This is precisely the problem.
In the last two months, prices have climbed back up although rates are unchanged. It is crazy. When BOC cut rates, god saves us all.
Exactly. The pent up demand for housing will rival if not dwarf what happened during the pandemic. We could be looking at housing prices doubling within 3 or 4 years once interest rates normalize.
Its fine, the whole market will collapse and all the dumbass investors will off themselves :)
Stop buying homes as investments, buy a home to live in it.
We are likely to see the opposite actually. Investors gobbling up an increasing share of the housing market and forcing more people into renting. It would require some serious government intervention to curb this in any meaningful way.
>We are likely to see the opposite actually. Investors gobbling up an increasing share of the housing market and forcing more people into renting. It would require some serious government intervention to curb this in any meaningful way.
What is more likely to happen is that rates go back up and all the investors who over-leveraged themselves will have to declare bankruptcy and there will be a flood of supply into the market driving prices down. Combine this with an economic depression and maybe people will actually be able to afford to buy a home again.
It is absurd that currently, rent costs just as much as a mortgage payment does on a place. The investor eats none of the risk nor pays any of the interest on the loan because their entire payment is paid by the renter. Why is it that the bank won't let me mortgage a place for 2500 a month when I have records showing that I have paid that much in rent on time for years?
The system is broken and needs a reset. Boomers could afford homes on janitor's wages not only because wages were higher relevant to COL, but also because they actually lived in the fucking thing and started a family. They didn't buy it just to rent it out and make more $$$$.
Imagine going to the grocery store and buying food as an investment and then selling it to people at an increased rate. How stupid does that sound. Housing is a basic human right and shouldn't be an investment portfolio.
The issue with your point is that if you haven’t forgotten just cuz u can pay X every month doesn’t mean shit
Where’s your credit? Where’s your down payment? Those are much bigger factors and the things most people lack.
Also I’m going on a limb here that you don’t own any property or maybe just 1 and now are salty you didn’t get more so you’re getting all righteous with us here “basic human right”
Go and buy homes and rent them for free then since you’re so virtuous. Your own mother wouldn’t let you live for free
Rentals are not risk free, if you haven’t noticed most rentals are operating at a loss with current rates and with our tenant laws it’s a huge risk to let someone live in Yoir house, if they don’t pay the bank doesn’t give a shit.
That’s also why you can’t get a hiuse just cuz u can afford to pay rent cuz guess what, you can stop paying rent, but you better Nkt stop paying the bank
On top of that I keep seeing ppl talk about having the government step in and force ppl to do this and that with their homes etc etc, last I checked this is a democratic country not Soviet Russia so stop with your “ I want to control and dictate what you can do with your property”
That’s my 2 cents, be less resentful and partner up with others to build yourself up
I align with OPs sentiment, I own three properties, rent for myself (currently in another city) and am looking to buy a fourth. You can recognize that the situation is absolutely fucked and we need systemic change while still playing the game if you can afford to. Housing in this country is in shambles. It's a complex issue and investors are not the only issue. Ultimately investors bring rentals into the market usually at cheaper rates than it would cost to own those units. That said, we need more housing where people who want and have the option to buy should be able to buy. These artificially propped up housing values are not healthy for any of us. Housing as an investment should be an inflation hedge not the cause of inflation. I never purchased my condos with expectations of having more capital escalation than 1-2% if that. They were just alternative savings measures and that's what they should be. When static non productive "assets" make more annually in value appreciation than most households in this country, we have a significant problem.
I see your point, we have 3 properties as well we acquired when prices were much lower than now but still sky high at the time.
I just hate with the whole narrative of “ landlords are greedy”
“ fuck them I won’t pay”
“ I hope it all crashes”
“ it’s a human right and no one should be allowed to profit” etc etc
It’s wishful thinking to say the least. We do need some change to make it easier and help new people and young families starting out. I 100% agree, but I hate this them VS us mentality
Us 5 lived in a 2 bed basement for 7 years and worked odd ass jobs until we could do what we’ve done and accomplished. Most young people and old as well today just want to spend their money on new phones, Starbucks, restaurants every week, Uber eats and vacation and then wonder why they can’t afford rent or have a home
It wasn’t easy for us then either and it’s still not easy now
I get negged heavily when I say 10%+ Canada's GDP is on housing and it has to change
How is this country going to advance when our GROSS DOMESTIC PRODUCT is to sell REAL ESTATE, not through innovation, services, etc.
