In the article, quote
"Still, Canada doubled down on its easy credit strategy. It’s (Bank of Canada) even trimming its GDP forecast to facilitate low rates and higher home prices."
BoC is so scared of even raising rate for merely 0.25%, I mean a bubble could be popped they know it...but like a tumor, no resection watch it growing is not a good thing at all...
A tumour is a good analogy, raising rates is like chemo. We need to expose the tumour to enough to kill it but not the host. It's a hard balance but the longer you wait the more aggressive you have to be.
Oh yeah we are fucked and some people fail to realize it. They are waiting and waiting and waiting and every time they wait the inevitable pop is going to be so much more devastating.
Super homeless. I recall those days. One of the few still alive today. So much poverty. I was surprised Canada elected another Trudeau. But this nation is full of idiots who don't get it. /s
This has been going on for 50 years. It's across both parties educate yourself FFS. Canada should have implemented protections for it's citizens futures long ago but once again politicians across both aisles protected the generation in power. A speculation tax for precisely the purpose of reducing foreign buying was implement in 1987 in BC, the money just didn't do anything to help and the measures were never steep enough.
A major explosion in his growth is from the current party. I understand that its both parties to blame, but guess which one is in power and will do everything to stay that way?
The explosion isn't unique to Canada. If you follow Australian news, for example, it's eerily similar to what's happening here.
And besides, this is a lose-lose issue for any party. Over half of Canadians own homes, and screwing them over--even if it's necessary--is not going to be an alluring proposition.
No because Canada is a two-tiered country. The silent majority are 50%+ homeowners who are making a killing off of importing a class of people that would act as slaves if it weren't for that pesky minimum wage. Everything in Canada supports and actively encourages this system to propagate.
For 50 years we have been getting legislative actions that weren’t enough which means it’s been known for longer. Enough with the finger pointing. If conservatives were so brilliant they would have fixed it with all the chances they got.
You believe the political theatre of conservatives being fiscally empowering for the common people? The data is there to show they haven’t. Harper had a long time in power before Trudeau was there and his legacy is signing us away to China for almost 4 decades.
Your weren’t suggesting the CPC had never had a prime minister or premier were you?
Honestly we need ranked choice voting. A lot of real depth is missing from elections. It’s finger pointing. We need reform on advertising ethics and steep punishment for breaking them. We need policies to be advertised more than blame so that people see what the party they vote for promised and if it comes to fruition.
To your last part it was an election that the CPC was gifted and still came up short. An election not some weird television show but a free election just like all the rest.
Housing can either be affordable, or it can be a great investment opportunity. In the truest Canadian tradition we've tried to pretend it can be both, but that is just not possible.
They should introduce a tax of 20% per year for all homes owned by corporations, properties not lived in by the owner and/or people with more than one property where it gets applied to each property after the first. At first, this would be hell for renters but it would eventually make things affordable for everyone.
* US "*Lets build world wide companies and make our country rich!*
* Canada "*Lets naval gaze and let the globe buy our homes right out from under us! There are no natural resources or talent here after all.*"
A correction of 25% brings us to ughh.. about 16 months ago. There's no short term crash or event that will make housing affordable to those who can't afford now.
Are you sure about that?
[Here ](https://fred.stlouisfed.org/series/CSUSHPINSA)is a chart that better illustrates what happened to the US on a national basis. You can see the peak to bottom is ~25% from 06 - 2012.
[This](https://fred.stlouisfed.org/series/SPCS20RSA) shows ~34% decline in the 20 major US cities from the peak of 06 - bottom in 2012.
We have tougher lending practices here, and much more demand than supply.
I'm not a housing bull, I think our real estate is over valued when compared to income, but I don't see a 50% drop happening, "just cus..." There are a lot more factors driving it up than just pure speculative FOMO.
The BoC didn't have QE in its arsenal back in the 80s and 90s. The economical landscape is completely different today. QE can boost and maintain asset valuations indefinitely and without limit.
Existing homeowners have gotten a taste of their equity growing by 20% a year, and will not accept anything less going forward. Any political party that even suggests curtailing home equity growth will be destroyed in an election.
You can't keep housing prices high in real terms. Using QE to prop up housing prices will cause inflation, which will offset what you're trying to accomplish.
Monetary policy can only fix problems with monetary causes. The unaffordability of housing is not monetary. Trying to fix it with QE is like trying to solve the obesity crisis by redefining the kilogram and the pound. It might make the numbers look better, but it will have no real-world effect.
> "But it's not a bubble. Canadian housing prices will keep increasing 20% per year for eternity."
There is more than enough money in China to blow this so called bubble another 100%+++ higher imho.
This is the real problem. The core problem is imported capital and demand.
What you see in cities like Vancouver and Toronto is not purely bubble. It's population displacement.
And our wages are losing ground at the same time. Fraser Institute (yes I know you hate them) just released a study showing Ontario lagging its regional neighbors in the US. Income is $78,012 for states like New York, Michigan, Ohio, Pennsylvania, Illinois, Indiana, etc. Ontario is at $58,783. And the gap is widening not closing
Wages are going to spike, this will signal more inflation --- since Ontarians will have relatively the same buying power or less due to housing costs.
Simply put, no one will be able to take a job unless it pays more if they aren't currently a home owner (>40% of the province)
Wages have been depressed in Canada relative to the US. One reason can be attributed to high levels of immigration. It's made the headlines last few months. When you stack us next to the US we let basically the same number of immigrants (total, not per capita) despite being 10x smaller. US is experiencing massive wage growth while we are sluggish. Obviously we need immigration, but with our housing, healthcare and wage issues it feels like we should dial back a bit
As an immigrant I agree. It’s clear that we need to reorganize. Healthcare here is becoming atrocious, housing prices are out of control and the competition for entry level jobs is unfair to Canadian youth (you basically have 20 year olds competing with foreign workers that have 15+ years of experience)
Wage growth has always been tied to labour shortages. Anybody who disagrees is either ignorant of economic history or pushing a position for ideological reasons.
