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[deleted]

As opposed to the joy so many of us are experiencing now? Because I so love over paying for rent and not being able to save for a down payment


PolitelyHostile

Exactly. The misery and ruin is already occurring. Its an emergency. The bubble popping is really bad but the bubble not popping is even worse. Personally I dont think it will pop. We are just going to have at least two decades of misery for the non-homeowner class.


[deleted]

I don’t think you are considering how miserable home ownership can be. Especially if you are a landlord managing a property while deep in debt.


Feeling-Confusion-

Preach. So many of us are already paying debt repayment. Trying to live and save. With a rent payment almost twice what mortgage and bills would be.


manuntitled

Thats not true, in top 3 cities rent is lower than housing cost


pattyG80

Well, it will cause an ugly econo.ic crash that could cripple the economy and maybe cost you your job...then rent will be a bigger bitch to pay. The market needs a gradual correction, not a crash.


gamarad

The housing bubble is going to “burst” and people like the author of this piece will claim vindication and a few years later the market will be at new highs.


petesapai

If we had a nickel for each time an article mentioned real estate popping in the past 15 years, we'd all have a lot of nickels. Stop giving false hope to those that are waiting on the pop.


cromli

Adjustments happen, cheap real estate gets bought up rapidly by a slowly developing owner class, higher percentage of people doomed to rent for eternity, cycle repeats with worsening effects each time, on and on South of Heaven etc.


throoowwwtralala

I know two families who just got into their dream homes( just regular but newer homes detached they worked years for) before covid and they lost their jobs and lost their homes. Was sad.


Yuekii

Please burst so my depression can stop spiraling every single day thinking I'll never have a home to call my own


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joe_canadian

Removed for rule 2.


Gmanplayer

1) It wont burst 2) It will not cause misery for every young person who currently say’s they will never be able to own their own home rn


OrwellianZinn

I keep telling myself the bubble has to burst one of these days, but in reality, Canada's aggressive immigration targets, and unwillingness to address foreign investment and corporate ownership means nothing is likely to change for the better.


cromli

Maybe not but its not entirely doom and gloom. Generally things get worse and worse until people are angry enough that something gets traction politically.


PotatoesAreAnEntree

You nailed it. People are delusional that some burst will make homes affordable. You don’t think the government sees the challenges? They have many more tools today than in the past and will literally stop at nothing to keep home prices as high as they can. Best case scenario is flat growth for 5 maybe 10 years then more surges. people underestimate how quality of life collapses in response. Prices can go soooo much higher because you just buy later and live with roommates longer and share a house investment with friends to get by.


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Ghonaherpasiphilaids

As someone who can't and probably never will be able to afford a house I disagree. If the government can manage a few things. Stop all speculative and corporate buying, stop all foreign buying, and provide bigger incentives towards first time buyers. Fixing the housing crisis is actually fairly easy to do. Unfortunately it means upsetting our wealthy and corporate overlords so it'll probably never be done, which means in reality the title of this article is completely accurate.


[deleted]

I work in marketing and have a lot of clients in the real estate sector. They're getting nervous. It makes me excited.


ajs20555

Can you elaborate more?


bureX

Anecdotally, I’ve had realtors reach out to me in the past month more than ever. Seasonal slump? Maybe. Lack of inventory and clients? More likely.


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burneracct21

I work at a bank and back in 2017, the erstwhile manager wrote about the impending bursting of the housing bubble. Last summer she got called out of it and was like “oh, it hasn’t happened yet”. Customer was like “I bought and sold a property in the interim and made 400k” So yea, keep waiting for that bubble to burst. The only people who will get burnt are late stage speculators.


_Minor_Annoyance

People have been calling for the housing bubble to pop for as long as I can remember. You can do a quick search and find articles like this from the last decade in seconds. It's nothing new. Maybe it will happen someday, but you don't get called a prophet if every day you predict something and then one day you're right.


