Persistent rain-producing low-level nimbus (Latin: “rain”) clouds are thick and dark enough to block out the sun, and often bring torrential rains or snow. NIMBYs (not in my back yard) are ad hoc groups of residents who band together to oppose real estate developments in their local area. They share traits that are similar in many ways to nimbus clouds; but maybe with a silver lining.

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The government’s multi-decades failure to provide housing to meet population growth has led not only to an unprecedented unaffordable housing crisis, but also to substantially widening the gap between the “haves” and “have-nots.” Little is spoken about how rapidly increased housing prices resulted in rapidly increased equity. Homeowner net worth skyrocketed in the past two years while renters enjoyed no similar upside. However, you can’t blame homeowners, investors or foreign buyers for this, despite government misdirection.

Government created the cheap money supply to empower the “haves” to buy up existing housing while it passed debilitating legislation and added significant tax costs that discouraged new affordable housing construction.

Roughly two-thirds of voters are single-family homeowners, while one-third are tenants. Municipalities accommodate “community input” in their new housing and re-zoning approval processes. The number of projects that have been derailed by community input has been so great that it’s commonplace to call these self-interest groups NIMBYs.

NIMBYs are a significant source of housing unaffordability. The Ontario Association of Architects in 2018 reported that $193,000 is added to the cost of a 100-unit condo project for every month it is delayed and municipal delays are sometimes measured in years.

NIMBYs argue that multi-unit housing will “change community feel” but that’s a euphemism for “don’t negatively impact my property value.”  However, that train left the station over 15 years ago. Municipalities should not be permitted by existing law to accommodate NIMBYs. Politicians recognized that (a) urban sprawl was threatening the long-term availability and viability of our irreplaceable local food sources and (b) municipalities couldn’t collect enough from each taxpayer to build and maintain municipal infrastructure services. This latter point is one of the pivotal reasons that development charges ballooned.

The solution was to increase the number of citizens living and working in each municipal hectare, called intensification or “densification.” Ontario wrapped a “greenbelt” around major urban centres, severely restricting construction in these greenbelts via the Places to Grow Act, 2005. To date, no Ontario municipalities have achieved anywhere near their intensification goals and this failure is due in part to NIMBYs.

To enjoy 24-7-365 municipal infrastructure services and reasonable property taxes, municipalities must spread these costs over more people/hectare. It’s the age-old Economics 101 rule of economies-of-scale.

Additionally, I’ve not found any formal and respected studies (versus “fake news”) that provide evidence of housing depreciation because of intensification (except rooming and public housing) but municipalities succumb to the majority voters’ influence. In fact, I’ve read more than one study that proves increased housing density supports not only municipal infrastructure but also increases local business and economy, provides a greater variety of amenities and stabilizes municipal taxes that improve … everything.

“Affordability” is about money. Everything else is altruism or misdirection. NIMBYism is also about money. Does a NIMBYs entitlement to maximum ROI outweigh society’s need to provide housing, especially affordable housing for the less affluent?

Ontario has a unique opportunity to capitalize on the dramatic net worth increase of NIMBYs. Second suites are the quickest, easiest and lowest-cost way to infill affordable housing into urban areas.

The primary reason a homeowner would open up their extra home space to a renter is to offset their mortgage costs, so the business case is easy to appreciate. However, legislation doesn’t provide the same guarantee to landlords that it provides to lenders.

Everyone knows what happens if a homeowner doesn’t pay their mortgage. There’s no discussion about “housing as a right” or “security of tenure.” For some inexplicable reason, tenants, media and government believe that tenants who don’t pay their rent should have legal entitlements that homeowners don’t have. Equity in the marketplace begins with equity in law.

Homeowners abandon the financial upside of a second suite because of overwhelming financial and legal risks established by decades-long persecutorial tenancy legislation, the catastrophic failure of the Landlord and Tenant Board, unwritten deliberate delays in Above Guideline Increase hearings, zero-per-cent rent increases despite 10-per-cent to 100-per-cent increases in operating costs, six to 12-month rent-free housing for non-paying tenants and a plethora of other downsides.

If government balanced residential tenancy legislation and compelled municipalities with already established provincial legislation to dismiss NIMBY objections, thousands and possibly tens of thousands of second suites could open up in a matter of a few years.

NIMBYs might object until they understood that their housing-shortage-induced appreciative values would be replaced by higher valuations from an income-producing source, improved mortgage security, the option for a kid-or-parent suite and good ol’ rental income in their pocket to offset mortgage payments. The community also wins with higher population density attracting more businesses and amenities, increased local economic prosperity and more jobs. Government wins by spreading municipal costs across a larger tax base.


