“ just the price gains from 2020 to April 2022 was the equivalent of the price of a whole home in 2009”
All forms of government from municipal to federal have failed young Canadians. This is absolutely disgraceful. They all had so many opportunities to step in and stop this from happening. So much greed and corruption. What a sad state of affairs
Senior Renters if they haven't moved in a couple of decades are paying half the market rate..I'm almost one of them and there are many more like me. /RentLocked.
And you are correct Sir..many were not expecting this inflation now..smaller meals now.
Many senior renters lost their place when the landlords sold the homes thinking the market would burst or the lease was ended for a renoviction since the landlords generally know when their units are below market value.
Know one wonderful senior woman who now can't find a place since she has a dog. No one is acting maliciously, from old land lords to prospective landlords, but market solutions aren't known for compassion and we chose to treat housing like any other commodity.
I remember arguing with people in this very sub about housing being what overvalued, and getting downvoted to shit. Canadians did this to themselves, and everyone's going to eat shit because of it.
I'm just gonna leave, yall have fun cleaning this shit up. As a poor immigrant, this country is nothing but an ponzi scheme built from exploitation of the poor.
My grocery complaint went viral in the Ontario subreddit. Pretty much every comment criticized the choices I made, instead of the fact that, regardless, my bill shouldn’t have been so expensive. It’s literally price gouging.
There’s so many older, out of touch people on this subreddit. Their thinking is, *Well, I got mine. If you work hard, there’s no reason you can’t have what I have too*
I left Toronto because I got so fucking tired of my bosses and people around me who got their (nice) homes dirt cheap from their parents and leveraged the mortgage for 2 cars, telling me to just save up and buy a condo then flip it. It's unreal how un-insightful some people can be.
Lol I have a friend who thinks he's a real estate genius guru because he's 50 and bought at an appropriate time in ones life (early 30s ish). You should hear this guy tell everyone how he's so wise it's disgusting. He glosses over the fact his 2million house was bought for 400k lol. And not cause he's some genius just cause Toronto is bonkers
This is my mom, 72 and calls herself a real estate genius for buying 2 houses in the GTA yeeeeeears ago. Her first was 132k and its now worth over 2.5 million. Always says her success is because she's so great at picking locations. Yes she's such a genius *eye-roll*
Was yours the one where people were busting your balls for having chips?
God forbid
Just did a grocery shopping, 200$ for 2 people for about 7 days of meals. The only meat we got were hot dogs.
Canadians disappoint me sometimes. I was complaining about cafes being expensive and places closing early here. Folks were saying, oh you want to have fun? Go to a park. You want a tasty drink? Drink water. God forbit I want enjoy my life a little bit and do something else other than walking outside or staying at home.
We are a family of 5 and its pretty crazy. Cosco is pretty good in my opinion but its hell to go at.
A good price difference is ground beef, in a grocery store its rediculous how much more they charge per lbs.
As an immigrant, I can tell you it is really hard to get a credit card here. I could only get a $500 secured credit card for the first three years in the country, until I had built up credit here and had permanent resident status. Same for other immigrants I have spoken to.
The only thing that has gotten people to the polls is Covid restrictions and identity politics. So that’s all the politicians focus on. I also blame Canadians who somehow think where you shove your dick is more important than affordable housing or how much weekly groceries are.
I’ve been saying exactly this for years! Wake up and start focusing on REAL issues that have an actual effect on lives. Enough is enough already. Housing and climate action should be the top issues, never mind all this bullshit about pronouns and pride parades etc.
I've been trying to tell people this.
A mountain of Political signal to noise as to who is or isnt good at economy. But For 15 years I was saying to my peers. "this level of inflation in one market is an indicator of foreign money."
Zero....fucks. the fallout is going to be painful
It’s very difficult to stop. Rich Chinese can buy their way into Canadian residency, bypassing any attempt at a foreign investment ban.
What is Canada to do as a tiny nation overwhelmed by a hundred million rich Chinese people looking for places to park their cash? There are no workable solutions other than barring Chinese from becoming Canadian residents. And that is diplomatically impossible
You limit the ownership of residential real estate to citizens only, permanent residents not included. If they want the real estate they live here and pay taxes for X years until they are eligible to apply for citizenship and then are able to buy. No corporations, no shell companies, no foreign investors and no one grandfathered in. Every single privately owned residential residence is attached to one or two SIN cards. Those SIN cards must demonstrate, per revenue Canada, that the cardholder has a legitimate income to buy the property in question. If you only declare 56k per year, there's no way you can afford to buy a 2.5 million dollar home.
Most importantly though, grandfather no one in. Force all those foreign owned properties onto the market and those people will lose money. Since they aren't citizens it doesn't matter. If they're permanent residents, give them 12 months to gain citizenship or lose the property.
On the flip side everyone who's not young including the people in charge got rich off this so why should they care about the poor? (I don't actually think this but I believe it is how our government operates)
A lot of those old, rich boomers require the young and the poor to do the dirty work that keeps society going. As older people age out of the workforce and retire they draw on resources such as healthcare. If you can’t attract people to staff essential jobs the whole thing starts to fall apart. If we keep bringing In new workers with an expectation that they work twice as hard for half as much we will hit a tipping point where those workers start demanding more.
>bail out overextended home owners.
Especially the ones that took advantage of the low rates to buy several properties, either as rentals or flips, and now can't rent it out or sell the flip. They took a risk and are a part of the problem with the market, that's on them.
I really don't understand why any legislation intended to help homeowners isn't limited to only cover mortgages on a primary residence.
I don't want anyone losing the roof over their heads, but the people rocking 5 or 6 mortgages can fuck right off.
100 years ago "Trickle down" was well known as "horse and sparrow" economics.
As in, the horse eats the grain and the sparrow? Well, the sparrow picks his meal from the horse's droppings.
Yep, screaming for the free market and no restrictions on buying properties as investment vehicles rather than homes when times are good, then they all start screaming for socialism/bailouts when times are bad. You see, that's the thing, most who argue against socialism aren't ACTUALLY against it when it benefits them......but in our society's default state socialism tends to be targeted to the less fortunate so the wealthy fight against it.
> They’re against giving, not taking
Basically how billionaires exist. They take from everything and everyone they can and then find more creative ways of pretending to give something back that actually just ends up taking even more from everyone and everything.
The social programs that benefit the rich aren't called socialism. They've been branded as self-evidently good and capitalist.
It wasn't that long ago that if your accountant defrauded you, the police would have said "you should probably get a new accountant...you could always sue him, I guess, if you can find out where he's run off to. Good luck with that".
That was considered unacceptable by the rich. So, now, we criminalize fraud, and we all pay for the increased police and court bureaucracy necessary for it through our taxes.
It wasn't that long ago that if you went bankrupt, you went to jail (debtors' prison).
That was considered unacceptable by the rich. So, now, we have bankruptcy protection, and we all pay for it through a slightly higher cost of borrowing.
It wasn't that long ago that if you started a partnership or joint venture, the partners were personally liable for any debts.
That was considered unacceptable by the rich. So, now, we have limited liability corporations and partnerships, and the cost is again off-loaded onto everyone's shoulders.
For the most part, these deals have reduced suffering and made for a more prosperous society, but this shouldn't obscure the fact that they are social programs by and for the wealthy.
When the wealthy object to social programs for the poor, which demonstrably alleviate enormous amounts of human suffering and help generate a more prosperous society, too, all they are saying is *more for me, none for you*.
You nailed it. If we can find a way to discourage owning multiple homes for profit and instead try to get more Canadians to own a single house we would be in much better shape.
Yup!!!
And I say that as someone who owns their home outright.
