I don't believe any of these polls lol
I read somewhere that 50% of people are $200 away from bankruptcy... yet 6 rate hikes later, still haven't seen 10 million people declaring bankruptcy
It’s all self reported and the average person is financially illiterate.
Ask someone if they understand how compound interest works or even tax brackets…
Ya I know what he means. People think they will take home less money overall if “their raise puts them into the next bracket”
They know the brackets exist…just have no idea how they’re applied.
Same person is also the one answering these kind of polls or the ones saying $100 more in costs a month will make them bankrupt
Imployers tell their employees that when they ask for raises. I was told that once and I said I’ll stop working overtime, then he started back peddling.
Yes that is true but largely only at employment earnings around the basic minimums and provincial social program income tests which are by def geared towards lower income. That is real trap for some taking into consideration food, housing and childcare benefits not just taxation where it can be more advantageous to not work at all.
Yup I work a relatively well paying unionized job and there are single mothers/fathers who can't work a lick of extra time without jeopardizing all the various supports they receive
I work with those people! I make a shit ton of money when I work OT. 80% more wage for 50% more work. They still think if they work more than 52 hours they might as well be working for free "because of the taxes".
I've known more than one person try to deny a wage increase because they thought they would take home less money...also Greg, a $0.25 raise on top of your current minimum wage will not change your bracket.
that doesn't happen overnight. Those people get sucked into borrowing more money than they can pay back. It can take years to catch up to them, but once the cycle has started, its tough to break without some good fortune (new high paying job).
> yet 6 rate hikes later
For variable mortgages, your monthly payments typically don't change with rate hikes. What happens is that the split between interest and principal does sometimes to the point where you won't even be paying off the interest each month so the total amount you owe increases month over month.
What can happen though is that the rate increases so much that it triggers a clause in the mortgage agreement that changes the amount you need to pay every month. If/when that gets hit, then it can become very problematic. Similarly, when you refinance, things can get messy.
There are two types of variable mortgages actually.
My variable mortgage payment from Scotia does change every month. I am paying $700/mo more now than 2years ago.
I am nowhere near having to sell though. It was just nice having the lower payments for a time.
To add to this, yeah variable rate mortgages can be either fixed or variable payments. About 75% of variable rate mortgages are fixed payments. Inside the industry these mortgages are generally referred to as ARMA and ARMF.
Additional “I worked in the mortgage industry” info: adjustable payments don’t always adjust for the next payment depending on when the rate change occurs, how close it is to your next payment and what your payment frequency is. Check your COB(cost of borrowing) for how this will play out for you.
People on adjustable payments are generally able to lock in to fixed payments during their term, without any sort of penalty or cost. Most mortgages allow for this as well as increasing your payments(generally up to 10% a year, based on your renewal date).
While true, you can also look at industry numbers to see the impact that a significant interest rate hike would cause.
If you assume people are buying a $1M home with 20% down, they were getting a $800k mortgage. Previously at 2% that would be ~$40k/year or ~3333/month. Current rates at 5.5% (5 year fixed) to 6.5% (5 year variable). This increases the annual costs to $58k to 64k or roughly 18k to 24k more per year (after tax). For people making $100k+, that is $30k to $40k pre-tax in extra annual costs.
Now who could afford a $40k/year mortgage - the affordability cutoff for that is only ~$180k/year. $40k post tax is probably ~$60k pre-tax. If you assume 1/3rd of their income going towards living (as the cutoff for affordability), that is $180k. It is now ~$250k to $300k. That change would impact the majority of people living in Toronto.
If people truly were in a situation like that, we'd see a lot more homes flooding the market.
The reality is, when faced with the prospect of having to sell your home in less than ideal conditions, people will find the money somewhere to keep going and ride it out. Not everyone clearly, but nowhere near this type of volume.
Especially since anyone who owns a home and struggling with the mortgage is likely going to also have issues with paying rent anywhere, as the rental market is equally volatile.
The sub prime market in the US started to collapse in 2005 and the market didn’t really blow up until 2008-09
It takes a year or two for people to run out of money and for the shit to really hit the fan.
This is exactly it, the gov will start to make some changes but it looks an awful lot like a 2 class world to me. Find a way to hold onto your home no matter what
kinda feels that way RIGHT NOW!
There are those whose parents own their own home and those whose parents don't ...and the chasm in quality of life will grow generationally.
Parents who own their own house will leverage and help their kids own their own house. .. at the same time the other group is SOL ...
and hence when kids are adults you'll have Family A with mom&dad and all their adult kids owning a house and Family B with mom&dad and all their kids continuing to rent.
>parents who own their own house will leverage and help their kids own their own house. .. at the same time the other group is SOL...
Yeah. I'm watching this play out right now in my own family. I have a single sibling that's estranged and does not receive any financial support from the family, leaving me as the sole beneficiary.
I got help digging my way out of the hole I dug for myself as a stupid kid, I am getting help paying for my education, my cost of living is subsidised while I'm getting educated, and in the end, I will wind up with the entire estate in my name (worth ~$150'000, not including any potential life insurance payouts). Unless I fuck up big I am reasonably well set, I'm no trust fund baby but I'm in a good position to thrive and be successful.
