 Welcome back to Think Tech. I'm Jay Fidel. This is you from the north, Dr. Ken Rogers in Kelowna. He's Columbia, Canada. And we're going to talk today about building houses because, you know, the way to avoid homelessness, at least one way, probably the best way is to build homes, isn't it? This seems logical. So welcome to the show, Ken. Nice to have you here yet again. Hello, Jay. I think that, you know, the housing crisis is more than just the whole situation. Yes. Well, let's talk about it. What are the dimensions of the crisis? Well, I suppose one could start with, in Canada, it's almost like a birthright that you're entitled to a single family home in the suburbs with a backyard, garage, you know, hit a school thereby. And, you know, somehow there's a shortage of housing of that type, you know, and the prices are going through the mood and there's, you know, reasons for that. But, you know, people are grasping at potential solutions. And, you know, in my opinion, there's no short-term solution to the general housing crisis. But you've got to start with the idea that the public warrants a single family home in the suburbs with a leafy vegetation in the neighborhood. On the other hand, the municipalities do not work that. The municipalities are doing everything they can to minimize urban sprawl because they simply don't have the money to extend roads and be a sanitary sewer facilities, water facilities, and in particular, transportation. You can't separate housing and transportation, but really, you know, it's the municipalities not having sufficient funds to do their job that is really key to the housing shortage. Well, yeah, but there is a connection, isn't there, between a housing crisis of the kind you've described and homelessness. If I can't find a house, if nobody wants to build me a house, or sell me a house, or finance a house for me, I'm closer to homelessness, right? Well, that, you know, difficulty to build suburban housing in the quantity that is needed is just one part of it. I think of homelessness of people living in tents in the center of larger cities or even medium-sized cities like the one I live in, and I think there are totally different problems. There is a connection, but really, you know, the kind of connection would be we do not really have the types of housing that we had before. You used to have, you know, boarding houses, but we really don't have such a thing as a boarding house or a rooming house of the scale that we had, you know, in the 30s when people were short of housing. You know, I think 1930s, since it's almost a sultry ago. However, the major housing crisis really starts with rental properties that people can't afford, and single-family homes, which there's not large enough quantity, and because of that, the prices keep skyrocketing. Well, let's talk about rental for a moment. You mentioned it, the R word, if I may. You know, I was looking at a really silly article this morning in the paper about all the people, all the celebrities that we have heard their names over and over again. Now, we don't think about their individual wealth, but you know, such a huge number of people that we see in the media, celebrities, have personal jets, okay, and there's a distinction between those who have the money to buy the personal jet and those who have the money only to rent the personal jet. So there's this really interesting distinction in the economy. Are you the kind of person who buys or are you the kind of person who rents? And you know, let me throw one solution at you. What about just building houses for rental or building apartment buildings for rental? You know, I grew up in a neighborhood in New York City where everybody rented. Nobody owned their own home. And the rent, you know, the rent was relatively cheap. Why don't we just build apartment houses and rent the apartment? Well, that's a reasonably good idea. But you know, it depends, you know, where you live. I know for sure you, you know, were raised in the Queens area of New York City, where I was raised in a city where, you know, 75% of the people in that city still live in single-family homes. You know, it was probably 90% when I was there. And you know, it's really what do people want. I would assume, you know, your parents probably would have preferred a single-family home, but you know, in metropolitan New York City, that's difficult. Well, the migration in my parents' generation was to get out of town, to go to Nassau County or Connecticut or New Jersey, and get a single family on exactly what you're talking about. And if you could afford it, that's what you would do. On the other hand, if you couldn't, you stayed in rental units. And what seems to me that you could house people pretty well in the rental unit. Yes, your idea is a good one if you take this concept that the ownership of a rental housing unit is a business for a lot of people. It was a business that I'd been in much of my life. And the major problem with rentals is that the price of rent is very high. And an awful lot of the rules or the laws are anti-landlord. You know, for example, during COVID, quite a few cities such as Los Angeles imposed rent control and went overboard with the rent control saying you couldn't even evict a tenant for non-payment of rent. You know, so you'd say who wants to be a