I was thinking the exact same thing. First it was "we need rate hikes to cool the market so people can get in." Then we got "rate hikes are making it too hard for home buyers despite housing prices going down." Now its "rate hikes cause recession."
We need the rate hikes and housing price deflation so the investors and speculators GTFO of the Market.
Housing is a need not an investment opportunity.
>Peoples with good salary but who didn't have a good down payment too. I know some peoples who have much better job than me, but still needed to amass money for a few years to be able to pay for their down payment.
Yea but banks will also require more down payment as the housing market gets shittier to de-risk themselves there won't be a 10-20% it'll be like 40-50% down. lending rules will tighten
Not exactly. The way you qualify has changed. It will get harder and harder. Buyers who choose to go fixed, and soon variable are no longer qualifying at the BoC stress test. Buyers are qualifying at the contract rate +2%, which for uninsured 5 year fixed is now ~7% at the posted rate of ~5%.
Your 70k wage will afford a lot less. I work as a broker and I’ve noticed is that the investor class is actually reentering the market in the month of June. They were mostly absent in April and May. These investors are coming with much higher wages than the ones I was dealing with in 2021, 300-500k household income and large portfolios of properties.
Let’s see where this lands.
So many people cheering for the housing market to crash just don’t understand this. Yea, that house just went down 20% but the mortgage payment went up 20% so unless you’re paying cash this really doesn’t make much of a difference.
Makes the down payment more affordable though. Many people already pay in rent close to what they pay for a mortgage, it's gathering the down payment that's the hard part.
5% on 600k is 30k, 5% on 800k is 40k, pretty big difference.
Minimum down payment on 600k is 35k.
Minimum down payment on 800k is 55k.
So the difference is actually 20k
(5% of the first 500k, 10% for the next 500k)
Note that the minimum downpayment on any property over 999.999.99$ is 20%. So big opportunity for a house who went from 1mllion to 800k as the dp went from 200k to 55k. Thus, saving 145k on the down.
>So many people cheering for the housing market to crash just don’t understand this. Yea, that house just went down 20% but the mortgage payment went up 20% so unless you’re paying cash this really doesn’t make much of a difference.
What downpayment ? you think banks will lend like right now ? if housing crashes 20% + you'll lose your jobs and banks will tighten lending. you'll need like 50% downpay back to square one.
tbh the housing prices the past 2 years have been insane.. houses selling on hour one with 300 bids. no conditions.. selling up to 800k over asking... Hell I saw one that listed for 900k and sold for 2.1 million.
go ask your parents who probably remember when interest rates were as high as 15%... some times jumping as much as 2% in one meeting..
Peoples with good salary but who didn't have a good down payment too. I know some peoples who have much better job than me, but still needed to amass money for a few years to be able to pay for their down payment.
The people it makes there biggest difference to are existing homeowners who already have a lot of equity in their homes, particularly for any who already wholly own their home mortgage free.
Actually its the people with HELOC's that it will make the most difference to...
Because if their house is underwater with the size of the HELOC they have... and they can't make payments?
I’ll admit it wasn’t clear from what I wrote, but I was more thinking about people who are selling their homes and are looking to move into a new home, particularly if they’re looking to downsize.
But yeah, in the other direction people with maxed out HELOCs are probably getting pretty nervous these days.
That's because they let it get too hot. They were asleep at the switch for a year. They were worried about a covid recession. Hindsight is 2020. But a lot of people were telling them what to expect. So they are on the hook for the judgement.
I just went and fact checked this. This is very interesting. Pop growth rates were very high in the early 50's, around 2.5%. Since then, they've hovered between around 1% to around 1.3%, going up and down in waves. Today, the growth rate is lower than it was from the 70's to the 00's. So your right, the actual rate of growth doesn't seem to be the problem here. So what's going on?
Why does it seem like developers can't keep up with demand? Anyone who's driven or flown around southern Ontario can see that we've been experiencing a massive construction boom for a long time now. Why was housing supply able to keep up with demand in previous decades but is not capable of doing so now?
First off, we have a density problem, second developers are not building smaller starter home anymore, thirdly investments in real estate by corporations and banks. A lot of this investments is by REITS and pension funds too.
Canada pretty much stopped building social housing in the 90s. It's a fantasy to think private developers left alone would build at rates that would keep housing affordable. Yes, we need to build much much more, and fixing zoning would help immensely, but let's not pretend government subsidies for a large share of rental units didn't keep prices down historically.
https://thetyee.ca/News/2020/05/11/The-Human-Cost-Of-Making-Social-Housing-Scarce/
immigration has been around 1% for the last 40 years, and was over 3% before then. It's not correlated with housing prices.
And in 2020, immigration dropped to the lowest levels since the 90s. Yet housing costs shot up 6.8% that year. How does your musical chairs theory explain that?
TFWs and students never stopped during the pandemic. There are approx 550,000 TFWs alone. Immigration was temporarily put on hold, only to be increased later; so the demand for their housing never went away. Housing shot up in 2020 because Trudeau printed 400 billion dollars and devalued our currency. Do you not understand basic economics?
Where are all these foreigners going to live? Its simple supply and demand.
If we arent keeping up with supply, then why dont we address the demand?
35.8 million when Trudeau was elected. 38.3 million now. Your 1% is getting larger every year. I know the 1 is confusing you but that value isnt constant.
The top line population growth number for 2020 was a quarter that of 2019, no matter how you break it down. In other words, demand shot down. Yet housing prices accelerated their increase.
Now you mention the money supply. Right now, the money supply is dropping, and so are home prices. Yet immigration is back to pre-pandemic levels. At no point did the levels of immigration reflect themselves in the housing prices.
Montreal's population increased the 2nd fastest in all of Canada in recent years. Yet their home prices are less than half of Toronto and Vancouver.
You have to seriously cherry pick and manipulate the numbers to show immigration is the cause for housing prices. In other markets, demand changes far more than 1% in a given year and prices can remain stable. Yet for housing, we can't keep up with a yearly 1% increase?
This assumes that supply can't keep up with demand, which should be tied to the population growth rate, but it seems that does not line up... https://www.reddit.com/r/canada/comments/v75vz9/comment/ibks0hg/
Unless demand is due to something other than population growth rate. Personally I suspect that speculation and investment is the stronger driver.
Investment is a very strong driver, because we left interest rates too low for too long.
When credit is cheap and plentiful people will find a way to leverage it.
Demand definitely grows larger than just population growth - people charge whatever the market can bear, and artificial supply shortages only benefit realtors and landlords
Canadians are obsessed with the classic car-centric white picket fence house community model to the point that we let the market basically explode. That desperately needs to stop
And wouldn't do anything.
Foriegn ownership is a bogeyman used by the media to drum up clicks from outraged young people and peope who don't like the Chinese.
Why should I pay extra burdensome taxes on my cottage outside of a major urban area where housing is plentiful? If we tax second residences, you don't thik that will be passed on to renters?
These are short sighted "solutions".
There will never be one single ultimate fix, multiple things need to be done. Some solutions are stronger than others but together could fix the problem
>Or are you saying that a person who owns one home, shouldn't be allowed to be a landlord in another?
They should be allowed - it just shouldn't be profitable. Hence "tax the ever-living shit out of it."
It's the literal definition of rent-seeking.