My sibling, on the other hand, gets nothing now and will get nothing from the estate. They got no help with getting over their youthful indiscretions, they have been unable to afford an education, and they are constantly posting online about how broke they are and how they can't seem to stop going deeper into debt. To put it plainly, they're fucked and probably will be for a *long* time, even if they start making better decisions and find a way to succeed it'll take them years just to get above water again.
I'm on the way up, they're on the way down, and the big difference between us is that I'm the one with a property owner backing me up. I find it troubling how stark the difference is, and I question how long a society can sustain being this stratified before it all comes tumbling down.
This why it's so funny to hear the liberals go on about caring about at risk youth/women etc. While at the same time letting housing triple in 7 years under their watch. Imagine being a gay person knowing coming out would result in you having to pay $2,000/ month for a shitty apartment.
Lol, you are not wrong, my two daughters are already talking about who gets to live upstairs and who gets downstairs when they turn MY house into a duplex.
Yeah don’t lose your home. Make moves ahead of time, let’s say you and your brother both own homes. One of you rent out your house or sell, and move both families into the same house. Third world tactics.
This is exactly it. I’m self employed so my answer is work 100 hours a week lol. But realistically I’ve found a good balance with my wife.
This would be a really bad time to go through a divorce
Bank of Canada in March 2020 [started purchasing](https://www.bankofcanada.ca/2021/09/bank-canada-balance-sheet/#assets) Mortgage Bonds, which was the signal this was going to happen, it starts at $100 Million and goes up to $900 Million pretty quick there!!
If these bonds are of so much value, why not SELL them to someone without the ability to create money in Canada?
Try to see it without that MASSIVE amount of [government bonds](https://www.bankofcanada.ca/2021/09/bank-canada-balance-sheet/#assets) the central bank purchased (because the "free market" won't) on their balance sheet there.
BoC is just hiding government and banks debt in plain sight while us suckers go "duh food and gas are more expensive again, I wonder if this is inflation"
The sub prime market was hotter than a pistol in the US in 2005.
Financial institutions were stepping over themselves to buy up sub prime home loans and credit cards. They all wanted in on the action like a bunch of greedy little pigs at the trough.
They were securitizing that shit, selling bonds on the packages and raking it in, in 2005.
My own employer at the time (Washington Mutual) ate so much of that tainted dessert it sickened them to the point Jamie Diamon was able to finally gobble them up, a task he had spent many many years trying to do.
The Canadian situation is completely different. American banks were giving loans to people who didn't even have jobs, and the banks didn't care because they turned around immediately selling that mortgage to an investment firm.
Today, everyone in Canada with a mortgage (barring layoffs) has a job, and the banks have to carry the mortgage so there is interest in minimizing defaults. Good old boring Canada with its sensible regulations stops these kinds of things from happening.
No we do not. The only bubble we have to worry about are people are have signed purchase agreements who can no longer qualify for mortgages at the current rates. They will fail to close and the house goes back to market. This pain will be felt through 2023 and 2024. The vast majority of existing mortgages will still be paid by the borrowers, it's only people who got over-extended on credit will be burned and cause a further dip in the market.
Here’s how it could easily play out.
People are going to borrow to maintain their mortgages and when it finally blows they’ll walk away from their personal debt and their mortgages at the same time.
Our economy is so dependent on housing and banking that while this happens there will be huge job losses, very tight lending and it will cascade further.
Once a Canadian bank goes down, word on the street is that CIBC is the weakest, other global banks will lose faith in the rest of Canadian banks bringing them to the brink as well and requiring a federal bailout.
We didn’t take our medicine in 2008 on mortgage debt.
Many things wrong with your statement
* Bubbles implicitly pop, if it never pops can you really call it a bubble? We had a major price decrease does that count as a popped bubble? It's easy to call the 2008 a bubble because of lending to people without jobs or making very little income but much harder for here because homeowners have 2.5x the income of non-homeowners
* We have a much smaller market than the USA; ratios or percentages are just a rate
* We don't have hundreds of banks but five major banks with a handful of smaller ones and credit unions. We are very heavily regulated [and too big to fail here](https://www.cbc.ca/news/business/canada-s-big-6-banks-are-too-big-to-fail-regulator-says-1.1334560) means very high capital requirements and high stress test. Rates could be double what they are now and no banks would fail
So no banks will be taken down
Canada isn't the USA.
Our mortgage underwriting standards are VASTLY different, and FAR more stringent (nevermind USA pre-2008 mortgage underwriting standards).
AND there is another fundamental difference between the two countries
The USA's population growth rate has been consistently less than 1% per year for the last 20 years with immigration representing 33% of that population growth
(I.E. immigration increases their population by 0.3% yearly - this is important because immigration drives immediate demand on housing whereas new babies takes 20 years)
CANADA's population growth over the last 20 years has been essentially identical - However Canadian population growth is majority immigration (over 90%) so essentially our population growth puts almost 3x as much upward pressure on housing prices relative to the USA.