landlord if, you know, the municipality is going to let people live in your place for free. Now, one of the key solutions for the housing crisis or lack of supply of housing, which is greater in Canada than it is in the US, believe it or not, that would be for the federal government to use their financial leverage or their financial muscle to build housing units which are owned by either the federal government or a government agency or even the local government. Local in my mind is better, that is the federal government should provide the financing so the local government could build a large amount of rental housing. And the idea with that is that they maintain the ownership of it and you could have also non-profits that they would encourage to own rental housing. But where if the government owns it, you know, if you wait 10 years, then those rental units could be rented at a price which is far below the mark. You know, and that is really kind of the solution that Singapore did with great success. They, you know, they had the advantage if they don't have a city government, a provincial government, a state government, they just have one and they built the housing units and it didn't take very long for those housing units which they built and publicly owned could be rented at a very low price. And, you know, so that they were able to, you know, bring their whole society along like most people if you've got a roof over their head and they're not, you know, choking to death to pay the rent, they can usually improve their law fairly quickly. And I think that you need a stark of housing which the government owns which has no problem with the rent, you know, that they're not in it for making a big profit from renting the housing, they're in the business of trying to help their citizens make their way. And, you know, some housing units will always need a subsidy. You know, if you're going to have some young girl that's pregnant and, you know, her husband leaves and she's got a couple of kids in tow and she doesn't have much education, she's going to have a real trouble with housing. She's got to go quite a few years where she would have trouble even having a job plus playing a being a mother. And, you know, so that there is that type of person that needs housing. But I think that that's a first solution and it emphasizes the idea that any solution for housing is usually not a short term quick fix situation. You know, government housing has been popular in a number of American cities. I can't speak to the large cities in Canada, but and they're called project. And so we have in New York, we have a huge number of projects, they're high rises, they're not fancy. And then we have them in Chicago, I guess Chicago is famous for the Chicago project. And what happens, you know, you talk about five or 10 years, what happens, you talk about five or 10 years. And by that time, the project is turned into a huge slump. Dangerous, crime infested, drug infested. And, you know, a society you wouldn't want to live it. And this, this is pretty much predictable. Well, are you referring like I familiar with example, Stuyvesant town in Manhattan, you know, and it's the scale of that. The Stuyvesant town is not a government project. Stuyvesant town was built privately by, I think, Metropolitan life insurance company. But there were projects, for example, in the Bronx, they're huge. And in Harlem, huge. And these, these are, these are projects that began deteriorating 10 minutes before the doors opened. And nobody takes care of them. The government has essentially abandoned them. And they are really not a place you want to be on any level. So how do you deal with that? I mean, yes, the government should step in, but how do the government manage what it, what it has built? Well, in, in Canada, we had a program at one stage called limited dividend housing in which the government subsidized the financing to enable developers to build rental units as long as they maintained the lower rent, or they had rules for what the rent could be. But it was basically subsidized rental for the term of the mortgage 25 years. And then the person that built or owned that project could do what they wanted. And during that period, the owners of those projects had probably had the best kept units in, in the cities that I'm familiar with them because they, their rent was at such a bargain. And these were usually townhouses, rather than, you know, really big city apartments, or, or mega projects, even though the townhouse projects were sometimes quite large. But they really had inspections of the units on a regular basis. And any, you know, employee or neighbor complaint about somebody involved inspections and the occupants were just turfed out. It's the units were not well kept. And, and they were really fussy. And it was really, really successful way to just, you know, have hanging over the tenant is, you know, to do proper upkeep, you're out, period. Yeah. And where are you going to go? Yeah, there's not a lot of options where it gets thrown out. Yeah. So the government management could be done on a similar basis. You know, you've got to watch that you don't get a bunch of bleeding hearts running the government program that would say, you know, they're not going to enforce anything and not going to kick people out. You've got