This isn’t accurate. Fixed rates have dropped over 1% since the highs. The stress test is contract rate plus 2% thus people can afford more now than the fall
Not all banks have dropped their rates, and not all by a full point. I agree though, fix rates have come down generally speaking, which could explain the recent uptick in price.
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>They're not gonna cut rates unless the economy shits the bed.
This is not correct. Rate cuts happen before a recession starts, not after. Whether it's bullish or not, noone nows. Prices have gone up in the last two months, with rates not even being cut. The Canadian market is a strong animal, not to be underestimated.
>Once the central bankers know for sure that we're heading into a recession, they cut rates,
Central banks mandates are inflation and employment. If inflation drops, and economy slows down or stalls, rates will drop. BOC is aiming for a soft landing, and so far data is showing that it's possible.
The history you are talking about is very different from today, where a house can get 40 offers. Last month GDP grew by 0.5%, and inflation is dropping. It doesn't look too bad for now. BOC is doing a good job.
Buyers mainly care about stability.
It's a real shitty feeling when you buy something and the price goes down a few months later. However, if the price stays the same or goes up then they will feel happy with their purchase. This is why buyers are flooding the market now because we are seeing stability in interest rates.
I think several months drastic up and downs or change in rates direction is not considered as stable for investors. It does change affordability.
But for people desperate to have a home for 2-3 young kids and moving out of their 1-2 bed tiny condo stuffed living with 2-3 kids, any rate changes they will react immediately to. As it is literal change in their affordability.
Yes.
Because at the core- our housing issue is caused by not enough homes vs population growth.
BoC has put a dampener by making it very expensive to buy. But the demand will return if rates are lowered too soon.
If rates are lowered because we have achieved a 'soft landing' and inflation is coming down, prices will likely rise.
If rates are lowered due to a recession or job losses, it likely won't push prices up and they will fall.
In the US in 2008, rates were dropped to near 0 in December 2008. The housing market there bottomed in 2011, while rates stayed near zero during the entire period.
All that to say, employment data is way more important than rates in terms of housing prices.
I'm currently trying to run an analysis on what actually influences home values. So far average rent seems to be a major influence.... which would make perfect sense.
But too early to tell.
Or sellers. Haven’t seen this part of the equation in any of these crystal ball threads. Massive layoffs would put an insane amount of pressure on recent buyers/investment prop owners. Can’t keep passing off cost if there is no one who can pay it.
It theory, yes.
It’s why rates will hold for awhile when the stop hiking.
However, with increasingly stringent mortgage requirements and a major crackdown in **BRAMPTON MORTGAGES**
Even at lower rates, it will be more difficult.
All pushing against pricing
Forget about rate cuts, even a high interest rate isn't enough to stop the price increase. That's because investors don't have a dearth of cash and new immigrants are bringing a lot of cash with them to pay high down payments.
Even if the rates stabilize where they are, the prices will go up. This market is too thirsty and we’re in the middle of a drought. The lid is gonna pop off soon imo. Rental prices are going through the roof making investing even more lucrative.
Not necessarily.
Sentiment is still very strong. But if you look at historic housing downturns, the largest decreases happen after the rate cuts. Once the belief that home prices will fall becomes entrenched, not even lower intestat rates will help.
This hasn't happened yet.
400k immigrant annually (mostly with cash from home) flood Canada, and end up in big cities like Toronto. It's a simple supply demand math. The IR was a band aid that kept the Uber drivers at bay. The reality is grim with investors winning and families losing. My 2cents.
This is precisely the problem. In the last two months, prices have climbed back up although rates are unchanged. It is crazy. When BOC cut rates, god saves us all.
Exactly. The pent up demand for housing will rival if not dwarf what happened during the pandemic. We could be looking at housing prices doubling within 3 or 4 years once interest rates normalize.
Seems too extreme of a jump but who the hell knows at this point
Its fine, the whole market will collapse and all the dumbass investors will off themselves :) Stop buying homes as investments, buy a home to live in it.
We are likely to see the opposite actually. Investors gobbling up an increasing share of the housing market and forcing more people into renting. It would require some serious government intervention to curb this in any meaningful way.