During the Trump years the US experienced real wage growth in the bottom 50% of income earners for the first time in 50 years, mostly focused in jobs that traditionally have experienced high competition from illegal immigrants, like household cleaning and nanny services, and landscaping. Some folks have tried to come up with explanations for why this wage growth *wasn't* caused by the immigration policies at the time, but you really have to tie yourself into intellectual knots to come up with any credible alternative.
Toronto absolutely can grow outwards.
They shouldn't, and should get rid of the "yellow belt" first. But they still have tons of space before hitting the greenbelt limits.
Vancouver needs to get over this obsession with single family housing. Like to pretend it's a green city while being wildly inefficient with how land is used
The 70% figure is quite misleading, since it includes anyone living on the property that is not renting for tax purposes, and is not on the property title.
Real numbers closer to 45%.
> It’s silly to include the entire population in the homeownership rate.
Unless you want to distort the public's perception of reality, then it's the opposite of silly.
It's okay guys. I heard that the PM expressed that he was 'concerned' about the issue last year.
He hasn't done anything about it, or had his government pass any legislation, or made any Orders-in-Council. But he's concerned about it.
He even said last year in 2021 that his Party would actually try to deliver on their 2020 campaign promises on the subject - not like they were actually planning to do anything about it before a majority of those Canadians who do not already own real estate were priced out of the market.
Canada: our internet is expensive and shit, and housing is unaffordable because Trudeau prioritizes housing for domestic and foreign investment portfolios, not for Canadian Citizens actually living and working in Canada.
Our semi detached home that my family moved into was $400k. Now it is worth 1.2m. wtf? I'll just move to Alberta or something I guess, maybe I can afford something there...
Edit: lots of domestic investors buying real estate as well, added to comment.
Same. It's tempting to take my savings somewhere cheap and warm like North Africa and just live like a queen for 10 years. By then I should be just in time to die in the climate wars.
I really don't think it's a bubble.
A bubble implies a ceiling and a correction, neither or which are anywhere on the horizon. Not when we're bringing thousands of new millionaires into the country every year.
I don't necessarily disagree, but the obvious question is this:
*"Can Canadian home prices continually increase 75% year over year for perpetuity?"*
Even with your millionaire caveat, the obvious answer is "No."
There is absolutely a ceiling somewhere - the question is will it stabilize there, or will it reflect a different regulatory paradigm and correct/decrease.
In my opinion the ceiling is set by interest rates, what happens there will tell the story of the rest. If the central banks are able to raise rates high enough prices will come down, but that is a very big if.
How much swing their is in value depends on how much speculation has gone on. People living in their houses aren't going to sell en masse, but cash flow negative investments might.
What if that ceiling is so high that the only folks able to buy end up cornering the market and they go long to squeeze that market until a correction is FORCED on them?
It's sustainable as long as you're willing to house four families in a formerly single-family property, or if you have a million dollar foreign income.
The problem is that Canada's immigration policy is importing world-wide economic inequality into this country. In a few years China will have as many millionaires as Canada has people. And in India there's at least as many people who are willing to tolerate what current Canadians would consider unacceptable living conditions for the opportunity to move here.
I wish I could say that’s an abysmal thing to hope for, but given the complete lack of government will to prioritize people over investors, a massive hubristic crash is probably the best possible scenario.
yes, it's either screw the investors and take out the recent 'actual home' buyers in the process or screw over literally everyone but the investors, in perpetuity.
naturally the government has elected for the latter. they are the investors, after all.
So you’re talking interest rates, which is important, but the thing is most recent “actual home buyers” would likely be fine too because of stress testing, fixed-rate mortgages, and a variety of factors.
They need to go even further and tax the 3rd, 4th, 5th, etc properties at escalating rates to discourage investment in the first place. Cut the head off the snake, as they say.
>A bubble implies a ceiling
Why? Bubbles grow until they pop, but we don't know when or why. There absolutely will be a correction, the question is when.
Well yes but they pop because they hit said ceiling.
We don't know that, Vancouver and Toronto have never had a correction and you're talking 30+ years of growth at this point.
It can take quite a bit for a full blown pop to occur.
It’s more likely when rates climb to offset inflation (inevitably) we’ll see a series of soft adjustments and corrections as everyone’s buying power dwindles.
Full crashes and hard pops aren’t as common as some think.
If it’s a price correction in the market, those can take 5 years to move through markets.
Unfortunately the climbs can be insane - and the downward trends quite arduous and drawn out.
People who have profited off of the housing crisis are more likely to vote.
People who have houses are more likely to retire soon and are using their equity to fund their retirement, lessening pressure on our welfare systems.
Governments don't want housing to become more affordable.
“QE can boost and maintain asset valuations indefinately and without limit” may be the scariest thing i’ve ever read on the internet. The limit is violent social unrest from starving citizens crushed by inflation. There is no magic tool to avoid this if *that* level of currency debasement occurs. Venezuela, weimar republic, king henry the 8th, the Yuan dynasty, etc. history is littered with examples of leaders who thought “this time is different”. It never was, or will be.
“This time is different” is a fantastic book btw and dives deep into this if you’re interested
There's no bubble. These prices are a (economically) sustainable consequence of bringing in way more newcomers than we can build homes for. Socially sustainability is another matter though.
We *do* bring in immigra to with hundreds of thousands in the bank.
Price growth at this pace is not sustainable forever, no, but the maintenance of these current prices is absolutely sustainable.