to be pretty, pretty ruthless about the standards that you're going to keep. Yeah, sure. Absolutely. But to me, that, that is the solution and the government really has to step in. And I think, you know, the point here is that the government has to step in. So let's talk about changing the rules. You know, you mentioned in Los Angeles during COVID, a landlord, he was a small landlord who owned one rental unit, you know, he couldn't collect the rent. And a lot of tenants took advantage of that. It's okay, I'm not going to pay the rent because it's COVID time. And then the landlord has to bear the burden. He, he, he, he suffers financially, maybe to the point, often to the point where he can't pay his market. New York had the same divine, New York had the same experience. They made it impossible for a landlord, even a small landlord to collect the rent during COVID. A lot of landlords lost their properties. Well, you know, this is, this is very troublesome, and you, you can't adopt those kinds of rules and expect that one part of the, what it called the food chain could, could, you know, bear the burden of the whole, of the whole chain, especially in a crisis like that. The other thing is that, you know, we have government agencies that are responsible for permitting, responsible for, as you say, managing that, that are failed agencies. You know, in Hawaii, we've had a big problem with corruption in permitting. So if you have a, you know, a huge big project and you are a big and a multi, multinational company building the project, you're going to catch a permit pretty quick. But if you're Joe Dokes, the ragman, and you want to build a small unit, a small building, it's not so quick. And sometimes you'll have to wait for literally years to build some, you know, a green field or a brown field or a remodel or renovation. A lot of people in Hawaii, I think this is probably the case on the mainland, do not build new homes, new apartment buildings because of the permitting issues, because the permit, the requirements may have changed since the original construction. And now it's much more expensive, you know, to build precisely the same kind of structure that was there before. So as far, it's hard to build a new one, they wind up refurbishing an old one. And that also takes a long time. So I mean, I think government is standing right in the way here in a lot of jurisdictions, including especially including Hawaii, where if we alleviated that and forced them to act on permits, we, and we allowed them to, you know, get by some of the most odorous provisions in the building codes, not like Istanbul, by the way, I want to distinguish that. But, you know, we could make it a lot easier for investors, builders, contractors, and banks, you're building housing. You're correct in most regards, but you've got to put in perspectives that for a municipal council to get elected, you've got to say who are the voters. And there's an awful lot more tenants, renters, than there are landlords. And so the bias is there. And you have to have senior levels of government intervene to prevent that bias from ruining the market to the degree that it does. You know, in British Columbia, for example, you know, the provincial government, which is equivalent to a state government in the US, the provincial government has imposed a variety of rules on the major cities in the province in order to avoid some of that, you know, not in my backyard type of push from local residents. They've insisted on certain zoning things. And really the development, the real estate development industry is probably loaded with more entrepreneurs than any other business there is. And the United States and Canada are ahead in that regard compared to, you know, any part of Europe, they're just entrepreneurship's a bigger thing here in North America. And so if you bring in rules that push, the development industry will rise to the occasion. And a great example is in the city of Vancouver, they created a, the province subsidized the creation of their public transit system for, you know, rapid transit, the train system. Now their rail system, they basically insisted that no rail line will be built anywhere unless every time there's a station, there has to be a huge increase in the amount of density permitted around that station, you know, and so any, you know, then, you know, nearby single family neighborhood that says, well, we don't want any apartments in our neighborhood, that's just too bad. You know, there's either no train, or you've got these high rocks as well. Now, if you drove into the city of Vancouver, you'd have a lot of trouble recognizing where is the downtown because it looks like there's about 30 of them. You know, and those just happen to be the you know, the oldest 30 train stations. There is one whole city, or let's call it used to be a city, you know, that has a municipal government, but it's really part of Metro Vancouver and it's part of this transit system called Burnaby. And, you know, the apartment buildings are like 60 stories. And, you know, when you get one of those neighborhoods around those transit stations, then you have a place where all kinds of people can live, all kinds of different households, you know, works really well for for seniors or for, you know, anybody with a job in the downtown area of