  1. Replying to Carolyne L (Brian calculates taxes) comme ts – the process you outlined regarding determining the amount of tax payable is still applicable today as it was then but only for single family homes. It\ commonly called the “Comparables Approach” by realtors. Property value and consequent property tax for rental investment properties are determined by MPAC, CRA, all lenders, etc. by the Direct Capitalization Method (DCM), called the “Income Approach” by realtors.

    The reason two buildings that are exactly the same physically (eg. two 12-unit apartment buildings) can be enormously different in property value is because the net operating income they generate are vastly different. If one 12 plex is filled with seniors for example who have been living there for over a decade, then the income of that property would almost assuredly be lower overall than the income of a property filled with upwardly mobile tenants who move out after three years to start a family for example. Any investor will be willing to pay more for a building that generates more cash flow and net profit. Determining these metrics is a well-prescribed mathematical process that shows a direct invesrse relationship between net operating income, property value and a buyer’s expected return on investment, which in simplistic terms is the capitalization rate. It takes me about 6 hours when I teach this process in class so space here and time don’t permit a more detailed explanation.

    I did write an article for REM on the “misunderstood cap rate” back in 2018. The premise and basic function has not changed and can be applied universally to different geographies and property types, especially retail.

    • Thank you, Chris for your comment at my (Martin tax) REM post.

      I’ve never worked commercial or investment properties. Likewise never did a rental, lease or any such definition real estate contract in nearly four decades. But oddly enough in my broker courses I enjoyed the most and made the highest marks in the courses related to what you do.

      I wish I were younger I would put more effort into your end of the real estate world. I lived in such a real estate bubble, concentrating on pure residential, referring out anything that remotely smelled of anything but single family residential. And even then mostly fully detached. I only rarely had a semi, townhouse or condo of any kind. I just didn’t feel qualified and didn’t want to find myself in a misrepresenting situation. I took plenty of ad hoc courses but was so busy being busy it just didn’t work for me.

      I probably earned more income from referrals in Canada and the States than anyone I ever met. I referred even across town. In one particular instance the owner of a historic gingerbread house near the GoTrain station called. Didn’t ask me to compete for their listing; just come list our house. I felt bad turning them down but didn’t feel qualified; likewise there was a property at the SW quadrant of town that I gave away (turned out it had an oil furnace contaminated soil issue) I felt bad for the agent I gave it to because the manager refused to help guide him. I gave the historical listing away to a senior lady in our office who knew the area well and had been in RE for many years but no longer did much business. I didn’t take a referral fee because I knew she was having a slow time. I was not involved in the transaction in any way shape or form. The branch manager thought I had done a crazy thing. C’est la vie.

      Often colleagues bemoaned my outrageous success and wondered what my success secret was.

      Your post explains it as best as could be said. Concentrate on what you do best, as you do. I did and it netted me a wonderful end result. I really enjoy your REM contributions. And find your topic of expertise fascinating, but clearly not for me.

      My reason for posting about the tax issue largely was to alert agents of the costs they could run into by not using assessment crosschecks to support their CMA residential findings.

      But surely crosschecking in your practice would also prove useful and supportive, helping you to do the excellent job you do not just helping colleagues and teaching but presenting to the public things they would otherwise never know or understand. You wear many hats particularly well. Retail is a whole other specialty that agents should not go near unless they have skill sets equal to yours. Not many can do.

      Carolyne L

      Sent from my iPhone

  2. I am with you on this one Brian. I too, have lived with all three hats on at various times in my life.
    I now keep my rentals as separate units from my home in a commercial/multi-family neighbourhood.
    I do not want to live with my tenants (too many sleepless nights, parking issues, annoying smells, etc) and….I don’t want to put up with anyone else’s in my neighbourhood either.
    We paid a premium to buy and adhere to building schemes when we built and have had others completely disregard them when houses passed from the first owners. That is bad enough!
    We, as realtors, know that folks buy emotionally, more than with money in mind. We see it daily.
    And…..when have you ever seen government do the right thing financially, or when they step into any situation????

