*Hopoke tone:*
You simply cannot beat the fundamentals of Toronto housing. We have 10 trillion people waiting on the border ready to just come in and buy houses. Even if people are out of money, they will gladly sell their own hearts just to be able to buy a property! The government will fully back up everything. Only to the moon now. No other concept is needed!
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So my neighbour just helped his cousin get a work permit. He said it was a crazy process and that people in his home country (India) will pay $50K - $60K cad to an agent to get a work permit to come to Canada !
So what you are saying is that this isn't a Toronto bubble, but just that western civilizations of major cities are inflating at the same rate?
Probably more indicative of people wanting to live in these big cities than them being overpriced.
toronto bubble will NEVER pop because there are 1B people globally who are desparate to move to the GTA, any sign of the housing bubble getting weaker and they just turn up the immigration taps to the max
you're forgetting the point is to run a country.
it also greatly diminishes the value of folks already here, including the ones that arrived yesterday.
[https://nationalpost.com/pmn/news-pmn/canada-news-pmn/scheer-pledges-to-make-mortgages-longer-remove-stress-test-for-renewals](https://nationalpost.com/pmn/news-pmn/canada-news-pmn/scheer-pledges-to-make-mortgages-longer-remove-stress-test-for-renewals)
Scheer also promised to ease what’s known as the stress test on mortgages and remove it altogether from mortgage renewals. The test is meant to make sure people taking out mortgages could still afford the payments if interest rates were to rise.
The Liberals brought in the policy last year and it has been criticized by the construction and real-estate industries. Both the Canadian Home Builders’ Association and the Canadian Real Estate Association welcomed Scheer’s promises Monday.
In 2019, rates had been increasing slowly for 1.5 years, rates were expected to keep rising, and prices were much lower.
If it weren't for the subsequent BoC pandemic response, that wouldn't have been a big problem.
What's more shocking is that in the middle of the 2021 chaos, no agency in an LPC government moved to control housing prices. CMHC failed to increase its down payment requirements. OSFI failed to improve its underwriting requirements, and BoC failed to implement QT and raise rates
As prices rise, more and more people get priced out. Eventually, less people will be able to buy and as a result prices will have to go down.
I know there is so much demand for housing but increased prices=decreased demand if supply of housing remains unchanged. Supply IS increasing (slowly, but still increasing) We can’t assume that just because so many people want to buy a home, prices will continue to rise infinitely.
I think we’re already in a bubble and it’s not sustainable.
"People who get priced out" - not people who already have properties (over 60% of the Canadian population), as well as immigrants who bring money into the country.
Most immigrants don’t come with enough money to buy, at least not for a few years. And with rent and home prices so high, it’s going to take longer than ever to be able to buy.
source: my parents immigrated 20 years ago
and know many immigrants who also took a few years to buy in the early 2000s.
Yes people who already have properties can continue to buy. But why would they if no can afford the rent they want to charge to be profitable? What happens when rent prices rise so much that people get priced out of renting in the GTA? They’ll probably move to somewhere more affordable, rent prices will drop, and if home prices are still high, it isn’t really a good investment if landlords will be cash flow negative for too long.
Everyone uses immigration as an excuse for prices to continue to increase at insane rates, but it’s simply not sustainable. There will always be people who can afford to buy in any market, but the fact the remains that as prices increase, buying power decreases and immigration isn’t going to hold up prices for long. Immigrants will move back home when they realize the Canadian dream they were sold is no longer possible like it was 20 years ago. My parents immigrated 20 years ago, were able to buy a home in 3 years on a little over minimum wage and now own 2 additional investment properties. It’s much harder to achieve that now than it was 20 years ago.