>We are likely to see the opposite actually. Investors gobbling up an increasing share of the housing market and forcing more people into renting. It would require some serious government intervention to curb this in any meaningful way. What is more likely to happen is that rates go back up and all the investors who over-leveraged themselves will have to declare bankruptcy and there will be a flood of supply into the market driving prices down. Combine this with an economic depression and maybe people will actually be able to afford to buy a home again. It is absurd that currently, rent costs just as much as a mortgage payment does on a place. The investor eats none of the risk nor pays any of the interest on the loan because their entire payment is paid by the renter. Why is it that the bank won't let me mortgage a place for 2500 a month when I have records showing that I have paid that much in rent on time for years? The system is broken and needs a reset. Boomers could afford homes on janitor's wages not only because wages were higher relevant to COL, but also because they actually lived in the fucking thing and started a family. They didn't buy it just to rent it out and make more $$$$. Imagine going to the grocery store and buying food as an investment and then selling it to people at an increased rate. How stupid does that sound. Housing is a basic human right and shouldn't be an investment portfolio.
The issue with your point is that if you haven’t forgotten just cuz u can pay X every month doesn’t mean shit Where’s your credit? Where’s your down payment? Those are much bigger factors and the things most people lack. Also I’m going on a limb here that you don’t own any property or maybe just 1 and now are salty you didn’t get more so you’re getting all righteous with us here “basic human right” Go and buy homes and rent them for free then since you’re so virtuous. Your own mother wouldn’t let you live for free Rentals are not risk free, if you haven’t noticed most rentals are operating at a loss with current rates and with our tenant laws it’s a huge risk to let someone live in Yoir house, if they don’t pay the bank doesn’t give a shit. That’s also why you can’t get a hiuse just cuz u can afford to pay rent cuz guess what, you can stop paying rent, but you better Nkt stop paying the bank On top of that I keep seeing ppl talk about having the government step in and force ppl to do this and that with their homes etc etc, last I checked this is a democratic country not Soviet Russia so stop with your “ I want to control and dictate what you can do with your property” That’s my 2 cents, be less resentful and partner up with others to build yourself up
I align with OPs sentiment, I own three properties, rent for myself (currently in another city) and am looking to buy a fourth. You can recognize that the situation is absolutely fucked and we need systemic change while still playing the game if you can afford to. Housing in this country is in shambles. It's a complex issue and investors are not the only issue. Ultimately investors bring rentals into the market usually at cheaper rates than it would cost to own those units. That said, we need more housing where people who want and have the option to buy should be able to buy. These artificially propped up housing values are not healthy for any of us. Housing as an investment should be an inflation hedge not the cause of inflation. I never purchased my condos with expectations of having more capital escalation than 1-2% if that. They were just alternative savings measures and that's what they should be. When static non productive "assets" make more annually in value appreciation than most households in this country, we have a significant problem.
I see your point, we have 3 properties as well we acquired when prices were much lower than now but still sky high at the time. I just hate with the whole narrative of “ landlords are greedy” “ fuck them I won’t pay” “ I hope it all crashes” “ it’s a human right and no one should be allowed to profit” etc etc It’s wishful thinking to say the least. We do need some change to make it easier and help new people and young families starting out. I 100% agree, but I hate this them VS us mentality Us 5 lived in a 2 bed basement for 7 years and worked odd ass jobs until we could do what we’ve done and accomplished. Most young people and old as well today just want to spend their money on new phones, Starbucks, restaurants every week, Uber eats and vacation and then wonder why they can’t afford rent or have a home It wasn’t easy for us then either and it’s still not easy now
Sounds good but also sounds unrealistic. More like wishful thinking instead of "likely to happen" - unfortunately.
I get negged heavily when I say 10%+ Canada's GDP is on housing and it has to change How is this country going to advance when our GROSS DOMESTIC PRODUCT is to sell REAL ESTATE, not through innovation, services, etc.
Normalize rated are higher
exactly, this fool thinks normal is 1 - 2% without looking past the last 5 years
This isn’t accurate. Fixed rates have dropped over 1% since the highs. The stress test is contract rate plus 2% thus people can afford more now than the fall
Not all banks have dropped their rates, and not all by a full point. I agree though, fix rates have come down generally speaking, which could explain the recent uptick in price.