  3. if we are to follow what is being requested by city dwellers moving to smaller rural areas in the U.S., then our planners & Provincial Policy Statement is out of date. We are planning cities/towns the same way today as we did in the 1950s. Today more & more the clientele moving to rural Ontario is looking for 3 property types. 1-5 acres parcels, 5-30+ acre parcels & the ones looking to continue living in a community with water & sewer wanting space such as 50 plus ft X 120 ft plus lot. However upon arriving they are being offered the standard sized lot & finding fewer rural lots as communities restrict the ability to sever outside built up areas.

  4. Good points Chris.

    One additional point I like to make is that the allowance for the creation of secondary and even tertiary suites in a property’s residence can actually allow many homeowners to remain in their homes and their neighborhoods in their later years much longer,’as they can continue to live in one unit, while renting out the remaining units.

    The owners likely need less space and they can generate additional revenue to afford the home.

    It can be a win/win scenario.

  5. Hi Chris:

    I’ve usually agreed with most everything you’ve written about herein over the years, but not this time.

    What you are not addressing within your arguments is that always-present and annoyingly persistent thing known as human nature.

    Your position is centered around a purely economic overview. On that basis your argument makes perfect sense. But we humans are not just autonomic automatons responding only to economic theories. We have feelings and biases that often fly in the face of pure theoretical reasoning. This is what makes us human vs pre-programmed robots.

    To wit: When we purchase a residential property, we choose one that fits our personal human desire for some semblance of control over our immediate and surrounding neighbourhood. We pay a premium for privacy and hopefully good neighbours who share our common beliefs re what a good neighbourhood should be like. If we wanted to be imbedded within a high density area replete with rentals, we would buy within neighbourhoods already set up like that. Thus, we choose our neighbourhoods, and we don’t want government waltzing in and changing it up after the fact against our wishes in order to satisfy late-comers—for votes—who might not share our beliefs about what a good neighbourhood ought to be. Why might they be like that? Maybe because they have no skin in the game? It’s much easier to pull up stakes for a renter to move on out than for a homeowner to sell and try to find another residential area similar to what was bought into originally before government changed the rules and the neighbourhood’s character.

    I’ve lived all three ways: as a renter; as a homeowner and as a homeowner with a rental unit within my home. I was very good renter who went out of my way to not bother anyone else in the neighbourhood. Not all renters share that personality trait. I learned this from personal experience. Many do not and just don’t give a shit about anyone else, especially for those high falutin’ homeowners. We’re talking about a class distinction here for the most part. Humans want to coexist with their own kind. It’s simply the result of the operation of human nature, and we can’t blame humans for being what they are by nature.

    Government economists often do not factor in human nature when calculating economic strategies, and that is where they fail for their constituents. That is why Communism doesn’t work over the medium to long term, and never will. Human nature cannot be legislated away.

    I’m a NIMBY, and I understand and accept why that is so.

    • I think there’s a popular movement afoot among governments across Canada and the world to remove a municipality’s power to approve new construction of missing middle properties.

      Ontario’s Affordable Housing Task Force made that recommendation last month in their report to government. Some U.S. states have passed such legislation and the most often quoted case is New Zealand.

      B.C., Canada may be moving in that direction, which would give Ontario some impetus since BC and ON often track each other’s housing legislation. This article was published a few days ago.

      This links to another reporting source so if it isn’t permitted on the REM website do a search on something like “BC remove housing approval powers”

      • Thanks Chris.

        I read the article from the link you provided. Here is my take on it:

        This is big governments—whether they be federal of provincial—trampling upon the rights of citizens and local governments to develop and “maintain” their own local residential autonomy. Big isn’t always right, but it is entirely political. It is a form of top-down elected communism. Both you and I have little regard for the bureaucratic Landlord and Tenant Board which is comprised of anti-profit Marxists who are biased in favour of tenants, no matter they be dead-beats, or worse. Just because tenants outnumber homeowners does not give them the right to unduly influence public policy regarding how one lives within the context of residential sheltering. Who pays one hundred percent of municipal property taxes? Residential homeowners, NOT renters. Thus, if one believes in the theory that whomever pays gets the ear of the political elites, local residential taxpayers’ fiduciary interests should hold sway. It’s a no-brainer. But they obviously don’t, due to big brother breathing down the necks of local politicians, holding the sticks and carrots over their heads re receiving federal and provincial transfer dollars for this and that local politicians’ pet projects…or not.

        We have far too many Marxist university-educated bureaucrats embedded within our various big-government agencies, and it is they who actually influence our elected, often ignorant—here-today-gone-tomorrow— politicians, toward communistic strategies designed to control people like you and me and, likely, most Realtors, not to mention most single-family homeowners who have struggled to get where they are, who don’t want their wool pulled out from under them by the We-Know-What’s-Best-For-You-Marxists…aka Communists.

