On today’s show we’re talking about affordable housing initiatives. It’s no secret that housing in many major cities like Toronto, San Francisco, Vancouver, Los Angeles is increasingly difficult to find, and highly unaffordable.

In a free market, this is a function of supply and demand. Many of these cities have struggled with allowing new supply as a result of bureaucratic gridlock.

Some homeowners have added supply to the market by adding secondary suites, or accessory dwelling units. These are often a basement apartment in climates where homes have basements. Sometimes, it’s an attic apartment, or a rear apartment. In each case, the accessory dwelling must share the utilities from the main house.

A few years ago, a new classification of accessory dwelling unit was introduced. These coach houses, sometimes called a backyard tiny home, are separate dwellings that just like their attached counterparts must take their utilities from the main house.

The province of Ontario just introduced legislation that would allow for two accessory dwelling units on each R1 residential property for a total of three. You could have a basement dwelling unit or attic apartment attached to the main house, and a separate carriage home all on the same property.

This idea is that these units are among the more affordable units in the market and they would contribute supply at the affordable end of the spectrum. Allowing builders a free hand to add supply at the top end of the market does add supply, but doesn’t directly address affordability.

Accessory dwellings suffer from a few problems.

  1. There are not that many of them and many lenders and appraisers have a hard time valuing them. There are countless stories of lenders undervaluing them and requiring owners to bring a lot more cash to the table when funding these improvements.
  2. The cost of these units are often disproportionately high when compared with the cost of new construction to high volume builders.

Coach houses are not new. But they are new in the zoning code in many cities as they try to create incentives for affordable housing.

The latest startup venture to make headlines is called Samara and was started by Joe Gebbia, co-founder of AirBnb.

The Samara product is a modular build that can be assembled quickly on the site of a tiny backyard home. The focus initially is California.


Host: Victor Menasce

email: podcast@victorjm.com