The Canadian property bubble is at the part where some people now only see the expensive real estate that can be used for housing. One of Canada’s national newspapers recently ran a staff-written piece on why public parks are a waste of space. Instead, they suggest parks should be used for more housing or run as private facilities.
Let’s gloss over whether you think it’s a dumb idea or not, and let’s appreciate how frothy the author’s take is. There are people that no longer see the value in public space, because the expensive land could produce more trade value. It turns out this take comes up during every real estate bubble, and is cyclical. Weird, I know. Let’s dive in.
Some Canadians Think Public Parks Are A Waste of Space… This Happens More Often Than You Think
Real estate is all Canadians can see, as more and more people question the use of land, especially in Toronto and Vancouver. “There’s no doubt that parks have been a godsend for many Canadians throughout this pandemic, offering a place to play and stretch the legs when virtually everything else is closed. But when I see an urban park, I can’t help thinking it’s a waste of prime real estate,” says the author.
Adding, “Now, we have vast swaths of land smack in the middle of large urban centers that could house hundreds of people, but are instead being used as a toilet by half a dozen dogs.”
Repurposing urban parks as housing is, uh… an interesting perspective. It’s also a recurring theme that has occurred throughout various real estate bubbles as well. In Toronto for instance, the late 1980s bubble saw people argue plots of land like the Lakeshore Psychiatric Hospital in Etobicoke needed to be turned into high-density housing. If they didn’t, ever-escalating home prices would collapse the City and produce mass poverty.
In 1991, two years after the hot topic city discussion, Toronto’s real estate market began to collapse. Suddenly the property wasn’t needed, and it was declared a historic site, with Humber college moving into the space. The green around the historic buildings is still preserved now.
Parks Make Housing Expensive and Should Be Privatized? Nah, It’s How Value Is Created
The real point of the article finally boils up — it makes new housing more expensive, so it should be privatized. “And instead of requiring developers to set aside valuable condo real estate to build parks, how about flipping the script: let Starbucks or some other company take over a corner of an existing park, in exchange for maintaining the public space. We may have to accept empty patches of grass in our cities, but we shouldn’t all be forced to pay for them,” he writes.
A lot to unpack there, but the biggest one is the argument developers should build more housing instead of parks. The suggestion is it makes housing more expensive, by underutilizing space. Let’s gloss over the fact that ramping up building occurs near every peak, ironically driving prices higher by placing more pressure on material demand.
Instead let’s focus on the fact that in a bubble, people completely ignore how price value is created. One of the key factors in establishing price value is the amenities around the property. That park space generates both social value for the community, as well as aesthetic value for the owners. The only way you forget that is in a bubble mindset where you assume prices will grow at this rate forever, regardless of what changes. Which is kind of like taking how much a kid grows from the age of 11 to 13, and using that to project their final height at 86.
“I would gladly pay $5 or $10 to take my kids to the park if it meant a reduction in my property taxes.”
Ticketed parks are an adorable idea, but if the park closed you wouldn’t be saving property tax money. You would likely have to pay more — much more. An estimate from American Forests shows trees in cities, and the green surrounding them, save cities $400 billion per year in stormwater retention facilities. Kind of a pillage and plunder mindset. Save now, it’s someone else’s cost later… hopefully.
People Really Hate Cemeteries During Real Estate Bubbles
The same author also previously wrote a piece on eliminating cemeteries, because it’s valuable property. This was a hot topic in the late 1970s and late 80s. Toronto was supposed to become so heavily populated, the dead would have to commute. After the crash in 1991, you were free to be buried in the city again without anyone throwing you some shade. While I don’t have strong feelings about cemeteries either way, it is interesting to see how market history repeats — even the bad takes.
The bubble mindset appears to be cyclical, producing similar arguments every time it starts to froth. The land is expensive, so it needs to be maximized without any regard for the impact on quality of life. The detachment from fundamental price growth leaves many to think prices will always rise. It doesn’t matter what we do, we just need to fit in as many worker boxes as possible. For the good of the economy.
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