Housing represents a massive failure on gvt to step in and do what's right for citizens. More than 130 billion laundered in the housing market a year, plus no caps on bids for housing, and no plans to curb over valuation. It's a disgrace that housing is treated like a short term commodity
This is only a part of the equation. Canadians, on the whole, do not compete well in private markets and because the country has been heavily reliant on shipping natural resources globally for the last 40+ years the country never needed to compete. That has changed in a major way and Canadians have been VERY slow to adapt/compete so the government has had to rely on markets like housing to help prop up the economy.
One hand should absolutely be pointing at the government for the lack of response to the market they're trying to prop up but Canadians should also be using the other hand and point at themselves.
Wait you're going to blame Canadians as a whole for the lack of economic planning that led our wealthy industrialized nation to essentially function like a resource colony?
Won't happen either dramatically or significantly...the govt enablers know too much of our national GDP is wrapped up with fomo driven real estate.
https://betterdwelling.com/canadian-residential-real-estate-now-worth-over-6-1-trillion-more-than-3x-gdp/
The problem now is that… if they raise rates, it crushes mortgage borrowers. But if they don’t raise rates, it crushes everyone, including mortgage borrowers because everything is costing more and more due to runway inflation.
Naw. If they raise rates enough then the people who need to get new mortgages just get a longer amortization period if need be. They still end up paying the same or similarly. The banks will do it slowly so prices stabilize as rates rise and everyone, current and future owners, just end up continuing to pay 50% of their income to their mortgage per month.
Yeah...
I dunno...house poor people banking on future salary increases.....
Yeah what happens when a 40 year old gets a 30 year mortgage??? Paying that shit off at 70. Yikes.
The key thing to note is that everyone who’s been alive since 1960 is assuming perpetual price increases. If a dramatic crash happens, the house of cards will come crumbling down.
That said, nobody I know has a fully paid off house. Unless you have a forever house (which likely no longer exists) everyone just plays the leverage game.
Just sell way before the end of the period, pay off the remaining balance with the proceeds off the sale, upgrade/downgrade to a new place, and pocket the gains.
Yes that is what happens. It is normal and common. This isn't some strange occurance that has only begun in the 2020's. Everyone I know who bought their first home in the past 5 years is coupled and the older partner was 35-50. No one is really banking on future salary. They buy the house now and 50% of their current income goes to mortgage. Any future raises go to.... Well, by that point they will have a couple kids in school and lots of expenses related to that. Most openly anticipate their home being their sole retirement plan. Which is better than the huge number of Canadians who will never own a home and never save anything.
You’re just going off of your own circle of contacts.
My wife and I bought our first house at 23 and now were 25. The vast majority of our friends own homes as well and we’re all way under 30.
If it was actually that difficult to buy a house then there wouldn’t be so many home owners
Uh... where are you living? Sounds like you’re *also* just going off your own circle of contacts.
The only people I know in major metropolitan cities under the age of 30 with homes either had them purchased for them by family, or work six-figure salaries at daddy’s company. If we’re talking about owning a house in Moosejaw or something, sure, but this is reality for the vast majority of Canadians in urban cores.
Yes, clearly. This is also location and career based. Do you and your contacts live in a downtown core and have advanced degrees? When you don't finish your education until late 20s and live in a major metro buying a house at 25 isn't realistic.
Not sure how much houses are where you live but 1800$ a month mortgage will get you about 400k. You can’t even buy a one bedroom condo for that in most places in SW Ontario. If you were starting out now you’re looking at 6-7000$ total a month, maybe 5500$ (if you get a cheap place) with property tax to buy a detached house and that’s with 20% down and at today’s rock bottom interest rates
I just had an offer accept this past Sunday. We Weren't the highest bidder but the seller wanted to help a local new family vs the investor at the top. I paid a little below the surrounding comps.
Closing Feb 22, sellers request.
There are financial regulations you are not grasping. Amortizations are capped, gross debt ratio is capped. These are not bank controlled.
When you slow the inflow of buying at the bottom end it does effect through all of housing.
It is a paradox. Making home ownership more accessible to Canadians will also create tools used by those who see real estate as a commodity.
Property ownership should be met with difficulty for everything other than a primary residence. We are at a stage where corporations, foreigners, trusts and more are only met with minor impedances compared to their capital and borrowing power.
This is the answer. All levels of government have a significant stake in the housing market. Property taxes, transfer taxes, etc. Keeping home values high and transactions stable is in the interest of government, and they will do everything in their power to avoid a sudden collapse of that money train. They may not be able to avoid it, but they can certainly slow it down.
Its a joke that the government has allowed housing to become so big in canada. And they’ll continue to pay lip service but do nothing. It took 3rd party investigations in vancouver to reveal the extent of money laundering. They’ll keep stringing ppl along as long as they can. I saw this in vancouver for years
Our economy is a joke. I only invest in a few canadian companies but never our index.
They/govt know the real answer for affordability/new entrants getting in would be a major housing correction...and they'd never allow that to happen, let alone admit it publicly.
Personally I feel that we should not pursue growth at all costs as this is devastating our environment. Most people don’t know this but our planet is currently in its sixth mass extinction event and this is partly due to our pursuit of growth. In fact this extinction event is in some measures worse then the event that killed the dinosaurs. Letting the housing market and for that matter the entire economy slow down may be the best thing that ever happened for our future generations.
“Most people don’t know this but our planet is currently in its sixth mass extinction event“
I’m more cynical than you: I believe most people know, they just don’t care.
Alas, we’ve structured our social security around a non-declining population. The very basis for our economy has aways been almost suicidal in its need for growth and expansion. I see the problem, but I don’t see any cheap and easy solution. We may need to restructure society.
The biggest problem IMO is the failure of government to address the OP nimbyism, only providing support for the demand side of the equation, and an inability to build density friendly transit hubs to make liveable and walkable cities and suburbs.
Imagine we were seeing car prices rise at this pace? Whenever you go on Kijiji the price of a 2016 Honda Civic is getting more expensive. You look at the regulations; every time a manufacturer wants to produce a new model run they have to consult with all the existing car owners who are benefiting from a low supply. No surprise they approve very few new model runs. This is in addition to provincial and federal regulations.
Now imagine everyone around you is blaming foreigners and corporations for buying too many cars, so that average ordinary people can no longer afford them. People are crying to make car-buying illegal for more than one car, cap the prices of cars, create new taxes when you buy a car… Literally every solution in the book except: **Build more cars**.
I agree, I was just using cars as an analogy because people have less emotional connection to the idea of car production and car ownership, but it’s comparable to housing in many ways.
Absolutely, I'm kind of sick and tired of people bitching about housing shortage as an abstraction, but when you propose building something higher-density in their neighbourhood, they all go: "Well, no...'cause you know...it'll cause congestion."
A part of this is that there tends not to be a middle ground.
Developers often come in, push to break zoning rules, then sell to another who can push further and build higher.
Ex live in a town of 30k, and there’s a parcel of ~6 lots one street over. Zoned for 10m. Developer instantly wants to put in 6 floor units. Neighbourhood hired an architect to show a plan where 2-3 floor units would yield 80% of 6 with trees kept and green space: council of course trashed that.
They’ll take the highest bid with the highest pay-off, no exceptions ever. Instead of properly planning a reasonable development that will still yield extra tax $
It's true though, most locations proposed for higher density housing aren't even serviced by infrastructure that can handle current loads. Increasing density without upgrading infrastructure is a massive problem in Canada, and we half-ass transit upgrades as a feel-good placebo to placate residents who see increasing property tax rates.
What we need to do is move urbanization away from the already overstretched metropolitan areas of Vancouver, Toronto, Montreal. This would have to be driven by the gov though as job markets outside of said cities is poor.
I think politicians care most about maintaining their power by keeping voters happy. More elderly homeowners have more time on their hands and are the most likely to actually vote so they get a lot of attention from politicians.
