Frank Steinhausen, Broker
FSteinhausen@REMAX.net
RE/MAX Rouge River Realty Ltd., Brokerage
Phone 905-428-6533
Fax 905-668-1850
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Archive for the 'Area interest' Category
Gas Prices Fuel Urban Desire
July 10th, 2008 Categories: Area interest
It seems that a 30% increase in the price of gas may be causing people to think very seriously about commute times and gas consumption when buying a home—especially when we hear, again, about the 401 being closed.
A recent Coldwell Banker Associates Report, “Interest in Urban Homeownership Fueled by Higher Gas Prices,” (they actually studied it?), found that 78 percent of respondents said that the rising cost of gas was fueling their desire to live in the city instead of the suburbs. More than 80% of them said that the commute was just killing their household budget.
Good news for and GO Transit. Hop on the green train and you can get where you want to go with traffic headaches.
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The Ins-and-Outs of Home Staging
June 27th, 2008 Categories: Area interest
Christine Rae and journalist Jan Saunders Maresh have recently released “Home Staging For Dummies.” This handy book offers a wide range of home staging tips allowing home sellers to help give you the edge in selling your home.
Home staging leads the eye to what is great about the home and rooms, while minimizing (not hiding) the flaws. “The way you live in your home and the way that you sell your home are two different things,” says Christine Rae. She has become Canada’s best-known stager and is leading the charge to add credibility to this new profession.
At first home stagers were often decorators. Now there is specific certification through the Canadian Staging Professionals and Certified Staging Professionals course.
The book sets out the differences between decorating and staging. “One big misconception professional stagers overcome time and time again is that staging the property means over-decorating or something akin to set design for a magazine shoot,” says the book. “Nope. Decorating appeals to the person living in the house; staging is removing the owner’s personal connection and targeting the buyer who will purchase your home.”
There are extensive before-and-after photos so that you can see and use their recommendations.
The book concludes with several lists, including mistakes that sellers often make, “tricks of the trade” to help sell a house, and 10 ways to prepare your house (and yourself) for the sale.
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Canadians Don’t Have An Umbrella: Rainy Day Funds Fall Short For Most Home Owners
May 28th, 2008 Categories: Area interest, Pickering Village, Real Estate News
The National Post reported recently that Canadians are not very well prepared for rainy days, like an economic slowdown. Despite a lot of press being given to the economy inching towards the “”R-word,” most Canadians only have about one month of expenses covered. I heard it suggested that we are in a virtual recession, which is like being virtually pregnant, I’ll bet.
According the an RBC report, Canadians should be paying themselves first:
“The message we’d like to really emphasize is that it’s important to put
away money first because you never know when an economy turns and we would hope we’ve got some emergency funds put away to get us through those times,” says Mr. Ratanshi. “The reasons why people are saving less vary from person to person, but there are a lot of individuals who may have the income but don’t have good savings habits.”
A key finding was that most Canadians do not believe they are good savers, RBC said, noting that 83% worry they don’t have enough money saved, and 86% that they can’t save as much as they would like.
“Many Canadians are also not prepared to cope with an unexpected long-term emergency or sudden life-changing event,” it said.
Only 49% have a rainy-day account set up, and of those that do, 55% have only enough saved to cover one month’s worth of expenses, while just 24% have three months’ worth of expenses covered.
“Surprisingly” two-thirds consider their line of credit and credit cards to be their backup in case of an emergency, it said. Meanwhile, 60% of the more than one million Canadians who keep $1,000 or more in their bank account each month, consider that money to be their safety net.
While the survey found that being financially prepared for an emergency is a priority for many Canadians, it is one of many priorities and a lower priority than saving for retirement, paying down debt, paying down one’s mortgage faster and saving for children’s education.
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Ontarians Get To Air Their Laundry
May 21st, 2008 Categories: Area interest
Although I am sitting by the computer today with wool socks and a 
sweater on (because I don’t want to turn my heat back on), I am looking forward to the fresh smell that summer-air-dried laundry can have. I am not looking forward to how stiff my jeans will be. Maybe I can put them away soon and bring out my sandals and shorts.
Here’s the word from Premier Dalton McGuinty:
This summer, Ontarians will have the choice to dry their laundry on an outdoor clothesline.