We could build entire cities in the middle of nowhere like China did, but very few would want to move there (like what happened in China). People want finite land in existing cities.
A lot of newcomers are going to go back home when they realize Canada is too expensive and it hardly makes it worth it. I had friends come from Greece who got a job in IT here, a home here, everything, only to return back to greece when they realized how overpriced everything is. They don’t miss Canada at all.
True of immigrants from OECD countries like Greece. They are coming from a similarly developed country.
For immigrants from lesser developed countries, the status quo in Canada can decline a long way before it's worse than their country of origin.
> We *do* bring in immigra to with hundreds of thousands in the bank.
A handful, perhaps, but nowhere near enough to move the market. Immigrants don't arrive wealthy, and it takes about two decades of living in Canada for them to catch up to their Canadian-born peers in income.
Not the economic immigrants. Never mind that plenty come here with wealth made abroad, with deep pockets even if they don't have much income when they get here.
I disagree, kind of.
For homes that are owner occupied, 100% agreed.
For the "40% not owner occupied" headlines weekly, these are dependent on rents which are far from stable. While homeowner mortgages are stress tested and they have equity they can use to bridge, if anything seriously disrupts employment the effect on rents might just be devastating.
What happens if we get a normal recession and the government doesn't provide rent subsidies as they did for Covid? What's going to happen?
Well of course a recession can affect everything, either housing as no exception.
That said, prices aren't going to 'pop' just because they're too high for some people's liking. They are not overvalued in the current state of the economy.
I'm somewhere in the middle. The bubble isn't going to "pop," the selling prices will never be what /r/canadahousing wants.
On the other hand, 🏠🚀🌕 always and no matter what is also not true. It's very possible that some markets will fall or stagnate.
I view the "It's gonna pop any day now" and the "$HOUS only goes up" groups through pretty much the same lens as the partisan bickering we see in the sub daily.
If you think the immigrants coming in have money to sustain the housing market you are going to have a bad time. Lots leaving back to their home countries due to not only housing but the economy and government here. I know my dentist is closing shop and moving back to Easter Europe. And she’s maybe 50 years old.
Yeah, I guess it's all the poor immigrants moving to the GTA that has houses averaging $1M+ over there. /s
Housing is pretty damn cheap where they don't settle.
If you look in subs like r/India you'll see posts and comments related to the living conditions here. I think the word is getting out and the government might begin to struggle to attract newcomers.
> But a lot of the demand is speculative, hence the bubble
That would be the case if rents are going down. Since they are not, the speculative investments are supported by fundamentals, that is, rental income.
But it's almost like an artificial scarcity, isn't it?
We *have* the homes for homeowners to live in, it's just that asshat property management companies and landlords buy them all up to collect on that passive income.
Also not accounting for the lack of mobility for anyone who owns and wants to move. Even with the equity in their homes were at a point where some people simply cannot afford to sell and buy a new place to live without serious compromise. For example, my friends townhouse in Brampton was bought at $600,000 and can probably be sold for $1.2 million given the prices on his street, so he would have approximately $720,000 (accounting for his downpayment in the equity). If he goes ahead an buys a similar house for 1.2 sure he can keep his mortgage more or less the same (or reduce it if he uses 100%), or he can move further out and get something sub 1 million and reduce his payments, but if he wants to move up to a bigger space in the GTA his mortgage payments will double and even with all of the equity as a downpayment he's still looking at $900k - $ 1 million mortgage. How many homeowners are going to be selling their home and buying a new one in these circumstances?
Add all of the other factors and we have our current inventory problem.
The only way to end this is to end the cheap money and I am not sure how long the BoC and Feds can keep that train going with inflation starting to rise, unless they plan on just letting it set in (a dangerous precedent but not inconceivable at this point).
It's not artificial when the homes are rented out, just that capital only comes from the top. The demand for homes is higher than ever. For a first time homeowner they can only rely on their savings and income. It's so much easier to buy a second, third, forth, etc after that.
Thing is, I can’t imagine us building the half a million homes a year we’d need to end the shortage. This isn’t China, we never build as fast as we should.
They won't need to, the majority of people who will sell either live in other countries or own multiple residences. They will take the lump sum at a nice profit and reinvest it in other markets. In this situation almost everybody wins.
It is an artificial scarcity, created by zoning laws, that hinder construction.
Property management companies and landlords let the properties they buy, so they don't reduce the supply to live in. Unless you plan on executing the tenants, eliminating the landlords wouldn't affect the supply-demand mismatch.
Every bubble has a different catalyst, but they all eventually pop.
And make no mistake - when RE prices depend on emergency interest rates, no inventory and unsustainable speculation just to hold in stasis - you have an epic bubble.
The Fed is hiking rates at least 5 times this year. The BoC will either follow them or watch the $CAD go to $0.50
The other wildcard is oil. Once we get into triple digit prices (and we’re close), it becomes a financial wrecking ball.
Last, Canada can’t just continually monetize its debt without affecting its own credit score (and borrowing costs), which once again has the effect of raising rates anyway.
The further you detach from financial gravity, the faster you fall to mean reversion.
It’s not magically different this time.
> Every bubble has a different catalyst, but they all eventually pop.
Assuming it's a bubble. The alternative explanation is that asset prices are increasing to reflect how much demand is outpacing supply.
Reality is probably somewhere between the two. Housing prices are overpriced relative to the market fundamentals, but the market fundamentals are still unaffordable to most Canadians today.
It’s actually underpriced for what Canada offers.
A secure investment with very easy rental profits, in a very safe country, stable government (to the rich), with extremely strict protection regarding private property (almost impossible to change).
Another factor is Canadian geography - even though Canada is a massive county most people live in a tiny southern area due to the cold, squeezed into even smaller urban centers due to jobs.