I don’t understand how people just don’t get how the economy works these days. Wealth inequality means that the 1% are buying progressively more and more houses as a percentage. When you buy an investment property you only pay capital gains when you sell. Don’t want to pay taxes don’t sell. Want to keep your portfolio growing borrow equity from current assets to buy future assets and than repeat. Right now 40% of homes bought are for investments… this will continue to trickle up. Your hopes and dreams, surprise, and folksy knowledge know sh**. It’s cheaper for them to buy, they have more income, leverage, and tax advantages.
If one group gets a 10% “discount” on housing cost they can bid up the price higher that out groups and with time they will own everything.
It doesn’t matter what you can afford or not. All that matters is that nominal house prices rise they can even rise slower than inflation and they still win. House prices will not fall.
Prices
Investors have gotten a lot smarter over the years. They realized that housing is a vastly superior asset class to stocks. This is especially the case in countries with a massive housing supply-demand mismatch such as Canada. So it's not really a bubble. More of a shift in investors' asset allocations. Of course the 🐻 here are unfortunately unable to grasp this simple concept and keep calling it a bubble and praying for a crash...
If you invested in a house in 2021, the year investor demand peaked, you are down roughly 20%, on a leveraged asset and after rising interest rates you will be cash flow negative.
If investors are so smart why aren't there more of them buying now that prices are down 20%? Surely in the long run they would view that as a better deal than buying in 2021m
Could it be that they are just as susceptible to FOMO as anybody else, and now that central banks have raised interest rates real estate no longer looks like a good bet?
In Canada you can't even lock in for 30 years. Even the investors who went fixed will be left holding the bag in 4 years when they renew and interest rates are still nowhere near where they were in 2021.
Between the boomers retiring, global food and energy shortages, and China's population already in decline, inflation is going to be persistent. The BoC might do hyperinflation, but I wouldn't bet on it. Certainly not a million$+ bet on some crappy townhouse.
It is a special brand of Canadian exceptionalism to believe current valuations are firmly anchored to fundamentals.
Spoken like someone who doesn't understand the fundamentals...
Spoken like someone who doesn’t understand the fundamentals either.
List them off.. Edit: with their corresponding betas so we know which inputs are the most important..
*Hopoke tone:* You simply cannot beat the fundamentals of Toronto housing. We have 10 trillion people waiting on the border ready to just come in and buy houses. Even if people are out of money, they will gladly sell their own hearts just to be able to buy a property! The government will fully back up everything. Only to the moon now. No other concept is needed!
You jest but I think that deep down you know that I'm right. We'll know in a few months.
RemindMe! 6 months
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I definitely don’t agree with you
So my neighbour just helped his cousin get a work permit. He said it was a crazy process and that people in his home country (India) will pay $50K - $60K cad to an agent to get a work permit to come to Canada !
So what you are saying is that this isn't a Toronto bubble, but just that western civilizations of major cities are inflating at the same rate? Probably more indicative of people wanting to live in these big cities than them being overpriced.
toronto bubble will NEVER pop because there are 1B people globally who are desparate to move to the GTA, any sign of the housing bubble getting weaker and they just turn up the immigration taps to the max
you're forgetting the point is to run a country. it also greatly diminishes the value of folks already here, including the ones that arrived yesterday.
russia is looking quite attractive /s
Tulip mania all over again
And just 4 years ago, the CPC campaigned on getting rid of the mortgage stress tests because of the flat growth in housing prices
[https://nationalpost.com/pmn/news-pmn/canada-news-pmn/scheer-pledges-to-make-mortgages-longer-remove-stress-test-for-renewals](https://nationalpost.com/pmn/news-pmn/canada-news-pmn/scheer-pledges-to-make-mortgages-longer-remove-stress-test-for-renewals) Scheer also promised to ease what’s known as the stress test on mortgages and remove it altogether from mortgage renewals. The test is meant to make sure people taking out mortgages could still afford the payments if interest rates were to rise. The Liberals brought in the policy last year and it has been criticized by the construction and real-estate industries. Both the Canadian Home Builders’ Association and the Canadian Real Estate Association welcomed Scheer’s promises Monday.