Premier Dalton McGuinty said the province is putting an end to some restrictions that prevent people from using outdoor clotheslines. This includes agreements between home builders and buyers in some towns and cities in Ontario.
Using outdoor clotheslines instead of electric dryers can:
- Save consumers $30 per year when they reduce their dryer use by 25 per cent.
- Cut greenhouse gas emissions.
- Reduce demand on the power grid — home dryers use about 900 kilowatt hours of electricity per year.
QUOTES
“There’s a whole generation of kids growing up today who think a clothesline is a wrestling move. We want parents to have the choice to use the wind and the sun to dry their clothes for free,” said Premier McGuinty.
“We want every Ontario family to have the tools they need to save energy and save money. Just using a clothesline instead of a dryer can make a significant difference to your pocketbook, reduce demand on the electricity grid, and help keep our air clean,” said Energy Minister Gerry Phillips.
QUICK FACTS
- Florida, Utah and Hawaii have laws in place that ensure people can use clotheslines. Similar legislation is being considered in Vermont.
- Electric clothes dryers use about six per cent of electricity in the home — as much as a refrigerator running 24-7.
- Over the course of a year, five clothes dryers could result in roughly the same amount of greenhouse gas emissions as an average-size car.
http://www.premier.gov.on.ca/news/Product.asp?ProductID=2153
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New Homes: Top 10 Energy-Efficient Remodeling Projects for 2008
April 30th, 2008 Categories: Area interest, Green Building, Real Estate
by Dena Kouremetis
PATH (The Partnership for Advancing Technology in Housing) recently released its annual recommendations on the top remodeling technologies to make existing homes more durable, stronger and more resource efficient.
The top 10 technologies include:
1. Air Sealing: which include non-fiberglass batts, sprayed foam insulation, and sprayed fiber insulation are recommended because they improve the thermal resistance of exterior walls.
2. Smartvent Ventilation: This new mechanical ventilator system measures the moisture content of outdoor and crawlspace air and only provides ventilation when the outdoor air is drier than crawlspace air.
3. HVAC Sizing (Heating, Ventilation and Air Conditioning): estimating heating and air conditioning loads more accurately so properly sized HVAC systems are installed to ensure energy efficiency.
4. High Efficiency Toilets: Designed for water conservation, high efficiency toilets have been defined by the plumbing industry and the EPA as those that use an average of 20% less water per flush than the industry standard of 1.6 gallons. A high efficiency unit toilet can save up to 8,760 gallons of water each year for a family of four.
5. Compact Fluorescent Lighting: Compact fluorescent lamps (CFL), are simply miniature versions of full-size fluorescent lights, but four times more efficient and last up to 10 times longer than incandescent bulbs.
6. High Performance Windows: Window technology has evolved over the years to the point where windows can be selected not only for their aesthetic qualities, but also for their performance abilities.
7. Wireless Lighting and Thermostats: These controls can be set on timers or using a variety of sensors with wireless systems to increase home efficiency without sacrificing home owner comfort.
8. Solar Hot Water: Solar water heaters come in a variety of configurations but each differs in design, cost, performance and level of complexity. Most systems have back-up water heating such as electricity or gas.
9. Recycled/Renewable Flooring: The two types of environmentally-conscious flooring that lead the market are recycled flooring from old structures and renewable flooring from fast-growing trees, such as bamboo.
10. Tubular Skylights: Tubular skylights use the sun for lighting interiors without the drawbacks associated with conventional skylights. They are generally easier to install than typical skylights and, from the home’s interior, resemble conventional lighting fixtures.
For more information, visit the PATH website at pathnet.org.
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What We Can Learn From the U.S. Mortgage Fallout
April 25th, 2008 Categories: Area interest, Durham Region, Mortgage, Real Estate, Real Estate News
U.S. President George Bush recently announced a stop-gap (albeit limited) 
measure that may assist many U.S. homeowners from experiencing what millions already have – losing their homes. In light of the dilemma south of the border, what can we Canadians learn from all this, and how can we be better prepared to avoid similar devastating effects?