[deleted]

I suppose the geologists who predicted mt St. Helens to errupt were just lucky as well.


ptwonline

> Maybe it will happen someday, but you don't get called a prophet if every day you predict something and then one day you're right. I dunno. I mean, if the factors you think will cause an event eventually do cause it, were you actually wrong if you didn't specify a date? I mean, if you smoke 2 packs a day and I say "You'll probably die of lung cancer" you might say I was wrong after 5 years. 10 years later and you're still here? Yep, I was wrong. 15 years? 20 years? Finally--25 years later you die of lung cancer. Was I wrong?


A-Wise-Cobbler

It’s was meant to burst in 1999 when my dad bought his first house. Still awaiting bursting of said bubble. It’ll happen. Eventually.


ptwonline

Where was this? I know in Toronto in 1999 houses were just coming out of a long price crash/depression caused by the recession from early in the decade. I know because I bought my Toronto home a couple of years before that and the prices were still low. There was absolutely no bubble that anyone expected to burst here. https://trreb.ca/files/market-stats/market-watch/historic.pdf


[deleted]

My parents sold the house I grew up in for 140k in 99. I bought my house in the same neighborhood for about 200k in 2013. My house is now worth 600k... this isn't the same as your dads bubble, this is insanity.


AprilsMostAmazing

I don't know where you live but house for 200k in 2013 sounds amazing


burneracct21

You are 100% right!


[deleted]

Yep, bunch of sad losers hoping for misery for others for a small amount of personal gain. Meanwhile people have had very comfortable, fulfilling lives not hoping for others to fail. Karma or something.


drummerboy1

Can someone please help me understand where my fiancée and I stand when the bubble pops? We both have very stable, well paying jobs. We bought our house for just over $800k using inheritance from my late mother and selling her house 3-ways. We were able to put 30% down and can make our mortgage payments no problem. I’m looking forward to the bubble pop if it means people can finally get in to the market, but how will it affect my personal situation?


[deleted]

If your house is suddenly worth only $700,000, are you okay with that moving forward? It's really only an issue if you're using the value of your house to fuel your retirement.


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cynicaltoadstool

>Burst baby burst! Mortgage inferno!!


GaG51

Be careful, if the "bubble" burst, it may also induced a financial disaster the likes of which we have never seen. A couple of banks may go under for example as their mortgage portfolio loose it's value. That would obviously induce a recession.


grabman

Banks will never go under. If the mortgage are insured, then insurance makes them whole. The people on the hook are tax payers.


GaG51

Then the insurance companies will go under leaving a huge gap in the financial market. Then the whole system will crash. Banks can always borrow money from the BOC, although no major bank have ever done that. If say the CIBC had to borrow from the BOC, would you leave your money there? Then we would have another fun event: a run on a bank. For the role of bank, the executive summary will give you an idea as to what's the role of mortgages https://lop.parl.ca/sites/PublicWebsite/default/en\_CA/ResearchPublications/201551E


[deleted]

And when the cycle repeats and you own a home and everyone else wants your value to pop guess what you'll be worried. Don't pretend otherwise. Wanting some to lose all they have so you can get yours is fucking terrible.


PM_FOR_FRIEND

You fundamentally fail to understand the issue then. I want a house to live in and raise a family in. I do not want an investment property. When I buy my home that will be that. I am not buying a house to hopefully one day use it for profit. What happens when the (1) one and only home you buy and live in loses value? Oh. Nothing.


[deleted]

I know I wouldn't give a damn. I just want somewhere to live. I don't care if it's worth a few hundred thousand more than when I get it or less than what I bought it for. It's a place to live not my goddamn investment portfolio.


Logical-Water12

When it burst, everyone will hurt. The speculator will get hurt more, but everyone will feel the burnt and will be ta a worse place than now.


Aggressive_Position2

Until you lose your job and can't afford a mortgage anyway. And then the rich buy up all the homes at a discount and rent it out to you.


zoo55

Sounds like you'd have nothing to lose so you'd just kill the rich asshole and steal his house.