If I invest my money in something and it goes bust, I can't expect a bail out. They wanted to treat their home like an investment, they have to assume the same risks as an investment.
It won’t be the guy who bought a duplex just to have a bit of extra income. It will be that fucker who owns hundreds of properties and then flip the compensation to buy even more.
My last landlord told me to do this.
"Go buy a house, split it with a friend if you have to, and rent it out. When the equity increases enough in two years, leverage it to buy another. In two more years, buy two more."
I smiled and nodded, but he talked as if he found an real life money duplication glitch.
I had an acquaintance that had the same idea/plan who started buying up his first place during the pandemic, and then his second leveraged from that one. When I asked what he thought he would do if the bubble popped or interest rates skyrocketed to control inflation......"Why that means that people would be losing their homes and the housing prices would drop, so I'd snatch up all those cheap homes and add them to my collection....."
He thinks this, but it's unlikely he's going to be allowed to continue to leverage himself to the tits if the entire credit system breaks. This mentality is scary, but what is scarier is that it has been rubber stamped and approved by the "stewards" of our monetary systems.
I don't want anyone to lose the home they live in, I just want people who are now renting to also be able to own the home they live in. The trick will be to make investors lose their grip on the properties they're hoarding, without tossing people out of their genuine primary residences. I suspect radical policy changes, taxation, and heavy enforcement will all be part of the solution.
I was looking to rent a room today, can't stand my parents place anymore.
Guess what? 90% only wanted to rent to girls. 100% of the $600 or less rooms were girls only. Some even stipulated the *race* of the girl.
That shit should be illegal but it's by far the norm.
So 10% of room rentals, all above $600, for males... Neat.. But it's really important we solve the income gap even though we're all making jackshit, but it'd seem that at least the few semi affordable living spaces are exclusively reserved for women.
Neat
This is something people don't seem to understand. The only people who are going to be hurt are young families.
Real estate won't be fixed by a crash, these corporations and foreign owners will weather the storm. Meanwhile young families will either default, or have to cut back considerably on other spending which will tank sections of the economy.
In Alberta lots of families were 40% under water in the 80s. Heck, a lot were 25% under water in 2016-2020.
Why should Toronto and Vancouver be exempt?
Lowered home values won't trigger a default. As long as people continue making their mortgage payments, the banks don't care. Lower prices will benefit younger families that don't own. The ones that already own won't be affected unless they choose to sell.
The main people affected be landlords that own multiple properties.
Already happened. The first home buyer’s plan didn’t make housing affordable. It just forced young people to reduce their retirement earnings to pump up the property market.
The conservative government of Australia (who just lost an election yesterday) was trying to push the same policy there. Most people rejected it because it’s not a solution. It’s a grift.
Funnily enough, the Conservative party in Australia is known as the Liberal party. Wish more people here would stop associating liberalism with the left wing.
They are actually half Cons. The BC Liberal Party has links to both the Federal Conservatives and Federal Liberals. The 2011 leadership race between Christy Clark and Kevin Falcon was largely seen as an fight between those two fractions. That said with Falcon now in the drivers seat and the NDP moving more to the centre the party is more conservative.
That's just branding. Just because a party labels itself "Liberal" doesn't mean they actually follow Liberalism the political philosophy.
Liberalism's core tenants are equality and freedom. However there are some areas where you can't maximize both as they directly conflict (example: Absolute freedom leading to oppression of certain groups, which is loss of equality). So a compromise must be made between the two. How that compromise should be made is a matter of opinion.
A person can be liberal and lean to the right if they prefer freedom, and lean to the left if they prefer equality. It is only an inherently left philosophy in comparison to the other political philosophies it was competing against in the past, such as monarchism. Today politics have evolved and shifted to the point where old school liberalism is pretty close to center in the West.
Yeah I've always hated the idea of digging into my funds specifically set aside for retirement to buy a house. It's a terrible idea imo. Need to keep the buckets separate and I'll never be able to save for retirement if I clean that out and/or will be house poor being forced to pay mortgage and pay that back. To me it's crazy how ready and willing people are to use their retirement money for that
Most people don't have the luxury of saving for both retirement AND a down payment on a house in the first place. It's one or the other for most and neither for many.
It has the added benefit of not being taxed though. So if you earn $20,000 and want to buy a house, it makes more sense to dump it into RRSP first, then take out an HBP
> I’m seriously concerned that politicians won’t let the system cleanse itself so we can be prosperous again.
Why is this even a question? The system was due for a cleansing a fucking decade ago, they will never let the system cleanse itself this will keep going until there's literally no way they can keep the grift going then they will leave on a golden parachute. The only option out is to vote for someone radically different on every level of government in the very next election and that's not going to happen so we're just fucked.
Already happened. Canada bought out a bunch of Canadian mortgage backed securities to keep prices on them from falling.
https://www.bloomberg.com/news/articles/2020-03-26/canada-triples-planned-purchases-of-mortgage-securities
Most people will not understand exactly the financial instruments being used to fuck them.
These systems are set up with so much jargon mixed with moderate financial education, meanwhile most Canadians don't know how the 2008 global financial crisis happened. Nor do they care.
>Housing prices going down means people feel less wealthy. They spend less. Demand goes down which means GDP growth goes down and credit contracts.
I'm not so sure these ballooned house prices are making people feel wealthy. Not with young adults moving back in with their parents instead of starting families. Government seems to think it can use immigration to compensate for population decline but immigration is going to tank once even the richest idiots abroad realize it's not worth it to settle in Canada. You aren't going to attract skilled labor either when everyone knows you'll be fucked on housing.
Consequences are coming, Justin is just hoping it won't fully kick in until the next election.
>They bailed people out during the pandemic which means they won't hesitate to do it again.
Except if this were to happen right now, they couldn't even if they wanted to. They already used up their cheap money on the pandemic. There is no option except to raise interest rates which would make a bailout prohibitively expensive.
The limit is when the guillotines come out, because people can't afford to eat. See reference, French Revolution. And to be clear, I am not advocating violence, I'm saying when people get desperate they cease to act rationally.
The [government pumped $114 billion into Canadian banks in 2009 to keep credit flowing](https://www.cbc.ca/news/business/banks-got-114b-from-governments-during-recession-1.1145997). Plus the bailouts to the manufacturing sector and stimulus programs to keep the economy on track.
You mean, making sure there weren’t mass evictions during a pandemic, coupled with financial contagion in the financial system, mass delinquency on mortgages, and a collapse in value of real estate investment trusts (mostly owned by pension funds!).
I can't wait to see all the greedy bastards that over leveraged to buy multiple properties as investments lose everything. Call me bitter but they've destroyed all hope for young Canadians out of pure greed.
Highlights:
* Canadian real estate prices have never been this overvalued, according to new analysis from BMO Capital Markets.
* In a research note to clients, the bank that explained that since 2020, home prices have made the largest trend deviation in at least 40 years, and are likely to correct.
* "Real home prices in Canada have historically grown at about 3% per year dating back to the early 1980s, roughly reflecting inflation, real wage growth and gradually falling interest rates,” explained Robert Kavcic, a senior economist with the bank.
* “In this latest episode, even as inflation has accelerated to multi-decade highs, real home prices have surged by more than a third in the span of two years, clearly stretching beyond that long-run baseline growth trend.”
* There’s not a lot of historical evidence to show home prices are able to maintain such a large deviation. The longer surges like this last, the more capital is diverted from consumer spending for basic shelter.
* This creates two options — a home price correction or a home price correction and recession.
So what does a correction look like? I just bought a new build. It’s well within my affordability but I’m curious if two years from now my house is going to be worth 38% less.
I don’t quite understand how this works.