A brief history of U.S. home lending practices: it all started when credit was provided early in the 20th century after the Great Depression. Lenders first offered simple interest 80/20 short-term loans; 80 per cent down and 20 per cent financing. Then some ingenious private entrepreneurs and banks decided they could charge more interest by providing 50/50 loans over longer periods. They saw the opportunity to really make large returns on their investments. 50/50 soon became 80/20, with 20 per cent down and 80 per cent financed. After lobbyists pressed Congress, they eventually passed a law approving compound interest, not long after the Second World War when all the vets returned home.
Amortization schedules and pay-off times went from five and 10 years to 15, 20, 25, 30, 40 years and more. The banks capitalized enormously on these lending practices. Compound interest extended for as long as the gullible public would bear, and made the banks astronomically profitable. Initially they weren’t even sure if they could convince the general public to contract such huge long-term debt commitments. But untethered capitalism and the desire for “more than one could really afford” reigned supreme. Communities like Levittown (America’s first planned “assembly-line” subdivision in Long Island, N.Y.) were enormously successful. The groundwork for today’s real estate and mortgage template was cast.
People who really couldn’t afford the credit they desired were given loans at higher rates to counter balance higher gross-debt-ratios. Even those who didn’t qualify under normal circumstance could also live beyond their means through creative and exotic loans like
Adjustable Rate Mortgages (ARMs) and 40- or 50-year amortization periods. Therein lies the core-formula for millions of Americans losing what used to be their most valued and protected asset, their homes. The formula was to over-extend ourselves, live beyond our means or buy more than we could really afford, with funding provided by a lending system that understood high-risk, high-return and gladly participated. Lenders became ‘enablers’ for a public who acted like dope-crazed addicts, never able to satisfy their need for more of this euphoric drug – extended credit.
As long as equity in their investments continued to grow, they were safe. But when over-inflated house values soon began to deflate, they could no longer tap into the reservoir of ‘savings’ built into their homes.
After extending themselves even further with home equity loans, thus adding another monthly payment, the American public was trapped. They became unable and/or unwilling to continue to pay for homes that were worth less than what they owed on them, especially if it crimped their salacious appetite for a lifestyle they could no longer afford. The fallout became apparent to the lending institutions and they quickly lobbied Congress to make it harder for people to bail out through bankruptcy. To nobody’s surprise, the law was passed.
To date, Canada and Canadians have been spared, for the most part from the major fallout experienced in the U.S. Why? We have yet to lower our standards to the point of our neighbours to the south. But will we continue to hold higher standards – and for how long?
That’s the key.
So as a dual citizen who has lived and worked for equal years in the U.S. and Canada, I say, take heed. Be cautious. Real estate, though cyclical, is being influenced by new parameters that have to be weighed in the balance – including demographics and preferences of aging baby boomers, the economic impact of ever-increasing oil prices and the like. How can we protect ourselves? We can try to avoid extended amortization periods, exotic loans and creative financing; but most importantly, simply live within our means – an unpopular idea, but the undeniable truth.
Frank Kirschner, MBA has been licensed in real estate since 1982. He has held a variety of executive positions in the industry, including vice-president and director of operations for Prudential Real Estate Affiliates/Canada; broker/owner of Atlanta Buckhead Realty and executive vice-president, Prudential Sadie Moranis Realty. Email frank@atlantabuckheadrealty.com
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Calling Their Fluff: 6 Tips to Spot the Stagers’ Tricks
April 22nd, 2008 Categories: Area interest, Buying real estate, Home staging
When Derek and Angela Chezzi go house hunting in downtown Toronto, they’re struck by a disturbing similarity in what they see. The furniture at many resale homes looks suspiciously fresh and new, the art hanging on the walls seems all-too-familiar and the rooms are just soooo squeaky clean. After looking at dozens of houses, the Chezzis recognize the signs that a home stager has been at work. “Let’s face it, how many of us have furniture that matches perfectly?” asks Derek, 32, who works as a website manager. “You can tell as soon as you walk into a staged home that this is something that belongs in an interior design shop, not your average family’s home.”
Remember: no matter how beautifully decorated a home may be, its true value hinges on practical considerations — how much space it offers, the neighborhood it’s in, how many bedrooms and bathrooms it has. Here’s how to make sure you don’t get taken in by a stager’s tricks:
1. Beware of old panes
The best tipoff that a home stager has been at work is a beautifully decorated home with old windows. Why? Because a complete set of new windows is expensive — think $10,000 or so — and most stagers won’t bother to put them in. But if the windows are old, you have to wonder what other secrets the house may be hiding.