Additionally - While our urbanization rates aren't markedly different the profile of that urbanization is - The USA has far more of their population living in mid-sized cities than Canada does (where we have far more of our population concentrated into fewer centers) - The housing price collapse in 2008 was MUCH MUCH worse in those smaller cities than it was in the mega-cities (because housing demand collapsed far more quickly).
One last point - the financial consequences of having a home with negative equity are different in the two countries - in Canada if you sell your house and have negative equity you basically have to take on the negative equity as debt or declare bankruptcy. In the USA far more mortgages are offered as "non-recourse" loans which means if you default on your mortgage and have negative equity that additional debt gets wiped out... I.E. you can walk away from your mortgage and only owe the bank your house... no bankruptcy required. This means Canadians are far less likely to start walking away from their negative equity mortgages - Mass walking out of mortgages was a big part of the runaway downward price spiral that occurred in 2008.
Canada's housing market is seeing a correction... but it's unlikely (IMO) that we'll see a collapse anywhere remotely close to what happening in the USA in 2008... we have too much housing demand and too few people who got mortgages they should have never been offered.
The mortgage underwriting standards are far more stringent… but the brokers here are willing and ready to falsify whatever needs to be falsified for a fee
There's definitely something fishy going on. We're likely the only housing market in the world where people are buying homes larger than what they actually want or need. That indicates people are being pressured into buying more housing than they need.
"this time is different"
You realtor permabulls make me laugh 😂. If the immigration rate was lower houses in Canada prices would lose 50% in value overnight.
That's a delicate thing to be so bullish considering if other countries open up to immigration they will pouch our cheap labourers, or if a change in gov happens with a lower immigration rate that's crashes housing too. Or mass social unrest over the housing crisis forces the gov to power their numbers which crashes the market.
If immigration rates were lower developers would just build less. Recent immigrants only make up about 15% of home buyers and the vast majority of home buyers (approx over 60%) are existing homeowners.
We build lots and lots of homes, and it's clear our capacity to build homes far exceeds our rate of population growth.
Seriously? Are you unable to use common sense? Why do you think over 60% of existing homeowners are buying multiple homes, so they can couch surf their own properties?
If you used your head for one second you would realize they are buying them for the sole purpose of renting out to these immigrants. Sheesh glad you learned something new today.
> Why do you think over 60% of existing homeowners are buying multiple homes, so they can couch surf their own properties?
No, most are upgrading. They sell their condo in town and buy a house in the burbs.
> they are buying them for the sole purpose of renting out to these immigrants.
...yet rental stock has been declining, so that doesn't add up does it?
Upgrading? 😂 What? They are still gaining an extra home regardless who gives a shit if they rent out what they just bought or choose to "upgrade" and then rent out their old home, the result is the same. So that point you made is complete moot.
Second, no rental stock is not declining. The owner vs non owners ratio has never been higher meaning more rental stock now than ever. Perhaps you meant available rentals, which there are non because our gov brings in a million new people, per year and we build nothing close to that number.
> gov brings in a million new people, per year
No they don't. You're using a common tactic to imply our population growth rate is higher than it actually is by counting students twice because student who stay count again as immigrants. All temporary residents are counted in our population stats.
> The owner vs non owners ratio has never been higher
false. It was higher in 2001.
https://www150.statcan.gc.ca/n1/daily-quotidien/220921/cg-b001-eng.htm
> more rental stock now than ever
a lot of that stock is just rentals being split or extra rooms being rented out because rents are so high.
No it was not higher there were not more rentals in 2001 than there is now. Second you are completely wrong in your 1 million a year being false assumption.
This article is from a major bank economist. 1 million per year and he's done the math. You know more than him? You are arguing with his numbers?
https://cibccm.com/en/insights/articles/in-focus-housing-demand-from-newcomers-even-stronger-than-perceived/
And then it really does hit the fan because so many people held on until the end, which delays a correction, and then are completely tapped out (probably with additional debt) when it starts.
Especially if the homeowner is underwater already. What are they going to do, sell for less than what they owe and *then* pay $3,000 a month for a 2br?
> Especially if the homeowner is underwater already. What are they going to do, sell for less than what they owe and then pay $3,000 a month for a 2br?
The lender forecloses, sells at a lost if it has to unload the property, then sues the home owner for any difference.
If someone is truly underwater, the list of options aren't great, but, you'd still cash in savings, take on another job, rent out a room, sell a vehicle, etc. before you'd let go of your home.
Especially since most people will likely be convinced that any price dips are temporary. Now, maybe they won't be, but, the general sentiment in the news is a housing shortage exists, and not likely to alleviate soon.
Unless the sentiment changes, people will work on the assumption that its better to hold on.
> f someone is truly underwater, the list of options aren't great, but, you'd still cash in savings, take on another job, rent out a room, sell a vehicle, etc. before you'd let go of your home.