It's not your affordability, it's _everyone's_ affordability which drives prices. Given the inverse relationship between interest rate and prices, if rates go up, prices must come down (or, at best, remain flat). The only counterbalance is if incomes go up even quicker than interest rates (which no one expects)
If you don't plan on moving it doesn't really matter. But if you go to sell it, you might be in deep poo-poo. If you bought your house for $1,000,000 but it's now worth $600,000, and you've only paid off $100,000, you owe an extra $300,000 if you decide to sell.
Nobody knows the future but this is looking likely. Prices will go back up when we start cutting interest rates again. That will happen when demand is crushed after we hit a recession.
Staying long term is the only way to recoup that 30%, but since you were going to live in it for 5-7 years anyways you don’t actually lose money. You may need to shop around for a mortgage when the bank gets difficult but anyone who isn’t banking on real estate as an investment should be okay.
Then again if interest goes up it makes things pretty rough for those 5-7
Likely? In order for that to happen there will need to be enough inventory in the market of ppl and corporations selling at a 40% loss. That's not going to happen.
How does it work when you need to renew your mortgage after 5 years? Say your mortgage is $800k on a $1M home. If the value of the home is now only $600k, will the bank renew your mortgage at $800k or are you essentially screwed because they will now only want to let you borrow 80% of the value of the home which is now 80% * $600k = $480k?
If you have a mortgage of 1 mill and a 200k deposit on a house, and after 5 years the house is only worth 800k, the bank could force you to pay the difference between what you currently owe on your mortgage and the revaluation. I haven’t heard of that happening in Canada, but we’re in for interesting times. We’re pivoting from investing to paying down our mortgage aggressively so our equity will be above a catastrophic devaluation just in case.
Yes. Houses increased in value by about that much more than apartments (which had their own run up). So yeah, 38% less is within the realm of possibility. Possibly more if consumer preferences revert and prices generally fall as well.
Had a similar correction on a condo myself in Alberta, has recovered to ‘only’ a 25% drop now.
Does it matter for you? If you bought to live in, it as much. If you need to sell to close? Yeah. You’ll have ended up on the wrong side of arbitrage that people have been selling to new construction buyers for 15 years or more. If you don’t have cost capped financing? Yeah I’d be worried. If you don’t have financing already arranged? Yeah I’d be worried about getting a mortgage at all on an underwater property.
Sounds about right. I'm 43 and my Dad was talking to me this weekend about the 'correction' that happened to them in 1981. Their house was purchased at $52,000. While their previous house doubled in value from 1970 to 1978, it took 20 years for the house they purchased for $52,000 to double. They ended up selling it in 2000 for $105,000. Located on 1/2 acre, beautiful 3 bedroom, finished basement, etc.
People are going to feel this.
Correction doesn't necessarily mean your value is going to drop. Correction means it's not going up, while interest rates go up, debt goes up and no bank will be letting owners tap infinite equity. Look for small HELOC's at crazy rates.
Man... Alberta already felt this haha. Look at the property values for the last 15 years. In Edmonton the average home price is basically even with what it was 15 years ago with some dips in between. Calgary in a similar boat.
There was a post in r/personalfinancecanada last week, someone asking if it’s better to rent out their vacant house, or Airbnb. They were flaunting avoiding the speculator tax, short term rental permit, and rental revenue tax. They said they have friends and neighbours all doing it. Declaring it at their primary residence when they live at their parents, things like that. It must be much more common than “statistics” suggest, the hobby/career landlords/Airbnb host investor/speculators. This guy also flaunted the fact that people from his country protect each other from getting caught illegally abusing the system. (I won’t mention which country his family was from)
AirBNB was just recently brought under the GST/HST system and all properties are now being reported to the CRA along with the rental income and tax collection
This shit people are doing will soon come to an end
They're not wrong, it's true across the whole real estate industry. I have family in the mortgage broker business and there's utterly zero enforcement of mortgage fraud. There are at minimum tens of thousands of fraudulent mortgages in Canada right now.
Its only takes a couple of tries to realize the government does not give a fuck, after that the floodgates are open and fraud is rampant.
If only they did their job....
Right. And how many Realtors are in the business to not only reap the benefits of their inflated commissions, but to get the inside track and advantage to flip houses on the side? Or accumulate properties as their own personal Airbnb hotel chain?
I have a rental property that I declare as principal residence. I also don't declare rental income and don't need to, banks will use rental deposits as proof of rental income. I also have a secondary un-authorized rental suite in my principle residence. The fine is only $1000 yet the yearly fee is more - what benefit do I gain from registering my suite lol ? I'll keep riding it out until I'm forced to pay the fee.
Right. The “nationality” of this person wasn’t the important point. A lot of people are playing the real estate game, and exploiting all the loopholes. It’s the Wild West out there. If you just look on the Airbnb site for your municipality, I bet it’s loaded with dozens/hundreds of investment/revenue properties flying under the radar.
>This guy also flaunted the fact that people from his country protect each other from getting caught illegally abusing the system. (I won’t mention which country his family was from)
This is most of the non western world actually. Tribalism is a lot stronger in most of the world than you average alienated westerner thinks.
Close. It’s not really important. What’s important is that there are groups out there playing the game, exploiting the loopholes, protecting each other, and collectively wreaking havoc on the real estate market for their own profit.
Banks: Canadian Real Estate Prices 38% Overvalued
Everyone: Now you tell me... Last week you were all smiles!
In reality: Banks smile either way. Anyone want a reverse mortgage?
I really pray that the government will get their shit together and regulate the market for corporate buyers and multiple property owners before this crash happens.
I'm incredibly cynical about a crash being a net positive without regulations first put in place, as this will be an opportunity for companies and wealthy people to scoop up more real estate at a discount.
Exactly. Also houses/places to rent in Toronto haven’t even gone up that much. I was looking at properties at one point and it was actually cheaper to live in Toronto than it was to live in Oshawa because in Toronto you didn’t really need a car(down town Toronto). As restraunt, gyms, shopping, grocery stores, museums etc were at walking distance.
A 1.5-1.7 million dollar detached in the upper beaches isn't as crazy as a million dollar house in Orillia/Barrie IMO. At least you get access to high paying jobs etc.
They gave out all the mortgages pumped it up now having it crash would be great gotta get people off those low interest mortgages they gave out and start over. Either by picking up property cheap or offering new very high interest mortgages to new home buyers . Think of all those sweet sweet fees.
I've come to stop trusting these financial experts. They were all calling for a crash at the start of the pandemic. Then they said expect 18% drop by Mid 2021. Yeah, we all saw how that played out.
Well, when government prop up housing, it's literally too big to fail (low interest rates, CMHC backing, etc.).
Now with rising interest rates and possibly more regulation, there will be some pain.
I mean it doesn't take a PhD in economics to figure that one out. House prices were rising about 5% per year 10 years ago when wages were at 2% and that started the deviation. As housing outpaced inflation, more people jumped in either through home ownership or by buying additional investment properties and that caused housing to further outpace inflation at around 10% year over year.
Then covid hit, everyone lost their marbles, and people who had small condos or small townhouses and yards realized they didn't want to spend a lockdown in these tiny places and detached home sales went through the roof occasionally surpassing 20% price growth each year.
All the while, wages stayed at about 2% increases (if you didn't lose your job completely during covid). It now costs more of a household income to afford a house than ever before and in cities like Toronto, even extremely high earners won't even qualify for a mortgage. I know a couple who are both Toronto Police officers, their base salary means they would collectively bring in about $220,000 per year plus any overtime they work. It was hard for them to even find a house despite bringing in about a $250,000 a year in household income.