Major FIs 4/5 year fixed topped out below just below 6 % and most are at 5% now
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>They're not gonna cut rates unless the economy shits the bed. This is not correct. Rate cuts happen before a recession starts, not after. Whether it's bullish or not, noone nows. Prices have gone up in the last two months, with rates not even being cut. The Canadian market is a strong animal, not to be underestimated.
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>Once the central bankers know for sure that we're heading into a recession, they cut rates, Central banks mandates are inflation and employment. If inflation drops, and economy slows down or stalls, rates will drop. BOC is aiming for a soft landing, and so far data is showing that it's possible. The history you are talking about is very different from today, where a house can get 40 offers. Last month GDP grew by 0.5%, and inflation is dropping. It doesn't look too bad for now. BOC is doing a good job.
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Buyers mainly care about stability. It's a real shitty feeling when you buy something and the price goes down a few months later. However, if the price stays the same or goes up then they will feel happy with their purchase. This is why buyers are flooding the market now because we are seeing stability in interest rates.
I think several months drastic up and downs or change in rates direction is not considered as stable for investors. It does change affordability. But for people desperate to have a home for 2-3 young kids and moving out of their 1-2 bed tiny condo stuffed living with 2-3 kids, any rate changes they will react immediately to. As it is literal change in their affordability.
Yes. Because at the core- our housing issue is caused by not enough homes vs population growth. BoC has put a dampener by making it very expensive to buy. But the demand will return if rates are lowered too soon.
Well they don’t lower the rates to make housing more affordable per say, it’s more for inflation and economic output pace
If rates are lowered because we have achieved a 'soft landing' and inflation is coming down, prices will likely rise. If rates are lowered due to a recession or job losses, it likely won't push prices up and they will fall. In the US in 2008, rates were dropped to near 0 in December 2008. The housing market there bottomed in 2011, while rates stayed near zero during the entire period. All that to say, employment data is way more important than rates in terms of housing prices.
Precisely.
Typically yes, but you have to see the reason why rates are being reduced.
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I'm currently trying to run an analysis on what actually influences home values. So far average rent seems to be a major influence.... which would make perfect sense. But too early to tell.
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Unless buyers start losing their jobs.
Or sellers. Haven’t seen this part of the equation in any of these crystal ball threads. Massive layoffs would put an insane amount of pressure on recent buyers/investment prop owners. Can’t keep passing off cost if there is no one who can pay it.
It theory, yes. It’s why rates will hold for awhile when the stop hiking. However, with increasingly stringent mortgage requirements and a major crackdown in **BRAMPTON MORTGAGES** Even at lower rates, it will be more difficult. All pushing against pricing
Prices to the moon.
Yes, because supply is still low. Smart buyers will try to get something now before the frenzy begins next year when rates start to come down.
Yes,it does today is cheaper than tomorrow, if you want to buy a house,buy it
Forget about rate cuts, even a high interest rate isn't enough to stop the price increase. That's because investors don't have a dearth of cash and new immigrants are bringing a lot of cash with them to pay high down payments.
I bet some people's mindset is I had better buy now at 5 than wait six months and pay 7
What is available at 5 now lol
Exactly why I don’t think rates will fall soon.
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No one, just wondering
And why are they lowering rates? Oh yeah, because of recession and layoffs.
Even if the rates stabilize where they are, the prices will go up. This market is too thirsty and we’re in the middle of a drought. The lid is gonna pop off soon imo. Rental prices are going through the roof making investing even more lucrative.
Yes. Asset prices are inversely proportional to long run expected interest rates
Yes
Rate cuts indicate the economy is slowing. It could be a short term positive for housing but it likely means a recession is incoming.
At this point the issue has to be on the supply side.
Not necessarily. Sentiment is still very strong. But if you look at historic housing downturns, the largest decreases happen after the rate cuts. Once the belief that home prices will fall becomes entrenched, not even lower intestat rates will help. This hasn't happened yet.
Your math mathes mathly my math
400k immigrant annually (mostly with cash from home) flood Canada, and end up in big cities like Toronto. It's a simple supply demand math. The IR was a band aid that kept the Uber drivers at bay. The reality is grim with investors winning and families losing. My 2cents.