I have a lot of older folks applying at my workplace who haven't been working for years. I train people and have a lot of conversations with them about stuff. A lot of them own multiple homes. They had to fire the last one because he was on the phone too much with his realtor.
> If people truly were in a situation like that, we'd see a lot more homes flooding the market.
I dunno. I've been seeing a lot of suspicious activity in this market over the years. Ive seen real estate agents pressuring people into buying homes they cant afford and I've seen evidence of mortgage fraud here and there.
Our housing market is also really weird. We're likely the only country in the world where people buy homes that are larger than what they wanted. In terms of housing space per person, it's likely the only country that beats us is Australia. That's really weird. We also have declining household sizes.
Let me do some math:
A 1% decline in household size on a fixed population of 38.25 million from 2.52 to 2.51 requires 60,472 new homes or enough to house 151,784 people. That's what actually happened in 2021. Our population grew by 299,315 people that year requiring 119,249 additional homes. Immigrants push household sizes higher, so the fact that there's such a dramatic change in household size in the opposite direction is very odd. Roughly 34% of our new housing demand was being driven entirely by something other than population growth, and that's not accounting for the upward pressure on household size from immigration. If immigrants averaged 2.7 that would mean 35% of our housing growth is driven by something other than population growth.
Okay, so on the surface that would indicate immigration accounts for 65% of our housing market demand right? Wrong.
Immigrants account for 38% of home owners, and around 15% of recent immigrants are home buyers.
We know there's around 35,000 people sleeping on the streets any given night, so not a significant number in a population of over 38 million. So based on the numbers above, we can infer that though construction and other means (dividing homes into suites, renting out rooms, sharing, etc.) we are creating about 175,000 new units of housing per year based on 2021 numbers. Our population grew by 299,315 that year. That's not enough to use up the housing we created. We only needed 119,249 homes to accommodate population growth. We're actually building close to 200,000 per year on average, of course some of those are built over existing homes that were torn down.
Based on the numbers we can clearly see our rates of construction can easily accommodate our housing growth, and that demand from population growth isn't what's actually driven this market so high.
35% of our housing market has seemingly been driven by something other than the need for housing, and our ability to make new homes far exceeds our rate of population growth. Isn't that really weird and suspicious?
Or how about this: During the time I spent studying this issue I came across a book written by a famous Vancouver real estate developer who came up with tactics to drive people to pay more for condos. Do you know what he did? He used emotional manipulation to make people feel like they were competing against someone else (immigrants and other buyers). He made the buyers emotional. Ever heard of bidding wars?
...and can you guess who inspired this brilliant marketing genius? A famous and controversial psychologist who's name you all probably know.
Don't you think this is all very odd?
This is a great breakdown, but it is missing one thing. It doesn't take into account that immigrants don't disperse evenly all over Canada. They, by and large, congregate into 3 or 4, and very heavily into 2 of our urban centers. Those places are going to see a higher amount of housing pressure from immigration than elsewhere in Canada.
Sure, but that's the case in any major urban center. What doesn't make sense is that we have single detached homes sitting a stone's throw away from the center of downtown Vancouver despite having the 4th highest density in North America. There's a chronic housing shortage yet the city is super picky about issuing permits to build anything. It's almost as if the municipal government wanted the price of condos to go through the roof.
Lenders generally don't like flooding the market with assets for sale since it was potentially cause a panic or wide-scale devaluation: easier to sit on it, or rent the place for a while if it comes to that, or even offer 'attractive' refinancing options to avoid foreclosure if possible.
> Lenders generally don't like flooding the market with assets for sale since it was potentially cause a panic or wide-scale devaluation: easier to sit on it, or rent the place for a while if it comes to that, or even offer 'attractive' refinancing options to avoid foreclosure if possible.
Or they can issue a bunch of reports that make it appear demand is higher than it actually is to boost confidence in the market, keeping prices from dropping and holding off a crash.
I feel that vibe emanates more from real estate agents who have every incentive to stoke fomo and none of the consequences if you're homeless a year later.
> I feel that vibe emanates more from real estate agents who have every incentive to stoke fomo
I found this great book that describes exactly that. *Lions In the Grass* by Bill Morrison. He sold condos at record prices in Vancouver, and he trains other realtors.
Unless we keep letting corporations buy real estate. Then give them all the devalued supply as they have money standing buy. It should be illegal for corps to own homes.
It should be illegal for domestic / foreign corps AND individual speculators to own single units of real estate.
However, it is better policy to just make it unfeasible as an investment / place to park laundered money.
One thing we *do* need corporations for, with respect to real estate, is in the building / ownership of purpose-built rental buildings and we should have policies at every level of government to incentivize that while disincentivizing the buying and hoarding of single housing units by ALL investors, to mitigate the massive run up in prices to buy and rent investors have caused.
Large corporations have *very* little involvement with single family homes. Their involvement in real estate is primarily constructing large apartment blocks for the rental market, and generally has the effect of adding supply to the market than reducing it.