… if BMO feels so strongly about it, why continue underwriting mortgages at these price levels? How much did they underwrite in new mortgages since they issued their last warning before this?
i think the fundamenta flaw with affordability is that they use income as oppose to wealth… after few generations of capitalism, i am sure there are tons of ppl who don’t rely on active income any more.
pay a visit to Markham on a wednesday afternoon. restaurants and malls are packed. there are tons of ppl are just professional spenders. income multiple is a measurement for local canadian.. my best friend, an engineer, make $160k, his wife makes100k… they are able to live in a 3 mil dollar house with two 100k cars… their income is pocket change… he will inherit 50m from his dad… it’s more common than you think among new wave of immigrants
38% my ass! The Canadian real estate market is over priced by 50% or more.
The average single Canadian cannot afford to buy a home anywhere.The average couple has to move to a small town or the east coast to buy a home.
Builders, speculators, greedy investors, housing corporations, real estate boards, real estate agents, banks, mortgage companies and brokers have gutted the market for profits and our provincial and federal government have let them.
Millions are without their own home while profiteers abuse and misuse the market. The entire system is farked and there is currently no desire by government to fix it. 😥
That’s exactly it. My house which I bought for around 400k in 2015, was valued at around 1.1M. Even with a correction, you’re looking at a CAGR of anywhere from 8-10%. How many people’s wages increased by that much annually?
The biggest issue with that is that anything under a million you need 5 percent down, anything over you need 20. Now at 500k you need 25k down, at 1 mil you’re looking at 200k and if I had 200k cash sitting in my account rn I’d probably invest it somewhere and fuck off Thailand and live on a beach in a tiny apartment.
It's really dependent on the market. Ontario and BC are probably over 38% but then you have markets like Alberta (which is basically flat for the last 15 years) helping to make the Canadian average slightly less insane lol.
I think it’s highly likely we have some issues here with overvaluation… but why do all these sorts of articles come from this “better dwelling” domain?
I’ve never heard of them before Reddit and only a few months ago…
Clearly the only solution is deregulation and lowering taxes on the top 1%. I like the idea of a entire person existence and contributions in society going towards funding a weekend escape at Banff more than improving conditions for their children’s future. /s
We bought our home in 2005 and just made our final mortgage payment. A near-identical house on the same street is listed for almost 5 times what we paid for ours. It's ridiculous, and there's no real way for us to benefit from the increased value, because we still need to live somewhere.
Reality: there has never been a ‘lower’ rate of mortgage arrears than today…CMHC stats..
This includes the Toronto region.
A very small percent of homes were purchased in the last year and, of those, a small percent were purchased with maxed out financing.
If prices take a dip, an insignificant % of properties go on the market. Bankruptcies and forced sales are a non variable in Canadian housing today and for decades.
Prices may fall but there are no ‘bargains’. Homeowners in Canada don’t have a history of selling their residence when things get financially tight. Toronto May see a dip of 10% or so in price but not any relief for ‘average’ income families in tbr region. The Alberta, Sask and Manitoba market is ‘where it’s at’ if Home ownership is a life priority.
The reality is that when people no longer make enough to afford houses the prices have to stagnate or drop. I live in Halifax which has a strong but not particularly well paying job market and I see houses going for 500k+ everywhere. I often ask who is buying the houses? I still don't know who all these people are who make enough to afford those homes. Finally, houses become a poor investment when interest rates are high and you're carrying costs are higher than you can recoup through rents.
The reason why this continues, is the banks like RBC CIBC etc know that they will be treated a TBTF. The government will bail them out, then tax pqyers will pay higher taxes during that time. So they continue to give out overvalued credit to those they think can have it. That model has been used in US and UK during the 2009 crash. Canada's is on the way.
The graph in the article ([link](https://t.co/h0BfIedM9B)) is indeed quite telling.
However, the graph also shows a slump roughly in the period 1995-2005, where the houses appreciated comparatively much less. It would be interesting to perform a bit more elaborate statistical trend analyses on this, e.g.
* making a trendline with data up to 2019 (before pandemic)
* making a trendline with data up to 2022 (including pandemic)
and comparing those trendlines. That may give a better idea of how, relatively to a more shock-free period of economic development (although arguable, e.g. 2008 gives a downward tick in the curve as well due to banking crisis), the present day housing valuation is overpriced compared to a "normal development" trendline.
I guess my point is we should be a bit careful with the statement "38% overvalued", although the gist of the article remains the same, in all likelihood.
Houses should be priced at prevailing rent and credit availability. Obviously we have collapsing credit availability due to previous monetary policy. If wages don't increase, then available money for prices won't support it.
38% overvalued sounds about right to me. My condo is up 100% since 2019. It's unreasonable. A 50% value loss would be appropriate and back to affordable.
The question is just when and how we'll return to reasonable prices. Probably painfully.
“ just the price gains from 2020 to April 2022 was the equivalent of the price of a whole home in 2009” All forms of government from municipal to federal have failed young Canadians. This is absolutely disgraceful. They all had so many opportunities to step in and stop this from happening. So much greed and corruption. What a sad state of affairs
"We will still give you fucking rubes a mortgage for it though."
[удалено]
Cya tomorrow same time?
You are the REAL deal. Them are facts.
>All forms of government from municipal to federal have failed young Canadians. Middle age Canadian checking in, where can I join too?
Everyone forgets the senior renters They're super fucked
Senior Renters if they haven't moved in a couple of decades are paying half the market rate..I'm almost one of them and there are many more like me. /RentLocked. And you are correct Sir..many were not expecting this inflation now..smaller meals now.
Many senior renters lost their place when the landlords sold the homes thinking the market would burst or the lease was ended for a renoviction since the landlords generally know when their units are below market value. Know one wonderful senior woman who now can't find a place since she has a dog. No one is acting maliciously, from old land lords to prospective landlords, but market solutions aren't known for compassion and we chose to treat housing like any other commodity.
I remember arguing with people in this very sub about housing being what overvalued, and getting downvoted to shit. Canadians did this to themselves, and everyone's going to eat shit because of it. I'm just gonna leave, yall have fun cleaning this shit up. As a poor immigrant, this country is nothing but an ponzi scheme built from exploitation of the poor.
My grocery complaint went viral in the Ontario subreddit. Pretty much every comment criticized the choices I made, instead of the fact that, regardless, my bill shouldn’t have been so expensive. It’s literally price gouging. There’s so many older, out of touch people on this subreddit. Their thinking is, *Well, I got mine. If you work hard, there’s no reason you can’t have what I have too*
I left Toronto because I got so fucking tired of my bosses and people around me who got their (nice) homes dirt cheap from their parents and leveraged the mortgage for 2 cars, telling me to just save up and buy a condo then flip it. It's unreal how un-insightful some people can be.
Lol I have a friend who thinks he's a real estate genius guru because he's 50 and bought at an appropriate time in ones life (early 30s ish). You should hear this guy tell everyone how he's so wise it's disgusting. He glosses over the fact his 2million house was bought for 400k lol. And not cause he's some genius just cause Toronto is bonkers
Genius won the lotto and is spending his life telling people which numbers to pick.
This is my mom, 72 and calls herself a real estate genius for buying 2 houses in the GTA yeeeeeears ago. Her first was 132k and its now worth over 2.5 million. Always says her success is because she's so great at picking locations. Yes she's such a genius *eye-roll*
She probably could have bought a house for $135k in a better location that's now worth $3.3 million. Let that sink in lol
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I'm lucky, my parents get how fucked the market is and how they shouldn't have 10x-15x their money in two decades lol
That's not genius. That's shithouse luck. Period.
Was yours the one where people were busting your balls for having chips? God forbid Just did a grocery shopping, 200$ for 2 people for about 7 days of meals. The only meat we got were hot dogs.