2. Measure, measure
Stagers are notorious for making small rooms look larger by renting undersized couches, tables and chairs. “I staged a house in Rosedale that had a great third-floor master bedroom,” says Toronto home stager Debra Gould, “but it was awkward because the stairwell and entrance to the room were really small.” She ended up renting dressers from a kids’ furniture store because she couldn’t get adult-sized dressers up the stairs. Imagine the shock the new owners must have felt when they tried to move in their own furniture. To make sure you don’t have a nasty surprise, pack a tape measure and write down the dimensions of all key rooms.
3. Avoid showrooms
The showrooms in many new condo developments use pint-sized furniture, large mirrors and other space-expanding tricks to make the units appear larger than they are. “If you’re looking at something in a new complex,” says Feisal Panjwani, a senior mortgage consultant with Invis Inc. of Vancouver, “ask to look at another suite that hasn’t been done up. You’ll get a feel for what the home will look like with regular furniture and appliances.”
4. View it live
Most real estate agents insist that viewing the house when it’s empty gives
you time to examine it at leisure. But the Chezzis have found a better option is to view it around suppertime when the owners are present. “When someone’s in the place,” notes Derek Chezzi,”you get a better sense of the house. Is there enough counter space for the dinner dishes? Does the kitchen feel spacious with two or three people in it? You can imagine what it would be like to live there yourself.”
5. Come out of the closet
Stagers often empty out closets to make them look larger than they really are and give the illusion of plentiful storage space. Be aware of the trick and make sure you know exactly how much storage space you’re getting. “I often wonder where all the jackets, shoes and coats are in the homes we see because they certainly aren’t in the closets,” says Derek Chezzi. “I always ask to see other storage areas.”
6. Tune out the noise
Any good stager tries to create a relaxed, elegant mood. Jazz on the stereo, a roaring fire in the hearth, fresh flowers and homey scents are just some of the tricks you’ll encounter. The only defense? Close your eyes and imagine the same room with kids yelling and yesterday’s newspaper spread out on the floor. Reality may not be as pretty as the staged version, but it’s a much better guide to value.
By Julie Cazzin
From the April/May 2005 issue of MoneySense magazine
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Winning the Real Estate War: 10 Tips From Home Stagers
April 21st, 2008 Categories: Area interest, Home staging, Selling real estate
Home staging has become a staple in getting your home ready for the buyers. Here are 10 tips that can get you started and it could be the difference between selling and not selling, in today’s market:
1.Make an impression
Prospective buyers make up their minds about your house even before they get out of the car. To ensure they have the right idea, clean up your yard, rake the leaves, shovel the snow, and sweep driveways and porches. Get out the rags and cleanser and spend 30 minutes scouring your front door, porch, railings and steps. Then tuck away all your recycling cans and bins at the back of the house.
Debra Gould, who owns the Six Elements home-staging firm in Toronto, says it’s important to avoid planting negative associations in buyers’ minds. When attending an open house she had to climb several steps to get to the front door. “I couldn’t help but think that this could be a nuisance with groceries,” says Gould. “Then, when I finally got to the top, the recycling bins were sitting right there on the porch. I immediately told myself, ‘Imagine carrying one of those bins full of newspapers, cans down several slippery steps.’ I couldn’t see myself doing that, so I left, knowing it wasn’t the house for me.”
2. Unclutter
Clutter eats equity, say stagers. So purge your closets, empty cupboards,
box up small appliances. Rent a storage locker to keep what you want, then toss the rest. “I give storage boxes to my clients and tell them to edit, edit, edit,” says Theodore Babiak, a Toronto real estate agent with Royal LePage. “I suggest they take some of their books off the shelves, reduce the number of CDs or DVDs, pare everything down.”
The stager’s motto? Be ruthless. When Tamara Roberts was selling her Vancouver condo last year, she paid $150 for a one-hour consultation with home stager Carter, who gave her a detailed to-do list that included instructions to leave only one thing on the kitchen counter(a bowl of crisp green apples)and to remove fridge magnets and small area rugs. “Everyone knows to unclutter,” says Roberts, “but John brought it down to specifics. He even had me keep a storage container under the bed so I could throw my pajamas and bedtime reading in there so buyers wouldn’t see it.” The payoff? Her condo sold in one day for $6,000 more than her asking price of $339,000.