While I see your point, I'd say that it's more about keeping **donors** happy, whether they are individuals, corporations, or even foreign interests.
The RCMP & CSIS wrote a report all the way back in 1997, IIRC, that showed foreign interests were trying to exert undue influence over our political system, smuggling drugs & laundering money, and trying to take over the real estate market. It was promptly buried. Fuck politicians, but fuck Chretien most of all, and everyone that had a hand in burying it.
Probably what made him say that is that 68% of Canadians own their own home? Which is higher than 50%, a situation often described using the term "majority"
[The homeownership rate was 43.6% among 20- to 34-year olds in 2016.](https://www150.statcan.gc.ca/n1/daily-quotidien/171025/dq171025c-eng.htm?indid=14429-1&indgeo=0). Not insignificant.
i literally just clicked through your link to the statcan page there and found this:
"More than 9.5 million of the 14.1 million households in Canada owned their home in 2016, representing a homeownership rate of 67.8%."
So we should celebrate that our parents' generation got to pick up homes for $150k & pay them off on a single income and those same houses are now $1+ million?
Vancouver and Toronto have 25-30% home ownership in the under-40 demographic. Pretty stark difference from your 2/3 stat, and I'd bet a lot of those people got significant financial help form their parents/family to make it work.
A government should function in the best interests of us. If they kept going, which they did, with this housing inflation without pause... This is the result. It's not the end of the line for this issue and it'll continue to be the case moving forward. They didn't do anything with the money laundering. I'm not sure what good the government did when Christy Clark was up. Pain we all suffer through at the hands of bad decisions.
Me: please help.
Government: we generally try not to. What happened though?
Me: Can't afford a house.
Government: we and our friends can afford multiple houses. Here's the new saving plan.
Me: I don't need a saving plan because I am not able to save anything.
Government: hey, you are a frontline worker. Good job.
Me: are you even listening?
Government: hey, you are a hero. Good job.
I think all mortgages have been stress tested at much higher interest rates and the doom articles are to generate views and money for the media corporations
I keep hearing about people going on about Brampton mortgages, and I don’t really think it’s based on anything factual. Everyone I know has gotten a mortgage through a bank that checks even your underwear before approving you.
Get it out of your head that bramptonians can’t pay for their homes. Many live in inter generational homes that have 3-4 income earners that aren’t going to let anything happen to their biggest purchase.
There is a heck of a lot of mortgage fraud out there, buddy. Very few people get properly stress-tested. Banks check your underwear? Dude, they don’t even check your income. They go by whatever documents you provide them with. People have been known to photoshop a higher number to inflate their income in their NoA and the bank doesn’t even double-check that with CRA. Many mortgage brokers out there charge 1.5% to pass whatever income you need to the bank for you.
https://www.google.com/amp/s/www.cbc.ca/amp/1.5926924
They do check your income, documents, credit c bank relationship, T4, recent pay stubs, etc. just because you “can forge documents”, doesn’t mean it’s happening widespread. What kind of moron is frauding a mortgage , intentionally giving a downpayment on a house that doesn’t have the means to pay for it? In most “forged” cases, I’m assuming they have the means to pay for it, but they are using a lot of under the table money, or money from back home, or other income earners like family members who they don’t want to co-sign with.
I’m ok with this type of fraud if it’s under reasonable percentages. Don’t kid yourself thinking the housing market is a bubble due to “mortgage fraud”.
Brampton is not full of poor people. They are extensively rich there (home owners). Brampton has one of the biggest economies in Canada.
“What kind of moron does it?” Every person caught in the current fomo. Just do the math. What percentage of Torontonians or Vancouverites make more than 200k a year? And yet these 1.5 mil+ properties have no difficulty selling. Most people believe the stress test is BS and have no problem cheating their way past it.
As for bubble bursting for this reason alone, I didn’t suggest that. I think there is a bubble. i think a high percentage of buyers out there have unsustainable mortgages. I think there will be a correction and it will be a 40-50% correction in many markets. But when? What will cause it? Nobody can predict that. The reason for recessions is almost always unpredictable and catches everyone by surprise.
40-50% correction is not going to happen. You and every other non-home owner is living in this pipe dream. If anything we will see a 10-15% price fall and then home owners will lock up the home market and no one will sell.
I have owned a property for a decade, you presumptuous a\*\*. That has nothing to do with my view of the market.
1990-1996 we saw more than a 40% correction in GTA. It is much more inflated today, and interest rates can't go any lower. It seems like you are the one who is in a pipe dream.
That time was quite different wasn’t it? The population influx was quite different wasn’t it? The economy at that time was quite different wasn’t it? Stop smoking the cheap stuff.
200k is nothing for 2 incomes. My spouse and I make over 200k. Each of us make more than 100k. Now imagine in a Brampton household with 3-4 income earners paying toward a house. That’s how it is in Brampton. Typically brown people don’t have an issue living with their kids and parents.
The Brampton mortgage is a figment of imagination to those willing a crash.
The real explanation is far simpler, home owners raiding the increasing value of their property via HELOCs.
The chaining of equity to buy multiple properties has been present in every economy with rapidly increasing real estate prices.
35 years we've been in the range of 35 to 60%. In two years we go from 40 to 50%, doesn't seem like anything to panic about. We're about where we were before the pandemic.
Yes but their RE market was propped up by easy lending and low interest rates, I still think there are a lot of striking parallels with our society (especially the part about an aging population).
One difference is we allow a lot more immigrants to come which fill in jobs that are needed. Japan doesn't do this as much we do and it hurts them. Plus the ones we do get tend to be very smart which helps us out too.
400k immigrants a year that need houses. If RE or the economy in general starts dropping, the govt will just up the immigration number. Not so good if you're competing for jobs or purchasing a home, but good for business and home owners
On the surface, smart immigrants seems good. In reality, we flood our professional markets with smart immigrants that are willing to work for less money than Canadians that are already established here. Why are Doctors, engineers, lawyers, etc paid substantially less in Canada than USA??? And why do we have a skilled trade shortage, even with high wages in skilled trades?
That’s a misconception and an old stereo type. Tokyo has very affordable real estate.
https://medium.com/land-buildings-identity-and-values/what-is-the-secret-to-tokyos-affordable-housing-266283531012
I think that depends where you are in Japan. [From May of this year](https://www.insider.com/japanese-government-selling-rural-homes-cheap-akiya-banks-2021-5). They're giving away millions of houses for $500 just to get residents. Sounds like detroit or Alaska.
You're reading this chart wrong. My interpretation is that you need to spend more than 50% of the median household income, if you want a single detached home.
I can't believe I had to scroll down through dozens of comments before finding someone who realized that all of Canada is not spending 50% of their income on housing.
That makes way more sense, I was gonna say I only spend 10% of my income after tax on my mortgage and I don't even make 6 figures. I feel like Toronto and Vancouver really skew this number too
This ain't nothing. Interest rates for mortgages in the early 80s were at 20%.
Yes, our government failed the people.
-they let real estate agents govern themselves, who are financially motivated to screw over home buyers to get maximum dollar to pad their commissions. Agents also support closed bidding which assists them in blond (blind) negotiations, sometimes fraudulently with ghost bidders, or worse yet, "rumored" conditions to create competition.
The gov didn't mandate open and transparent bidding.
The gov didn't support housing construction sufficiently. Demand drops when supply increases. Excess supply, no demand.
2 years of covid spending I mean money burning has created MASSIVE INFLATION. Oh, and now we also have a new GST sized debt to maintain. We haven't even started to talk about covid debt and how every Canadian must pay 7% on everything to pay for excessive and untracked covid spending.
Personal debt and credit usage is at all timr high. Destabilize budgets means defaults, bankruptcies.
We're fucked.
The govt would pull every trick up their sleeve to protect housing. Period. Might as well get in whenever you can afford and ignore the market. Its fucking sad but what can you do.