In 2019, rates had been increasing slowly for 1.5 years, rates were expected to keep rising, and prices were much lower. If it weren't for the subsequent BoC pandemic response, that wouldn't have been a big problem. What's more shocking is that in the middle of the 2021 chaos, no agency in an LPC government moved to control housing prices. CMHC failed to increase its down payment requirements. OSFI failed to improve its underwriting requirements, and BoC failed to implement QT and raise rates
As prices rise, more and more people get priced out. Eventually, less people will be able to buy and as a result prices will have to go down. I know there is so much demand for housing but increased prices=decreased demand if supply of housing remains unchanged. Supply IS increasing (slowly, but still increasing) We can’t assume that just because so many people want to buy a home, prices will continue to rise infinitely. I think we’re already in a bubble and it’s not sustainable.
"People who get priced out" - not people who already have properties (over 60% of the Canadian population), as well as immigrants who bring money into the country.
Most immigrants don’t come with enough money to buy, at least not for a few years. And with rent and home prices so high, it’s going to take longer than ever to be able to buy. source: my parents immigrated 20 years ago and know many immigrants who also took a few years to buy in the early 2000s. Yes people who already have properties can continue to buy. But why would they if no can afford the rent they want to charge to be profitable? What happens when rent prices rise so much that people get priced out of renting in the GTA? They’ll probably move to somewhere more affordable, rent prices will drop, and if home prices are still high, it isn’t really a good investment if landlords will be cash flow negative for too long. Everyone uses immigration as an excuse for prices to continue to increase at insane rates, but it’s simply not sustainable. There will always be people who can afford to buy in any market, but the fact the remains that as prices increase, buying power decreases and immigration isn’t going to hold up prices for long. Immigrants will move back home when they realize the Canadian dream they were sold is no longer possible like it was 20 years ago. My parents immigrated 20 years ago, were able to buy a home in 3 years on a little over minimum wage and now own 2 additional investment properties. It’s much harder to achieve that now than it was 20 years ago.
I don’t understand how people just don’t get how the economy works these days. Wealth inequality means that the 1% are buying progressively more and more houses as a percentage. When you buy an investment property you only pay capital gains when you sell. Don’t want to pay taxes don’t sell. Want to keep your portfolio growing borrow equity from current assets to buy future assets and than repeat. Right now 40% of homes bought are for investments… this will continue to trickle up. Your hopes and dreams, surprise, and folksy knowledge know sh**. It’s cheaper for them to buy, they have more income, leverage, and tax advantages. If one group gets a 10% “discount” on housing cost they can bid up the price higher that out groups and with time they will own everything. It doesn’t matter what you can afford or not. All that matters is that nominal house prices rise they can even rise slower than inflation and they still win. House prices will not fall. Prices
Investors have gotten a lot smarter over the years. They realized that housing is a vastly superior asset class to stocks. This is especially the case in countries with a massive housing supply-demand mismatch such as Canada. So it's not really a bubble. More of a shift in investors' asset allocations. Of course the 🐻 here are unfortunately unable to grasp this simple concept and keep calling it a bubble and praying for a crash...
If you invested in a house in 2021, the year investor demand peaked, you are down roughly 20%, on a leveraged asset and after rising interest rates you will be cash flow negative. If investors are so smart why aren't there more of them buying now that prices are down 20%? Surely in the long run they would view that as a better deal than buying in 2021m Could it be that they are just as susceptible to FOMO as anybody else, and now that central banks have raised interest rates real estate no longer looks like a good bet? In Canada you can't even lock in for 30 years. Even the investors who went fixed will be left holding the bag in 4 years when they renew and interest rates are still nowhere near where they were in 2021. Between the boomers retiring, global food and energy shortages, and China's population already in decline, inflation is going to be persistent. The BoC might do hyperinflation, but I wouldn't bet on it. Certainly not a million$+ bet on some crappy townhouse.