the city, you know, it it's not as good for families, you know, but the single family home family that could be, you know, a mile or so away can easily commute to the train station a lot more easily than they can commute to wherever their job is. You know, the train station, you know, usually can get them to where most of the jobs are. But that kind of insistence by a senior level of government to override local zoning rules, you know, is a good item, you know, and another one that you used to have in between housing, you know, for single family homes, you have apartments, well, what's the in between the in between usually row housing or town housing. And, you know, there's generally been a lack of enough of that type of housing. Well, one of the new rules that provincial governments have been posed in in Alberta and British Columbia is is what they call or just taking a single family home lot and saying you can get special government fendal or provincial help if the municipality takes a major neighborhoods and allows four to six dwelling units on each of those what used to be single family home lots. You know, and so you have neighborhoods that were total, you know, brand new single family homes in, you know, 1960s and early, you know, 1970 kind of thing and those take a neighborhood that was solid single family homes and put in that kind of zoning. And very quickly, you have, you know, tripled and quadrupled the density, you know, which is really important to the municipality because they didn't have to put in in any extra roads, any extra sewers, any extra water systems, etc. You know, with the extra population, they might need, you know, their sewage treatment plan or something may not be big enough, you know, but they at least didn't have to run the sewer pipe down every street. Well, you know, you're really touching on a very important point, a point maybe we should reserve for another show and that is city planning. Planning, zoning, you know, make bringing the city, the municipality, the living area current with the expectations, the requirements of the society, the population, the community. And I, a lot of, a lot of communities haven't done this. And they just let it go. And the result is that you get development willy nilly, you get strange relationships between the developers and, and the planning authorities, you politicize the zoning. And you make it very hard even for somebody motivated to be an entrepreneur, to be a developer, a housing developer to actually do the job. Because it's been politicized and it's been the subject of obstacles. And the city, you know, is just saying no to a lot of changes. So I feel that the enlightened city cities as a service, as they call them in Finland, in Finland, got the right idea, by the way, cities as a service to the people really has to keep track of what the people want, what the people need, what the city can provide. It's a dynamic, ongoing, ever-changing, kaleidoscopic affair. And a lot of cities just don't see that. Well, cities are run by, you know, the local council and the local council is elected and the majority of what the public wants is what they try to do. And the majority of the public who wants to have, you know, their neighborhood not disrupted, for example, you know, the best way to maintain the value of certain kinds of property is, is if you have real homogeneity of your neighborhood, the property will hold its value or increase in value more than any other way. You know, if you could build a whole subdivision and build a wall around it and control the size of every house and, you know, the make all the streets mesh nicely, your neighborhood will increase in value faster than anyone around you. You know, and so, you know, since a house is somebody's largest investment, you know, they're not about to, you know, easily let some planner or some state government tell them that they should, you know, have a, you know, housing for, you know, the homeless that are ruining the downtown of their city. You know, let's build the apartment building in the middle of your neighborhood and stick those people in it. You know, and it's not bloody likely. It just, you know, so you have to accept, you know, there are political realities to the housing situation and a single family home or an apartment condo is usually the largest investment that, that people have and they don't simply wish to have, you know, that economic reality disrupted by some, you know, stupid planning thought in their mind. It might be stupid, you know, so you really have to have long-term solutions for housing, not, you know, short-term band-aids don't work too well. Well, we have a unique situation here in the sense that people come from far away. They like the weather. They like, you know, all the things about Hawaii, but they want to buy a piece of the rock and they're not going to buy a cheap apartment. They're going to try to find a nice apartment because they're well-heeled in many cases. And so what you have is a whole market of mainland companies or multinational companies that have come here and built these extraordinary condo buildings. I mean, every inch that's been available for condo, that's a condo, places that used to be places where the public went to shop or do recreation, migrated into condos. And these condos are in the