Solving the Housing Crisis with Innovative Solutions (Opinion)

Solving Housing Crisis with Innovative Solutions (Opinion)

We all know that Canada & Greater Toronto Horseshoe faces an urgent and imminent housing crisis for the next decade. A recent article[i] in CTVNEWS , highlighted the grim situation and a lot of people are concerned about it. Equally government at all levels and real estate developers, city planners and everyone concerned is aware of the situation and are working on solutions.

So, we all must acknowledge that there is a Crisis and look for innovative solutions. Following and many more solutions are already in works

-?????????Allowing cities to sprawl

-?????????Building up (more and more condos and high rise)

-?????????Building basements (allowing more permits, faster, sooner)

-?????????Tracking and Taxing vacant apartment(s)

-?????????Creating Mixed Use & highly dense communities

-?????????Tax International investors

-?????????Approve more permits for new Condo’s and houses

-?????????Reclaim unused and old houses and re-purpose them

-?????????Gentrification

-?????????Community focused affordable housing projects to protect the vulnerable

These and many more are being worked upon by the government and its agencies to protect the common man, but it may not be enough to resolve the crisis. Based on the projection of population increase in Canada in the next two decades, we need more solutions.

Prime Minister, Justin Trudeau recently announced $120 million investment in Brampton for 307 affordable housing units, read all about it here[ii].

Can our Hotel Industry provide a part of the Solution?

Looking around we see that Greater Toronto Area Hotels Association has close to 36,000 guest rooms as per their website[iii], with about 170 hotel members. Another source[iv] suggest that GTHA has 212 hotels(2014) and 44180 rooms(2015) as per CBRE Hotels report (2016). ?Along with this we also researched the data for occupancy and vacancy rates for these hotels we find that the hotels are not 100% occupied throughout the year. The occupancy hovers on average around 60% to 70%, ignoring the 2020 and 2021 data due to covid-19 related low occupancy. See the Current Performance from Ministry of Tourism, Culture and Sport here[v]. Based on these facts and figures, the proposal is to approach the hotels and its association to offload about 10% of the rooms for general public to rent at market rent and/or sell these units as a condominium unit to private Canadian citizens who may be able to move from rental units to owned 1 bed or 2 bed units on the top floors of the hotels. Off course, this is not easy from legal ownership, kitchen operations, ownership, maintenance, and future ownership transfer of these units back to the hotel in case of re-construction of the hotel. The solution has many more problems to be solved for it to be a workable win-win for all parties, including the hotel owners, city and private citizens.

???????????????If this solution is given proper consideration, and a city-wide proposal is approved and proper incentives provided by federal government, in GTA alone we could add 3600 rooms to the inventory of rental units or about 1800 units to rental and 1800 for ownership, depending on how the hotels would like to increase their revenue by renting or by selling the units one time. Proper pricing must be worked out for rental and sale of each unit, otherwise the solution may not work.

???????????????A more detailed study of this proposal is required , with additional research, surveys and intentions of the hotel industry, but giving them incentives like creation of more hotels with 50% hotel rooms and 50% rental or owned units , faster permit approvals for hotels , with community kitchen on top floors , maintenance by hotel staff once a week , rather than daily and keeping the standards of hotel by only allowing residents to follow the hotel by-laws, as prescribed by each individual hotels.

During the covid-19 crisis we saw how innovative the hotel industry got by creating mandatory quarantine programs and working with government rolled it out, similarly there is a big potential to use the vacant rooms, solve the housing crisis by about 3600 rooms. If the hotels decide to offload 20% of the capacity, we are now looking at 7200 rooms and this public(incentives) private(ownership) partnership can elevate and add few hundred rooms to the inventory for people to own the small unit and start their homeownership dream, rather than renting. The Rooms are about 150 to 250 sq ft and if we go by average market rate of $1000 per sq ft in core downtown the rooms could sell for $150k to $250k depending on location, type of hotel and amenities provided to the residents and included in the price. Each hotel can then come up with a reasonable package of what they are willing to offer to private residents, cleaning (once a week), community kitchen (to be constructed on Top floor), no kitchen in room, community Laundry, microwave, a reasonable size fridge and cleaning service, access to pool, Gym etc., and list the units on the market for sale or rent based on their best effort, reasonable pricing.

What do you think ? Your opinions matter and you are invited to comment on this article below.

About the Author

Hardik Shah, is a Real Estate Broker with RE/MAX REAL ESTATE CENTRE INC., BROKERAGE, in Brampton and is very passionate about solving the housing crisis with innovative solutions. He is a Production Engineer, Software engineer, Technologist, an Accountant, a Project manager and has an MBA from University of Toronto, Rotman School of Management in Finance and Strategy. Hardik Shah, came to Canada for the first time in 2003 and since then has fallen in love with Toronto and Canada and has since moved to Canada in 2008 with his wife and two kids. He currently lives in Brampton and is passionately helping new comers secure their first home and guides his clients and investors to make smart investment decision in real estate. He can be reached out on LinkedIn, email or his cell phone.

Hardik?Shah, BEng, MBA, PMP?, CSPO?, CPA, CMA

Real Estate Broker

RE/MAX REAL ESTATE CENTRE, BROKERAGE

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[i] Canada's housing crisis: Where will the millions who are moving here live? | CTV News

[ii] https://globalnews.ca/video/rd/a0e4e6fa-e8c7-11eb-9ccf-0242ac110008/?jwsource=cl

[iii] https://www.gtha.com/about-gtha

[iv] https://www.toronto.ca/legdocs/mmis/2016/ed/bgrd/backgroundfile-98820.pdf

[v] Current Performance (mtc-currentperformance.com)