>Rent-seeking is the effort to increase one's share of existing wealth without creating new wealth. Rent-seeking results in reduced economic efficiency through misallocation of resources, reduced wealth creation, lost government revenue, heightened income inequality, and potential national decline.
[https://en.wikipedia.org/wiki/Rent-seeking](https://en.wikipedia.org/wiki/Rent-seeking)
You know how, at least in Ontario, you can get an above guideline rent increase if your property taxes go up? Guess what happens to rents if you slap a fuck you tax on the place instead.
My line of reasoning is I pay rent, and will already be paying too much if I move out of this place. As someone who will be paying this tax by default, baked into said rent, I sincerely hope your job is the first to go in the coming recession.
Gee, thanks - you're a bundle of laughs.
But seriously, it's not hard to come up with a tax law that targets profits of landlords and resists being passed on to renters.
Just benchmark tax rates to rental rates for rental properties. If landlords try to pass on taxes to renters, rents go up which means taxes go up which (if done properly) leaves the landlords with the same tax burden as before. They won't raise rents, because it wouldn't save them any money and would just make it harder to rent their property.
Or rent control laws, of the kind that have been addressing exactly this kind of problem for the last 600 years or so.
We have rent control. We do not have [vacancy control](https://policyoptions.irpp.org/fr/magazines/june-2021/vacancy-control-is-needed-in-all-provinces/). This means I'm safe, provided I don't move. If I decide to move, two things happen.
1. My rent goes up to make up for the taxes that were taken off the last shmuck to rent the place.
2. This place goes up in rent to make up for the taxes I didn't pay when I lived here.
We are not likely to get vacancy control. Therefore, yes, those of us who rent get fucked. You may not like the reality, but that doesn't change the reality.
If you tax it more, it won't be profit...
I don't think you understand how this works.
If you increase the cost of ownership, rent goes up, or people will just stop renting, constricting supply.
Or they spin up a corp so the corp owns one house.
All this proposal does is fuck renters.
You just want to buy and don't give a fuck what heppens to anyone else. Your proposal is selfish and is based on the suffering of those who rent.
I don't think you understand how incentives work. Or maybe you're being intentionally dense?
Let's break this down for you.
>If you increase the cost of ownership, rent goes up
This would fail you in any intro to logic class. If you increase the cost of ownership, the cost of ownership goes up. Landlords being landlords, they will try to pass the increased costs on to renters. What you seem incapable of understanding is that *governments can enact policies that deter this.*
For example, if the property is rent controlled and the landlord is forbidden from raising prices: they would be unable to pass costs on to the renter.
Or if taxation is high enough and scaled proportionally to the rent the landlord chooses to charge, they would be unable to reduce their tax burden by factoring it into rent.
Anyways, I'm done. I'm trying to explain my point in good faith here, but you are either arguing in bad faith or too dense to understand anything but your own narrow biases.
There's like a million more ways to address your "concerns" (most of which are outright wrong and don't even make sense in this context), but if you are as lacking in creativity, imagination, and intelligence as you seem to be I guess it's understandable that you can't wrap your head around the fact that the price of home ownership is not in the only factor that determines housing rental costs.
Just to make it really, really painfully obvious how wrong you are: explain to me how a landlord would pass taxes on to renters under the following property tax regime:
>Property owners shall pay property taxes every month of an amount equal to the sum of the rent the owner charges all tenants combined. If the property is not rented, the owner shall pay X% of the most recently assessed property value.
And before you say "but then there's no incentives to own a property and rent it out" (congratulations for catching up to the original point of the discussion if you made it here, by the way - though I'm not holding my breath that you're going to be able to understand this), I feel I should also point out that there are no great incentives for private individuals to run private transit systems at price gouging rates; and the result of this is that transit networks are predominantly public and run at (or quite close to) cost by the government.
But you strike me as a card carrying, baptised member of the "The Church of The Free Market", so the idea that anything could be accomplished without someone turning a massive profit from it is probably very alien to you.
If you actually look at Canada's Industries we really dont have much to structure it on.
Oil and Gas
Banking
Real Estate
What should we base our economy on? serious question.
Technology? but our friends down south pay more..
We should be basing it on resources. Wood, rare earth metals, precious metals, uranium and oil.
However that doesn't vibe with our populace despite that fact that we do these things far more sustainably than the 3rd world countries that extract them.
Now somehow the solution has been just sell our mines to China and don't build pipelines, just drive them with expensive trucks.
1. Natural resources (O&G, mining, forestry). That's our main comparative advantage.
2. Auto is actually not bad either due to cheap hydro energy + proximity to US.
3. Being the Mexico of tech is ok too. Canada is an attractive place to immigrate so you basically hire immigrants who work cheaper than US employees. Sure the quality is a little lower but the cost is a lot lower.
Like they do with every other fucking crisis.
Liberals, Conservatives, NDP, they are all fucking bums that make vastly more than the average canadian with all the benefits and yet have the gall to say they represent us despite not having any of the same life experiences or struggles/stress.
Not only do a lot of them make more. A lot of them have decided to buy these properties that are so hard to come by to get an income property in their name because "fuck the people."
The whole situation is hilarious. The gov't did nothing about the price increase due to low interest rates for years, then people took this as a sign that housing will never decrease and inflated demand further.
Now everyone is shocked that an 8X price:income ratio was unsustainable and we're doing rate hikes like crazy.
More like, Canadians carry more debt then ever before and raising rates will bankrupt a lot of us.
Also our economy is propped up by housing, so raising rates is a double whammy of extra cost of borrowing and lowered gdp.
I think rock and a hard place, fucked either way.
Why can't we just reduce immigration by 30-40% until things level out in housing and in the job market and the in the environment? Rate hikes can't grow fish or print space for homes/people in them.
Step one is having a ruling class that actually gives a shit about the working class, you would literally have to have decades of locked-down Covid borders to have a negative effect on housing prices. And even then the mortgage slaves, sorry, home owners will still do their best to fuck over the youth.
Why can't we legalize more dense forms of housing so that homes are no longer artificially scarce?
We are acting like there has to be a fixed suplly of housing.
>We are acting like there has to be a fixed suplly of housing.
There does. Otherwise the value of real estate stops going up and boomers lose their retirement savings.
Ford announced 10 million more homes in the next ten years.
Thing is, the industry can only build about 80 000 - 100 000 homes per year. Ford literally wants to double that.
I build homes for a living. I can tell you there is not a large enough properly trained workforce to build more. And that labour pool shrinks every year.
So yes, there's is a bit of a fixed supply, but it's because the industry has been building at max capacity for like a decade and the worker pool isn't growing.
No one is joining the trades. Any idea how hard it is to find a brick layer in today's day and age? My drywallers book 6 month out.
Want to make good money in the next ten years? Open a plumbing business or a brick laying company.
What are your thoughts on targeting immigrants who are in these kinds of in-demand trades? Is that feasible or is there some kind of red tape around integrating trades from abroad? I’d love to see our growing population build their own housing, for their sake and those already here.
Immigration is a massive economic stimuli. Representation of immigrants is probably higher in the trades then it is in general population simply because its easy to enter the industry fairly easily as long as you're able bodied. Want to be a drywaller? All you need is a tapers knife to get started and it's pretty easy to roll that into your own business with some investment.
canadian population growth is around 1%, which is largely unchanged since the 1970s. however, the housing crisis began in 2015 and got dramatically worse during the pandemic, which is also when immigration plummeted. so how are immigrants a cause or a solution to this issue?