3. Impersonal works
You want buyers to imagine themselves living in your home, not to feel like a guest in it. So stash anything connected to your family or personal interests. Hide your son’s hockey trophies, store family photos, remove all traces of day-to-day life. “If someone goes into the bathroom,” says home stager Gould, “and the rim of the tub is covered with shampoo bottles while people’s toothbrushes are lying around the sink, it’s hard for that person to imagine that this could be his or her bathroom. The buyer becomes very conscious of being in someone else’s environment. That won’t get you an offer.”
4. Keep it fresh
Barb Schwarz, president of StagedHomes.com of Concord, Calif., has been staging homes for 30 years and she says a disturbing number of home sellers don’t realize that their home … um, smells. “There’s nothing worse than stepping into a house that smells of smoke and pet odors,” says Schwarz. The easy solution is to keep your windows open for 10 minutes a day. This strategy works better than deodorizers, says Schwarz, since a lot of people have allergies to artificial room fresheners. The oldest trick of all? Leave chocolate chip cookies baking in the oven. Yes, it’s hokey, but the smell does do wonders to help buyers bond with your home.
5. Declare war on grime
Cleanliness helps put a buyer’s mind at ease since it suggests that you’ve probably taken good care of your residence in other ways as well. So clean everything: walls, door handles, light fixtures and pantry cupboards. At Carter’s suggestion, Jim Thompson, the Vancouver home seller, hired a professional cleaner to scour the inside of his home and a contractor to powerwash windows, walkways, eavestroughs and pathways.
Toronto home stager Gould recommends you pay special attention to the furnace room since every home buyer wonders what shape the furnace is in. “If the furnace looks clean, it looks newer,” says Gould. That goes for the fuse box and electrical panel, too.
6. Hire a handyman
Dripping faucets, cracked tiles and mouldy caulking around the bathtub can knock thousands of dollars off the price of your home. “I have a lot of clients who say, ‘Well, that’s a little problem, the buyer can deal with it,’ says Gould, who makes a practice of walking through sellers’ homes and compiling a list of what needs to be fixed. “And I say, ‘No, if it’s a little thing, then we should deal with it.’ ”
7. Color it up
Your single best investment may be a fresh coat of paint in key areas of your home. “Paint your front door and put some urns with brightly colored flowers on your front step or just inside the entryway,” says Jane Hall, a Toronto designer and owner of The Voice of Color in Toronto. “Those things make a house seem cared for, different and important.”
8. Reduce furniture
An easy way to create a sense of space is to get rid of some furniture. Moving a sofa and end tables into storage can give a small room some much-needed breathing space. So too can storing the table and chairs that normally sit in your kitchen, piled high with mail, magazines, books and groceries.
If your furniture dates from the Mulroney era, consider packing it away and renting a few modern, stylish pieces or borrowing a couple of well-chosen pieces of wall art. “Keep it clean and simple,” says Carter, “like a hotel room or the show room for a new house.”
9. Light me up
The brighter and sunnier a space, the easier it is to sell. Start by investing in a good window-cleaning service. Stagers say clean windows let in as much as 30% more light than grimy ones. Then thoroughly clean the shades on your light fixtures, change light bulbs and add floor lamps if an area seems dim. Dump those energy-saving 60-watt bulbs and go with higher wattage lights for maximum illumination. Finally, when it comes time to show your home, make sure all the lights are on. “Hallways especially should be lit,” says home stager Hall. “When those are dark, it gets depressing for buyers going from room to room.”
10. Add a touch of humanity
A couple of planters on your front porch, a vase of flowers on your dining room table, even a simple rose in a bud vase can warm up a room. This is where you can let some of your creativity show through. “You want to get away from making rooms feel dull and sterile,” says the home stager Gould. “Flowers and plants are good for that.” Candles help, too.
Apply all these tips and the final results can be stunning. “I could never have achieved anything as effective on my own,” says Thompson, the Vancouver home seller. “The stagers helped me turn it into a show home. And even though this might sound silly, all the changes made it so attractive that it sort of made me want to stay.”