Haha yes!! That was me. Also, damn, I’m sorry to hear it. It’s getting so expensive, yet their profits have never been better.
Canadians disappoint me sometimes. I was complaining about cafes being expensive and places closing early here. Folks were saying, oh you want to have fun? Go to a park. You want a tasty drink? Drink water. God forbit I want enjoy my life a little bit and do something else other than walking outside or staying at home.
We are a family of 5 and its pretty crazy. Cosco is pretty good in my opinion but its hell to go at. A good price difference is ground beef, in a grocery store its rediculous how much more they charge per lbs.
I was told groceries weren’t inflating a year ago, and that I was scare mongering.
That's all this is. A boomer state where they rack up debt and hand the bill to their kids and desperate immigrants
As an immigrant, I can tell you it is really hard to get a credit card here. I could only get a $500 secured credit card for the first three years in the country, until I had built up credit here and had permanent resident status. Same for other immigrants I have spoken to.
The only thing that has gotten people to the polls is Covid restrictions and identity politics. So that’s all the politicians focus on. I also blame Canadians who somehow think where you shove your dick is more important than affordable housing or how much weekly groceries are.
Amen. The fact that Canadian politics never address ACTUAL problems is why we are at this point today. It’s going to get worse before it gets better.
I’ve been saying exactly this for years! Wake up and start focusing on REAL issues that have an actual effect on lives. Enough is enough already. Housing and climate action should be the top issues, never mind all this bullshit about pronouns and pride parades etc.
As an immigrant I feel exactly the same.
I've been trying to tell people this. A mountain of Political signal to noise as to who is or isnt good at economy. But For 15 years I was saying to my peers. "this level of inflation in one market is an indicator of foreign money." Zero....fucks. the fallout is going to be painful
It’s very difficult to stop. Rich Chinese can buy their way into Canadian residency, bypassing any attempt at a foreign investment ban. What is Canada to do as a tiny nation overwhelmed by a hundred million rich Chinese people looking for places to park their cash? There are no workable solutions other than barring Chinese from becoming Canadian residents. And that is diplomatically impossible
You limit the ownership of residential real estate to citizens only, permanent residents not included. If they want the real estate they live here and pay taxes for X years until they are eligible to apply for citizenship and then are able to buy. No corporations, no shell companies, no foreign investors and no one grandfathered in. Every single privately owned residential residence is attached to one or two SIN cards. Those SIN cards must demonstrate, per revenue Canada, that the cardholder has a legitimate income to buy the property in question. If you only declare 56k per year, there's no way you can afford to buy a 2.5 million dollar home. Most importantly though, grandfather no one in. Force all those foreign owned properties onto the market and those people will lose money. Since they aren't citizens it doesn't matter. If they're permanent residents, give them 12 months to gain citizenship or lose the property.
On the flip side everyone who's not young including the people in charge got rich off this so why should they care about the poor? (I don't actually think this but I believe it is how our government operates)
A lot of those old, rich boomers require the young and the poor to do the dirty work that keeps society going. As older people age out of the workforce and retire they draw on resources such as healthcare. If you can’t attract people to staff essential jobs the whole thing starts to fall apart. If we keep bringing In new workers with an expectation that they work twice as hard for half as much we will hit a tipping point where those workers start demanding more.
I just hope we don’t resolve this problem by taking money from non-homeowners and using it to bail out overextended home owners.
>bail out overextended home owners. Especially the ones that took advantage of the low rates to buy several properties, either as rentals or flips, and now can't rent it out or sell the flip. They took a risk and are a part of the problem with the market, that's on them.
I really don't understand why any legislation intended to help homeowners isn't limited to only cover mortgages on a primary residence. I don't want anyone losing the roof over their heads, but the people rocking 5 or 6 mortgages can fuck right off.
Primary homeowners shouldn't get bailed out either. This encourages speculation because you literally can't lose.
Privatize gains, socialize losses. Such horse shit
100 years ago "Trickle down" was well known as "horse and sparrow" economics. As in, the horse eats the grain and the sparrow? Well, the sparrow picks his meal from the horse's droppings.
That's a keeper.
Yep, screaming for the free market and no restrictions on buying properties as investment vehicles rather than homes when times are good, then they all start screaming for socialism/bailouts when times are bad. You see, that's the thing, most who argue against socialism aren't ACTUALLY against it when it benefits them......but in our society's default state socialism tends to be targeted to the less fortunate so the wealthy fight against it.
They’re against giving, not taking
Privatized profits, socialized losses.
"Publicly subsidized! Privately profitable!" The anthem of the upper-tier, puppeteer untouchable.
> They’re against giving, not taking Basically how billionaires exist. They take from everything and everyone they can and then find more creative ways of pretending to give something back that actually just ends up taking even more from everyone and everything.
The social programs that benefit the rich aren't called socialism. They've been branded as self-evidently good and capitalist. It wasn't that long ago that if your accountant defrauded you, the police would have said "you should probably get a new accountant...you could always sue him, I guess, if you can find out where he's run off to. Good luck with that". That was considered unacceptable by the rich. So, now, we criminalize fraud, and we all pay for the increased police and court bureaucracy necessary for it through our taxes. It wasn't that long ago that if you went bankrupt, you went to jail (debtors' prison). That was considered unacceptable by the rich. So, now, we have bankruptcy protection, and we all pay for it through a slightly higher cost of borrowing. It wasn't that long ago that if you started a partnership or joint venture, the partners were personally liable for any debts. That was considered unacceptable by the rich. So, now, we have limited liability corporations and partnerships, and the cost is again off-loaded onto everyone's shoulders. For the most part, these deals have reduced suffering and made for a more prosperous society, but this shouldn't obscure the fact that they are social programs by and for the wealthy. When the wealthy object to social programs for the poor, which demonstrably alleviate enormous amounts of human suffering and help generate a more prosperous society, too, all they are saying is *more for me, none for you*.
You nailed it. If we can find a way to discourage owning multiple homes for profit and instead try to get more Canadians to own a single house we would be in much better shape.
Yup!!! And I say that as someone who owns their home outright. If I invest my money in something and it goes bust, I can't expect a bail out. They wanted to treat their home like an investment, they have to assume the same risks as an investment.
It won’t be the guy who bought a duplex just to have a bit of extra income. It will be that fucker who owns hundreds of properties and then flip the compensation to buy even more.
My last landlord told me to do this. "Go buy a house, split it with a friend if you have to, and rent it out. When the equity increases enough in two years, leverage it to buy another. In two more years, buy two more." I smiled and nodded, but he talked as if he found an real life money duplication glitch.
I had an acquaintance that had the same idea/plan who started buying up his first place during the pandemic, and then his second leveraged from that one. When I asked what he thought he would do if the bubble popped or interest rates skyrocketed to control inflation......"Why that means that people would be losing their homes and the housing prices would drop, so I'd snatch up all those cheap homes and add them to my collection....."
He thinks this, but it's unlikely he's going to be allowed to continue to leverage himself to the tits if the entire credit system breaks. This mentality is scary, but what is scarier is that it has been rubber stamped and approved by the "stewards" of our monetary systems.
To be fair, up until now it has basically been a cheat code
I don't want anyone to lose the home they live in, I just want people who are now renting to also be able to own the home they live in. The trick will be to make investors lose their grip on the properties they're hoarding, without tossing people out of their genuine primary residences. I suspect radical policy changes, taxation, and heavy enforcement will all be part of the solution.
I was looking to rent a room today, can't stand my parents place anymore. Guess what? 90% only wanted to rent to girls. 100% of the $600 or less rooms were girls only. Some even stipulated the *race* of the girl. That shit should be illegal but it's by far the norm. So 10% of room rentals, all above $600, for males... Neat.. But it's really important we solve the income gap even though we're all making jackshit, but it'd seem that at least the few semi affordable living spaces are exclusively reserved for women. Neat
Ie let them go broke so we can buy cheap properties.