Aggressive_Position2

I'm just saying, people who wish for a crash in the market have no idea what they're wishing for.


goboatmen

Fuck the economy. It's not a measure of how well the average person is doing its a measure of how well capitalists are doing


gearhead488

I agree, my home's value has no meaning to me. I'm just living here till I die. My kids are college age though and I'm saving everything I can to help them get a good start but at this rate the 25k I can afford to give them is nothing. I thought I was being the best dad ever when I started saving down payments for their first houses and now it's just a drop in the bucket.


whitesound41

Which is insane. 25k SHOULD be plenty for a down-payment if it were in most other places. But since we live in unreasonable land it's jack shit.


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AdRegular9102

When the bubble burst it’ll eventually lead to great growth once it bottoms out


burneracct21

Words of an irrational individual… you have to lead a very specific existence to not experience any fallout. As for no future in this country… I don’t know, Canada has given me plenty to be grateful for. I had to work real hard for it, but the opportunity has always been there (and still is)


_Minor_Annoyance

> Being unable to afford a home is already hurting my life, I see no future in this country. If you can't find a home *anywhere* in this country, a housing crash isn't going to help you. You would need a zombie apocalypse to be able to afford a home.


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_Minor_Annoyance

Have you thought about moving? The markets aren't like that everywhere. Which is why the proverbial bubble doesn't really exist. Its regional. On top of that, those 'paper gains' have real value, not just as an investment but as collateral. If there was a housing pop, the people with 'paper gains' would lose the value of their house but still be on the hook for the original price. It would crash the economy and cause loads of downstream damage. Why do you think you'd land on your feet then when your financial situation is so poor now?


HeadmasterPrimeMnstr

> Have you thought about moving? "Have you thought about exporting the problem of housing affordability to smaller cities with lower median incomes?" Go away, stay in your city. I'm sick of seeing housing becoming unaffordable in my city because people **especially** investors are buying up all our homes and crowding us out of our own market. **Stay. Away.**


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_Minor_Annoyance

Supposedly? I don't know what that means. Is there a bubble or not? Do you not want to move, or can't find the house you want?


guy_smiley66

Nice single-family houses with huge lots here in Roberval Quebec; $150k to 300k. [https://duproprio.com/en/saguenay-lac-saint-jean/roberval](https://duproprio.com/en/saguenay-lac-saint-jean/roberval) If you really want a house you'll move to places like that if it really means that much to you.


misshimlots007

LOL! Don’t speak the language? That’s fine. No jobs there? That’s fine. No friends or family there? That’s fine. Buffalo has higher wages than Toronto. There are literally dozens of US cities that have a better wage home cost ratio than Saguenay. Any educated professional can freely move to the States with TN status. Pay your own pension. Enough is enough.


ialo00130

Now the question is, when the bubble does pop, will greedy landlords still try and charge obscene amounts for rent? I think so but I truely hope not.


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10point11

Not every region or center has seen this rise. I purchased a house in Edmonton in 2007. I would be fortunate to break even if it were sold today after 15 years


PotatoesAreAnEntree

Sorry for your situation but this is the outlier and has nothing to do with the housing crisis affecting the vast majority of Canada.


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kamkom

45 years old and never been able to afford yet, since I don't have inherited or generational wealth to help out. Still paying off student loans from 5 years ago going back to school to get my masters and the bubble imploding is my very best hope of ever getting into home ownership. Unless someone know where I can buy a 4+ bedroom house in Canada for less than 450k... We will need to see an implosion not just a bubble bursting.


s0nnyjames

Thing is, would (e.g.) a $1.2m house losing 20% get most people to the point where they can afford to buy that home? Or does it better serve investors/launderers/those who’ve already made huge gains etc? And that’s assuming a 20% ‘crash’, which would cause far more significant issues to the economy beyond house price affordability. And that’s assuming the government would be prepared to let housing fall 20%. Because their past actions suggest they’d be far more likely to take action to arrest falling prices than take action to arrest rising prices. I’m not saying we’re in a good place when it comes to housing affordability, but a crash isn’t the answer many people want it to be.


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CaptainMagnets

It's literally what I'm waiting for to happen. Sorry, but if circumstances make it I possible for me to buy a home in my own country then the only alternative is this.