Such feelings are common. Stagers say a few homeowners actually change their plans and take their residences off the market once they see how good their old places can look. Many decide to stage not just their old homes, but their new ones as well. “Home sellers will often ask me to come to their new home and work some of my magic there because they don’t want to go back to their old way of living,” says home stager Schwarz, who’s prepped more than 2,000 homes in the U.S. and Canada. In fact, Schwarz notes that a lot of home sellers don’t even want to see any of the stuff they’ve put into storage because they discover they’ve never missed it. “They want to live fresh, clean and clutter-free. It’s a wonderful thing. Because staging is, above all, a cleansing experience.”
By Julie Cazzin
From the April/May 2005 issue of MoneySense magazine
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Add a Little Sunshine and Dirt: Let The Summer Sport Season Begin in Durham Region
April 15th, 2008 Categories: Area interest, Neighbourhood fun
The hockey playoff are on television. Hockey playoffs are off for my kid’s teams. And soccer practice has started. I hear football for the Pickering Dolphins has started also.
With the sun out this week and the grass drying and greening, I came across this video that reminds us why, as parents, drive all over Durham Region for our teams:
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Who’s Your City? Will Toronto And Area Make The Grade?
April 10th, 2008 Categories: Ajax, Area interest, Durham Region, Pickering, Pickering Village
I have been intrigued lately with the press that Richard Florida is getting about his new book, Who’s Your City. The Financial Post reported him as one of the most influential gurus in their Business Magazine and articles about the book are popping up everywhere.
As a realtor, I am curious about how people make decisions to move to certain locations, cities, even neighbourhoods.
I can’t speak as eloquently as Mr. Florida on how this is going to affect Canada, Ontario or the Greater Toronto Area, so here is an article he wrote for The Globe and Mail last December that strikes a cord:
The Globe and Mail
Pity the tri-city Toronto
The Globe And Mail
Saturday, December 22, 2007
For decades we’ve heard that new transport and communication technologies - from the street car to the Internet - would make geography and place irrelevant. We could all spread out and locate wherever we liked. The suburbs would boom, edge cities would predominate and the urban core would fade away into irrelevance. Some told us that the future of the centre of cities was to become little more than a “sandbox” or “reservation” - a holding pen for the urban poor. It turns out that these prognostications were dead wrong. A close look at the real data shows that the world is quite spiky, defined by surging mega- regions, declining hills (like the Clevelands and St. Louises of the world) and sinking valleys (the poor mega-cities and even poorer rural areas of the emerging economies and developing world).Now a landmark study by my University of Toronto colleague J. David Hulchanski of the Centre for Urban and Community Studies, “The Three Cities within Toronto: Income Polarization among Toronto Neighbourhoods, 1970-2000,” shows that Toronto is not only far from immune from these trends but also that its position as a centre for the global creative economy comes with a level of spikiness and economic polarization that are deep cause for concern.The study shows how, from 1970 to 2000, our city of neighbourhoods has been transformed into three separate cities, defined by their economic differences. Toronto may well be a thriving multicultural, ethnic mosaic of the sort Michael Adams’ Unlikely Utopia proudly identifies, but it is one where ethnic diversity is overlaid by growing class division.Some time ago, in his classic studies of the black-white divide in urban American, the sociologist William Julius Wilson wrote of the declining significance of race - meaning that racial division in the United States had given way to a new and more potent divide based on economic class. This divide has ultimately produced a class-polarized America - a divide that underpins and motivates declining social cohesion, a frightening culture war and an increasingly dysfunctional political system.The authors of the U of T report rightly note the intersection of race, ethnicity and class in the emergence of a new, more stratified Toronto, but they also make clear that this class divide has grown glaringly worse in the past couple of decades.
The three Torontos are defined by an increasingly rich and advantaged core, a shrinking middle-class zone, and low-income earners and immigrants at the outskirts. In some ways this is a good thing: Toronto is the opposite of hollowed-out American cities like Detroit and Cleveland. And the pattern is strikingly similar to what is happening in places that are becoming the epicentres of the creative economy. The gentrification of the urban core, with out-of-sight housing prices, is occurring in London, New York, San Francisco, even in Washington, D.C.