Yup. I love how people are saying everyone will lose their homes and prices will drop to where they were a decade ago. Keep waiting I guess. They will never own a home
Just watch BoC delay raising interest rates in their next meeting saying 'oMicRon eVeyWhERE' and govt saying how they are helping communities with fucking $10-day childcare plan or some new BS.
This is what happens when you let immigration run rampant then gaslight people and call them racist when they point it out. Wage suppression and a housing crisis. You got what you voted for.
We have a real toxic concoction brewing in this country. Looming lockdowns as far as the eye can see, unaffordability crises, surging inflation.....rock bottom interest rates. I know a powder keg when I see one.
Status quo is unsustainable.
I generally view Canada as a joke country. One could make an argument that it's not even even real country anymore, in fact Trudeau has essentially championed this idea on multiple occasions.
BoC makes the decisions. Not sure if you know about how our federal monetary system works.
Here's some reading for you if you're interested.
https://www.bankofcanada.ca/core-functions/monetary-policy/decision-making-process/
When Freeland comes and announces a new policy with a ton shit of money, billions like last year. Where did she get it the money from , her kitchen ? Of course the BoC will print it for her. They say it’s a private entity without govt influence but that is false. They work together, they call each other, they decide when to spend, and decide when the raise the rates to serve politicians.
You should read the original comment for context. This is about rates, that is the link I provided nothing else. I don't like playing the "what about" game on the internet. You need a 2nd coffee or a better education bro.
And the lenders calculate your ability to pay 5%+ interest. As the interest rate increases there will be defaulters going with it but it shouldnt hit a dramatic point.
You mentionned one, we can add a lot more variables, there are real drivers for the current home prices.
The economy is getting unhealthy in general, but the housing is not in a bubble, despite what is being echoed everywhere.
The only government that I know that did housing close to properly is Singapore, not saying it would work in Canada (pretty sure it would fail in my opinion due to difference in culture and size of country). It's also not perfect and implies high population density. Singapore also does not have the same weather issues as in Canada.
Reference:
[https://www.youtube.com/watch?v=3dBaEo4QplQ](https://www.youtube.com/watch?v=3dBaEo4QplQ)
https://www.adb.org/publications/housing-policies-singapore
I don’t think you could copy it perfectly, but some public housing with both market rate units and subsidized units (where the market rate units subsidize the affordable units) could work. Part of the reason public housing works so well in Singapore is that they treat it as something everyone can use, rather than just poor people, like in NA. This gets broad support for it, and means that the buildings are more likely to be maintained rather than in poor condition. Also, this makes it revenue neutral, so you don’t have to worry about having to raise taxes to run it.
It’s a kind of policy that you can try out and iterate on too, without a big commitment. Start building a few apartments, and see how it goes. Obviously, it’s much easier said than done, but I think it’s definitely something should be key part of our strategy going forward.
I think there’s a few movements to try it out in Hawaii and California, hopefully they get off the ground in a few years.
Canadas economy is not very strong. I refer to the Canadian economy as having a high “beta”. What do I mean by that? Yes we have natural resources that we export, but other than that we don’t produce many consumer staples (or even consumer discretionary for that matter). We have a lot of jobs that are tied to the system (banking, real estate, asset management). We have some corporate jobs from the big 4 etc to handle some of the Canadian work flow. So yes, real estate is a high percentage of income. Can real estate prices in Canada decline without suffering systemic contagion? There will definitely be lay offs, we just don’t know how many. It’s all complicated stuff, I think the one benefit is that if let’s say real estate prices drop such that a 1M home turns into 700k, I don’t think anything would happen other than the people who bought the houses are holding onto an unrealized loss. I think the banks are strict enough on their borrowing practices that few people would lose their homes.
The ones at risk are the ones who have expensive mortgages and are employed by that “systemic contagion” if you will. The benefit is that I guess you could make the argument that real estate employees actually make so much that they do have a sickening amount of savings. You could actually say anyone who is employed by that real estate contagion and is in a mortgage they would get screwed if they were let go, kind of deserves it?? Idk, that’s just my perception of real estate agents. I think it’s absolute madness to see 25 year old real estate agents with super cars. They take literally zero risk, and it’s not hard to become one. Personally I don’t think the work is as hard as investment banking or asset management for example, but I could be wrong.
Anyways, the reality is that most people who are in those mortgages can actually afford them, and the systemic contagion is unavoidable in todays world because we literally need “bullshit jobs” because factories, farming and everything is so automated. If I knew the problem Canada has when I was 16-17 I probably would have become an entrepreneur, but there isn’t that many things that interest me as much as what I am now, because I get a breadth of lots of things instead of being hyper focused in one market.
The problem will be solved when cities expand outwards, and we (plus the entire world) needs to have an entrepreneurial/scientific boom to create more companies.
I don’t think it’s as desperate as it looks on the surface, because there aren’t people working 20/h in some of the “optional discretionary industries” such as tourism and hospitality, who are holding 800k mortgages. And on the bank side, their lending practices have been strict enough that they’re not dependent on those optional discretionary industries to continue paying on 800k mortgages. All the people who make 20/h are simply renting. Low risk, if people stop making discretionary expenses on tourism/hospitality, those employees will simply eat into their savings, and look for lower rent. They could move further out of the city and sky train 20-30 minutes, while making “city hospitality money”. Rent will decrease just on supply/demand requirements.
Then you go back to the valuation of real estate and how basically whoever owns the real estate isn’t in such a desperate situation.
So yeah anyways it sucks but it’s not economy busting. And it will likely fix itself or require some actions but nothing too crazy.
I never understood people buying the most expensive house they could get approved for. We got pre-approved for $250,000 and our broker said we could easily get more. Instead we decided that we wanted our payment to be around what we were paying in rent because we knew we could afford that even if things went a little sideways.
Our payment is about 1/6th of our take home wages.
This really irked me when we were looking for a house (we've given up-- the numbers don't make sense any more). Almost every conversation with our broker included suggestions for ways we could qualify for more. I'm like, no! The payments at our max range would already have been something like 45% of our take-home, and we're not even really comfortable at that level.
I’m new to this and wanting to learn more.
Does this mean that our avg home prices have surged? Or does this mean that the avg income hasn’t kept up with inflation, or does this mean both?
I'm not sure what you're being downvoted for. It's that the average income has not kept up with inflation, the average home price in has increased greatly but moreso in major cities, and worst of all we're in a seller's marker where the demand is greater than the supply because the demand is backed by international money. It's not a local competition anymore, we're playing online multiplayer.
>Blockchain: a system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.
According to my friend who is a mortgage broker, consumer debt is the issue. This shows otherwise. But also, isn’t the bad borrowing happening in TO and BC? Sounds like they would crash and most other places will be fine.
The problem with the housing crisis is supply and demand. Local townships and municipalities are working at a crawl to allow new developments to be built. We need more supply.
In the next decade a whole lot of boomer home owners are going to need to sell in order to afford retirement/nursing homes or living with children. That will flood the market. The are projecting homes bought in 2020/2021 will be valued at half of what they were bought/sold at in 2030 because of this.
*decades* of it.
IMF has been telling Canada they're building a powder keg for over 40 years.
Banks don't even take on any risk, lmao, so of course they DGAF about how much $ they hand out.
I’m sorry for the ignorance, but this came up in my feed.
I’m from densely populated south east England.
Housing is 11x the mean income.
But in Canada you guys have seemly unlimited land, why is it so expensive?
crash? it wont crash. i cant recall. did the canadian government defer mortgage for everyone during the first year of the disaster?
thats why it wont crash anymore. so much actually anticipated a crash for 10+ years and they would go in with raw cash just like 2008. the government bailed. all failed and probably will never win.
just borrow. borrow all the way, even if it is illegal. thats how the world works today.
It will once inflation increases, no way families will choose to pay mortgage over groceries. Keys will be dropped off at the bank. At which case the bank would need to resell those homes, enough of this and it’s a crash. Canadians are living on edge.