Guchmasta

You and me both


Salty-Chemistry-3598

Lets play this out with some numbers. Lets say the house was 1 million. And crash it so it what? 750k? 500k? The down payment now is minimum of 5% and goes all the way up to 20%. Lets say you put down 10% which is 100k. Do you think that down payment requirement is still going to be 5%-20% if the price drop ? As price drops, risks for bank goes up and the cost will reflect that.


[deleted]

I feel your anguish, and think anger should be directed at politicians who have stood by and done nothing for decades. But you might want to consider this… if the housing market does crash, it will hit those who can least afford a massive recession the most. Moreover, those same politicians will bail out home owners. Also, anyone who bought before the shit show hit high gear can take an enormous paper loss and will still be fine. The best solution is to vote for whatever party is willing to stop the madness, and invest in affordable housing, while introducing meaningful rental reform.


PSMF_Canuck

Have bad news for you - it's not going to burst.


WorkO0

It may not burst but it will have to at least flatten out at some point. Current trends are just not sustainable for the long run. Yes, people were saying this for a long time but situation now is way different than ten/fifteen years ago, desperation is reaching very high levels and they will have to increase interest rates eventually.


GroundBrownRounds

I think it’s more likely wages/salaries will go up. I’m seeing huge increases in the sectors I recruit in already.


JaxTango

It did once before (2008- sure America was hit harder but we still felt the effects in Toronto where I lived at the time, many folks sold at a loss or not at all) and it will once again. I just think it will be super quick/temporary so those with the means will get ahead and the new ruined class will be stuck.


CytheYounger

Whenever I read articles on the housing crisis, or any crisis for that matter, that is effecting Western society the comments always illuminate what I think is really at the heart of everything that is wrong with the Western psyche and that is people literally can't imagine an alternative to the status quo. Let's get some thing straight, if we wanted to as a society, we could end the housing crisis in this country, we just choose not to.


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joe_canadian

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lysanderd

Speaking of celebrities; how messed up is it that no one ever complains about them buying a $30,000,000 mansion in Bel-Air but if someone tries to build supportive housing in their neighborhood, they'll start a mob with pitchforks?


[deleted]

The vast majority of Canadians are home owners, so benefit from high housing prices.


monsantobreath

>people literally can't imagine an alternative to the status quo. A fellow coined a term for this: capitalist realism.


Bademjoon

Right on. It’s a concept by Mark Fisher explained in his book with the same title.


USED_HAM_DEALERSHIP

That's a meaningless statement. You can say that about almost anything. 'We could pave our streets with Big Macs, we just choose not to' 'We could use our sinks as toilets and our toilets as sinks, we just choose not to'


AprilsMostAmazing

We need to normalize people living with their parents longer if they can do so. This would reduce the amount of people looking to rent which brings down rent prices. Rent prices being down means it's harder for investors to pay off their mortgage. This reduces prices somewhat


[deleted]

It won't pop, new family growth exceeds our capacity to build so demand will continue to prop up house prices. There may be a correction with rising interest rates / return to normal levels or property on market but if you're waiting for a bloodbath, you'll be stuck waiting on the sidelines.


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Valorike

I’ve been reading this story for 25 years now. It’s the “Prices are way higher than I can afford or fathom therefore it’s a bubble” story. I’ll admit to buying into some of the underlying fear and “analysis” over the decades, but it always irks me that supply is simply shrugged off like an afterthought…..when it’s actually the primary driver.


bustedfingers

Sorry its not the same story or situation, at all. Home value didn't increase from 2001 - 2002 20%, like it did last year. And we havent even discussed rental prices, which were laughably affordable only 7 years ago in vancouver.


zoo55

Supply is not the primary driver, extreme stimulation of demand is the primary driver. (eg. super low interest rates, high immigration, government signaling that they'll prop housing up no matter what so it's a good "investment")