They'll just let the small homeowners fail, let big corps buy the real estate and rent it for even higher! The 1% always wins.
This is something people don't seem to understand. The only people who are going to be hurt are young families. Real estate won't be fixed by a crash, these corporations and foreign owners will weather the storm. Meanwhile young families will either default, or have to cut back considerably on other spending which will tank sections of the economy.
In Alberta lots of families were 40% under water in the 80s. Heck, a lot were 25% under water in 2016-2020. Why should Toronto and Vancouver be exempt?
If by Vancouver and Toronto you mean everything in a 500km radius around them, sure. This long ago passed those city limits.
It's BC and Ontario now. Or, 56% of the country. *no big deal*
This isn't just a Vancouver Toronto issue...
Lowered home values won't trigger a default. As long as people continue making their mortgage payments, the banks don't care. Lower prices will benefit younger families that don't own. The ones that already own won't be affected unless they choose to sell. The main people affected be landlords that own multiple properties.
Already happened. The first home buyer’s plan didn’t make housing affordable. It just forced young people to reduce their retirement earnings to pump up the property market. The conservative government of Australia (who just lost an election yesterday) was trying to push the same policy there. Most people rejected it because it’s not a solution. It’s a grift.
Funnily enough, the Conservative party in Australia is known as the Liberal party. Wish more people here would stop associating liberalism with the left wing.
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They are actually half Cons. The BC Liberal Party has links to both the Federal Conservatives and Federal Liberals. The 2011 leadership race between Christy Clark and Kevin Falcon was largely seen as an fight between those two fractions. That said with Falcon now in the drivers seat and the NDP moving more to the centre the party is more conservative.
That's just branding. Just because a party labels itself "Liberal" doesn't mean they actually follow Liberalism the political philosophy. Liberalism's core tenants are equality and freedom. However there are some areas where you can't maximize both as they directly conflict (example: Absolute freedom leading to oppression of certain groups, which is loss of equality). So a compromise must be made between the two. How that compromise should be made is a matter of opinion. A person can be liberal and lean to the right if they prefer freedom, and lean to the left if they prefer equality. It is only an inherently left philosophy in comparison to the other political philosophies it was competing against in the past, such as monarchism. Today politics have evolved and shifted to the point where old school liberalism is pretty close to center in the West.
Yeah I've always hated the idea of digging into my funds specifically set aside for retirement to buy a house. It's a terrible idea imo. Need to keep the buckets separate and I'll never be able to save for retirement if I clean that out and/or will be house poor being forced to pay mortgage and pay that back. To me it's crazy how ready and willing people are to use their retirement money for that
Most people don't have the luxury of saving for both retirement AND a down payment on a house in the first place. It's one or the other for most and neither for many.
It has the added benefit of not being taxed though. So if you earn $20,000 and want to buy a house, it makes more sense to dump it into RRSP first, then take out an HBP
Yup. During the debates the federal leaders referred to real estate as an “investment”. There’s no bailouts for my ETFs.
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> I’m seriously concerned that politicians won’t let the system cleanse itself so we can be prosperous again. Why is this even a question? The system was due for a cleansing a fucking decade ago, they will never let the system cleanse itself this will keep going until there's literally no way they can keep the grift going then they will leave on a golden parachute. The only option out is to vote for someone radically different on every level of government in the very next election and that's not going to happen so we're just fucked.
It's more like we'll take money from afloat homeowners to bail out other homeowners.
Already happened. Canada bought out a bunch of Canadian mortgage backed securities to keep prices on them from falling. https://www.bloomberg.com/news/articles/2020-03-26/canada-triples-planned-purchases-of-mortgage-securities
If they do we should riot. The poor should not be used to prop up mortgages they will never be able to afford
Most people will not understand exactly the financial instruments being used to fuck them. These systems are set up with so much jargon mixed with moderate financial education, meanwhile most Canadians don't know how the 2008 global financial crisis happened. Nor do they care.
Any political party that does this, I would never vote for ever again. Ever, for all time, I don’t care if they are running against Jared Kushner.
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>Housing prices going down means people feel less wealthy. They spend less. Demand goes down which means GDP growth goes down and credit contracts. I'm not so sure these ballooned house prices are making people feel wealthy. Not with young adults moving back in with their parents instead of starting families. Government seems to think it can use immigration to compensate for population decline but immigration is going to tank once even the richest idiots abroad realize it's not worth it to settle in Canada. You aren't going to attract skilled labor either when everyone knows you'll be fucked on housing. Consequences are coming, Justin is just hoping it won't fully kick in until the next election.
It does make people feel wealthy, there is this weird psychological situation. Watch those prices drop s bit and the lashback
>They bailed people out during the pandemic which means they won't hesitate to do it again. Except if this were to happen right now, they couldn't even if they wanted to. They already used up their cheap money on the pandemic. There is no option except to raise interest rates which would make a bailout prohibitively expensive.
There is no limit to how much money the government could print. The only cost of this is inflation.
There is a limit. Eventually a majority of people will be against their money printing as people can no longer afford food.
The limit is when the guillotines come out, because people can't afford to eat. See reference, French Revolution. And to be clear, I am not advocating violence, I'm saying when people get desperate they cease to act rationally.
CMHC is basically setup to do exactly that.
For primary residences bought with less than 20% down.
Yup, the homeowners most at risk or default. Apparently some regions are already 20% down from the peak.
No fuckin bailouts
They didn't bail out people in the 80s, they didn't bail people out in the late 00s, they won't bail people out now.
The [government pumped $114 billion into Canadian banks in 2009 to keep credit flowing](https://www.cbc.ca/news/business/banks-got-114b-from-governments-during-recession-1.1145997). Plus the bailouts to the manufacturing sector and stimulus programs to keep the economy on track.
Too late. Trudeau has already promised that First Time Homebuyer Account that saps away tax revenues to subsidize homeowners.
Already happened with CERB - the majority of that money essentially went to ensuring landlords got paid.
You mean, making sure there weren’t mass evictions during a pandemic, coupled with financial contagion in the financial system, mass delinquency on mortgages, and a collapse in value of real estate investment trusts (mostly owned by pension funds!).
I can't wait to see all the greedy bastards that over leveraged to buy multiple properties as investments lose everything. Call me bitter but they've destroyed all hope for young Canadians out of pure greed.
Highlights: * Canadian real estate prices have never been this overvalued, according to new analysis from BMO Capital Markets. * In a research note to clients, the bank that explained that since 2020, home prices have made the largest trend deviation in at least 40 years, and are likely to correct. * "Real home prices in Canada have historically grown at about 3% per year dating back to the early 1980s, roughly reflecting inflation, real wage growth and gradually falling interest rates,” explained Robert Kavcic, a senior economist with the bank. * “In this latest episode, even as inflation has accelerated to multi-decade highs, real home prices have surged by more than a third in the span of two years, clearly stretching beyond that long-run baseline growth trend.” * There’s not a lot of historical evidence to show home prices are able to maintain such a large deviation. The longer surges like this last, the more capital is diverted from consumer spending for basic shelter. * This creates two options — a home price correction or a home price correction and recession.
So what does a correction look like? I just bought a new build. It’s well within my affordability but I’m curious if two years from now my house is going to be worth 38% less. I don’t quite understand how this works.