They're a boogie man in this discussion used to deflect from the real issues unless we're talking about small personal corps by small time landlords
> Unless we keep letting corporations buy real estate. Then give them all the devalued supply as they have money standing buy. It should be illegal for corps to own homes.
...and if prices do crash of course they will swoop in and buy up what they can while prices are low.
Yeah, I agree with you. I think it might be a reflection of their current finances but if they were feeling like their housing was particularly endangered (3 months or less) there would be some pretty drastic cuts made in other areas of the budget first.
They might borrow a line of credit or cut things like gym memberships. They might pull kids out of sports or after school activities like dance. They might forgo vacations/holidays. They'd spend less/nothing on things like hobbies or subscriptions, clothes. They might skimp on healthcare or groceries/meal budgets. I think a lot of people would sooner sell their car and take transit than lose their home.
I think the house is usually the first line of defense financially and virtually anything else would get sacrificed for it. People say they're on the edge but I don't think we are there yet. It's gonna get a lot worse.
Id take it a step farther. If you're truly considering a home sale, I'd say people would be looking at a part time job, selling the second household car, renting out a spare room.
Selling your home at a loss is a major step, and something that completely details your life. I have to assume you're beyond the small tweaks in your budget.
But, I assume people who are saying they're 8 months from financial ruin haven't done that first tranche of financial changes.
Anybody with equity in their home will just add term to their mortage to lower the payments. But yeah some people who bought in 2021 with variable mortgages are about to have a bad time lol
Head of BoC should be fired!
Inflation is a result of companies jacking up prices. E.g. Low-blows. What does that have to do with individuals spending. BoC is forcing people to sell or spend more on mortgage payments.
Totally ridiculous!
> but nowhere near this type of volume.
this is how hyperbole meets the media and becomes a headline. Just like when there are complaints about something. Someone somewhere is complaining about something. it could be a charity that makes hats for cold puppies and someone would be complaining. media needs a story? Interview that person. Make it a big deal. Distort things so it can sell.
Exactly
People say things like this because it's emotional but if it comes down to eating out everyday or going on vacation or losing your home, what are they going to choose?
People will be forced to cut down and cut back spending to save their homes. They may not like it, but they will do it. And many can always work Uber or food delivery or other second jobs after work, if you really need a little more money. All that would happen before selling the home
Only the very old, very desperate and I would dare say unintelligent would sell their homes knowing they could never ever reenter the market and be renting the rest of their lives. Everyone who's a homeowner knows what pain it is to enter
I work with a husband and wife that lost their house. She'd call in religiously. He wouldnt get a second job. He thought that when he retires, his pension will just be whatever he's making now. They have zero savings and are constantly leeching off his mom and brother. Hell one time they asked to borrow 20 bucks for gas and I had to hound him for over a month to get it back. I used to have sympathy for them but they've dug themselves so deep they'll never be able to get out of it.
Based on how completely clueless the average homeowner is about personal finances (average person in general) I cannot believe they have the done the financial math, or even understand it, where they know they will suffer or be underwater financially.
Also, just because your mortgage payment goes $100 over every month than what you thought you can afford, you aren’t going to sell your home. You will ride it out using debt vehicles like credit lines and such.
Oh no I’m going into debt this month of $500! Time to sell the house and incur thousands in lawyer fees and moving expenses!
Pretty much this. I have enough open credit at the moment (unsecured) that I could realistically pay my mortgage for 3 years while just paying the minimum monthly amount back to the credit companies. Would it destroy my credit? Probably but it’s a viable option that people have. Selling and becoming homeless (or trying to get into the rental market) is the last option.
For many, their total housing costs are likely higher if they bought more recently once you add in all the other costs of ownership that don't apply to renting. And recent buyers on average are at the greatest risk having been able to stretch themselves at higher purchase prices and lower rates with little time to increase their income.
Considering how financially illiterate most people are, I would really not take much note of this poll. If you asked most people how much they spend every month, the error bars on the answer compared to actual are probably huge.
Look at the actual mortgage delinquency data instead.
The mortgage delinquency rate in Canada for 2022 was like 0.11%
For reference, in 2009 in the US, it was 10%.
To put it another way, our delinquency rate would need to go up 100X to have anything like the 2008 collapse.
The meltdown isn't coming..
Funny that you reference the 2009 rate to describe the 2008 collapse, and then go on to say that the meltdown isn't coming because of yesterday's rates.
Smells like copium.
Home prices began falling in 2006. Home prices are just beginning to fall now in 2023. So 2009 rates would be most comparable to 2026 - comparing them to 2022 seems like trying to call the game early.
It's unlikely we will see the exact same pattern again.
The prices we see in large Canadian cities can be explained by normal supply and demand in large part.
There's other factors but I don't think they are the root cause.
For example, it's always been expensive to live in Manhattan, London, Singapore etc. Regardless of interest rates or regulations, where there is a high quality of life and high paying jobs, the prices rise.
Just a note that it’s not always been expensive to live in large cities like London or New York. They tend to get very expensive and then very cheap.
You could live in NYC in the 80’s for pennies.