multi-million dollar rate. So the local people can't afford them. At the same time, you know, the local people aren't getting their housing, their middle-class housing, their piece of the rock, not so easily. And it's like the appraisers, the banks, even the planning department, you know, all seem to be part of a process that makes housing way too expensive. I don't know if this happens elsewhere, but that's not really responding to the needs of the people. And then when you put on top of that, these extraordinary benefits that developers, you know, and the companies that build homes get from a tax point of view, you know, federal tax point of view, they achieve with, you know, the whole guy just have a chance. He's going to pay too much. And his mortgage and the mortgage rates are going up right now. It's going to be too high. And it's the biggest investment he makes in his lifetime, but it's really hanging around his neck. And then from time to time, we have, you know, crises like in 2008, where people couldn't afford the housing that they bought. So, I mean, it's all sort of disrupted. And I think the government is not doing the right thing in terms of the tax structure and the incentive structure. The government, the federal government, and for that matter, and state government, which usually follows the federal government, could be organizing its tax policy to increase middle-class housing, whether it's, you know, single-family or apartment housing, it should be beating up the process and enhancing the possibilities for construction and to achieve lower rents for people and so forth. And one thing, before I stop, I just want to mention that in Hawaii, we have this spinning affair. You have the bucks to buy a cheap and you sit on it for a year or two and then you sell it again and you sell it at a profit. So, not only is it too expensive for the middle-class person, family, to buy at the inception, but it gets further and further away from that. And, you know, it's treated as capital gain, as a tax benefit and so forth. Seems to me that there ought to be some kind of limitation on the spinning process to hold the values down, hold the resale prices down, so people don't get into the market just to make a lot of money on the reset. Well, there's a major reason that you miss, in your description, as to why new buildings, especially larger ones, involve an endless number of people who are short-term flippers. And that is that the mortgage rules or the financing require that the developer have pre-sales. So, it's pretty hard to get a genuine homeowner to be able to pony up their down payment or commit to a bunch of numbers two or three years before they can occupy a unit, you know, where professional investors or amateur investors, you know, little guys that flip a couple of units over and over and over. The major builders need those people to buy their unit or you know, sign up for their unit so they can qualify for their mortgage financing or their interim construction financing and to get the building built so that, you know, it's not so much a local zoning problem as a financial regulatory problem. Now, how would you change that? How would you fix that? Well, I don't, you know, the mortgage companies, you know, can, you know, put in whatever rules they want. And as long as, you know, all of them are requiring the pre-sales, then, you know, you know, the next new mortgage company, you know, has no trouble imposing that. Well, you need the federal governments financing like Fannie Mae or equivalent to be the first one to do that. Well, they were the first ones to go the other direction. You know, it's, you know, a part of it is all of the housing items that need to be adjusted are all lengthy. For example, because transportation and housing go together, you know, it would be ideal to have little satellite cities around, you know, these larger cities where land is not a great problem and it doesn't work for New York City. But, but if you took even, you know, big cities like Denver, Minneapolis, Phoenix that, that have lots of land around the menu, you take, you know, 20 miles away, you, you know, the government could acquire a large area of land and simply say, we, you know, the government will finance a rapid transit train system from there to the center of the nearby metro and, you know, require a whole bunch of density right where the train station will be, you know, somewhat like the Vancouver City has done within the middle of existing areas. And then, and you can have lots of single family homes not too far from, from that, that Newtown Center basically creating a new satellite city. And you can then control greatly the price of the house. Again, you're doing your utilities all as a larger scale. And you've got the real high density in the center where you're building your train station. Well, you know, we used to talk about Kapolei, which is out in the West End of Oahu as the quote, the second city input. And it was exactly on that concept that they, they put various institutional, you know, construction out there. You know, city, city building, bait building, and the like. And as time went, this is like 20, 25 years ago, maybe. And, and as time went on by, you know, it says you found that it was, it was not, it was not being developed as a second city. There were