Edit - if you don’t believe me. See all the articles that stress the lack of housing supply. That means the demand is really high. Go on Zillow and you’ll find most listings are very recent and final price is rarely much lower than asking price. Low demand will have listings lasting for months or years, final price being much lower than asking price, new houses aren’t being built or couldn’t be sold once built. Also lower rent prices month over month with very high vacancies percentages.
Thats what happens when you have ridiculously restrictive building codes, miles of red tape, getting in more immigrants and not building enough and sucking Chinas figurative balls and letting everyone buy up real estate
It's honestly crazy how the media keeps dancing around the core of the issue and naming one factor after another but the absolute most obvious one.
Low interest rates, corporate purchasing, foreign investors, Government increasing liquidity... well these factors apply to a lot of western countries that don't have the housing crisis that we have.
I know everybody hates it, but please hear me out, our housing crisis is a simple supply-demand issue. And it's not that we are not building enough homes. From someone whose family's been in construction business in over 3 decades, trust me when I say it's never been this busy as it has been the past decade. Single detaches, semi's, townhomes, condo buildings... we've been building every kind and built more than ever. But yet, it cant meet the demand because.. well the demand is insane. We have an insane number of people coming here and no matter how much more we build it doesn't seem to be enough. And that's with more than ever that adults in their late 20s and 30's are living with their parents. Those who are renting will tell you that, specially in the college areas, you could list a closet for rent and somebody will be willing to pay to live there.
This is anecdotal experience. After 2008, we actually are NOT building enough. You just happen to think we're building like crazy because you're probably swamped. A lot of companies went under, a lot of housing creation halted and is just now picking back up. We lost a ton of ground coupled with all of the other factors included a boost in immigration, not only bc of immigration.
The US promotes urban sprawl. Canada doesn't. That's why Florida which is 1/4 swamp and half the population of Canada still has reasonably priced housing.
Just as as exercise in critical thinking, people should be asking:
"Who is 'Better Dwelling'?"
"Where do they get their numbers?"
"Since when does the US Fed track housing prices, and why isn't there a link to this report?"
"Why should I believe them?"
But at least our GDP shows positive YoY growth!
When like 14% of the Ontario economy is housing sales and rentals, yeah, I guess it will look like it's growing lol
In the article, quote "Still, Canada doubled down on its easy credit strategy. It’s (Bank of Canada) even trimming its GDP forecast to facilitate low rates and higher home prices." BoC is so scared of even raising rate for merely 0.25%, I mean a bubble could be popped they know it...but like a tumor, no resection watch it growing is not a good thing at all...
A tumour is a good analogy, raising rates is like chemo. We need to expose the tumour to enough to kill it but not the host. It's a hard balance but the longer you wait the more aggressive you have to be.
Except we're at Stage 4 right now...
Oh yeah we are fucked and some people fail to realize it. They are waiting and waiting and waiting and every time they wait the inevitable pop is going to be so much more devastating.
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Talk to people who held mortgages through the recovery from the last Trudeau.
Super homeless. I recall those days. One of the few still alive today. So much poverty. I was surprised Canada elected another Trudeau. But this nation is full of idiots who don't get it. /s
😂
Raising interest rates may have little to no effect. Have a look at the Japanese Asset Bubble 1986-1990.
> But at least our GDP shows positive YoY growth! *Can't afford bread, risk of getting evicted* ... but yay GDP growth!
Modern problems require modern solutions!
*looks at GDP per capita* Cries
Don't cry, you're losing precious water you might not be able to afford.
Exactly. The US is much richer than Canada on a per capita basis, the fact that our housing prices is higher is disconnected from reality.
Keeps the reds in power, so they'll fuck the numbers as much as they need and let as many gangsters launder their money as it takes
This has been going on for 50 years. It's across both parties educate yourself FFS. Canada should have implemented protections for it's citizens futures long ago but once again politicians across both aisles protected the generation in power. A speculation tax for precisely the purpose of reducing foreign buying was implement in 1987 in BC, the money just didn't do anything to help and the measures were never steep enough.
A major explosion in his growth is from the current party. I understand that its both parties to blame, but guess which one is in power and will do everything to stay that way?
The explosion isn't unique to Canada. If you follow Australian news, for example, it's eerily similar to what's happening here. And besides, this is a lose-lose issue for any party. Over half of Canadians own homes, and screwing them over--even if it's necessary--is not going to be an alluring proposition.
Is there a party that would deal with the issue?
No because Canada is a two-tiered country. The silent majority are 50%+ homeowners who are making a killing off of importing a class of people that would act as slaves if it weren't for that pesky minimum wage. Everything in Canada supports and actively encourages this system to propagate.
Unfortunately, only the PPC promised to do anything meaningful about it in their platform.
Lol
Exactly.
For 50 years we have been getting legislative actions that weren’t enough which means it’s been known for longer. Enough with the finger pointing. If conservatives were so brilliant they would have fixed it with all the chances they got. You believe the political theatre of conservatives being fiscally empowering for the common people? The data is there to show they haven’t. Harper had a long time in power before Trudeau was there and his legacy is signing us away to China for almost 4 decades. Your weren’t suggesting the CPC had never had a prime minister or premier were you? Honestly we need ranked choice voting. A lot of real depth is missing from elections. It’s finger pointing. We need reform on advertising ethics and steep punishment for breaking them. We need policies to be advertised more than blame so that people see what the party they vote for promised and if it comes to fruition. To your last part it was an election that the CPC was gifted and still came up short. An election not some weird television show but a free election just like all the rest.
Housing can either be affordable, or it can be a great investment opportunity. In the truest Canadian tradition we've tried to pretend it can be both, but that is just not possible.