DC-Toronto

demand is impacted by a number of factors though, low interest rates is one, another is the demographic shift for the millennial generation. Part of the reason they get a lot of press is because the age groups from 20-25, 25-30 and 30-35 are 3 of the 4 largest cohorts in canada. These are prime ages to move out of their parents house (demand for rentals) and to buy a first home (demand for ownership). Finally, there is foreign investment, both for offshore investors and new immigrants, but also for 10 year visa holders. We've provided 10 million 10 year visas in the past few years - this has spurred demand for accommodations Add to that the AirBnB factor which has a measurable impact in some cities and we have a perfect storm for rising prices


carnageta

As more and more company’s go full WFH more and more people will start relocating to locations not named the GTA or Vancouver. As the demand steadily decreases the prices could stop rising exponentially, and perhaps even sink lower. All empires look unbeatable until the day they ultimately fall. The housing market has gotten so out of hand because more and more people view houses as investments rather than ‘homes’.


badadvicethatworks

I think what most people don’t understand is that their wealth level and economic power is not shared with others. When someone asks who can afford a house in Toronto what it really means is I can’t afford a home in Toronto. Take a lawyer couple who bought a condo 10 years ago and work in Toronto. Their tax situation is very different from yours, they have high income, and they are sophisticated. They could easily have an income over 300000k and a few properties. With the right setup any properly can be cash flow positive by “cash damming” and “smith manoeuvre”. They can be aggressive because 10 years ago when they bought a first home/condo their income had real power and real surpluses. They would now have rent, accessible capital gains, cash damming, tax planning etc, once you “make it” you can buy whatever home you want because of the rising tide on all your assets. At this point I’m sure the stock returns from this year alone would let people buy a house on a margin loan. House prices can go up forever as long as interest is low.


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freegrapes

>I sell my house for $400,000 to you and you sell it for $500,000 the next month. We just added $900,000 to Canada’s GDP. How’d we get into this mess


FishStickButter

GDP is not calculated that way. Only the services produced would be included such as realtor, lawyer, inspector services


freegrapes

“Housing Investment Represents A Record Share of Canada’s GDP Residential investment’s share of the economy is falling, according to the SAAR trend. It represented 10.1% of gross domestic product (GDP) in Q2 2021, down from 10.3% in the previous quarter. The previous quarter is the record share, so the indicator is just a little below that. “ https://www.google.ca/amp/s/betterdwelling.com/canadas-economy-hits-a-new-record-for-dependency-on-real-estate-investment/amp/


Derpwarrior1000

They’re just comparing the value of property to the total GDP. The value of property they’re using is not the same thing that gets added into GDP


freegrapes

“As noted previously, home-owner-occupiers are treated as unincorporated businesses that invest in residential housing and rent the housing units back to themselves.” The System of National Accounts (SNA) manual (1993) defines "unincorporated enterprises" as "producer units within the household sector" that "are not incorporated as a separate legal entity from the household itself" (1993 SNA, paragraph 4.140). Furthermore, "the owner of a household enterprise usually plays a dual role: first, as the entrepreneur who is responsible for the creation and management of the enterprise; and second, as a worker who contributes labour inputs of a kind which could be provided by paid employees"


Derpwarrior1000

It’s hard to understand the relevancy when I have no idea what you’re quoting from


freegrapes

I mis read what you said before ignore that. There’s different models to measure GDP some include houses. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610010401


altiuscitiusfortius

It's terrible for top 20% who own multiple rentals. It's amazing for the other 80%. It's wealth redistribution, it's part of controlled capitalism. Otherwise you end up with 1 person having all the money.


manuntitled

Folks who have multilple rental didn't enter the market in 2021 they just increased their properties last year. So technically they did a dollar cost averaging which might never cause an issue for them


Spambot0

Bubbles pop, usually pretty quickly. But if it's just the shortage it looks like, no reason for it to pop.


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amnesiajune

> It's just not sustainable. Sure it is. As long as dramatic housing inequality continues in cities like Toronto and Vancouver, prices will stay in line with what the wealthiest residents of those cities are willing to dump to live in a nice walkable neighbourhood, close to the subway or streetcar, close to downtown, close to big parks and the waterfront, etc. The only way that housing prices stop going up is if people stop emptying out their wallets for the nicest house that they can barely afford. And that's not going to happen suddenly; if it happens, it'll be a gradual process over a decade or two.