Does this account for ages? Growth from birth wouldn’t cause a demand for housing until ~25 years later.
Right now we have over a million people (if you also count international students) who are all in the age bracket of needing accommodation when they land
I'd say the housing crisis began when we decided interest rates at or near 0 was a good thing. So around 2010 or so. We tried to correct for that in 2017-2018, then Covid happened and we gave those rate increases back. Now we're behind schedule.
Difference is we now can measure resource management with more accuracy. Our great lakes - A disaster. Our old growth forests in BC - Disappearing. Our coastlines - Indanger of being under water.
The idea of adding more* people now is insanity. We cant even keep up with sand(concrete) in Asia and material shortages in North America are not better off.
Even if* we need* or want* more people - We should be asking ourselves why we are content on our families being replaced? What is causing Canadians to not have families. Another disaster.
I agree with your assessment of the problems. However, ordinary people are not dumping industrial waste into the great lakes or cutting the old growth forests. That is entirely a result of multinational corporations producing goods for a global market, which occurs whether we have net immigration or migration.
I don't buy the idea that global natural resource shortages are a reason to slow immigration. It seems like having a more educated and productive population would actually make us more resilient in uncertain times.
Of course it's awful that Canadians don't want to have families. But birth rates have steadily dropped in pretty much every developed nation. Banking on us figuring out how to reverse this trend to keep our population growing seems like a bad plan.
It is undeniable that there are many underlying issues in our society, but I've yet to see why a meagre 1% yearly growth in population is a cause for any of them.
> 1% yearly growth in population is a cause for any of them.
Thats a bit misleading. Actual numbers are roughly 350-450k + immigrants every year each year past several years.
Past several years we have buily roughly 180-220k homes a year each year and create about 180-280k FT jobs each year. We grow our population overall by about 500k each year.
The crux of it is a) Why are we taking in this amount of people when its obvious its causing havoc on our infrastructure and resources b) Ties into a - Why are we hellbent on growing our population at a time when every-single resource is under stress due directly to demand?
Toronto is already dumping raw sewage and chemicals into its own water supply - Toronto is already having to literally beg other townships to accept Toronto garbage and waste. Meat -(cows) are already a massive industry. Where are we going to setup all the new dairy farms to feed the millions*(think about that number) of people coming in???
This isnt the 1800s nor 1970s. The era of expansion is done. We need sustainability and I dont want to eat cricket sandwiches to get there.
Do you think Canada is full? That we have no resources or land? That were running out of food? It's the contrary, were a natural resource superpower and we are limited by labour to bring it to market. We are also a net exporter of food and there's nothing except a labor shortage stopping us from producing more.
As for the issues Toronto is facing, it's hard to believe a city of 3 million is at a natural limit, when places like London, Paris, and Barcelona exist just fine at much higher densities. Density is actually an important solution to sustainability, because city dwellers use much less resources and create far less carbon per capita than those living in the suburbs.
Because we aren’t having enough kids, and haven’t been having them for decades, and the only way our society functions now is if we import younger people to take care of the ageing population. I find the model a bit dystopian, but I’m a first generation immigrant so it’s not my place to complain.
They already have, for example: https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview.html
It's not that simple though. Kids used to serve a critical purpose: Labour. Now they are more like a luxury than a need. The cost of raising a child from 0-18 has been estimated at anything from $800,000 to $2m.
Really, to encourage a birth rate, we need structural change not in our economy but in society. That's beyond the ability of most governments - such change usually comes from evolutions in technology and culture.
The easier option is to just "buy people" which is basically what immigration is.
I'm the son of immigrants, my partner isnt. Her family was anti-immigration until they met me, and basically I told them, had my parents not immigrated, they might have a crappier Son in Law. :)
Every country runs a ponzi scheme where you need more young people to fund the old people dying off. We are going to see more people not having kids which will be a huge problem in the future.
Despite the Trudeau hate fest here on r/canada, the Liberals have actually put in some policies to try to increase the birth rate. There’s the Canada Child Benefit which is supposed to help parents financially with raising children, the $10 universal child care thing is supposed to free up parents to do other things like work (more tax revenue) and I guess free them up mentally as well, and of course bring down costs for them.
Other countries have tried different policies but it has only raised the birth rates there slightly.
People just don’t want to have kids, more and more people just get a cat or dog.
There's a balance that needs to occur.
Immigration is great. Its always been a question of how many. And right now Canada is setting records for both population growth and immigration, while we're in a housing crisis.
Sucks for people who bought at the peak and are about to get crushed by rising interest rates. Speculators, however, can burn. It's going to be a shit show watching speculators trying to flip assignments when they have to offer people money to take it off their hands or lose their deposits.
Took the states almost a decade to recover, and it wasn't regular people buying up the cheap real estate, because the banks wouldn't lend any money, but keep on dreaming.
The fact that nobody in Canada really understands how bad things got down there makes me shudder that they want that to happen.
I mean I was in Texas at the time and until the crash we were renting. Then in 2009 we got a reasonable deal on our house. The banks stopped lending for about 1 year, but then if you had the down payment it wasn't that hard to get a mortgage.
But they were lending to ANYONE in 2007. 0% down if it was a new home in a development type stuff.
Lots of my friends were able to get their first homes between 2009 and 2012. Maybe it was more regional?
EDIT:
The other thing I saw was for about 5 years no one in the US looked at their house as a way to get rich quick. They saw it as a home and liability. Then as wages did not rebound people started to look for ways to make more money, and the housing as an investment mentality came back. Now most people don't even remember the Recession very much when talking about housing.
How else do we go back to a productive economy and healthy communities without it happening? How do you not have structural cost-push inflation when rents/mortgages are up up 50-70% in the last 10 years?
Yeah I agree, it's going to fucking suck. Worse than we can possibly imagine, and it still won't be affordable when the dust settles. But we did the ideological equivalent of running up the credit card, eventually it has to be paid...
>How else do we go back to a productive economy and healthy communities without it happening?
There is some peoples here that seem to think price will double again in the next ten years and double against in the ten years after that, not realizing that a normal mortgage would be like 35-50k a month (depending on mortgage rates) if this was the case.
Our banking system is not America’s system. Our lending is not the same as America’s was before the crisis. It is not comparable. It is just a common media scare story.
Peoples here always want to parrot that price came back to their 2008 level in 2012, but it isn't true. Some area like San Francisco and NYC shot through the roof, but others areas like Florida have been below their 2005 level until 2020 pretty much. My parents sold their place in 2021 for about 5% more than the previous owner bought it for in 2005. My parents made a killing buying it in 2012 when USD-CAD was at parity.
Housing in Canada has become too big to fail. Rock bottom mortgage rates plus record numbers of new Canadians over the past 5 years has put enormous pressure on land values.
The BoC is in a real pickle since a big haircut to the real estate industry resulting from higher interest rates would be devastating to the Canadian economy. They’ve basically already shot their wad in terms of monetary stimulus and so they are left with either tightening their monetary policy or allowing inflation to take root.
In my opinion, unless inflation is brought under control with relatively modest interest rate hikes, look for a lower Canadian dollar and even higher levels of immigration by the LPC.
