attract the lower income groups…then when prices rise, how will they live with the expensive services and facilities around them? Hmm

  2. mikeniu says:

    Hi Melo,

    It is interesting to see an another example that a policy designed to make things better turned out to screw things. Things are connected with links that are easily sean and links that are not so easy to notice. People sometimes do things without noticing the links behind them, so they fail. So did the policymakers in Norquay.

    Thanks for your analysis. Very impressive!

    Best,

    Mike

  3. Roson says:

    Hi Carmelo,

    Thanks for bringing up this Norquay desification issue.

    I agree with you that the housing prices might be lowered at the initial stage as all the high rises, more dense buildings are constructed to replace the old flat development such as single houses. However, there’s a price floor they won’t go below. Then, having attracted more people (likely with higher purchasing power) to move into that area, the prices would go back up again and likely to overshoot the prices before. The lower income group would suffer from it more. This seems to be part of urbanization where higher “living standard” calls for a price. However, such higher living standard sometimes does induce more disparity among the high income and the low income group. Along with the zoning, the government probably need to devise plans to watch out for the lower income group.

    Roson

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