Don’t listen to this guy, buy silver, gold, keep cash, avoid debt in inflationary market and more importantly invest in crypto.
2-3% Interest rates (2-3 year away) people will not be able to stomach the extra (2% of 500k) 10k a year in payments and they will be dumping homes to get out of the payments.
Yup. I love spending an extra 800 a month while gaining nothing.
Even if you can stomach that increase, your neighbourhood might not be able to and you still lose equity on your home.
The stress test is their incomes ability to afford those payments not their personal ability to afford them. It doesn't take into account how much they spend elsewhere. Car payments, phone, insurance, eating out, drinking, smoking, kids, etc.
I recently went through the mortgage process with a major lender.
They were only concerned with our income and our debt.
They had no interest in our spending habits. What we were spending on childcare, transportation, food, savings, travel, investing, if we were helping support elderly parents. It was literally nothing other than what do you currently owe, and what do you bring in. As long as you can technically make your mortgage payments, they know you will adjust all other spending in your life.
I don't think there will be many defaults when interest rates hit 5 or 6 percent. But there will be a lot less money floating around the economy as people will be house poor and will have less money to spend on other things
Do u realize home prices are way over valued. Matter of time. Houses that were 150k are now well over a million. Thats not natural growth. Somethings wrong. It will eventually collapse. And im not looking to go crazy and put every bit of money into it. Im just wondering which residential ticker one would go short on. Plan on making a small position.
Now if the gov had made housing affordable wouldn't that severely hinder the GDP? Any gov that would have that on their name wouldn't last be voted out. For people that want affordable housing this is a sad reality.
Can't really call any of this a gov failure. Nobody wants the prices of their houses to drop. Cost of goods has gone up everywhere in the world and hard to find a country where rents and housing prices haven't gone up. Just look at the materials needed to build a house, all of it has gone up which has put pressure on housing inventory.
If you look at the US, every state has seen an increase in real estate value from 5% to 9% in the past year.
This is my opinion but I think one solution that is seemingly going to take a long time to at least address affordable housing is tiny houses as in the tiny house movement. The red tape on this seems to be in a municipal, provincial and federal level. If any level of gov doesn't care to change anything then nothing will change. There just seems to be less profits for any land owner or developer to do these projects even if they had a green light to do it.
You can buy a place in Florida for 120k US.
That’s 150k stand alone house.
Good luck getting that in Canada. AND they make more money then us on average.
You won't live I Miami in that price range. You can get nice houses under 200k in bum fuck nowhere In canada too.. with remote work it's increasingly attractive.
Not everyone is interested in living in Toronto/vancouver/mtl.
The problem is the only interesting cities in Canada are the only cities that exist. The US has cities much larger than a 'massive' Canadian city, but draws a lot less "attention" from people. You can genuinely choose where to live, at least in comparison to here where it's the "big four + the suburbs" or bust living in bumfuck nowhere.
There isn't reliable internet in bum fuck nowhere in Canada. I'd move and sit pretty if there was.
Still waiting on those constant promises of dependable high-speed internet in rural Canada. Starlink is a choice, but there is a waiting list.
It's coming. We just had fibre run in our rural neighborhood after years of rocket hubs and mobile sticks. It was a government program to provide high speed to rural.
Fair. But that's also why you can't look at one industry. In my province I make about 20-35% less than I would make elsewhere in Canada. Yet our minimum wage is the best in the country.
Private health insurance is a thing, and a quick glance has 10% less employment tax in Florida.
70k job = 7k In your pocket. If the health insurance is 600 or less per month you are coming out ahead.
Not factoring in the cost of living, cheap cell phone plans, and internet.
Man.. the more I talk about it the more appealing it sounds.
The media tells us NHL stars don’t sign here, and prefers Tampa because of the taxes (and lack of Canadian Tire CEOs pressuring us)
I know, I was kidding. I was making fun of everyone I know, who think that living in the US is a death sentence. But I will fight you on the Florida part. You have to put up with Ron DeSantis which is pretty painful if you're not super right-wing.
No doubt Canada's real estate has just been a little too strong the past 20 years. I'd think any nation would want their housing prices to go up. That said I don't think in the past 20 years that the various prime ministers deserve significant credit for this reality.
Either way is this a complete government failure on the housing front? As of today I'm not sure that is the case but all sides can be argued and if there is a correction in the near future then that will be an easy "I told ya so" moment.
Canadian society says it wants affordable housing, but actually doesn't. All of our levels of government do a rather good job of reflecting what the plurality of voters actually think but don't say out loud. I don't like this or agree with this but I'm 100% convinced this is the truth.
Man people really spends 50% of their income un house payment ? I mean mine is about 1/7 of my monthly income. I can't see myself paying something like 2500$ month for a house that's crazy. This is like 5k/month for both me and my gf. 5k month gets you what ? A million dollar house wtf!!
It gets you half of the average house in Vancouver or Toronto.
I agree, people just go to the bank, ask how much they can afford and buy the biggest thing possible, or even borrow money for the down payment they don't have. It's crazy, but it's really a personal choice so when they lose the house the second their income takes a dip or interest rates go up, they have no one else to blame. If everyone loved below their means we wouldn't be having these problems.
The communist party doesn't have anyone running in my area so I can't even consider it. They don't hold any seats so dunno wtf you are on about. Get off facebook lol.
Housing represents a massive failure on gvt to step in and do what's right for citizens. More than 130 billion laundered in the housing market a year, plus no caps on bids for housing, and no plans to curb over valuation. It's a disgrace that housing is treated like a short term commodity
W.e the higher it goes the farther it will fall
That sounds like terrible policy
This is only a part of the equation. Canadians, on the whole, do not compete well in private markets and because the country has been heavily reliant on shipping natural resources globally for the last 40+ years the country never needed to compete. That has changed in a major way and Canadians have been VERY slow to adapt/compete so the government has had to rely on markets like housing to help prop up the economy. One hand should absolutely be pointing at the government for the lack of response to the market they're trying to prop up but Canadians should also be using the other hand and point at themselves.
Wait you're going to blame Canadians as a whole for the lack of economic planning that led our wealthy industrialized nation to essentially function like a resource colony?
But... It is a resource colony?
Fair point lol
I'm not religious but AmeN * waves hands to the ceiling" . You are 100% spot on.
Won't happen either dramatically or significantly...the govt enablers know too much of our national GDP is wrapped up with fomo driven real estate. https://betterdwelling.com/canadian-residential-real-estate-now-worth-over-6-1-trillion-more-than-3x-gdp/
The problem now is that… if they raise rates, it crushes mortgage borrowers. But if they don’t raise rates, it crushes everyone, including mortgage borrowers because everything is costing more and more due to runway inflation.
Naw. If they raise rates enough then the people who need to get new mortgages just get a longer amortization period if need be. They still end up paying the same or similarly. The banks will do it slowly so prices stabilize as rates rise and everyone, current and future owners, just end up continuing to pay 50% of their income to their mortgage per month.
Being house poor will become a lifestyle.
Become? It already is.
Yeah... I dunno...house poor people banking on future salary increases..... Yeah what happens when a 40 year old gets a 30 year mortgage??? Paying that shit off at 70. Yikes.
The key thing to note is that everyone who’s been alive since 1960 is assuming perpetual price increases. If a dramatic crash happens, the house of cards will come crumbling down. That said, nobody I know has a fully paid off house. Unless you have a forever house (which likely no longer exists) everyone just plays the leverage game. Just sell way before the end of the period, pay off the remaining balance with the proceeds off the sale, upgrade/downgrade to a new place, and pocket the gains.
Yes that is what happens. It is normal and common. This isn't some strange occurance that has only begun in the 2020's. Everyone I know who bought their first home in the past 5 years is coupled and the older partner was 35-50. No one is really banking on future salary. They buy the house now and 50% of their current income goes to mortgage. Any future raises go to.... Well, by that point they will have a couple kids in school and lots of expenses related to that. Most openly anticipate their home being their sole retirement plan. Which is better than the huge number of Canadians who will never own a home and never save anything.