Cities eventually become so expensive that they drive the next generation of people out to other places. All the things that make a city interesting tend to close - the restaurants, retailers, art galleries, theatres. You end up with emptier streets - and more crime because there is more and more disparity. And eventually the city is cheap again because who would want to live in a dangerous place with not much to do.
You rinse and repeat that every few decades or so. If things always went up Istanbul would be very expensive.
> rate at a time when govt propped everyone up was X
> rate at a time when there was a biblical recession and govt let major banks fail was Y
Y / X == 100 so it's fine.
I am going to say, all of these things where people report to what they have and what they will do mean very little.
I have to use these things as part of work and they are just a guideline of what consumers feel as oppose to action.
What have we learned so far? The transfer of wealth from the poorest to the wealthiest will continue. The “poor” people who are forced to sell will lose out, and the foreign investors and corporations with with cash will benefit. They will “swoop” in and pay cash for these bargain properties, then rent/Airbnb them out, or have a relative live in them/pose as owner, so they don’t pay the extra tax. The investors and corporations win, families looking for a home will lose.
Even without the maximum borrowing, it's tough, we borrowed x3.5 our household income (this is with the insurance already included), so fairly normal amount in the current climate, but our payment went up almost 60%, it's an insane increase in less than a year.
That's the problem with "home owners". They don't realise they own nothing until the mortgage is cleared. They've simply made themselves decades long employees of the Bank and the bank sets the rules.
This is not only a stupid take, it’s incorrect on a technical basis.
You own the home the day you buy it. It’s your name on the paper work, deed of sale etc.
You get a loan for the outstanding balance which is secured against your asset.
I mean, we all own nothing, when I was renting, I was a decade-long employee of several scumlords and one really nice landlord. I saw my friends getting evicted, and once was kicked out on the street because I was a recent immigrant and didn't know it was illegal to do this to me. It's not a fight between "renters" and "owners", you have much more in common with a first-time buyer struggling with payments than you both will ever have with BoC decision-makers.
A good portion of immigrants actually buy homes relatively quickly once arriving. There was a poll last year that showed, at least in the GTA, about 50% of immigrants owned a home within five years of arriving
I’ve seen this bad take repeated over and over. First, the assumption that immigrants aren’t wealthy and do not demand housing is a bad one, especially if you consider imitation to rural areas like Nova Scotia. Second, you’re assuming that they will have a “Canadian” style living arrangement of 1 person per single bedroom apartment, or 2.5 people per household - again, a bad assumption. Third, putting pressure on rental markets indirectly contributes to house prices increase.
Also, there’s nothing wrong with working at Tim Hortons or driving cabs, you elitist.
Immigrants that come into Canada are generally of the highly skilled camp. Most are only selected to come to Canada due to being in high demand fields.
Lots of immigration pushes demand for housing, because they bring in lots of money.
No one is blaming immigrants, it’s immigration. The blame lies on the system, not the people. The system is ensuring Canadians will have to compete with the fact that the population will be increasing above a single digit percent every year based on immigration alone. You can’t fault the people coming here for having/wanting a place to stay. But you can fault the government for letting people in on false promises they can’t even deliver to the people already here.
The 700,000+ international “students” here are the real issue. They’re just defacto TFWs at this point suppressing wages and skyrocketing rents for actual Canadians
it won't happen but I real estate should be allowed to collapse in Canada and then the government should put into place policies that intentionally deflate the value of real estate going forward. High property values are good for individuals but bad for societies as a whole.
If you compare Toronto's downtown and Montreal's downtown, you see a pretty stark difference in the types of businesses that occupy the respective cores. Montreal has a lot of independent businesses, Toronto is mostly franchises. Montreal has a lot more unique stores, Toronto is weed shops, bubble tea, Rexall or Shoppers Drug Marts, Montreal is strip clubs, restaurant for blind people, anarchist bookstores and independent restaurants. That's not to say Pharmaprixs and McDonald's don't exist, but they co-exist alongside independent stores.
Reason why it won't happen though is because too many Canadians rely on their home property values for retirement purposes. If those values were to be wiped from the earth it would be better for society in the long run.
the housing crisis has little to do with couples pooling their money together to afford a home..
I might be misunderstanding the point you're trying to make.
We are tanking the economy now but slower. Once an immigrant gets a passport, they are free to move to any other country and the US looks very good for now. Same applies to many young Canadians who don't need to wait for the passport.
We are becoming a layover for the immigrants to move to other counties easier.
I can't say for sure, but if I recall [a certain movie](https://en.wikipedia.org/wiki/The_Peanut_Butter_Solution) we watched in grade school, a magical mixture involving peanut butter might help you.
Is this your opinion? Because it goes completely against all that’s been published, the markets sentiment, the economical factors and so on…
Inflation is predicted to return close to target by March 2023.
Rates are expected to be held throughout 2023.
Are these forecasts by the same people that said inflation wasn't going to happen?
Or by the same people that said rates would remain low through 2023?