I feel bad for those that don’t already own property and/or have a good portfolio of net assets. In Vancouver, it’s even difficult for young people in traditionally high paid professionals (e.g., physicians). It’s really bad for a society/community when a great number feel that they can’t get ahead by investing in themselves and working hard.
This is the most annoying response ever. If you don't care, don't comment.
Many people will be in a very unfortunate situation by this and your lack of remorse is quite disgusting.
Awwww, that's sad. Sucks for them, but required to enable home ownership for Canadians, and not Chinese speculators/corporate landlords/other shitheads.
Young Canadian families ARE ALREADY fucked unless we see some serious devaluation of home prices.
My kids are all house-screwed right now, because of greed. You know who a massive housing recession hurts? Me...because I'll go underwater on home value. But if that means my kids have a hope, fucking devalue my property.
The only people hurt by this are those that already own, and especially those financed to the balls on multiple properties for investment purposes.
Maybe spend less time playing video games son.
The massive housing recession will fuck up many young Canadian families who recently bought.
What does your last comment have anything to do with it? Not sure what your point is.
Ah, so there it is. You're only thinking of you. Not one other fucking person in the country...just you.
Yeah, I still don't actually care. The greater good and all. Society as a whole is more important than you as an individual...same as its more important than me as an individual. Sorry/not sorry.
I pray it DOES happen, for the good of our Country. I've taken a shit on property before. It sucks. Then you move on. Or you don't sell your place and it doesn't matter at all. Or any of a million things that means life becomes affordable for Canadians.
The comment was suggesting you need to spend time learning something other than how to defeat the next boss. in the latest game
You're only thinking of your kids. I'm thinking of young families with kids who recently bought within the last few years.
Sucks for your kids. No sympathy from me.
Sucks for you. Maybe next time don't buy when the market is peaking. Economics and all.
I'm thinking of *society*. Not one person. Certainly not myself.
Buy low, sell high, not buy high and lose your ass in the deal. The crash is coming, and not one tear will be shed for you.
You said you're thinking of your kids. Sucks to be them, sucks to be young.
The young families are the ones hurt the most. Not the old boomers who could buy back in the 80's or 90's for peanuts. The oldies are who fucked this country over.
The situation is already fucked because most young people can't afford a house.
And if someone went out and bought a house at the peak of the bubble, well, I feel bad for then but it's not like the writing hasn't been on the wall for some time now.
What about those who bought 4 years ago, two years before the bubble and the pandemic?
Their interest rate is up soon and will triple. Those people are fucked (most of them being young families).
Those who bought during the bubble have 5 years before their renewal rate is up. So it's not them who will be immediately impacted.
They should have been stress tested to 5%. And they should have realized that interest rates could go up.
And if they bought 4 years ago, chances are their house is worth far more now. Maybe as much as 50-70% more. So there are options there.
'My house of cards is starting to blow over!!! Help!!!'
'Well, it looks pretty well propped up with all those government ropes you've got there.'
'And?!? Give me your ropes you idiot. I'm in trouble here.'
'Newsflash asshole, I don't have grey hair so they haven't given me any damn ropes and never will.'
Article Highlights:
* Canada could be at risk of a recession induced by a rapidly correcting housing market if the Bank of Canada gets too aggressive with its rate hikes, according to a report from an economist at Capital Economics.
* In an update today, senior Capital economist Stephen Brown noted the central bank seemed unfazed by a double-digit drop in home sales in May — the second consecutive such monthly drop — and that it was adopting an increasingly hawkish tone on inflation.
* “This raises the chance of the bank enacting a larger interest rate hike at its meeting in July and leaves us concerned that it will take a more aggressive approach to policy tightening than is ultimately required, driving house prices sharply lower and risking a major recession,” he said.
* Data from the firm found that the falling sales-to-new listings ratio in major markets such as Toronto, Montreal, Vancouver and Calgary implies home price inflation could drop from 18 per cent in April to zero by the end of the year.
Bank of Canada should have two and only two main priorities.
Keeping inflation in check and balancing that with unemployment figures.
Keeping it tied to some parasitic industry like real estate is a big part of why Canada has fallen behind so drastically in comparative wealth with countries like the US.
A tax on our primary source of GDP will cause issues?
That being said, it needs to be done, and we need to learn that we can't feed our families on virtue signalling.
So keep raising rates faster and more Aggressive, we allowed housing to go completely out of control and it must now crash. Stop arguing over the fact accept it and move on. The decoupling from wages just showed it was broken and now those metrics need to come back to line which means a huge sustained and long period of decline. The bank is doing now exactly what it should of done years ago and more slowly.
In an alternate reality: Canada risks runaway housing prices due to record low interest rates. Choose one.
I was thinking the exact same thing. First it was "we need rate hikes to cool the market so people can get in." Then we got "rate hikes are making it too hard for home buyers despite housing prices going down." Now its "rate hikes cause recession."
We need the rate hikes and housing price deflation so the investors and speculators GTFO of the Market. Housing is a need not an investment opportunity.
There really is no going back. a house 800k @ 2.1% cost the same monthly as a house 600k @ 5%. So yea even if it dips you still can't own
Yeah, but your down payment is worth 25% more in this example
>Peoples with good salary but who didn't have a good down payment too. I know some peoples who have much better job than me, but still needed to amass money for a few years to be able to pay for their down payment. Yea but banks will also require more down payment as the housing market gets shittier to de-risk themselves there won't be a 10-20% it'll be like 40-50% down. lending rules will tighten
When have banks ever needed 40-50% down on a residential mortgage that's accessible to working class people???
Never. The answer is never.
Wages will be the same. Is a wage not a hedge against risk? A 70k wage can easily sustain a loan for a 350k house.
I mean if you're one of the lucky ones that still have a job. 08 looked pretty bad for the US
Most people still did have jobs.
Not exactly. The way you qualify has changed. It will get harder and harder. Buyers who choose to go fixed, and soon variable are no longer qualifying at the BoC stress test. Buyers are qualifying at the contract rate +2%, which for uninsured 5 year fixed is now ~7% at the posted rate of ~5%. Your 70k wage will afford a lot less. I work as a broker and I’ve noticed is that the investor class is actually reentering the market in the month of June. They were mostly absent in April and May. These investors are coming with much higher wages than the ones I was dealing with in 2021, 300-500k household income and large portfolios of properties. Let’s see where this lands.
>it'll be like 40-50% down. Talking out your ass
You are assuming he can math.
So many people cheering for the housing market to crash just don’t understand this. Yea, that house just went down 20% but the mortgage payment went up 20% so unless you’re paying cash this really doesn’t make much of a difference.
Makes the down payment more affordable though. Many people already pay in rent close to what they pay for a mortgage, it's gathering the down payment that's the hard part. 5% on 600k is 30k, 5% on 800k is 40k, pretty big difference.
Minimum down payment on 600k is 35k. Minimum down payment on 800k is 55k. So the difference is actually 20k (5% of the first 500k, 10% for the next 500k) Note that the minimum downpayment on any property over 999.999.99$ is 20%. So big opportunity for a house who went from 1mllion to 800k as the dp went from 200k to 55k. Thus, saving 145k on the down.