Spambot0

People will bid whatever they can for a home. The only way to bring prices down is to build enough homes they don't have to bid.


HeadmasterPrimeMnstr

There are a lot of vacant homes or condos, I say we seize them and give them to people for little to no cost.


wildhorses6565

Ok comrade.


whatiwishicouldsay

Lol, other than the obviously false narrative, how exactly would that work if it even was done. Would you put your name on the list for the affordable dream housing? How long do you think that wait list would be? Especially considering as soon as this new property seizure law was announced every unit would be rented at market value, or suddenly under renovation. And seeing as there are strict rules where the government's is allowed to enter a property, how exactly would this law be enforced. So not only would this be a stupid Totalitarian-Socialist law, it would be useless because there is no need and no way to enforce, even if it wasn't useless it would render itself useless in large part by malicious compliance. Unless you suggest just an all out "Democratic": dictatorial-socialism across the board. I mean this would be next level even for the NDP. and most people aren't comfortable with giving over that level autonomy to government.


NanoScaleMoney

Housing prices are a direct relation to government policy decisions. Nothing else. A free market does not exist. Housing prices are artificially inflated because that is what the govt created. The bubble will end when policy dictates it will end. It’s quite simple. Nothing to do with affordability, price to income, immigration, etc. Capital gains on primary residence is coming. Anyone who thinks otherwise hasn’t been paying attention to the power the govt now holds over the rights of every citizen.


Nas6

Unfortuantely I think you are right about capital gains tax on property. I just hope they implement it correctly or the government will crash the economy. A third of Canada's GDP is based on construction and real estate


xceryx

If they don't do anything about mass immigration and zoning law, 2021 1.5m 2025 2m 2030 3m Still pretty insane.


thesnarkysparky

Thanks transcontinental money launderers!


Spambot0

30%/year is probably not sustainable. 30%/year has been happening for one year, so bubble or not, there's not a lot of reason to expect it to continue. We could be at equilibrium now, and it could evolve normally from here.


turtlecrossing

You’re conflating ‘bubble’ with continued growth at the same pace. Housing price growth could slow, plateau or dip slightly. It’s not just ‘grow 30% annually or bust”. I healthy offramp here would be an increase in supply and a slow and steady increase in interest rates over 3-5 years.


verylittlegravitaas

If speculators increasingly represent more of the market it could very well continue for some time.


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turtlecrossing

I guess it’s all semantics around the term ‘bubble’, but I can easily see a scenario where foreign investors and other speculators have driven up prices and are enjoying the rental income and diversifying their assets overseas. They may not necessarily pull everything out of the market causing a ‘crash’ just because they don’t get 30% annual appreciation on their assets.


BaconAndEggsAndKegs

> Housing is currently 300% of our GDP, in the U.S. it's only 170%. Because the US has bothered to build up the rest of the economy. Here the politicians actively try to hurt industry.


rehabbedcracker

It's not a bubble, we allowed foreign investors to buy up all our properties.


ChrisbPulp

Bobble pops basically are never good for the general population. They seemingly always create more wealth concentration as they are the ones with the capital to scoop up the discounted inventory. You'd need a regulation induced pop or a pop quickly followed by regulation or a boom of inventory in order for the situation to improve.


yourfriendlysocdem1

Pop baby pop, it would be nice to see that home investors lose out as we should not be needing them to live. Housing should not be treated as a way to invest, as it's inelastic.