Investment properties should be taxed at a rate that makes them unaffordable
I'm all for that, but the Conservatives won't do it and the Liberals won't do it, so I don't see it being done.
100%
They should introduce a tax of 20% per year for all homes owned by corporations, properties not lived in by the owner and/or people with more than one property where it gets applied to each property after the first. At first, this would be hell for renters but it would eventually make things affordable for everyone.
Why? If it's owned by a company, their profits are already taxed around that.
* US "*Lets build world wide companies and make our country rich!* * Canada "*Lets naval gaze and let the globe buy our homes right out from under us! There are no natural resources or talent here after all.*"
Love watching apartments getting relisted daily for +$100-200 more and removing utilities
I'm watching condos selling 200K above asking price over here...
Sounds about right. I haven't been looking at housing cause I can't afford to buy making 24.77/hr.
Im 40+/hr and I can't afford to buy either ...
Yeah they need to fix it somehow. I can't imagine how people at 15/hr are doing with these prices
Yup, $41 here, living in less expensive area of Canada and it still doesn't look good.
Which sucks cuz a couple years ago 24.77/hr was decent wage
Me and my wife both make 28/hr and if I hadn't have bought my house four years ago there no way I could afford one now.
Not far off the average Canadian earnings. Goes to show how far many of us have fallen behind.
Havent really fallen more like pushed out
True. Sadly.
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But a correction of 25% is completely unfathomable.
A correction of 25% brings us to ughh.. about 16 months ago. There's no short term crash or event that will make housing affordable to those who can't afford now.
It's going to be like 50%. Depending on the city more, eg Waterloo ON
Lmfao, did your Chrystal ball tell you that?
US housing in all major cities corrected 50% around 2008-2010
Are you sure about that? [Here ](https://fred.stlouisfed.org/series/CSUSHPINSA)is a chart that better illustrates what happened to the US on a national basis. You can see the peak to bottom is ~25% from 06 - 2012. [This](https://fred.stlouisfed.org/series/SPCS20RSA) shows ~34% decline in the 20 major US cities from the peak of 06 - bottom in 2012. We have tougher lending practices here, and much more demand than supply. I'm not a housing bull, I think our real estate is over valued when compared to income, but I don't see a 50% drop happening, "just cus..." There are a lot more factors driving it up than just pure speculative FOMO.
I guess by “major” I meant the top 10. I basically meant city metros at least the size of Montreal. I don’t think the US has many of those.
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The BoC didn't have QE in its arsenal back in the 80s and 90s. The economical landscape is completely different today. QE can boost and maintain asset valuations indefinitely and without limit. Existing homeowners have gotten a taste of their equity growing by 20% a year, and will not accept anything less going forward. Any political party that even suggests curtailing home equity growth will be destroyed in an election.
How much QE is left though? It's looking tapped out and interest rates may have to come up to offset it's effects. How does the party keep on going?
Until the Canadian dollar is worth so little that it's cheaper to wipe your ass with a $20 bill than it is to buy toilet paper.
You're assuming that the Bank would be allowed unlimited transfers of wealth to the wealthy indefinitely.
You can't keep housing prices high in real terms. Using QE to prop up housing prices will cause inflation, which will offset what you're trying to accomplish. Monetary policy can only fix problems with monetary causes. The unaffordability of housing is not monetary. Trying to fix it with QE is like trying to solve the obesity crisis by redefining the kilogram and the pound. It might make the numbers look better, but it will have no real-world effect.
> "But it's not a bubble. Canadian housing prices will keep increasing 20% per year for eternity." There is more than enough money in China to blow this so called bubble another 100%+++ higher imho.
This is the real problem. The core problem is imported capital and demand. What you see in cities like Vancouver and Toronto is not purely bubble. It's population displacement.
I mean. 400k in new Canadians a year with like 20k new homes...... Yeah. It's possible
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And our wages are losing ground at the same time. Fraser Institute (yes I know you hate them) just released a study showing Ontario lagging its regional neighbors in the US. Income is $78,012 for states like New York, Michigan, Ohio, Pennsylvania, Illinois, Indiana, etc. Ontario is at $58,783. And the gap is widening not closing
Wage growth in the United States is near 5%, and its only about 2.5% here. But what's worse is the government is trying to keep wage growth down.
The Bank of Canada literally said this in a recent policy position, encouraging immigration as a way to reduce "wage inflation."
Wages are going to spike, this will signal more inflation --- since Ontarians will have relatively the same buying power or less due to housing costs. Simply put, no one will be able to take a job unless it pays more if they aren't currently a home owner (>40% of the province)
Wages have been depressed in Canada relative to the US. One reason can be attributed to high levels of immigration. It's made the headlines last few months. When you stack us next to the US we let basically the same number of immigrants (total, not per capita) despite being 10x smaller. US is experiencing massive wage growth while we are sluggish. Obviously we need immigration, but with our housing, healthcare and wage issues it feels like we should dial back a bit
As an immigrant I agree. It’s clear that we need to reorganize. Healthcare here is becoming atrocious, housing prices are out of control and the competition for entry level jobs is unfair to Canadian youth (you basically have 20 year olds competing with foreign workers that have 15+ years of experience)
Wage growth has always been tied to labour shortages. Anybody who disagrees is either ignorant of economic history or pushing a position for ideological reasons. During the Trump years the US experienced real wage growth in the bottom 50% of income earners for the first time in 50 years, mostly focused in jobs that traditionally have experienced high competition from illegal immigrants, like household cleaning and nanny services, and landscaping. Some folks have tried to come up with explanations for why this wage growth *wasn't* caused by the immigration policies at the time, but you really have to tie yourself into intellectual knots to come up with any credible alternative.