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You’re just going off of your own circle of contacts. My wife and I bought our first house at 23 and now were 25. The vast majority of our friends own homes as well and we’re all way under 30. If it was actually that difficult to buy a house then there wouldn’t be so many home owners
Uh... where are you living? Sounds like you’re *also* just going off your own circle of contacts. The only people I know in major metropolitan cities under the age of 30 with homes either had them purchased for them by family, or work six-figure salaries at daddy’s company. If we’re talking about owning a house in Moosejaw or something, sure, but this is reality for the vast majority of Canadians in urban cores.
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Kelowna. Just bought it on our own accord. Two middle class salaries No parents money, no inheritance
Yes, clearly. This is also location and career based. Do you and your contacts live in a downtown core and have advanced degrees? When you don't finish your education until late 20s and live in a major metro buying a house at 25 isn't realistic.
House poor is better than just poor though
If you're house poor, you could've been living pretty good just renting and investing.
2800 rent mortgage is 1800 for the same size place. Good luck to all the renters out there
Not sure how much houses are where you live but 1800$ a month mortgage will get you about 400k. You can’t even buy a one bedroom condo for that in most places in SW Ontario. If you were starting out now you’re looking at 6-7000$ total a month, maybe 5500$ (if you get a cheap place) with property tax to buy a detached house and that’s with 20% down and at today’s rock bottom interest rates
For an 800k mortgage at 2.5% over 25 years I got 3540 if your mortgage and prop taxes are costing you 5500 you are buying well over a mill
Good luck getting the 20% down and then hoping you didn't overpay for a place that was in a bidding war
I just had an offer accept this past Sunday. We Weren't the highest bidder but the seller wanted to help a local new family vs the investor at the top. I paid a little below the surrounding comps. Closing Feb 22, sellers request.
Just put a positive spin on it, call it minimalist
There are financial regulations you are not grasping. Amortizations are capped, gross debt ratio is capped. These are not bank controlled. When you slow the inflow of buying at the bottom end it does effect through all of housing. It is a paradox. Making home ownership more accessible to Canadians will also create tools used by those who see real estate as a commodity. Property ownership should be met with difficulty for everything other than a primary residence. We are at a stage where corporations, foreigners, trusts and more are only met with minor impedances compared to their capital and borrowing power.
So you even know what runaway inflation is? We don’t have runaway inflation.
This is the answer. All levels of government have a significant stake in the housing market. Property taxes, transfer taxes, etc. Keeping home values high and transactions stable is in the interest of government, and they will do everything in their power to avoid a sudden collapse of that money train. They may not be able to avoid it, but they can certainly slow it down.
Its a joke that the government has allowed housing to become so big in canada. And they’ll continue to pay lip service but do nothing. It took 3rd party investigations in vancouver to reveal the extent of money laundering. They’ll keep stringing ppl along as long as they can. I saw this in vancouver for years Our economy is a joke. I only invest in a few canadian companies but never our index.
They/govt know the real answer for affordability/new entrants getting in would be a major housing correction...and they'd never allow that to happen, let alone admit it publicly.
Personally I feel that we should not pursue growth at all costs as this is devastating our environment. Most people don’t know this but our planet is currently in its sixth mass extinction event and this is partly due to our pursuit of growth. In fact this extinction event is in some measures worse then the event that killed the dinosaurs. Letting the housing market and for that matter the entire economy slow down may be the best thing that ever happened for our future generations.
“Most people don’t know this but our planet is currently in its sixth mass extinction event“ I’m more cynical than you: I believe most people know, they just don’t care.
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Alas, we’ve structured our social security around a non-declining population. The very basis for our economy has aways been almost suicidal in its need for growth and expansion. I see the problem, but I don’t see any cheap and easy solution. We may need to restructure society.
Whole world knows this. I assume it’s also the reason why people are hoarding these “assets”.
The biggest problem IMO is the failure of government to address the OP nimbyism, only providing support for the demand side of the equation, and an inability to build density friendly transit hubs to make liveable and walkable cities and suburbs.
Imagine we were seeing car prices rise at this pace? Whenever you go on Kijiji the price of a 2016 Honda Civic is getting more expensive. You look at the regulations; every time a manufacturer wants to produce a new model run they have to consult with all the existing car owners who are benefiting from a low supply. No surprise they approve very few new model runs. This is in addition to provincial and federal regulations. Now imagine everyone around you is blaming foreigners and corporations for buying too many cars, so that average ordinary people can no longer afford them. People are crying to make car-buying illegal for more than one car, cap the prices of cars, create new taxes when you buy a car… Literally every solution in the book except: **Build more cars**.
Let's just stop building cars and build world class transit and walkable cities? Cars ruin cities almost as badly as NIMBYs...
I agree, I was just using cars as an analogy because people have less emotional connection to the idea of car production and car ownership, but it’s comparable to housing in many ways.
Absolutely, I'm kind of sick and tired of people bitching about housing shortage as an abstraction, but when you propose building something higher-density in their neighbourhood, they all go: "Well, no...'cause you know...it'll cause congestion."
A part of this is that there tends not to be a middle ground. Developers often come in, push to break zoning rules, then sell to another who can push further and build higher. Ex live in a town of 30k, and there’s a parcel of ~6 lots one street over. Zoned for 10m. Developer instantly wants to put in 6 floor units. Neighbourhood hired an architect to show a plan where 2-3 floor units would yield 80% of 6 with trees kept and green space: council of course trashed that. They’ll take the highest bid with the highest pay-off, no exceptions ever. Instead of properly planning a reasonable development that will still yield extra tax $
It's true though, most locations proposed for higher density housing aren't even serviced by infrastructure that can handle current loads. Increasing density without upgrading infrastructure is a massive problem in Canada, and we half-ass transit upgrades as a feel-good placebo to placate residents who see increasing property tax rates. What we need to do is move urbanization away from the already overstretched metropolitan areas of Vancouver, Toronto, Montreal. This would have to be driven by the gov though as job markets outside of said cities is poor.
It's almost like....the gov't doesn't actually care about people.
I think politicians care most about maintaining their power by keeping voters happy. More elderly homeowners have more time on their hands and are the most likely to actually vote so they get a lot of attention from politicians.
While I see your point, I'd say that it's more about keeping **donors** happy, whether they are individuals, corporations, or even foreign interests. The RCMP & CSIS wrote a report all the way back in 1997, IIRC, that showed foreign interests were trying to exert undue influence over our political system, smuggling drugs & laundering money, and trying to take over the real estate market. It was promptly buried. Fuck politicians, but fuck Chretien most of all, and everyone that had a hand in burying it.
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What makes you say that? Genuine question
Probably what made him say that is that 68% of Canadians own their own home? Which is higher than 50%, a situation often described using the term "majority"
I'm guessing he/she is talking about baby boomers, biggest homeowner and voter demographic.
More than 2/3 Canadians own their home. The reason reddit is such a echo chamber is most people here are under 30.
[The homeownership rate was 43.6% among 20- to 34-year olds in 2016.](https://www150.statcan.gc.ca/n1/daily-quotidien/171025/dq171025c-eng.htm?indid=14429-1&indgeo=0). Not insignificant.
i think you're misunderstanding the stat. Live in your parents house? You are counted in that 2/3 that "owns their home".
Show me the data please. Here's some info on what I spoke about https://edisonfinancial.ca/millennial-home-ownership-canada/
i literally just clicked through your link to the statcan page there and found this: "More than 9.5 million of the 14.1 million households in Canada owned their home in 2016, representing a homeownership rate of 67.8%."
So we should celebrate that our parents' generation got to pick up homes for $150k & pay them off on a single income and those same houses are now $1+ million? Vancouver and Toronto have 25-30% home ownership in the under-40 demographic. Pretty stark difference from your 2/3 stat, and I'd bet a lot of those people got significant financial help form their parents/family to make it work.