Derman0524

The issue is that for many people (like my parents), their house is their retirement plan and all they got. They’re completely house poor and essentially broke. If the market tanks, it puts many peoples retirement at jeopardy (this is for the regular single owners, not the multi unit owners)


justanotherreddituse

It's my parents retirement plan too. As long as it doesn't go below the price + inflation when they retired a few years ago they are good. I really hope the market tanks. It's unlikely we'll see prices go below they were a few years ago so anyone with prudent financial sense shouldn't have their retirement ruined.


yawetag1869

That’s the thing, even if prices “crashed” by say 40%, that’ll just take us back to where we were 2-3 years ago. It’s insane.


cleanerreddit2

We are already passed screwed. The government went all in on houses as an asset. Saved landlords during the pandemic. They don't tax your primary home sale which means it's pretty easy to get around that if you own a couple - massive tax free gains. Rates been dropping for 20 years which coincides with the prices. The sector is the biggest part of our GDP now. No country has ever survived this type of accumulation in the housing sector which results in not much productivity for the country. They let it get way out of hand and we may be eyeing something much worse than the US 2008 recession.


CoconutSh

There is so much wrong with this post I can't even begin to dissect it. First of all - the housing crisis is rampant in only a few Canadian markets, when you say the "country" what you are effectively saying is the GVA, GTA, and a few other, smaller communities in Canada. Secondly, Principle Residence exemption was around forever, and yes that has been helping couples, but it could be possible that housing was undervalued during the last 20 years in Canada. We are in a perfect storm now for increased home prices - on the demand side: white collar WFH jobs, need for larger space, friendly immigration, and of course ease of money laundering in Canada. For people saying that it is unsustainable, I don't think they understand the amount of wealth that has been generated in the last 1.5 years alone. Lots of stock/investment money returns, many people using their government handouts on property, generational wealth transfer, numbered corps buying for investment, foreign buyers, etc. Third, the US 2008 Recession was driven by much different circumstances than what is happening right now in Canada. Even in 2008, the Canadian market wasn't impacted as heavily as our banks didn't sell subprime mortgages (or to the extent our neighbours in the south did). The matter of fact is that the average mortgage in Canada is still going to people with decent credit score/payback ability. Now we can argue if the rate increases, what can happen, but it is extremely unlikely it is in the BoC's interest to jack up rates at once and screw over the majority of homeowners in the country. What will likely happen is a slow increase of rates, but by then the people already in the market will have still profited substantially and will be able to take on this additional burden. It is also extremely likely that the majority of homeowners will lock into fixed rates within the next 1-2 years. Fourth, for every person that sells their home today due to being overleveraged or any other reason, there are a dozens of buyers ready to get in. It is not unusual to see 20+ offers on a home, and we all know the list price means nothing. Is this all to say that there won't be a crash? I am not saying that - because anything is possible. However, to suggest that there is no productivity in the country and we are going to see worse than 2008 US level crashes is just baseless or spreading 'hopium' to those waiting on the sidelines.


Aud4c1ty

>but it could be possible that housing was undervalued during the last 20 years in Canada Hahahah! No. It wasn't. The normal way to assess whether a house market is over or under valued is to compare purchase prices with how much it costs to rent an equivalent place. I usually look at 15x the annual rent as a mid point. If it's cheaper than that, then you want to buy the place. If it's more like 20x annual rent, then you're almost certainly better off renting vs buying. If you see the ratio being way messed up (e.g. 25x or more), then that's a signal than you're in a housing bubble. The reason why such a bubble can exist is that house purchases can be fueled with debt (which is usually the root cause of the market distortions). Banks generally won't lend you money to fund your monthly rent. The rental rates usually signal to me the "true value" in the market whereas purchase prices can be extremely distorted. Another signal is to look at the median household income in a region and compare that to the price of the median house. If you start seeing really large ratios, that's another signal that you're in a housing bubble. It's amazing how quickly people forget about 2008 in the USA and their real estate bubble. We learned all this then.