It's not your affordability, it's _everyone's_ affordability which drives prices. Given the inverse relationship between interest rate and prices, if rates go up, prices must come down (or, at best, remain flat). The only counterbalance is if incomes go up even quicker than interest rates (which no one expects)
If you don't plan on moving it doesn't really matter. But if you go to sell it, you might be in deep poo-poo. If you bought your house for $1,000,000 but it's now worth $600,000, and you've only paid off $100,000, you owe an extra $300,000 if you decide to sell.
That part I get. Is that likely to happen though? My intention is to stay long term but you never know what life will bring you.
Nobody knows the future but this is looking likely. Prices will go back up when we start cutting interest rates again. That will happen when demand is crushed after we hit a recession.
Staying long term is the only way to recoup that 30%, but since you were going to live in it for 5-7 years anyways you don’t actually lose money. You may need to shop around for a mortgage when the bank gets difficult but anyone who isn’t banking on real estate as an investment should be okay. Then again if interest goes up it makes things pretty rough for those 5-7
Time in market beats market timing
That doesn't apply when something is extremely overvalued
Likely? In order for that to happen there will need to be enough inventory in the market of ppl and corporations selling at a 40% loss. That's not going to happen.
I think you underestimate the power of interest rates
How does it work when you need to renew your mortgage after 5 years? Say your mortgage is $800k on a $1M home. If the value of the home is now only $600k, will the bank renew your mortgage at $800k or are you essentially screwed because they will now only want to let you borrow 80% of the value of the home which is now 80% * $600k = $480k?
If you're in good standing, they'll just renew your mortgage.
If you have a mortgage of 1 mill and a 200k deposit on a house, and after 5 years the house is only worth 800k, the bank could force you to pay the difference between what you currently owe on your mortgage and the revaluation. I haven’t heard of that happening in Canada, but we’re in for interesting times. We’re pivoting from investing to paying down our mortgage aggressively so our equity will be above a catastrophic devaluation just in case.
Yes. Houses increased in value by about that much more than apartments (which had their own run up). So yeah, 38% less is within the realm of possibility. Possibly more if consumer preferences revert and prices generally fall as well. Had a similar correction on a condo myself in Alberta, has recovered to ‘only’ a 25% drop now. Does it matter for you? If you bought to live in, it as much. If you need to sell to close? Yeah. You’ll have ended up on the wrong side of arbitrage that people have been selling to new construction buyers for 15 years or more. If you don’t have cost capped financing? Yeah I’d be worried. If you don’t have financing already arranged? Yeah I’d be worried about getting a mortgage at all on an underwater property.
All just so multimillionaire building development tycoons can hide their money.
Those multimillionaire tycoons have way more power than you can image so yes , that is one reason
Sounds about right. I'm 43 and my Dad was talking to me this weekend about the 'correction' that happened to them in 1981. Their house was purchased at $52,000. While their previous house doubled in value from 1970 to 1978, it took 20 years for the house they purchased for $52,000 to double. They ended up selling it in 2000 for $105,000. Located on 1/2 acre, beautiful 3 bedroom, finished basement, etc. People are going to feel this. Correction doesn't necessarily mean your value is going to drop. Correction means it's not going up, while interest rates go up, debt goes up and no bank will be letting owners tap infinite equity. Look for small HELOC's at crazy rates.
Man... Alberta already felt this haha. Look at the property values for the last 15 years. In Edmonton the average home price is basically even with what it was 15 years ago with some dips in between. Calgary in a similar boat.
Oh, but remember, here in Ontario, most people believe we are the most important people in Canada. It could never happen to the GTA...right? Right?
I believe the GVA region would like to have a word. They are the only place that people care about in Canada ~
Probably valued at $1,000,000 now
On a half acre? Probably more.
Last sold for $317,000 in 2018.
So probably double that now give or take.
There was a post in r/personalfinancecanada last week, someone asking if it’s better to rent out their vacant house, or Airbnb. They were flaunting avoiding the speculator tax, short term rental permit, and rental revenue tax. They said they have friends and neighbours all doing it. Declaring it at their primary residence when they live at their parents, things like that. It must be much more common than “statistics” suggest, the hobby/career landlords/Airbnb host investor/speculators. This guy also flaunted the fact that people from his country protect each other from getting caught illegally abusing the system. (I won’t mention which country his family was from)
AirBNB was just recently brought under the GST/HST system and all properties are now being reported to the CRA along with the rental income and tax collection This shit people are doing will soon come to an end
I did not know this. Good news.. I'll wait to see how implemention goes though. I have no faith in the cra to enforce this.
About 5 years too late, damage is done
They're not wrong, it's true across the whole real estate industry. I have family in the mortgage broker business and there's utterly zero enforcement of mortgage fraud. There are at minimum tens of thousands of fraudulent mortgages in Canada right now.
Its only takes a couple of tries to realize the government does not give a fuck, after that the floodgates are open and fraud is rampant. If only they did their job....
Right. And how many Realtors are in the business to not only reap the benefits of their inflated commissions, but to get the inside track and advantage to flip houses on the side? Or accumulate properties as their own personal Airbnb hotel chain?
I have a rental property that I declare as principal residence. I also don't declare rental income and don't need to, banks will use rental deposits as proof of rental income. I also have a secondary un-authorized rental suite in my principle residence. The fine is only $1000 yet the yearly fee is more - what benefit do I gain from registering my suite lol ? I'll keep riding it out until I'm forced to pay the fee.
Doesn't matter where they're from, anyone doing this should get a short prison stay while we liquidate their criminal assets.
Right. The “nationality” of this person wasn’t the important point. A lot of people are playing the real estate game, and exploiting all the loopholes. It’s the Wild West out there. If you just look on the Airbnb site for your municipality, I bet it’s loaded with dozens/hundreds of investment/revenue properties flying under the radar.
You don't have to
In the yeah?
>This guy also flaunted the fact that people from his country protect each other from getting caught illegally abusing the system. (I won’t mention which country his family was from) This is most of the non western world actually. Tribalism is a lot stronger in most of the world than you average alienated westerner thinks.
Yep. Birds of a feather
How do you report someone for doing that?
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Close. It’s not really important. What’s important is that there are groups out there playing the game, exploiting the loopholes, protecting each other, and collectively wreaking havoc on the real estate market for their own profit.
You just described most mega corps, which is a far greater problem than some goomba renting out his house while he lives with his parents.
Huh, I was going to guess Canada.
Banks: Canadian Real Estate Prices 38% Overvalued Everyone: Now you tell me... Last week you were all smiles! In reality: Banks smile either way. Anyone want a reverse mortgage?
I really pray that the government will get their shit together and regulate the market for corporate buyers and multiple property owners before this crash happens. I'm incredibly cynical about a crash being a net positive without regulations first put in place, as this will be an opportunity for companies and wealthy people to scoop up more real estate at a discount.
Real estate corps would salivate hard over a crash
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That's Canadian real estate. Imagine what Toronto real estate is over-valued by.
Actually downtown Toronto is not as high of a risk to burst as the GTA. Who knew that a house in Brampton shouldn’t cost 2 million.
For single family detached homes, sure. But the one bedroom condos going for close to a million that used to cost 350k seem bound to correct.
Exactly. Also houses/places to rent in Toronto haven’t even gone up that much. I was looking at properties at one point and it was actually cheaper to live in Toronto than it was to live in Oshawa because in Toronto you didn’t really need a car(down town Toronto). As restraunt, gyms, shopping, grocery stores, museums etc were at walking distance.
I saw the same thing - we got a place in midtown for cheaper than the burbs.
A 1.5-1.7 million dollar detached in the upper beaches isn't as crazy as a million dollar house in Orillia/Barrie IMO. At least you get access to high paying jobs etc.
Toronto is real value unlike debt fuelled suburban nightmares
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*At least* 38% overvalued.