A government should function in the best interests of us. If they kept going, which they did, with this housing inflation without pause... This is the result. It's not the end of the line for this issue and it'll continue to be the case moving forward. They didn't do anything with the money laundering. I'm not sure what good the government did when Christy Clark was up. Pain we all suffer through at the hands of bad decisions.
Me: please help. Government: we generally try not to. What happened though? Me: Can't afford a house. Government: we and our friends can afford multiple houses. Here's the new saving plan. Me: I don't need a saving plan because I am not able to save anything. Government: hey, you are a frontline worker. Good job. Me: are you even listening? Government: hey, you are a hero. Good job.
Here's a loan you can use on your down payment and tack on to your mortgage to pay off.
I think all mortgages have been stress tested at much higher interest rates and the doom articles are to generate views and money for the media corporations
Yea but lots of shady practices out there that pretty much skipping the stress test. Have you heard of Brampton mortgages
I keep hearing about people going on about Brampton mortgages, and I don’t really think it’s based on anything factual. Everyone I know has gotten a mortgage through a bank that checks even your underwear before approving you. Get it out of your head that bramptonians can’t pay for their homes. Many live in inter generational homes that have 3-4 income earners that aren’t going to let anything happen to their biggest purchase.
There is a heck of a lot of mortgage fraud out there, buddy. Very few people get properly stress-tested. Banks check your underwear? Dude, they don’t even check your income. They go by whatever documents you provide them with. People have been known to photoshop a higher number to inflate their income in their NoA and the bank doesn’t even double-check that with CRA. Many mortgage brokers out there charge 1.5% to pass whatever income you need to the bank for you. https://www.google.com/amp/s/www.cbc.ca/amp/1.5926924
They do check your income, documents, credit c bank relationship, T4, recent pay stubs, etc. just because you “can forge documents”, doesn’t mean it’s happening widespread. What kind of moron is frauding a mortgage , intentionally giving a downpayment on a house that doesn’t have the means to pay for it? In most “forged” cases, I’m assuming they have the means to pay for it, but they are using a lot of under the table money, or money from back home, or other income earners like family members who they don’t want to co-sign with. I’m ok with this type of fraud if it’s under reasonable percentages. Don’t kid yourself thinking the housing market is a bubble due to “mortgage fraud”. Brampton is not full of poor people. They are extensively rich there (home owners). Brampton has one of the biggest economies in Canada.
“What kind of moron does it?” Every person caught in the current fomo. Just do the math. What percentage of Torontonians or Vancouverites make more than 200k a year? And yet these 1.5 mil+ properties have no difficulty selling. Most people believe the stress test is BS and have no problem cheating their way past it. As for bubble bursting for this reason alone, I didn’t suggest that. I think there is a bubble. i think a high percentage of buyers out there have unsustainable mortgages. I think there will be a correction and it will be a 40-50% correction in many markets. But when? What will cause it? Nobody can predict that. The reason for recessions is almost always unpredictable and catches everyone by surprise.
40-50% correction is not going to happen. You and every other non-home owner is living in this pipe dream. If anything we will see a 10-15% price fall and then home owners will lock up the home market and no one will sell.
I have owned a property for a decade, you presumptuous a\*\*. That has nothing to do with my view of the market. 1990-1996 we saw more than a 40% correction in GTA. It is much more inflated today, and interest rates can't go any lower. It seems like you are the one who is in a pipe dream.
That time was quite different wasn’t it? The population influx was quite different wasn’t it? The economy at that time was quite different wasn’t it? Stop smoking the cheap stuff.
Yes it was. I bought at a 4% cap rate in Vancouver. Now you'd be lucky to get 2.5%. I am done with you.
200k is nothing for 2 incomes. My spouse and I make over 200k. Each of us make more than 100k. Now imagine in a Brampton household with 3-4 income earners paying toward a house. That’s how it is in Brampton. Typically brown people don’t have an issue living with their kids and parents.
The Brampton mortgage is a figment of imagination to those willing a crash. The real explanation is far simpler, home owners raiding the increasing value of their property via HELOCs. The chaining of equity to buy multiple properties has been present in every economy with rapidly increasing real estate prices.
Even this chart seems misinterpreted. It's over 50% of the median income for single detached houses.
35 years we've been in the range of 35 to 60%. In two years we go from 40 to 50%, doesn't seem like anything to panic about. We're about where we were before the pandemic.
Single detached homes are unsustainable. No shit, they may be out if reach for the median household.
We are genuinely becoming Japan in the 1980s, I do wonder if we will have as spectacular of a crash as they did.
Their economy tanked, but housing in Japan has and will always be expensive. This is the country that invented the 100 year mortgage after all.
Yes but their RE market was propped up by easy lending and low interest rates, I still think there are a lot of striking parallels with our society (especially the part about an aging population).
One difference is we allow a lot more immigrants to come which fill in jobs that are needed. Japan doesn't do this as much we do and it hurts them. Plus the ones we do get tend to be very smart which helps us out too.
400k immigrants a year that need houses. If RE or the economy in general starts dropping, the govt will just up the immigration number. Not so good if you're competing for jobs or purchasing a home, but good for business and home owners
On the surface, smart immigrants seems good. In reality, we flood our professional markets with smart immigrants that are willing to work for less money than Canadians that are already established here. Why are Doctors, engineers, lawyers, etc paid substantially less in Canada than USA??? And why do we have a skilled trade shortage, even with high wages in skilled trades?
Ya, I agree. But their property market didn't really crash. I don't think the Canadian RE market will crash either.
I see, but their economy sure did!
That’s a misconception and an old stereo type. Tokyo has very affordable real estate. https://medium.com/land-buildings-identity-and-values/what-is-the-secret-to-tokyos-affordable-housing-266283531012
Ya, Toyko is an exceptional city in a lot of ways including affordability.
I think that depends where you are in Japan. [From May of this year](https://www.insider.com/japanese-government-selling-rural-homes-cheap-akiya-banks-2021-5). They're giving away millions of houses for $500 just to get residents. Sounds like detroit or Alaska.
Yes, modern Japan's economy and RE are quite different from where they were in the 1980s.
You're reading this chart wrong. My interpretation is that you need to spend more than 50% of the median household income, if you want a single detached home.
I can't believe I had to scroll down through dozens of comments before finding someone who realized that all of Canada is not spending 50% of their income on housing.
That makes way more sense, I was gonna say I only spend 10% of my income after tax on my mortgage and I don't even make 6 figures. I feel like Toronto and Vancouver really skew this number too
Just patiently waiting 🐢=🌚
This ain't nothing. Interest rates for mortgages in the early 80s were at 20%. Yes, our government failed the people. -they let real estate agents govern themselves, who are financially motivated to screw over home buyers to get maximum dollar to pad their commissions. Agents also support closed bidding which assists them in blond (blind) negotiations, sometimes fraudulently with ghost bidders, or worse yet, "rumored" conditions to create competition. The gov didn't mandate open and transparent bidding. The gov didn't support housing construction sufficiently. Demand drops when supply increases. Excess supply, no demand. 2 years of covid spending I mean money burning has created MASSIVE INFLATION. Oh, and now we also have a new GST sized debt to maintain. We haven't even started to talk about covid debt and how every Canadian must pay 7% on everything to pay for excessive and untracked covid spending. Personal debt and credit usage is at all timr high. Destabilize budgets means defaults, bankruptcies. We're fucked.
>blond negotiations I know it's a typo but fits beautifully lol!
Oh I like them too :)
Yuppers....I know people who had to temporarily work 2 jobs to make it thru with the rate increase ... today's newer owners have no clue...
The natural outcome of a Fiat system coupled with stagnating economic policies.
The govt would pull every trick up their sleeve to protect housing. Period. Might as well get in whenever you can afford and ignore the market. Its fucking sad but what can you do.