        NIMBY’s have paid for and deserve to be NIMBY’s. Let’s not make villains out of them.

        • There’s a lot of emotion and perception of right and wrong in this hotly debated topic. The topic also involves some fundamental issues of human rights, social and societal obligations and responsibilities, and the rights of disparate self-interest groups. For better or worse, these types of contrasting issues are a driving reason for the creation and evolution of government. What we have today, however flawed, is in my opinion still a lot better than if we were ruled by a monarch or a single dictator or elite authortarian group (not the same as elected politicians who abuse their power).

          You are wrong on a key point though. Renters pay the property tax Residential landlords collect it on behalf of renters in the same way retailers collect HST but it’s heavily disguised by politicians. Retailers clearly show how much HST was collected on every bill. Government does not empower landlords to do this because it’s not in government’s best interest to do so. The proof of this is detailed in this REM article that I wrote in May 2019 on the subject.

          • Hi Chris:

            I remember reading that article. To my mind it’s smoke and mirrors. Property taxes are paid by property owners. Tenants are not property owners. Of course the tax amounts are built in to rents as charged by landlords. Supply and demand does not account for taxation. If a landlord’s properties are all empty, property taxes must still be paid, because the taxes are applied to the assessed value of the property, not the assessed value of rents. Rents are income taxable, are they not? I could be wrong, but if so we have a screwed up system of taxation.

            You make a good argument, but common sense dictates that tenants do not pay property taxes, else they would receive taxation notices just like their landlords, and the landlords would still charge whatever rents they could. Is tenant property taxation a hidden tax? No. It is simply a tax dodge for landlords when filing their income tax forms. That’s different than tenants filing same and claiming deductions for property taxes, which they cannot.

            I used to rent out properties, and never once calculated into the rent charged my property taxes. Why? I couldn’t show on the rental agreement how much property tax I had to collect from my tenants. I paid the property tax whether my suites were leased or not.

            Your argument is that tenants pay property taxes via legal tax write-offs in favour of landlords. What tenants are actually paying for are landlords’ tax rebates.

            I’m no tax expert, as I’m sure you are Chris, but common sense—which I think is the direct underpinning of English Common Law—dictates tenants do not pay property taxes. They simply pay rent which is then dispersed by landlords appropriately into their bank accounts and government coffers, using all legal loopholes to keep as much of those rents as possible…and taxes?…as possible.

            When landlords show on their tenancy agreements how much tenants pay as a percentage of their rents is property tax, then I will agree with you, because that will be a legal and disputable tax burden as placed upon tenants.


          • Many years ago I decided to try to have a better understanding of how taxes show increases year over year in a particular subdivision. How the particular increases are arrived at; calculated. Who exactly makes those decisions and how.

            When preparing comps I always did a final crosscheck of the tax bill assessment amount just as an overview. There were many variables on what otherwise appeared to be identical properties. When a giant tax differentiation appeared with no logical reason I called the tax department to find out why.

            Sometimes an agent had made a tax error entry on MLS. Did you know that agents can be forced to pay a wrong tax entry error to whomever the error applies?

            It might not be true today or even apply. But what I was told back then was that the tax department reviewed the solds of the given subject year for any particular location.

            They needed a minimum of three area sales in a specific year. They created some sort of pattern. The example used was that I had three large side-split sales at high prices very close by one another on a given long internal subdivision street.

            That meant that there would be a tax increase the following year for the homeowners with comparable homes who hadn’t sold, the solds reflecting a new price point of value.

            It would be worth contacting the taxation department where you live and ask how each new taxation year’s numbers are arrived at; likely a different process in each domicile.

            You might find some unknown public information of interest re your own home or regarding a listing.

            One example I had encountered was exact same floor plan across the street from one another. Same frontage, same lot size being 50′ x 120′ with one house backing onto a city street. The other backing onto other subdivision house. Identical floor plans and square footage. The one backing onto the street paid substantially higher taxes. There had been some leftover lots the subdivision builder had sold off to another builder, the one backing onto other houses and that house although identical in every imaginable way, paid substantially less taxes.

            That was the answer the tax department provided as to why the house backing onto the city street paid substantially higher taxes: what month in the same year each house had been built several years prior.
            I wanted to be sure I was entering the correct tax information on my listing.

            I pointed it out to my would-be seller. He was surprised as was I.

            Carolyne L

            Sent from my iPhone


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