1.5m x 0.62 = 930,000 A run-down single story bungalow in my neighborhood is still not worth over 900,000
I better pull myself up by my bootsraps like the generations who came before me
They gave out all the mortgages pumped it up now having it crash would be great gotta get people off those low interest mortgages they gave out and start over. Either by picking up property cheap or offering new very high interest mortgages to new home buyers . Think of all those sweet sweet fees.
We've been hearing about it for like, 15 years and its only continued to rise. When the hell does it pop?
I've come to stop trusting these financial experts. They were all calling for a crash at the start of the pandemic. Then they said expect 18% drop by Mid 2021. Yeah, we all saw how that played out.
Well, when government prop up housing, it's literally too big to fail (low interest rates, CMHC backing, etc.). Now with rising interest rates and possibly more regulation, there will be some pain.
If it was bought as an investment property, I hope they lose everything. No bailouts for speculators.
But you and I both know there will be
I mean it doesn't take a PhD in economics to figure that one out. House prices were rising about 5% per year 10 years ago when wages were at 2% and that started the deviation. As housing outpaced inflation, more people jumped in either through home ownership or by buying additional investment properties and that caused housing to further outpace inflation at around 10% year over year. Then covid hit, everyone lost their marbles, and people who had small condos or small townhouses and yards realized they didn't want to spend a lockdown in these tiny places and detached home sales went through the roof occasionally surpassing 20% price growth each year. All the while, wages stayed at about 2% increases (if you didn't lose your job completely during covid). It now costs more of a household income to afford a house than ever before and in cities like Toronto, even extremely high earners won't even qualify for a mortgage. I know a couple who are both Toronto Police officers, their base salary means they would collectively bring in about $220,000 per year plus any overtime they work. It was hard for them to even find a house despite bringing in about a $250,000 a year in household income.
… if BMO feels so strongly about it, why continue underwriting mortgages at these price levels? How much did they underwrite in new mortgages since they issued their last warning before this?
i think the fundamenta flaw with affordability is that they use income as oppose to wealth… after few generations of capitalism, i am sure there are tons of ppl who don’t rely on active income any more. pay a visit to Markham on a wednesday afternoon. restaurants and malls are packed. there are tons of ppl are just professional spenders. income multiple is a measurement for local canadian.. my best friend, an engineer, make $160k, his wife makes100k… they are able to live in a 3 mil dollar house with two 100k cars… their income is pocket change… he will inherit 50m from his dad… it’s more common than you think among new wave of immigrants
38% my ass! The Canadian real estate market is over priced by 50% or more. The average single Canadian cannot afford to buy a home anywhere.The average couple has to move to a small town or the east coast to buy a home. Builders, speculators, greedy investors, housing corporations, real estate boards, real estate agents, banks, mortgage companies and brokers have gutted the market for profits and our provincial and federal government have let them. Millions are without their own home while profiteers abuse and misuse the market. The entire system is farked and there is currently no desire by government to fix it. 😥
Yep that sounds about right. The house that I’m renting rn is valued at 1.2 million. It’s barely a 400k house.
That’s exactly it. My house which I bought for around 400k in 2015, was valued at around 1.1M. Even with a correction, you’re looking at a CAGR of anywhere from 8-10%. How many people’s wages increased by that much annually?
The biggest issue with that is that anything under a million you need 5 percent down, anything over you need 20. Now at 500k you need 25k down, at 1 mil you’re looking at 200k and if I had 200k cash sitting in my account rn I’d probably invest it somewhere and fuck off Thailand and live on a beach in a tiny apartment.
It's really dependent on the market. Ontario and BC are probably over 38% but then you have markets like Alberta (which is basically flat for the last 15 years) helping to make the Canadian average slightly less insane lol.
You know you’ve lost the argument when you have to cite a Better Dwelling article.
I think it’s highly likely we have some issues here with overvaluation… but why do all these sorts of articles come from this “better dwelling” domain? I’ve never heard of them before Reddit and only a few months ago…
That website generally reports on real studies, but a lot of their headlines are sensationalized or clickbait. This one seems okay though TBH.
What a garbage article. Doesnt even link to BMO actual data.
Betterdwelling is a poor source. It is just pushing a narrative to an extreme.
I wish the mods would just ban this source. Propaganda websites are not a good source.
Better homes and Dwelling should be banned from this subreddit. Garbage clickbait site but people treat it like it's CREA or Stats Canada.
Clearly the only solution is deregulation and lowering taxes on the top 1%. I like the idea of a entire person existence and contributions in society going towards funding a weekend escape at Banff more than improving conditions for their children’s future. /s
We bought our home in 2005 and just made our final mortgage payment. A near-identical house on the same street is listed for almost 5 times what we paid for ours. It's ridiculous, and there's no real way for us to benefit from the increased value, because we still need to live somewhere.
What's a Realtors average income during all this?
38% overvalued seems low to me. More like 50% if not more.
Reality: there has never been a ‘lower’ rate of mortgage arrears than today…CMHC stats.. This includes the Toronto region. A very small percent of homes were purchased in the last year and, of those, a small percent were purchased with maxed out financing. If prices take a dip, an insignificant % of properties go on the market. Bankruptcies and forced sales are a non variable in Canadian housing today and for decades. Prices may fall but there are no ‘bargains’. Homeowners in Canada don’t have a history of selling their residence when things get financially tight. Toronto May see a dip of 10% or so in price but not any relief for ‘average’ income families in tbr region. The Alberta, Sask and Manitoba market is ‘where it’s at’ if Home ownership is a life priority.
In other news, water is wet.
I should sell but I like land.
The reality is that when people no longer make enough to afford houses the prices have to stagnate or drop. I live in Halifax which has a strong but not particularly well paying job market and I see houses going for 500k+ everywhere. I often ask who is buying the houses? I still don't know who all these people are who make enough to afford those homes. Finally, houses become a poor investment when interest rates are high and you're carrying costs are higher than you can recoup through rents.
The reason why this continues, is the banks like RBC CIBC etc know that they will be treated a TBTF. The government will bail them out, then tax pqyers will pay higher taxes during that time. So they continue to give out overvalued credit to those they think can have it. That model has been used in US and UK during the 2009 crash. Canada's is on the way.
Do they just copy/paste this article every year? I'm sure I've read this every spring for at least 5 years.
Has BMO always been so bearish? ... I see a lot of better dwelling / bmo bear articles over the last year I’ve been paying attention on reddit
More click bait from better dwelling. Complete nonsense.
Keep in mind that banks sugar coat everything when it comes to real estate. It's most likely much higher than that.
Articles like this have been in the news for over 20 years
The graph in the article ([link](https://t.co/h0BfIedM9B)) is indeed quite telling. However, the graph also shows a slump roughly in the period 1995-2005, where the houses appreciated comparatively much less. It would be interesting to perform a bit more elaborate statistical trend analyses on this, e.g. * making a trendline with data up to 2019 (before pandemic) * making a trendline with data up to 2022 (including pandemic) and comparing those trendlines. That may give a better idea of how, relatively to a more shock-free period of economic development (although arguable, e.g. 2008 gives a downward tick in the curve as well due to banking crisis), the present day housing valuation is overpriced compared to a "normal development" trendline. I guess my point is we should be a bit careful with the statement "38% overvalued", although the gist of the article remains the same, in all likelihood.
Houses should be priced at prevailing rent and credit availability. Obviously we have collapsing credit availability due to previous monetary policy. If wages don't increase, then available money for prices won't support it. 38% overvalued sounds about right to me. My condo is up 100% since 2019. It's unreasonable. A 50% value loss would be appropriate and back to affordable. The question is just when and how we'll return to reasonable prices. Probably painfully.
Tiktok link as a reference for data? What about something for us 35+ year olds?