What we are witnessing in Toronto is the rise of a new set of economic, demographic and social patterns being set in motion by the global creative economy. There is a mass migration of highly educated and highly skilled people to a smaller and smaller number of cities. Harvard economist Edward Glaeser has documented the sorting of highly educated, high human-capital households in the United States. Thirty years ago, most cities had a similar proportion of educated and less educated people; now highly educated people are concentrated in just a handful of major metropolitan regions like New York, Washington, San Francisco and Seattle.
They have gravitated to the cores of these metros to take advantage of clustered work, gain access to amenities, and reduce their time costs spent on travel. In the five-year period from 2000 to 2005, New York City took in 285, 000 recent college graduates - a number roughly equivalent to the entire population of the city of Buffalo. Driving this is the benefits of economic clustering long ago identified by Jane Jacobs. It is the clustering of people, even more so than the clustering of business and industry, that today is the motor force of economic growth.
Left to its own devices, this clustering is causing the sorting of people by economic class. Not just across cities but within them, as the U of T report demonstrates. This is also similar to what is happening in the United States. Kevin Stolarick of the Martin Prosperity Institute has shown that the leading U. S. creative regions (San Francisco, Austin, the North Carolina Research Triangle, and Washington) also have the highest levels of income inequality. While not quite in this league, Toronto is beginning to see a similar trend of economic and social polarization.
We need to understand the tremendous economic and social polarization produced by the shift to a global creative economy. The same things happened with the Industrial Revolution. It took the leading nations of the world 50 or more years to understand it - a period punctuated by depression, epic class struggles, and two world wars - and finally for progressive leaders to enact new deals that would spread the productive capacity of the industrial engine and allow working people to benefit from the productivity improvements their work helped create.
It’s time to wake up and act on these striking new realities. The key task of our time is to build new institutions to spread the gains of the creative economy. If not, it will continue to concentrate those gains geographically and socially.
This is Toronto’s and Canada’s great opportunity. It’s also a major part of the reason why I moved to Toronto. Absent a major miracle, the level of economic and social polarization is so deep in the United States that it may well prohibit the kind of concerted action required to overcome that class divide and build a more cohesive and shared creative economy.
In my view there are at best three economies worldwide that have the social capacity to navigate and lead in this change. Canada is one, Australia another, the Scandinavian nations still another. And that leadership, given the absence of awareness of these issues at the national level, will have to come from the major cities in these nations.
Toronto, despite its worsening economic polarization, or perhaps because of it, is perhaps in the best position worldwide to lead here. It should put aside its dream of becoming another New York, London or, in some quarters, another high-tech Silicon Valley. Those are yesterday’s models - thriving commercial cores and growing polarization and poverty. Toronto must break the mould and strive to deal with the spikiness and polarization that its improved position in the global creative economy has brought with it.
As I have seen for myself, despite this polarization, Toronto remains a cohesive community. Even as that cohesion is stressed, the city remains the unlikely utopia Mr. Adams identified. In contrast to the U.S., where there is open class warfare, moves to restrict immigration and lashing out against gays and lesbians, Toronto has what it takes to bridge the class divide. My conversations assure me that economic and business leaders are aware of this; at a recent meeting with Mayor David Miller and key political leaders, this was the central topic of discussion.
But we need to move quickly in light of what this landmark U of T study shows us. We need to develop strategies to close the gap. We need to make sure immigrants have a chance to see their full skills be rewarded. We need to make sure all Torontonians can use their creative capabilities and as such contribute even more fully to economic growth.
And we need to upgrade the service economy as a key part of our strategy for the future. Low-paying service jobs are analogous to what blue-collar jobs were in the industrial age. Just as unionization and collective bargaining made once- low-paying blue-collar jobs into well-paying ones that could support families, Toronto - and Canada - must do something analagous to improve work in the service economy.
Caught today between the twin pillars of economic growth and widening social and economic polarization, Toronto has the opportunity to become a model of the prosperous, sustainable and inclusive region - one where each and every person can fully develop their talents, find work that fufills their dreams, and connect the further development of human creative capabilities to future economic prosperity.
The three Torontos can become one Toronto. The time to act is now.
Richard Florida is a professor at the University of Toronto’s Rotman School of Management and academic director of the Martin Prosperity Institute at the Rotman School. He is the founder of the Creative Class Group (creativeclass. com) in Washington, D.C., which develops strategies for business, government and community competitiveness, and author of the bestselling books The Rise of the Creative Class and The Flight of the Creative Class.
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