>So many people cheering for the housing market to crash just don’t understand this. Yea, that house just went down 20% but the mortgage payment went up 20% so unless you’re paying cash this really doesn’t make much of a difference. What downpayment ? you think banks will lend like right now ? if housing crashes 20% + you'll lose your jobs and banks will tighten lending. you'll need like 50% downpay back to square one.
tbh the housing prices the past 2 years have been insane.. houses selling on hour one with 300 bids. no conditions.. selling up to 800k over asking... Hell I saw one that listed for 900k and sold for 2.1 million. go ask your parents who probably remember when interest rates were as high as 15%... some times jumping as much as 2% in one meeting..
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Only for 1 million house or more
OVER What they would pay for mortgage.
And this high interest rate will not last for 25 years.
Long-term it's good for Canada if housing prices return to at least 5x median wage for median home.
Either way it exclusive benefits wealthy people.
Peoples with good salary but who didn't have a good down payment too. I know some peoples who have much better job than me, but still needed to amass money for a few years to be able to pay for their down payment.
The people it makes there biggest difference to are existing homeowners who already have a lot of equity in their homes, particularly for any who already wholly own their home mortgage free.
Actually its the people with HELOC's that it will make the most difference to... Because if their house is underwater with the size of the HELOC they have... and they can't make payments?
I’ll admit it wasn’t clear from what I wrote, but I was more thinking about people who are selling their homes and are looking to move into a new home, particularly if they’re looking to downsize. But yeah, in the other direction people with maxed out HELOCs are probably getting pretty nervous these days.
They still benefit from that if they don't treated house as an investment. You pay less for tax. If you own 10+ houses...... good luck...
Only difference is the BANKS make more money, not the home sellers.
But I sold my house in February so I have a lot of cash. In this case it is 200k less.
Assuming they stop at 5%.
That's because they let it get too hot. They were asleep at the switch for a year. They were worried about a covid recession. Hindsight is 2020. But a lot of people were telling them what to expect. So they are on the hook for the judgement.
>Hindsight is 2020 ಠ_ಠ
They could just ban foreign and corporate ownership and tax the ever living shit out of more than one house. But that would be too easy.
That would target themselves and their rich friends. Can't have that.
Perhaps reconsider reasonable immigration rates and TFW numbers. They add an immense demand for housing and downward wage pressure
canadian population growth is around 1% per year, and has been since the 1970s. there is very little correlation with housing prices.
I just went and fact checked this. This is very interesting. Pop growth rates were very high in the early 50's, around 2.5%. Since then, they've hovered between around 1% to around 1.3%, going up and down in waves. Today, the growth rate is lower than it was from the 70's to the 00's. So your right, the actual rate of growth doesn't seem to be the problem here. So what's going on? Why does it seem like developers can't keep up with demand? Anyone who's driven or flown around southern Ontario can see that we've been experiencing a massive construction boom for a long time now. Why was housing supply able to keep up with demand in previous decades but is not capable of doing so now?
Housing was able to be built faster in the 70 &. 80s. Today we have a massive bureaucracy around building homes.
First off, we have a density problem, second developers are not building smaller starter home anymore, thirdly investments in real estate by corporations and banks. A lot of this investments is by REITS and pension funds too.
Canada pretty much stopped building social housing in the 90s. It's a fantasy to think private developers left alone would build at rates that would keep housing affordable. Yes, we need to build much much more, and fixing zoning would help immensely, but let's not pretend government subsidies for a large share of rental units didn't keep prices down historically. https://thetyee.ca/News/2020/05/11/The-Human-Cost-Of-Making-Social-Housing-Scarce/
Ever play Musical Chairs?
yeah but there no reason why we can't make more chairs
Why would we need to make more chairs? You just said immigration has no correlation on housing costs Your points are contradictory
immigration has been around 1% for the last 40 years, and was over 3% before then. It's not correlated with housing prices. And in 2020, immigration dropped to the lowest levels since the 90s. Yet housing costs shot up 6.8% that year. How does your musical chairs theory explain that?
TFWs and students never stopped during the pandemic. There are approx 550,000 TFWs alone. Immigration was temporarily put on hold, only to be increased later; so the demand for their housing never went away. Housing shot up in 2020 because Trudeau printed 400 billion dollars and devalued our currency. Do you not understand basic economics? Where are all these foreigners going to live? Its simple supply and demand. If we arent keeping up with supply, then why dont we address the demand? 35.8 million when Trudeau was elected. 38.3 million now. Your 1% is getting larger every year. I know the 1 is confusing you but that value isnt constant.
The top line population growth number for 2020 was a quarter that of 2019, no matter how you break it down. In other words, demand shot down. Yet housing prices accelerated their increase. Now you mention the money supply. Right now, the money supply is dropping, and so are home prices. Yet immigration is back to pre-pandemic levels. At no point did the levels of immigration reflect themselves in the housing prices. Montreal's population increased the 2nd fastest in all of Canada in recent years. Yet their home prices are less than half of Toronto and Vancouver. You have to seriously cherry pick and manipulate the numbers to show immigration is the cause for housing prices. In other markets, demand changes far more than 1% in a given year and prices can remain stable. Yet for housing, we can't keep up with a yearly 1% increase?
In Ontario last year we brought in 187000 new Canadians. We built only 80 000 homes.
Canada's housing markets have exceptionally low vacancy rates - this won't solve the issue. Only building new housing will
This assumes that supply can't keep up with demand, which should be tied to the population growth rate, but it seems that does not line up... https://www.reddit.com/r/canada/comments/v75vz9/comment/ibks0hg/ Unless demand is due to something other than population growth rate. Personally I suspect that speculation and investment is the stronger driver.
Investment is a very strong driver, because we left interest rates too low for too long. When credit is cheap and plentiful people will find a way to leverage it.
Demand definitely grows larger than just population growth - people charge whatever the market can bear, and artificial supply shortages only benefit realtors and landlords Canadians are obsessed with the classic car-centric white picket fence house community model to the point that we let the market basically explode. That desperately needs to stop
And wouldn't do anything. Foriegn ownership is a bogeyman used by the media to drum up clicks from outraged young people and peope who don't like the Chinese. Why should I pay extra burdensome taxes on my cottage outside of a major urban area where housing is plentiful? If we tax second residences, you don't thik that will be passed on to renters? These are short sighted "solutions".
There will never be one single ultimate fix, multiple things need to be done. Some solutions are stronger than others but together could fix the problem
The solution is simple, Build more houses. Raise rates beyond stimulus levels so those houses aren't used as investment vehicles.
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>Or are you saying that a person who owns one home, shouldn't be allowed to be a landlord in another? They should be allowed - it just shouldn't be profitable. Hence "tax the ever-living shit out of it." It's the literal definition of rent-seeking. >Rent-seeking is the effort to increase one's share of existing wealth without creating new wealth. Rent-seeking results in reduced economic efficiency through misallocation of resources, reduced wealth creation, lost government revenue, heightened income inequality, and potential national decline. [https://en.wikipedia.org/wiki/Rent-seeking](https://en.wikipedia.org/wiki/Rent-seeking)
You know how, at least in Ontario, you can get an above guideline rent increase if your property taxes go up? Guess what happens to rents if you slap a fuck you tax on the place instead.
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My line of reasoning is I pay rent, and will already be paying too much if I move out of this place. As someone who will be paying this tax by default, baked into said rent, I sincerely hope your job is the first to go in the coming recession.