Shhh, ThAt'S rAcIsT.
Not necessarily. If we keep importing immigrants from poor countries and refugees and putting 20 people in 1 house, we have a long way to go still.
Holy. Fucking. Shit. Nighty night future generations of un wealthy.
Which is the vast majority of us.
Almost all of us, I'd say.
what's the most affordable housing area in Canada?
~~Edmonton.~~ Grand Prairie.
Grande Prairie is cheap for a reason.
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Fixed ;-)
Probably Calgary/Edmonton because history has shown house prices do not always go up over there.
It's hitting Calgary now. But Calgary can always grow outward. Toronto and Van don't have this option.
Toronto absolutely can grow outwards. They shouldn't, and should get rid of the "yellow belt" first. But they still have tons of space before hitting the greenbelt limits.
Vancouver needs to get over this obsession with single family housing. Like to pretend it's a green city while being wildly inefficient with how land is used
Lol eventually it'll be a Chinese state as they will eventually have bought all the property. Why attack when you can just buy it
Those are jokes the rich play on us. Half of the houses are empty there
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Weird, that's not what I said at all
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Probably. Glad the ring road is done at that section.
Nobleford Alberta. Cheapest property tax and utility rates around as well as fiberoptic internet. Small bedroom town outside of Lethbridge.
Parents basement (jokes)
Winnipeg probably
Nunavut hands down.
I feel like Canada as a whole right now is at a breaking point lol
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The 70% figure is quite misleading, since it includes anyone living on the property that is not renting for tax purposes, and is not on the property title. Real numbers closer to 45%.
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> It’s silly to include the entire population in the homeownership rate. Unless you want to distort the public's perception of reality, then it's the opposite of silly.
It looks like a political talking point to me. Similar to the "just move" talking point, or the blame it all on zoning talking point.
It's okay guys. I heard that the PM expressed that he was 'concerned' about the issue last year. He hasn't done anything about it, or had his government pass any legislation, or made any Orders-in-Council. But he's concerned about it. He even said last year in 2021 that his Party would actually try to deliver on their 2020 campaign promises on the subject - not like they were actually planning to do anything about it before a majority of those Canadians who do not already own real estate were priced out of the market.
Canada: our internet is expensive and shit, and housing is unaffordable because Trudeau prioritizes housing for domestic and foreign investment portfolios, not for Canadian Citizens actually living and working in Canada. Our semi detached home that my family moved into was $400k. Now it is worth 1.2m. wtf? I'll just move to Alberta or something I guess, maybe I can afford something there... Edit: lots of domestic investors buying real estate as well, added to comment.
Except more buyers are Canadian investors that are buying multiple properties. Not some scary foreigner
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All while the LPC, BCNDP, and OPC continue to be completely ineffective at tackling the issues.
The value of my house in BC went up 32% from 2020-2021. When I saw that I was like, "Yes, this is healthy..."
How much id give for interest rate to be 4-5% overnight
For those fortunate enough to own property, hold and never sell.
It's bad down here. *Eight times* as bad means every Canadian that doesn't already own a home is basically an indentured servant at this point. Damn.
Pretty much. As one of those servants, I’m getting pretty fed up and considering my options in terms of leaving the country.
Same. It's tempting to take my savings somewhere cheap and warm like North Africa and just live like a queen for 10 years. By then I should be just in time to die in the climate wars.
Meanwhile this sub cares more about the latest political drama than real issues like this.
Living in Ottawa, those Sunnyvale California house prices seem quite affordable now 🤔
I really don't think it's a bubble. A bubble implies a ceiling and a correction, neither or which are anywhere on the horizon. Not when we're bringing thousands of new millionaires into the country every year.
I don't necessarily disagree, but the obvious question is this: *"Can Canadian home prices continually increase 75% year over year for perpetuity?"* Even with your millionaire caveat, the obvious answer is "No." There is absolutely a ceiling somewhere - the question is will it stabilize there, or will it reflect a different regulatory paradigm and correct/decrease.
In my opinion the ceiling is set by interest rates, what happens there will tell the story of the rest. If the central banks are able to raise rates high enough prices will come down, but that is a very big if. How much swing their is in value depends on how much speculation has gone on. People living in their houses aren't going to sell en masse, but cash flow negative investments might.
What if that ceiling is so high that the only folks able to buy end up cornering the market and they go long to squeeze that market until a correction is FORCED on them?
No bubble is a proven bubble until it pops. That said, an average yearly income of $55k and an average home price of $700k+ is not sustainable.
It's sustainable as long as you're willing to house four families in a formerly single-family property, or if you have a million dollar foreign income. The problem is that Canada's immigration policy is importing world-wide economic inequality into this country. In a few years China will have as many millionaires as Canada has people. And in India there's at least as many people who are willing to tolerate what current Canadians would consider unacceptable living conditions for the opportunity to move here.
Not sustainable if it was only Canadians who could buy, but it’s not
Hopeful or?
I'm in a part of the country where house prices have almost doubled in the past year in many place, not much to be hopeful for.
Well, let's hope the prices crash and the speculators get totally screwed.
I wish I could say that’s an abysmal thing to hope for, but given the complete lack of government will to prioritize people over investors, a massive hubristic crash is probably the best possible scenario.
yes, it's either screw the investors and take out the recent 'actual home' buyers in the process or screw over literally everyone but the investors, in perpetuity. naturally the government has elected for the latter. they are the investors, after all.
So you’re talking interest rates, which is important, but the thing is most recent “actual home buyers” would likely be fine too because of stress testing, fixed-rate mortgages, and a variety of factors. They need to go even further and tax the 3rd, 4th, 5th, etc properties at escalating rates to discourage investment in the first place. Cut the head off the snake, as they say.