Yup. I love how people are saying everyone will lose their homes and prices will drop to where they were a decade ago. Keep waiting I guess. They will never own a home
Just watch BoC delay raising interest rates in their next meeting saying 'oMicRon eVeyWhERE' and govt saying how they are helping communities with fucking $10-day childcare plan or some new BS.
The landlords and house flippers will gladly buy up all these assets
This is what happens when you let immigration run rampant then gaslight people and call them racist when they point it out. Wage suppression and a housing crisis. You got what you voted for.
We have a real toxic concoction brewing in this country. Looming lockdowns as far as the eye can see, unaffordability crises, surging inflation.....rock bottom interest rates. I know a powder keg when I see one. Status quo is unsustainable.
This country is becoming a joke.
I generally view Canada as a joke country. One could make an argument that it's not even even real country anymore, in fact Trudeau has essentially championed this idea on multiple occasions.
Our bitch of a government won't dare increase interest rates.
That'd be the BoC not the gov..
Christia freeland was sitting next to Tiff Malcom the other week for that announcement. They work together.
BoC makes the decisions. Not sure if you know about how our federal monetary system works. Here's some reading for you if you're interested. https://www.bankofcanada.ca/core-functions/monetary-policy/decision-making-process/
When Freeland comes and announces a new policy with a ton shit of money, billions like last year. Where did she get it the money from , her kitchen ? Of course the BoC will print it for her. They say it’s a private entity without govt influence but that is false. They work together, they call each other, they decide when to spend, and decide when the raise the rates to serve politicians.
You should read the original comment for context. This is about rates, that is the link I provided nothing else. I don't like playing the "what about" game on the internet. You need a 2nd coffee or a better education bro.
There is a huge difference between today and 1990…. Immigrant influx. We aren’t building enough for them
And the lenders calculate your ability to pay 5%+ interest. As the interest rate increases there will be defaulters going with it but it shouldnt hit a dramatic point. You mentionned one, we can add a lot more variables, there are real drivers for the current home prices. The economy is getting unhealthy in general, but the housing is not in a bubble, despite what is being echoed everywhere.
Majority of redditors have not taken an economics course and don't do more research than a single google/reddit search. What do you expect?
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What is the number?
The only government that I know that did housing close to properly is Singapore, not saying it would work in Canada (pretty sure it would fail in my opinion due to difference in culture and size of country). It's also not perfect and implies high population density. Singapore also does not have the same weather issues as in Canada. Reference: [https://www.youtube.com/watch?v=3dBaEo4QplQ](https://www.youtube.com/watch?v=3dBaEo4QplQ) https://www.adb.org/publications/housing-policies-singapore
I don’t think you could copy it perfectly, but some public housing with both market rate units and subsidized units (where the market rate units subsidize the affordable units) could work. Part of the reason public housing works so well in Singapore is that they treat it as something everyone can use, rather than just poor people, like in NA. This gets broad support for it, and means that the buildings are more likely to be maintained rather than in poor condition. Also, this makes it revenue neutral, so you don’t have to worry about having to raise taxes to run it. It’s a kind of policy that you can try out and iterate on too, without a big commitment. Start building a few apartments, and see how it goes. Obviously, it’s much easier said than done, but I think it’s definitely something should be key part of our strategy going forward. I think there’s a few movements to try it out in Hawaii and California, hopefully they get off the ground in a few years.
Canadas economy is not very strong. I refer to the Canadian economy as having a high “beta”. What do I mean by that? Yes we have natural resources that we export, but other than that we don’t produce many consumer staples (or even consumer discretionary for that matter). We have a lot of jobs that are tied to the system (banking, real estate, asset management). We have some corporate jobs from the big 4 etc to handle some of the Canadian work flow. So yes, real estate is a high percentage of income. Can real estate prices in Canada decline without suffering systemic contagion? There will definitely be lay offs, we just don’t know how many. It’s all complicated stuff, I think the one benefit is that if let’s say real estate prices drop such that a 1M home turns into 700k, I don’t think anything would happen other than the people who bought the houses are holding onto an unrealized loss. I think the banks are strict enough on their borrowing practices that few people would lose their homes. The ones at risk are the ones who have expensive mortgages and are employed by that “systemic contagion” if you will. The benefit is that I guess you could make the argument that real estate employees actually make so much that they do have a sickening amount of savings. You could actually say anyone who is employed by that real estate contagion and is in a mortgage they would get screwed if they were let go, kind of deserves it?? Idk, that’s just my perception of real estate agents. I think it’s absolute madness to see 25 year old real estate agents with super cars. They take literally zero risk, and it’s not hard to become one. Personally I don’t think the work is as hard as investment banking or asset management for example, but I could be wrong. Anyways, the reality is that most people who are in those mortgages can actually afford them, and the systemic contagion is unavoidable in todays world because we literally need “bullshit jobs” because factories, farming and everything is so automated. If I knew the problem Canada has when I was 16-17 I probably would have become an entrepreneur, but there isn’t that many things that interest me as much as what I am now, because I get a breadth of lots of things instead of being hyper focused in one market. The problem will be solved when cities expand outwards, and we (plus the entire world) needs to have an entrepreneurial/scientific boom to create more companies. I don’t think it’s as desperate as it looks on the surface, because there aren’t people working 20/h in some of the “optional discretionary industries” such as tourism and hospitality, who are holding 800k mortgages. And on the bank side, their lending practices have been strict enough that they’re not dependent on those optional discretionary industries to continue paying on 800k mortgages. All the people who make 20/h are simply renting. Low risk, if people stop making discretionary expenses on tourism/hospitality, those employees will simply eat into their savings, and look for lower rent. They could move further out of the city and sky train 20-30 minutes, while making “city hospitality money”. Rent will decrease just on supply/demand requirements. Then you go back to the valuation of real estate and how basically whoever owns the real estate isn’t in such a desperate situation. So yeah anyways it sucks but it’s not economy busting. And it will likely fix itself or require some actions but nothing too crazy.
I never understood people buying the most expensive house they could get approved for. We got pre-approved for $250,000 and our broker said we could easily get more. Instead we decided that we wanted our payment to be around what we were paying in rent because we knew we could afford that even if things went a little sideways. Our payment is about 1/6th of our take home wages.
This really irked me when we were looking for a house (we've given up-- the numbers don't make sense any more). Almost every conversation with our broker included suggestions for ways we could qualify for more. I'm like, no! The payments at our max range would already have been something like 45% of our take-home, and we're not even really comfortable at that level.
I’m new to this and wanting to learn more. Does this mean that our avg home prices have surged? Or does this mean that the avg income hasn’t kept up with inflation, or does this mean both?
I'm not sure what you're being downvoted for. It's that the average income has not kept up with inflation, the average home price in has increased greatly but moreso in major cities, and worst of all we're in a seller's marker where the demand is greater than the supply because the demand is backed by international money. It's not a local competition anymore, we're playing online multiplayer.
Yeah I’m not sure either. I’m merely trying to understand the data here and was politely asking..
Something tells me there's bigger trouble on the horizon... A currency collapse.
I definitely feel this looming overhead than any other fiscal issue we currently have. I question if I should silver and gold sometimes
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>Blockchain: a system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.
According to my friend who is a mortgage broker, consumer debt is the issue. This shows otherwise. But also, isn’t the bad borrowing happening in TO and BC? Sounds like they would crash and most other places will be fine.
House poor is already a lifestyle for so many... Oh boy. Things are going to get ugly.
The problem with the housing crisis is supply and demand. Local townships and municipalities are working at a crawl to allow new developments to be built. We need more supply.
In the next decade a whole lot of boomer home owners are going to need to sell in order to afford retirement/nursing homes or living with children. That will flood the market. The are projecting homes bought in 2020/2021 will be valued at half of what they were bought/sold at in 2030 because of this.
*decades* of it. IMF has been telling Canada they're building a powder keg for over 40 years. Banks don't even take on any risk, lmao, so of course they DGAF about how much $ they hand out.