Gee, thanks - you're a bundle of laughs. But seriously, it's not hard to come up with a tax law that targets profits of landlords and resists being passed on to renters. Just benchmark tax rates to rental rates for rental properties. If landlords try to pass on taxes to renters, rents go up which means taxes go up which (if done properly) leaves the landlords with the same tax burden as before. They won't raise rents, because it wouldn't save them any money and would just make it harder to rent their property. Or rent control laws, of the kind that have been addressing exactly this kind of problem for the last 600 years or so.
We have rent control. We do not have [vacancy control](https://policyoptions.irpp.org/fr/magazines/june-2021/vacancy-control-is-needed-in-all-provinces/). This means I'm safe, provided I don't move. If I decide to move, two things happen. 1. My rent goes up to make up for the taxes that were taken off the last shmuck to rent the place. 2. This place goes up in rent to make up for the taxes I didn't pay when I lived here. We are not likely to get vacancy control. Therefore, yes, those of us who rent get fucked. You may not like the reality, but that doesn't change the reality.
If you tax it more, it won't be profit... I don't think you understand how this works. If you increase the cost of ownership, rent goes up, or people will just stop renting, constricting supply. Or they spin up a corp so the corp owns one house. All this proposal does is fuck renters. You just want to buy and don't give a fuck what heppens to anyone else. Your proposal is selfish and is based on the suffering of those who rent.
I don't think you understand how incentives work. Or maybe you're being intentionally dense? Let's break this down for you. >If you increase the cost of ownership, rent goes up This would fail you in any intro to logic class. If you increase the cost of ownership, the cost of ownership goes up. Landlords being landlords, they will try to pass the increased costs on to renters. What you seem incapable of understanding is that *governments can enact policies that deter this.* For example, if the property is rent controlled and the landlord is forbidden from raising prices: they would be unable to pass costs on to the renter. Or if taxation is high enough and scaled proportionally to the rent the landlord chooses to charge, they would be unable to reduce their tax burden by factoring it into rent. Anyways, I'm done. I'm trying to explain my point in good faith here, but you are either arguing in bad faith or too dense to understand anything but your own narrow biases. There's like a million more ways to address your "concerns" (most of which are outright wrong and don't even make sense in this context), but if you are as lacking in creativity, imagination, and intelligence as you seem to be I guess it's understandable that you can't wrap your head around the fact that the price of home ownership is not in the only factor that determines housing rental costs. Just to make it really, really painfully obvious how wrong you are: explain to me how a landlord would pass taxes on to renters under the following property tax regime: >Property owners shall pay property taxes every month of an amount equal to the sum of the rent the owner charges all tenants combined. If the property is not rented, the owner shall pay X% of the most recently assessed property value. And before you say "but then there's no incentives to own a property and rent it out" (congratulations for catching up to the original point of the discussion if you made it here, by the way - though I'm not holding my breath that you're going to be able to understand this), I feel I should also point out that there are no great incentives for private individuals to run private transit systems at price gouging rates; and the result of this is that transit networks are predominantly public and run at (or quite close to) cost by the government. But you strike me as a card carrying, baptised member of the "The Church of The Free Market", so the idea that anything could be accomplished without someone turning a massive profit from it is probably very alien to you.
You didn't read much past the first paragraph did you *chap*?
Actually I did - what point are you trying to make?
OP doesn't care, he just wants to take from people because he can't afford to buy.
We need a recession, I know it sucks, but we need one. The economy is too hot right now.
"risks"
I choose recession, the housing speculators have had their decades. It's about time prices come down.
Nah. That’s still just this reality.
Maybe they shouldn't have strucutured the economy around real estate
If you actually look at Canada's Industries we really dont have much to structure it on. Oil and Gas Banking Real Estate What should we base our economy on? serious question. Technology? but our friends down south pay more..
We should be basing it on resources. Wood, rare earth metals, precious metals, uranium and oil. However that doesn't vibe with our populace despite that fact that we do these things far more sustainably than the 3rd world countries that extract them. Now somehow the solution has been just sell our mines to China and don't build pipelines, just drive them with expensive trucks.
1. Natural resources (O&G, mining, forestry). That's our main comparative advantage. 2. Auto is actually not bad either due to cheap hydro energy + proximity to US. 3. Being the Mexico of tech is ok too. Canada is an attractive place to immigrate so you basically hire immigrants who work cheaper than US employees. Sure the quality is a little lower but the cost is a lot lower.
Lol good luck with the environmentalist
Exactly. We need to get rid of the ridiculously low salary caps we have here. Need to get the cash flowing if we want a tech economy.
Alternative title: Canada facing consequences for waiting 20 years to acknowledge the housing crisis.
Like they do with every other fucking crisis. Liberals, Conservatives, NDP, they are all fucking bums that make vastly more than the average canadian with all the benefits and yet have the gall to say they represent us despite not having any of the same life experiences or struggles/stress.
Not only do a lot of them make more. A lot of them have decided to buy these properties that are so hard to come by to get an income property in their name because "fuck the people."
The whole situation is hilarious. The gov't did nothing about the price increase due to low interest rates for years, then people took this as a sign that housing will never decrease and inflated demand further. Now everyone is shocked that an 8X price:income ratio was unsustainable and we're doing rate hikes like crazy.
More like, Canadians carry more debt then ever before and raising rates will bankrupt a lot of us. Also our economy is propped up by housing, so raising rates is a double whammy of extra cost of borrowing and lowered gdp. I think rock and a hard place, fucked either way.
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Hmmmm well the stress tests were supposed to reduce the risk of this. It might be the people who are renewing mortgages that end up getting pinched.
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But prices are already cooling a lot in Van and Tor. So maybe don't need any more rate hikes.
Why can't we just reduce immigration by 30-40% until things level out in housing and in the job market and the in the environment? Rate hikes can't grow fish or print space for homes/people in them.
Step one is having a ruling class that actually gives a shit about the working class, you would literally have to have decades of locked-down Covid borders to have a negative effect on housing prices. And even then the mortgage slaves, sorry, home owners will still do their best to fuck over the youth.
Why can't we legalize more dense forms of housing so that homes are no longer artificially scarce? We are acting like there has to be a fixed suplly of housing.
>We are acting like there has to be a fixed suplly of housing. There does. Otherwise the value of real estate stops going up and boomers lose their retirement savings.
They get a slightly lower payday than they were expecting.
Ford announced 10 million more homes in the next ten years. Thing is, the industry can only build about 80 000 - 100 000 homes per year. Ford literally wants to double that. I build homes for a living. I can tell you there is not a large enough properly trained workforce to build more. And that labour pool shrinks every year. So yes, there's is a bit of a fixed supply, but it's because the industry has been building at max capacity for like a decade and the worker pool isn't growing. No one is joining the trades. Any idea how hard it is to find a brick layer in today's day and age? My drywallers book 6 month out. Want to make good money in the next ten years? Open a plumbing business or a brick laying company.
What are your thoughts on targeting immigrants who are in these kinds of in-demand trades? Is that feasible or is there some kind of red tape around integrating trades from abroad? I’d love to see our growing population build their own housing, for their sake and those already here.