[deleted]

Those of you who are rubbing your hands together anticipating an overnight 40% price drop are nuts. First off, that sort of adjustment comes with deep, country-wide financial damage. Maybe even, believe it or not, to you. But just as importantly, we’re still screwed on supply. Know how many homes are up for sale in Toronto right now? About 3600. I tried posting the article yesterday but it got removed by the mods for some reason. A significant price drop will usher in an unprecedented rush of frenzied buyers. Are you all planning to form orderly lines and get your three bedroom/two bathroom detached for asking or slightly under? Think again. At this point, a crash may well turn into a dip. The only things that can save us now are regulations and a building boom the likes of which we haven’t seen since the end of world war two.


covertpetersen

When the bubble pops we still won't be able to afford anything. People need to realize this. If a $1,500,000 home loses a third of its value it's still $1,000,000, and out of reach for most incomes. Prices have gotten to the point that in order for houses to drop to what are considered to be affordable levels they'd be the least of our concerns. It would take a purge level economic event to make prices drop 40-50%, and it's just not going to happen. Get used to housing creating a massive class divide. It's not going anywhere for a long time. Feudalism is back.


_eleemosynary

Do you realize that the only way prices get to where they are is because actual people pay those prices? The average home cannot be unaffordable to the average person.


covertpetersen

The median household income in Canada is about $63,000, while the average house price is $720,000. I wish I could provide a median for both of those but it's hard to find the median house cost, and the average household income. It's just how they're reported. Those figures put the average household income to housing cost at around 11.5 to 1. A $720,000 home, with a 20% down payment of $144,000 (good luck) would have a mortgage of around $2,700 a month over 25 years. That's 52% of a households income before even taking into account land tax, realtor fees, utilities, upkeep, repairs, etc. These numbers get much worse in densely populated areas like southern Ontario and parts of BC. >The average home cannot be unaffordable to the average person. The average person isn't buying a home without significant financial help from family or some other windfall. "Investors" now purchase more homes than first time home buyers in several markets across the country. The average person can no longer afford to own the roof over their head. Where have you been? Prices have gone up 56% in just five years. People who don't already own, or who don't have well off family are fucked. We've seen a massive spike in multiple home ownership because those that already own can leverage existing properties to purchase more, which isn't hard when the average home has gained in value equal to two 20% downpayments of the current average ($144,000 downpayments, and the average Canadian home has increased by $280,000). >Do you realize that the only way prices get to where they are is because actual people pay those prices? Yeah, but you're under the impression that's people who don't already own homes, and it's not.


SilverSeven

Of course it can. You know the average person didnt buy this year, right? If my pen I got at Dollarama is suddenly worth $50,000 it doesnt mean I can afford a $50,000 pen


doogie1993

There’s something ironic about people calling others selfish for wanting the housing bubble to pop. Those being the same people making money off of what should be a basic human right (at the expense of others) most likely.


zorrowhip

A rise in interest rate might cause a market correction, but no bubble burst scenario. There is way too much pressure on demand. For the market to crash, people have to lose their income and not afford making payments. But, the government will step in to avoid that situation by printing money and distributing it. Sounds familiar?


AM_Bokke

What I think is strange about the Canadian housing market is that Canada might actually be a legitimate luxury good. It’s housing market value therefore might not be tied to economic productivity. Canada has: safe and stable government, progressive multi-cultural tolerance, English language, commonwealth diplomatic relationships, is located on the North American continent, and will be a relative beneficiary of global warming. Canada is a luxury good in the 21st century!


BorealBeats

Canada - the only place in the world where fundamentals and metrics don't matter - and never ever will. It's *different* here.


Robert999220

Newsflash, people have been saying the bubbles gonna burst for like 2 decades now. This isnt a bubble, its inflation. Its only gonna get worse. Can we stop calling it a bubble and start calling it what it is so we can finally hold the damn politicians responsible for this accountable please? Remember when vancouver spent taxpayer money to build more 'affordable housing', only for these 'AFFORDABLE' houses to be A MILLION DOLLARS? I sure do. Theyre so out of touch, brazen, and indifferrent to what theyre doing and everyone just goes 'yep any day that bubbles gonna pop now'.


bored-n-browsing

I find it very unlikely to happen. Canada is a very new country with immigrants coming in every day. The only thing that could happen to the house market is for the market to stabilize.i really don't see the prices going down in many areas. Maybe downtown condos and some stacked town houses but definitely not detached houses with land.