some shopping centers out there. But people were still coming downtown, downtown level. And then, and this is interesting because you talk about transportation. And then we have built a rail and the rail goes from what was supposed to be the second city into the first city. So people really didn't change their habit. They stayed on the highways and pulled the highways to meet me clogged up. And then they built rail to achieve the same kind of transportation. So the second city idea really hasn't come to fruition. And I think, you know, again, it goes back to the notion of a project. The government has an idea to build a project. In this case, the second city. But then it doesn't follow up. We're on the same concept. Administrations up and go, politicians up and go. The electorate doesn't necessarily understand the fine points of city planning. And so here you have a second city, which is more like a half a city, and it's all connected with rail and people, they and work in pretty much the same places they used to. And I'm not sure that the housing out there is any better than the housing closer to the city. So, you know, it seems to me that you and I needed asbestos and much greater detail. If we are going to get all of the nuances involved in any city, whether it be Nolulu or Vancouver or any of us. Well, there's, you know, two, you know, what Canada would call major cities, both in Alberta, Calgary and Edmonton, each of which have grown phenomenally. And that importantly, these satellite city ideas, you know, both of them have actually grown so much, they've absorbed the original satellite cities, you know, but, you know, the new ones have been very successfully and, you know, but they really don't have, you know, rapid train transportation, but Alberta, you know, is the richest province in Canada, or the wealthiest by far. And they have a phenomenal road system. So this, you know, these satellite cities did not really ruin, you know, the traffic in the central cities. You know, those two, those two cities still have a extremely low priced housing compared to, you know, Vancouver or Seattle or Toronto or, you know, you know, either like Phoenix is, you know, more expensive than, than Calgary or Edmonton. You know, like I am reminded of a conclusion I made a long time ago, and that is that the Commonwealth countries, you know, British Commonwealth countries are, are better planned than the West. Not sure why, you not know why. But for example, Adelaide, Australia, Adelaide, Africa, the other three kings of India and Pakistan and, you know, Jamaica and a few, you know, Commonwealth countries that, that I do not fit that pistol at all. I mean, I certainly agree with you when you think of Australia, New Zealand and, and Canada, the United Kingdom. But, you know, you have, you know, some where the British had a big influence. I like to think that, that, you know, Hong Kong was the, you know, the leading city in, in China for, for a long, long time, you know, because of the British influence. And similarly, why is Singapore what it is today? I mean, it has pretty well the highest standard living in the world and, and, and leads in many, many areas in particular, you know, housing, I think is, is one of the things that Singapore shines at in terms of quality of planning, you know, you know, 90% of people own their own place in Singapore. They do not have homeless people of any scale on the street that, you know, that, that anybody that, you know, is destitute temporarily, they essentially give them free housing to help them get back on their feet. And what is fantastic success they've had, you know, getting people back into being productive members of their society, you know, but, but I think you, you underplay, you know, the US in terms of, you know, entrepreneurial skill and talent, I just think that, you know, the US is a bit overboard and, you know, the billionaire can do what they want. And a whole bunch of people at the lower end just get left off. I mean, there's just not a good enough, you know, let's call it care for your neighbor, like, you know, you don't work as a society as a group, it's, you know, every man for himself and stomp on your neighbor if you can make a buck doing it. And, you know, it's just, you know, the, the British factory in Canada, I don't know, Canadians have always, in my mind, been more polite than the typical American, they've been a little more concerned and certainly our society as a bit, you know, much bigger safety net, much better concern for our, you know, neighbor, especially those in a problem. But, you know, we still have every problem the US has, Canada has, it's just a matter of degree. Yes, just a matter of degree. So many issues raised, Kent. Well, we can explore this further. I'm particularly interested in exploring transportation, not only in the context of city planning and development, but also transportation through Canada and how it compares with transportation in the US. Thank you very much for this discussion. It's always interesting. And it's always provocative. Maha. Go Laurel Dave. Thank you so much for watching Think Tech Hawaii. If you like what we do, please click the like and subscribe button on YouTube. You can also follow us on Facebook, Instagram, and LinkedIn. Check out our website, thinktechawaii.com. Mahalo.