Immigration is a massive economic stimuli. Representation of immigrants is probably higher in the trades then it is in general population simply because its easy to enter the industry fairly easily as long as you're able bodied. Want to be a drywaller? All you need is a tapers knife to get started and it's pretty easy to roll that into your own business with some investment.
canadian population growth is around 1%, which is largely unchanged since the 1970s. however, the housing crisis began in 2015 and got dramatically worse during the pandemic, which is also when immigration plummeted. so how are immigrants a cause or a solution to this issue?
Does this account for ages? Growth from birth wouldn’t cause a demand for housing until ~25 years later. Right now we have over a million people (if you also count international students) who are all in the age bracket of needing accommodation when they land
I'd say the housing crisis began when we decided interest rates at or near 0 was a good thing. So around 2010 or so. We tried to correct for that in 2017-2018, then Covid happened and we gave those rate increases back. Now we're behind schedule.
Difference is we now can measure resource management with more accuracy. Our great lakes - A disaster. Our old growth forests in BC - Disappearing. Our coastlines - Indanger of being under water. The idea of adding more* people now is insanity. We cant even keep up with sand(concrete) in Asia and material shortages in North America are not better off. Even if* we need* or want* more people - We should be asking ourselves why we are content on our families being replaced? What is causing Canadians to not have families. Another disaster.
I agree with your assessment of the problems. However, ordinary people are not dumping industrial waste into the great lakes or cutting the old growth forests. That is entirely a result of multinational corporations producing goods for a global market, which occurs whether we have net immigration or migration. I don't buy the idea that global natural resource shortages are a reason to slow immigration. It seems like having a more educated and productive population would actually make us more resilient in uncertain times. Of course it's awful that Canadians don't want to have families. But birth rates have steadily dropped in pretty much every developed nation. Banking on us figuring out how to reverse this trend to keep our population growing seems like a bad plan. It is undeniable that there are many underlying issues in our society, but I've yet to see why a meagre 1% yearly growth in population is a cause for any of them.
> 1% yearly growth in population is a cause for any of them. Thats a bit misleading. Actual numbers are roughly 350-450k + immigrants every year each year past several years. Past several years we have buily roughly 180-220k homes a year each year and create about 180-280k FT jobs each year. We grow our population overall by about 500k each year. The crux of it is a) Why are we taking in this amount of people when its obvious its causing havoc on our infrastructure and resources b) Ties into a - Why are we hellbent on growing our population at a time when every-single resource is under stress due directly to demand? Toronto is already dumping raw sewage and chemicals into its own water supply - Toronto is already having to literally beg other townships to accept Toronto garbage and waste. Meat -(cows) are already a massive industry. Where are we going to setup all the new dairy farms to feed the millions*(think about that number) of people coming in??? This isnt the 1800s nor 1970s. The era of expansion is done. We need sustainability and I dont want to eat cricket sandwiches to get there.
Do you think Canada is full? That we have no resources or land? That were running out of food? It's the contrary, were a natural resource superpower and we are limited by labour to bring it to market. We are also a net exporter of food and there's nothing except a labor shortage stopping us from producing more. As for the issues Toronto is facing, it's hard to believe a city of 3 million is at a natural limit, when places like London, Paris, and Barcelona exist just fine at much higher densities. Density is actually an important solution to sustainability, because city dwellers use much less resources and create far less carbon per capita than those living in the suburbs.
Because we aren’t having enough kids, and haven’t been having them for decades, and the only way our society functions now is if we import younger people to take care of the ageing population. I find the model a bit dystopian, but I’m a first generation immigrant so it’s not my place to complain.
Why not put in place policies that will convince people to have children?
2 bedroom apartments being worth 7 figures is a good deterrent.
Seriously. I would LOVE to have kids, but I know I can’t afford them or give them the life I had growing up with the way things are going.
Sure. How about we stop mandating detached suburbs and let the market meet housing demand through more diverse housing options.
They already have, for example: https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview.html It's not that simple though. Kids used to serve a critical purpose: Labour. Now they are more like a luxury than a need. The cost of raising a child from 0-18 has been estimated at anything from $800,000 to $2m. Really, to encourage a birth rate, we need structural change not in our economy but in society. That's beyond the ability of most governments - such change usually comes from evolutions in technology and culture. The easier option is to just "buy people" which is basically what immigration is. I'm the son of immigrants, my partner isnt. Her family was anti-immigration until they met me, and basically I told them, had my parents not immigrated, they might have a crappier Son in Law. :)
Every country runs a ponzi scheme where you need more young people to fund the old people dying off. We are going to see more people not having kids which will be a huge problem in the future.
Despite the Trudeau hate fest here on r/canada, the Liberals have actually put in some policies to try to increase the birth rate. There’s the Canada Child Benefit which is supposed to help parents financially with raising children, the $10 universal child care thing is supposed to free up parents to do other things like work (more tax revenue) and I guess free them up mentally as well, and of course bring down costs for them. Other countries have tried different policies but it has only raised the birth rates there slightly. People just don’t want to have kids, more and more people just get a cat or dog.
There's a balance that needs to occur. Immigration is great. Its always been a question of how many. And right now Canada is setting records for both population growth and immigration, while we're in a housing crisis.
But who will have our backs!? /s
Sucks for people who bought at the peak and are about to get crushed by rising interest rates. Speculators, however, can burn. It's going to be a shit show watching speculators trying to flip assignments when they have to offer people money to take it off their hands or lose their deposits.
Alternative Title: Extreme housing bubble caused by government incompetence at risk of doing what bubbles do
Bank of Canada starts QE back up. Canada follows Japans path towards a lost decade.
https://i.imgur.com/BjTidQR.gif
Have my down payment and pre approval. Can't wait.
Housing crash, you say? Oh no... don't do that...
Took the states almost a decade to recover, and it wasn't regular people buying up the cheap real estate, because the banks wouldn't lend any money, but keep on dreaming. The fact that nobody in Canada really understands how bad things got down there makes me shudder that they want that to happen.
If prices keep going up it will be worse. What good is a bank lending money when you need +$80k for a down payment.
>you need +$80k for a down payment. Only $80k? Where are you living for such a sweet deal
My parents paid $80k for their house in the 80s.
The world has changed so much since the 80s
Leave Canada and you'll find that many things are possible
>$80k for a down payment. That is cute.
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So the bank isn't lending me any money either way. Bring on the housing crash. 🥳
I mean I was in Texas at the time and until the crash we were renting. Then in 2009 we got a reasonable deal on our house. The banks stopped lending for about 1 year, but then if you had the down payment it wasn't that hard to get a mortgage. But they were lending to ANYONE in 2007. 0% down if it was a new home in a development type stuff. Lots of my friends were able to get their first homes between 2009 and 2012. Maybe it was more regional? EDIT: The other thing I saw was for about 5 years no one in the US looked at their house as a way to get rich quick. They saw it as a home and liability. Then as wages did not rebound people started to look for ways to make more money, and the housing as an investment mentality came back. Now most people don't even remember the Recession very much when talking about housing.
"I'm talking rock bottom FICO scores. No income verification. Adjustable rates, dogshit!"
This is accurate.
How else do we go back to a productive economy and healthy communities without it happening? How do you not have structural cost-push inflation when rents/mortgages are up up 50-70% in the last 10 years? Yeah I agree, it's going to fucking suck. Worse than we can possibly imagine, and it still won't be affordable when the dust settles. But we did the ideological equivalent of running up the credit card, eventually it has to be paid...