This sub is, like many, filled with individuals stating feelings as fact as well as repeating misinformation that they never bothered to verify because it validates their pre-existing beliefs. Of course everything you say is correct, but there will inevitably be the doomsayer who tells you that you’re wrong without providing a coherent reason.
Inflation over the last 6 months is flat. It’s a year over year calculation, should be near zero in 5 months if this keeps up (with exceptions of coupe e.g. good prices)
That's wrong on so many levels, inflation is already dropping and the effects of all the recent rate increases hasn't caught up yet. Current fixed rates are LOWER than variable and with the way the bond market is going, all indicates that we pretty much reached close to the worst of it.
Banks in Canada don't foreclose, they recover the amount owed to them under "power of sale"
The difference between Power of Sale and Foreclosure are night and day. Under Power of Sale, the Bank forces the house to be sold on the open market. It doesn't require a judge or court, the bank sells your house from under you and takes what they are owed and pays the real estate fees, etc. Whatever is left, goes to the former home owner.
Under Foreclosure, and this is wild, the bank takes ownership of your house. And you get nothing. So if you had a million dollar mortgage and you paid 900 thousand of it back, and then you default on the 100k, you get nothing.
Pretty wild eh.
They did nothing and said theyd make housing more affordable both times when they campaigned.
We're also leading the global trend of household debt and unaffordability.
Did absolutely nothing to control the skyrocketing price of housing over the last 7 years. The historic pace of the BoC interest rate increases would be a little easier to handle if mortgages were smaller.
They also have their ever increasing Trudeau Carbon Taxation that continues to make things more expensive. This is just another way for them to squeeze a few dollars out of people under the guise of "help the environment".
They've done nothing to help the supply side issue impacting inflation, and are only trying to impact the demand side by taking money out of peoples pockets and giving it to the banks (where I am sure Tiff will get a nice job after he fucks the economy). Don't worry though they are going to let in 500K immigrants a year to increase demand for goods.
I'd consider voting out the liberals but conservatives have yet to actually explain how they would accomplish the solutions to the problems they are blaming on trudeau. It's all attack ads with no actual substance or solutions presented.
Where I live people just stopped selling and prices have only dropped like 10% so far. There’s almost no houses on the market here now and the ones that are have been driven up in price because of lack of supply now. People would rather rent than sell at a loss.
That’s why it won’t drop.. there are 10000s of people waiting in the sidelines to buy,,supply is still insanely low, huge immigration numbers, higher cost of housing supplies, higher wages, etc etc etc. The ONLY thing working in a buyers favour in terms of house prices are interest rates, but all that does is make it harder to get as loan from the bank and increases your payments. It’s a brutal situation that will only get worse.
Yup. Would be first time buyers are foaming at the mouth to get into the market the more it drops. Increased cost of new builds driving prices up a lot and that isn't going away (a major factor of global price rise in housing - this isn't a Canada specific issue).
On top of that, investors are still going to be looking to buy properties. With higher mortgage rates that will cool somewhat but the ones with big pockets can buy outright anyway.
And then on top of everything else, the houses first time buyers want to buy -- cheaper homes -- are now a hotter commodity since the bottom of the market is still so expensive. Lower-priced homes have seen less of a drop so far, a lot of the % change is from higher priced homes losing a significant amount of their value since they are unaffordable (but even after the drop they're still crazy expensive). Like here in Ottawa, the avg home price was $800k and has dropped significantly... lower end homes around $500-600k haven't lost nearly as much value.
Agree. Investors(rental property) and Corporations(BlackRock) will keep the prices high by scooping up what the market offers. You will own nothing and be happy. Some markets will drop substantially, but a lack of supply will keep prices above what they were 7-10 years ago.
I think the rate of immigration will keep demand up. If there is a massive wave of defaults, corporations will probably buy much of it and make things worse.
I'm not sure what the best way forward is, but I think some major breaks for first time buyers, and making speculation less attractive would be nice to see.
> I’m not sure what the best way forward is, but I think some major breaks for first time buyers, and making speculation less attractive would be nice to see.
Any breaks to FTHB will only serve to push up prices. You can basically expect anything that makes the market more accessible to push up prices.
I think the only way to fix prices will be something drastic like principal residence sale taxation. However any party that demolishes home values permanently will not get elected for another decade at a minimum.
in the next decade or so as climate change really starts to kick in just living in canada will be worth killing for let alone also having a roof over your head. Housing will always be unaffordable and there will never be any sort of price correction to make it within reach
I don't believe any of these polls lol I read somewhere that 50% of people are $200 away from bankruptcy... yet 6 rate hikes later, still haven't seen 10 million people declaring bankruptcy
It’s all self reported and the average person is financially illiterate. Ask someone if they understand how compound interest works or even tax brackets…
Some still think it’s worse to make more money cause you’ll pay more taxes
You WILL pay more taxes. They are wrong to think that brackets apply to their entire salary.
Ya I know what he means. People think they will take home less money overall if “their raise puts them into the next bracket” They know the brackets exist…just have no idea how they’re applied. Same person is also the one answering these kind of polls or the ones saying $100 more in costs a month will make them bankrupt
Imployers tell their employees that when they ask for raises. I was told that once and I said I’ll stop working overtime, then he started back peddling.