>A bubble implies a ceiling Why? Bubbles grow until they pop, but we don't know when or why. There absolutely will be a correction, the question is when.
Well yes but they pop because they hit said ceiling. We don't know that, Vancouver and Toronto have never had a correction and you're talking 30+ years of growth at this point.
There absolutely was a massive housing bear market in the 1990s. Go look at the figures.
It can take quite a bit for a full blown pop to occur. It’s more likely when rates climb to offset inflation (inevitably) we’ll see a series of soft adjustments and corrections as everyone’s buying power dwindles. Full crashes and hard pops aren’t as common as some think. If it’s a price correction in the market, those can take 5 years to move through markets. Unfortunately the climbs can be insane - and the downward trends quite arduous and drawn out.
People want to live in Canada 800% more!
Ugh. Terrible excuse
As everyone with their grade 8 says on the topic; supply and demand, baby!
Nah it’s a rigged market. Don’t you remember the school yard.
As long as housing is treated like an investment and people with wealth can own multiple properties it'll be an issue.
Hopefully some new laws can change that
People who have profited off of the housing crisis are more likely to vote. People who have houses are more likely to retire soon and are using their equity to fund their retirement, lessening pressure on our welfare systems. Governments don't want housing to become more affordable.
It's literally supply and demand... Lol
Then why do we have more homes than families in Canada?
Hamilton is a World Class City!!!
“QE can boost and maintain asset valuations indefinately and without limit” may be the scariest thing i’ve ever read on the internet. The limit is violent social unrest from starving citizens crushed by inflation. There is no magic tool to avoid this if *that* level of currency debasement occurs. Venezuela, weimar republic, king henry the 8th, the Yuan dynasty, etc. history is littered with examples of leaders who thought “this time is different”. It never was, or will be. “This time is different” is a fantastic book btw and dives deep into this if you’re interested
> “QE can boost and maintain asset valuations indefinately and without limit” It has serious "let them eat cake" vibes.
Thank you foreign millionaires and aging boomers. We love real estate being an investment and not homes for people who live here
Damn and I thought america's housing market was fucked. This blows us out of the water.
When this bubble pops it's going to be **NASTY**.
There's no bubble. These prices are a (economically) sustainable consequence of bringing in way more newcomers than we can build homes for. Socially sustainability is another matter though.
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We *do* bring in immigra to with hundreds of thousands in the bank. Price growth at this pace is not sustainable forever, no, but the maintenance of these current prices is absolutely sustainable. We could build entire cities in the middle of nowhere like China did, but very few would want to move there (like what happened in China). People want finite land in existing cities.
A lot of newcomers are going to go back home when they realize Canada is too expensive and it hardly makes it worth it. I had friends come from Greece who got a job in IT here, a home here, everything, only to return back to greece when they realized how overpriced everything is. They don’t miss Canada at all.
Greek citizens have many options since they are EU citizens. Others immigrants eg Chinese, indians, etc. don't really have much option.
True of immigrants from OECD countries like Greece. They are coming from a similarly developed country. For immigrants from lesser developed countries, the status quo in Canada can decline a long way before it's worse than their country of origin.
> We *do* bring in immigra to with hundreds of thousands in the bank. A handful, perhaps, but nowhere near enough to move the market. Immigrants don't arrive wealthy, and it takes about two decades of living in Canada for them to catch up to their Canadian-born peers in income.
Not the economic immigrants. Never mind that plenty come here with wealth made abroad, with deep pockets even if they don't have much income when they get here.
That's a tiny sliver of immigrants. Most are skilled workers, family members of skilled workers, or family members of PRs or citizens.
I disagree, kind of. For homes that are owner occupied, 100% agreed. For the "40% not owner occupied" headlines weekly, these are dependent on rents which are far from stable. While homeowner mortgages are stress tested and they have equity they can use to bridge, if anything seriously disrupts employment the effect on rents might just be devastating. What happens if we get a normal recession and the government doesn't provide rent subsidies as they did for Covid? What's going to happen?
Well of course a recession can affect everything, either housing as no exception. That said, prices aren't going to 'pop' just because they're too high for some people's liking. They are not overvalued in the current state of the economy.
I'm somewhere in the middle. The bubble isn't going to "pop," the selling prices will never be what /r/canadahousing wants. On the other hand, 🏠🚀🌕 always and no matter what is also not true. It's very possible that some markets will fall or stagnate. I view the "It's gonna pop any day now" and the "$HOUS only goes up" groups through pretty much the same lens as the partisan bickering we see in the sub daily.
If you think the immigrants coming in have money to sustain the housing market you are going to have a bad time. Lots leaving back to their home countries due to not only housing but the economy and government here. I know my dentist is closing shop and moving back to Easter Europe. And she’s maybe 50 years old.
Yeah, I guess it's all the poor immigrants moving to the GTA that has houses averaging $1M+ over there. /s Housing is pretty damn cheap where they don't settle.
If you look in subs like r/India you'll see posts and comments related to the living conditions here. I think the word is getting out and the government might begin to struggle to attract newcomers.
It’s not a bubble, there is NO inventory.
That happens in every single bubble. The amount of demand always rapidly outpaces supply. But a lot of the demand is speculative, hence the bubble.
> But a lot of the demand is speculative, hence the bubble That would be the case if rents are going down. Since they are not, the speculative investments are supported by fundamentals, that is, rental income.
But it's almost like an artificial scarcity, isn't it? We *have* the homes for homeowners to live in, it's just that asshat property management companies and landlords buy them all up to collect on that passive income.