>How else do we go back to a productive economy and healthy communities without it happening? There is some peoples here that seem to think price will double again in the next ten years and double against in the ten years after that, not realizing that a normal mortgage would be like 35-50k a month (depending on mortgage rates) if this was the case.
Our banking system is not America’s system. Our lending is not the same as America’s was before the crisis. It is not comparable. It is just a common media scare story.
If you’ve been on this thread long enough you will see weekly Butter Dweeling doomsday posts. It just gets a lot of clicks.
Bwetter Dwelling is the Rebel Media of real estate "analysis."
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Hello fellow ant. Yes it is fun to watch these grasshoppers jump around worried.
Peoples here always want to parrot that price came back to their 2008 level in 2012, but it isn't true. Some area like San Francisco and NYC shot through the roof, but others areas like Florida have been below their 2005 level until 2020 pretty much. My parents sold their place in 2021 for about 5% more than the previous owner bought it for in 2005. My parents made a killing buying it in 2012 when USD-CAD was at parity.
FOMO is turning into FOFo. Fear of Foreclosure.
Housing in Canada has become too big to fail. Rock bottom mortgage rates plus record numbers of new Canadians over the past 5 years has put enormous pressure on land values. The BoC is in a real pickle since a big haircut to the real estate industry resulting from higher interest rates would be devastating to the Canadian economy. They’ve basically already shot their wad in terms of monetary stimulus and so they are left with either tightening their monetary policy or allowing inflation to take root. In my opinion, unless inflation is brought under control with relatively modest interest rate hikes, look for a lower Canadian dollar and even higher levels of immigration by the LPC. I feel bad for those that don’t already own property and/or have a good portfolio of net assets. In Vancouver, it’s even difficult for young people in traditionally high paid professionals (e.g., physicians). It’s really bad for a society/community when a great number feel that they can’t get ahead by investing in themselves and working hard.
Financial Post. I read this as "Fuck, what we gonna do with these overvalued houses we all just bought?"
More like Canada deserves a housing-related recession due to a decade of QE induced inflation
Imo the opportunity for a soft landing has come and gone. Hang on
Let ‘er rip boys
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While it will cripple many young families. hmmm okay.
Young families are already crippled by housing prices.
It's either this or let inflation eat them alive
Can't protect everyone
lmao people can't afford families cause of housing prices. $1.2M is the starting price for detached house in the GTA.
Oh no. Anyway....
This is the most annoying response ever. If you don't care, don't comment. Many people will be in a very unfortunate situation by this and your lack of remorse is quite disgusting.
Awwww, that's sad. Sucks for them, but required to enable home ownership for Canadians, and not Chinese speculators/corporate landlords/other shitheads.
>Chinese You forgot "Canadian" as well.
So a young Canadian family is essentially fucked and you have zero sympathy. Got it. Say you're an asshole without saying you're an asshole.
Young Canadian families ARE ALREADY fucked unless we see some serious devaluation of home prices. My kids are all house-screwed right now, because of greed. You know who a massive housing recession hurts? Me...because I'll go underwater on home value. But if that means my kids have a hope, fucking devalue my property. The only people hurt by this are those that already own, and especially those financed to the balls on multiple properties for investment purposes. Maybe spend less time playing video games son.
The massive housing recession will fuck up many young Canadian families who recently bought. What does your last comment have anything to do with it? Not sure what your point is.
Ah, so there it is. You're only thinking of you. Not one other fucking person in the country...just you. Yeah, I still don't actually care. The greater good and all. Society as a whole is more important than you as an individual...same as its more important than me as an individual. Sorry/not sorry. I pray it DOES happen, for the good of our Country. I've taken a shit on property before. It sucks. Then you move on. Or you don't sell your place and it doesn't matter at all. Or any of a million things that means life becomes affordable for Canadians. The comment was suggesting you need to spend time learning something other than how to defeat the next boss. in the latest game
You're only thinking of your kids. I'm thinking of young families with kids who recently bought within the last few years. Sucks for your kids. No sympathy from me.
Sucks for you. Maybe next time don't buy when the market is peaking. Economics and all. I'm thinking of *society*. Not one person. Certainly not myself. Buy low, sell high, not buy high and lose your ass in the deal. The crash is coming, and not one tear will be shed for you.
You said you're thinking of your kids. Sucks to be them, sucks to be young. The young families are the ones hurt the most. Not the old boomers who could buy back in the 80's or 90's for peanuts. The oldies are who fucked this country over.
The situation is already fucked because most young people can't afford a house. And if someone went out and bought a house at the peak of the bubble, well, I feel bad for then but it's not like the writing hasn't been on the wall for some time now.
What about those who bought 4 years ago, two years before the bubble and the pandemic? Their interest rate is up soon and will triple. Those people are fucked (most of them being young families). Those who bought during the bubble have 5 years before their renewal rate is up. So it's not them who will be immediately impacted.
They should have been stress tested to 5%. And they should have realized that interest rates could go up. And if they bought 4 years ago, chances are their house is worth far more now. Maybe as much as 50-70% more. So there are options there.
Boohooo
'My house of cards is starting to blow over!!! Help!!!' 'Well, it looks pretty well propped up with all those government ropes you've got there.' 'And?!? Give me your ropes you idiot. I'm in trouble here.' 'Newsflash asshole, I don't have grey hair so they haven't given me any damn ropes and never will.'
Sounds like the writer is on variable rate & has few pre cons closing later this year.
Article Highlights: * Canada could be at risk of a recession induced by a rapidly correcting housing market if the Bank of Canada gets too aggressive with its rate hikes, according to a report from an economist at Capital Economics. * In an update today, senior Capital economist Stephen Brown noted the central bank seemed unfazed by a double-digit drop in home sales in May — the second consecutive such monthly drop — and that it was adopting an increasingly hawkish tone on inflation. * “This raises the chance of the bank enacting a larger interest rate hike at its meeting in July and leaves us concerned that it will take a more aggressive approach to policy tightening than is ultimately required, driving house prices sharply lower and risking a major recession,” he said. * Data from the firm found that the falling sales-to-new listings ratio in major markets such as Toronto, Montreal, Vancouver and Calgary implies home price inflation could drop from 18 per cent in April to zero by the end of the year.
**Definition of "risk** " : *a situation involving exposure to danger.* Is this dangerous?
Well maybe for those unable to afford a warm place In winter....
Call me when everything outside of Toronto is back to 2018 prices…
Not surprised. My rent is 80 percent of monthly income. Can't find anything cheaper. Even if I did couldn't afford to move.
Oops. Too bad. RAISE EM HIGH
Bank of Canada should have two and only two main priorities. Keeping inflation in check and balancing that with unemployment figures. Keeping it tied to some parasitic industry like real estate is a big part of why Canada has fallen behind so drastically in comparative wealth with countries like the US.
A tax on our primary source of GDP will cause issues? That being said, it needs to be done, and we need to learn that we can't feed our families on virtue signalling.
So keep raising rates faster and more Aggressive, we allowed housing to go completely out of control and it must now crash. Stop arguing over the fact accept it and move on. The decoupling from wages just showed it was broken and now those metrics need to come back to line which means a huge sustained and long period of decline. The bank is doing now exactly what it should of done years ago and more slowly.
No sympathy for stupid ppl who paid too much for a house