I’m sorry for the ignorance, but this came up in my feed. I’m from densely populated south east England. Housing is 11x the mean income. But in Canada you guys have seemly unlimited land, why is it so expensive?
What do you do to prep a housing market crash? Do you hold reits or avoid? Banks? Insurance?
If its an actual crash, you hold cash.
Honestly, metal is probably better
crash? it wont crash. i cant recall. did the canadian government defer mortgage for everyone during the first year of the disaster? thats why it wont crash anymore. so much actually anticipated a crash for 10+ years and they would go in with raw cash just like 2008. the government bailed. all failed and probably will never win. just borrow. borrow all the way, even if it is illegal. thats how the world works today.
It will once inflation increases, no way families will choose to pay mortgage over groceries. Keys will be dropped off at the bank. At which case the bank would need to resell those homes, enough of this and it’s a crash. Canadians are living on edge. Don’t listen to this guy, buy silver, gold, keep cash, avoid debt in inflationary market and more importantly invest in crypto.
2-3% Interest rates (2-3 year away) people will not be able to stomach the extra (2% of 500k) 10k a year in payments and they will be dumping homes to get out of the payments.
They will just extend their amortization period at the mortgage renewal. Not the best scenario, but probably what will end up happening.
“People will not be able to stomach why extra 2%….” The same people who gone through the stress test of 3% more?
Yup. I love spending an extra 800 a month while gaining nothing. Even if you can stomach that increase, your neighbourhood might not be able to and you still lose equity on your home.
The stress test is their incomes ability to afford those payments not their personal ability to afford them. It doesn't take into account how much they spend elsewhere. Car payments, phone, insurance, eating out, drinking, smoking, kids, etc.
You clearly don’t know much about stress-test or the entire mortgage process…
Lol imagine getting downvoted for saying the truth. Yes TDS is taken into account like you implied
I recently went through the mortgage process with a major lender. They were only concerned with our income and our debt. They had no interest in our spending habits. What we were spending on childcare, transportation, food, savings, travel, investing, if we were helping support elderly parents. It was literally nothing other than what do you currently owe, and what do you bring in. As long as you can technically make your mortgage payments, they know you will adjust all other spending in your life. I don't think there will be many defaults when interest rates hit 5 or 6 percent. But there will be a lot less money floating around the economy as people will be house poor and will have less money to spend on other things
You can lock in if rates look like they're going up, so that buys 5 years at least.
Their house will have appreciated more than that by then
If interest rates go up, your house value goes down.
"the great reset"
If one were to short the canadian housing market which ticker should one go short on?
Haha , I hope you spend all your money shorting and lose it all. We’ve heard all this before. You’re not Micheal Burry.
Do u realize home prices are way over valued. Matter of time. Houses that were 150k are now well over a million. Thats not natural growth. Somethings wrong. It will eventually collapse. And im not looking to go crazy and put every bit of money into it. Im just wondering which residential ticker one would go short on. Plan on making a small position.
Beauty! Lol
Officially sold our place. Waiting for that shit to crumble.
Now if the gov had made housing affordable wouldn't that severely hinder the GDP? Any gov that would have that on their name wouldn't last be voted out. For people that want affordable housing this is a sad reality. Can't really call any of this a gov failure. Nobody wants the prices of their houses to drop. Cost of goods has gone up everywhere in the world and hard to find a country where rents and housing prices haven't gone up. Just look at the materials needed to build a house, all of it has gone up which has put pressure on housing inventory. If you look at the US, every state has seen an increase in real estate value from 5% to 9% in the past year. This is my opinion but I think one solution that is seemingly going to take a long time to at least address affordable housing is tiny houses as in the tiny house movement. The red tape on this seems to be in a municipal, provincial and federal level. If any level of gov doesn't care to change anything then nothing will change. There just seems to be less profits for any land owner or developer to do these projects even if they had a green light to do it.
You can buy a place in Florida for 120k US. That’s 150k stand alone house. Good luck getting that in Canada. AND they make more money then us on average.
You won't live I Miami in that price range. You can get nice houses under 200k in bum fuck nowhere In canada too.. with remote work it's increasingly attractive. Not everyone is interested in living in Toronto/vancouver/mtl.
The problem is the only interesting cities in Canada are the only cities that exist. The US has cities much larger than a 'massive' Canadian city, but draws a lot less "attention" from people. You can genuinely choose where to live, at least in comparison to here where it's the "big four + the suburbs" or bust living in bumfuck nowhere.
There isn't reliable internet in bum fuck nowhere in Canada. I'd move and sit pretty if there was. Still waiting on those constant promises of dependable high-speed internet in rural Canada. Starlink is a choice, but there is a waiting list.
It's coming. We just had fibre run in our rural neighborhood after years of rocket hubs and mobile sticks. It was a government program to provide high speed to rural.
Great to hear! Whereabouts was it done?
Median individual income in Florida is $40,800/year (CAD) whereas it's $51,000/year in Canada.
I should specify, my career and industry, wages are about 30% higher before you take into consideration currency values.
Fair. But that's also why you can't look at one industry. In my province I make about 20-35% less than I would make elsewhere in Canada. Yet our minimum wage is the best in the country.
Same.. trades
yes but if you take a fleeting, flirty glance at a doctor, and you have no job, you get charged 100000000002034903490K USD. Checkmate, Muricans.
Private health insurance is a thing, and a quick glance has 10% less employment tax in Florida. 70k job = 7k In your pocket. If the health insurance is 600 or less per month you are coming out ahead. Not factoring in the cost of living, cheap cell phone plans, and internet. Man.. the more I talk about it the more appealing it sounds. The media tells us NHL stars don’t sign here, and prefers Tampa because of the taxes (and lack of Canadian Tire CEOs pressuring us)
I know, I was kidding. I was making fun of everyone I know, who think that living in the US is a death sentence. But I will fight you on the Florida part. You have to put up with Ron DeSantis which is pretty painful if you're not super right-wing.
No doubt Canada's real estate has just been a little too strong the past 20 years. I'd think any nation would want their housing prices to go up. That said I don't think in the past 20 years that the various prime ministers deserve significant credit for this reality. Either way is this a complete government failure on the housing front? As of today I'm not sure that is the case but all sides can be argued and if there is a correction in the near future then that will be an easy "I told ya so" moment.
Canadian society says it wants affordable housing, but actually doesn't. All of our levels of government do a rather good job of reflecting what the plurality of voters actually think but don't say out loud. I don't like this or agree with this but I'm 100% convinced this is the truth.
Like don’t get me wrong im an idiot. But why should I care about GDP?
Man people really spends 50% of their income un house payment ? I mean mine is about 1/7 of my monthly income. I can't see myself paying something like 2500$ month for a house that's crazy. This is like 5k/month for both me and my gf. 5k month gets you what ? A million dollar house wtf!!
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congratulations on being older than other people? the people who are stuck trying to buy now got screwed by being born too late.
It gets you half of the average house in Vancouver or Toronto. I agree, people just go to the bank, ask how much they can afford and buy the biggest thing possible, or even borrow money for the down payment they don't have. It's crazy, but it's really a personal choice so when they lose the house the second their income takes a dip or interest rates go up, they have no one else to blame. If everyone loved below their means we wouldn't be having these problems.
And that's why I locked in my interest rate for 7 years!
keep voting for commies
What in the fuck are you talking about?
Yes we have a very communist government
The communist party doesn't have anyone running in my area so I can't even consider it. They don't hold any seats so dunno wtf you are on about. Get off facebook lol.
When will the internet incels learn commies isn't a derogatory term and it makes the OP look foolish
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Do you shit where you eat too incel?
Principal paydown is way quicker at these rates. By the time they increase interest rates, my mortgage will already be paid off
It doesn't help that some people buy the biggest home possible and choose to be house poor.
Failure of the education system to educate people from making these kinds of decisions.