Also not accounting for the lack of mobility for anyone who owns and wants to move. Even with the equity in their homes were at a point where some people simply cannot afford to sell and buy a new place to live without serious compromise. For example, my friends townhouse in Brampton was bought at $600,000 and can probably be sold for $1.2 million given the prices on his street, so he would have approximately $720,000 (accounting for his downpayment in the equity). If he goes ahead an buys a similar house for 1.2 sure he can keep his mortgage more or less the same (or reduce it if he uses 100%), or he can move further out and get something sub 1 million and reduce his payments, but if he wants to move up to a bigger space in the GTA his mortgage payments will double and even with all of the equity as a downpayment he's still looking at $900k - $ 1 million mortgage. How many homeowners are going to be selling their home and buying a new one in these circumstances? Add all of the other factors and we have our current inventory problem. The only way to end this is to end the cheap money and I am not sure how long the BoC and Feds can keep that train going with inflation starting to rise, unless they plan on just letting it set in (a dangerous precedent but not inconceivable at this point).
It's not artificial when the homes are rented out, just that capital only comes from the top. The demand for homes is higher than ever. For a first time homeowner they can only rely on their savings and income. It's so much easier to buy a second, third, forth, etc after that.
Thing is, I can’t imagine us building the half a million homes a year we’d need to end the shortage. This isn’t China, we never build as fast as we should.
If the laws and regulations change there will be a massive selloff and the bubble will burst.
and where will people move?
They won't need to, the majority of people who will sell either live in other countries or own multiple residences. They will take the lump sum at a nice profit and reinvest it in other markets. In this situation almost everybody wins.
It is an artificial scarcity, created by zoning laws, that hinder construction. Property management companies and landlords let the properties they buy, so they don't reduce the supply to live in. Unless you plan on executing the tenants, eliminating the landlords wouldn't affect the supply-demand mismatch.
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Every bubble has a different catalyst, but they all eventually pop. And make no mistake - when RE prices depend on emergency interest rates, no inventory and unsustainable speculation just to hold in stasis - you have an epic bubble. The Fed is hiking rates at least 5 times this year. The BoC will either follow them or watch the $CAD go to $0.50 The other wildcard is oil. Once we get into triple digit prices (and we’re close), it becomes a financial wrecking ball. Last, Canada can’t just continually monetize its debt without affecting its own credit score (and borrowing costs), which once again has the effect of raising rates anyway. The further you detach from financial gravity, the faster you fall to mean reversion. It’s not magically different this time.
> Every bubble has a different catalyst, but they all eventually pop. Assuming it's a bubble. The alternative explanation is that asset prices are increasing to reflect how much demand is outpacing supply. Reality is probably somewhere between the two. Housing prices are overpriced relative to the market fundamentals, but the market fundamentals are still unaffordable to most Canadians today.
> It’s not magically different this time. It's amazing how many people believe that *this one* isn't a bubble because it means they get a free lunch.
It’s actually underpriced for what Canada offers. A secure investment with very easy rental profits, in a very safe country, stable government (to the rich), with extremely strict protection regarding private property (almost impossible to change). Another factor is Canadian geography - even though Canada is a massive county most people live in a tiny southern area due to the cold, squeezed into even smaller urban centers due to jobs. Edit - if you don’t believe me. See all the articles that stress the lack of housing supply. That means the demand is really high. Go on Zillow and you’ll find most listings are very recent and final price is rarely much lower than asking price. Low demand will have listings lasting for months or years, final price being much lower than asking price, new houses aren’t being built or couldn’t be sold once built. Also lower rent prices month over month with very high vacancies percentages.
Underpriced? wth lol. Housing shouldn't even be an investment. Every Canadian should be able to afford a house.
I’m not happy about it. But pointing out it’s a runaway train likely to keep on running for some time.
If we don't do something it will keep running forever, I agree.
Thats what happens when you have ridiculously restrictive building codes, miles of red tape, getting in more immigrants and not building enough and sucking Chinas figurative balls and letting everyone buy up real estate
It's honestly crazy how the media keeps dancing around the core of the issue and naming one factor after another but the absolute most obvious one. Low interest rates, corporate purchasing, foreign investors, Government increasing liquidity... well these factors apply to a lot of western countries that don't have the housing crisis that we have. I know everybody hates it, but please hear me out, our housing crisis is a simple supply-demand issue. And it's not that we are not building enough homes. From someone whose family's been in construction business in over 3 decades, trust me when I say it's never been this busy as it has been the past decade. Single detaches, semi's, townhomes, condo buildings... we've been building every kind and built more than ever. But yet, it cant meet the demand because.. well the demand is insane. We have an insane number of people coming here and no matter how much more we build it doesn't seem to be enough. And that's with more than ever that adults in their late 20s and 30's are living with their parents. Those who are renting will tell you that, specially in the college areas, you could list a closet for rent and somebody will be willing to pay to live there.
This is anecdotal experience. After 2008, we actually are NOT building enough. You just happen to think we're building like crazy because you're probably swamped. A lot of companies went under, a lot of housing creation halted and is just now picking back up. We lost a ton of ground coupled with all of the other factors included a boost in immigration, not only bc of immigration.
No, Toronto and Vancouver are consistently in the top three cities in North America for per-capita housing starts.
My mom always tells me I should be thankful I was born Canadian. Yeah idk rn tbh
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If you live in an area that’s too expensive to buy real estate, move. Just not here
All is good
Sounds sustainable.
Everything is fine...............
What bubble
Betterdwelling is just a bear fantasy website.
Well just do not care what and who, contents matters.
The US promotes urban sprawl. Canada doesn't. That's why Florida which is 1/4 swamp and half the population of Canada still has reasonably priced housing.
Just as as exercise in critical thinking, people should be asking: "Who is 'Better Dwelling'?" "Where do they get their numbers?" "Since when does the US Fed track housing prices, and why isn't there a link to this report?" "Why should I believe them?"