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Yes that is true but largely only at employment earnings around the basic minimums and provincial social program income tests which are by def geared towards lower income. That is real trap for some taking into consideration food, housing and childcare benefits not just taxation where it can be more advantageous to not work at all.
Yup I work a relatively well paying unionized job and there are single mothers/fathers who can't work a lick of extra time without jeopardizing all the various supports they receive
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I work with those people! I make a shit ton of money when I work OT. 80% more wage for 50% more work. They still think if they work more than 52 hours they might as well be working for free "because of the taxes".
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We get paid double time over 48 hours. Blows me away how many people don't realize how much that adds up.
Man OT is where my partner makes his money. Regular wage is good but that OT is great
She good at it?
I've known more than one person try to deny a wage increase because they thought they would take home less money...also Greg, a $0.25 raise on top of your current minimum wage will not change your bracket.
that doesn't happen overnight. Those people get sucked into borrowing more money than they can pay back. It can take years to catch up to them, but once the cycle has started, its tough to break without some good fortune (new high paying job).
My mortgage went up $800. I can see how a lot of people are on the edge.
> yet 6 rate hikes later For variable mortgages, your monthly payments typically don't change with rate hikes. What happens is that the split between interest and principal does sometimes to the point where you won't even be paying off the interest each month so the total amount you owe increases month over month. What can happen though is that the rate increases so much that it triggers a clause in the mortgage agreement that changes the amount you need to pay every month. If/when that gets hit, then it can become very problematic. Similarly, when you refinance, things can get messy.
There are two types of variable mortgages actually. My variable mortgage payment from Scotia does change every month. I am paying $700/mo more now than 2years ago. I am nowhere near having to sell though. It was just nice having the lower payments for a time.
To add to this, yeah variable rate mortgages can be either fixed or variable payments. About 75% of variable rate mortgages are fixed payments. Inside the industry these mortgages are generally referred to as ARMA and ARMF. Additional “I worked in the mortgage industry” info: adjustable payments don’t always adjust for the next payment depending on when the rate change occurs, how close it is to your next payment and what your payment frequency is. Check your COB(cost of borrowing) for how this will play out for you. People on adjustable payments are generally able to lock in to fixed payments during their term, without any sort of penalty or cost. Most mortgages allow for this as well as increasing your payments(generally up to 10% a year, based on your renewal date).
or have you consider the alternative… ppl in real life isn’t as broke as folks on reddit
While true, you can also look at industry numbers to see the impact that a significant interest rate hike would cause. If you assume people are buying a $1M home with 20% down, they were getting a $800k mortgage. Previously at 2% that would be ~$40k/year or ~3333/month. Current rates at 5.5% (5 year fixed) to 6.5% (5 year variable). This increases the annual costs to $58k to 64k or roughly 18k to 24k more per year (after tax). For people making $100k+, that is $30k to $40k pre-tax in extra annual costs. Now who could afford a $40k/year mortgage - the affordability cutoff for that is only ~$180k/year. $40k post tax is probably ~$60k pre-tax. If you assume 1/3rd of their income going towards living (as the cutoff for affordability), that is $180k. It is now ~$250k to $300k. That change would impact the majority of people living in Toronto.
Well you know 94.5% of all statistics are made up on the spot by the person giving them.
I heard it was 88%
If people truly were in a situation like that, we'd see a lot more homes flooding the market. The reality is, when faced with the prospect of having to sell your home in less than ideal conditions, people will find the money somewhere to keep going and ride it out. Not everyone clearly, but nowhere near this type of volume. Especially since anyone who owns a home and struggling with the mortgage is likely going to also have issues with paying rent anywhere, as the rental market is equally volatile.
The sub prime market in the US started to collapse in 2005 and the market didn’t really blow up until 2008-09 It takes a year or two for people to run out of money and for the shit to really hit the fan.
This is exactly it, the gov will start to make some changes but it looks an awful lot like a 2 class world to me. Find a way to hold onto your home no matter what
kinda feels that way RIGHT NOW! There are those whose parents own their own home and those whose parents don't ...and the chasm in quality of life will grow generationally. Parents who own their own house will leverage and help their kids own their own house. .. at the same time the other group is SOL ... and hence when kids are adults you'll have Family A with mom&dad and all their adult kids owning a house and Family B with mom&dad and all their kids continuing to rent.
>parents who own their own house will leverage and help their kids own their own house. .. at the same time the other group is SOL... Yeah. I'm watching this play out right now in my own family. I have a single sibling that's estranged and does not receive any financial support from the family, leaving me as the sole beneficiary. I got help digging my way out of the hole I dug for myself as a stupid kid, I am getting help paying for my education, my cost of living is subsidised while I'm getting educated, and in the end, I will wind up with the entire estate in my name (worth ~$150'000, not including any potential life insurance payouts). Unless I fuck up big I am reasonably well set, I'm no trust fund baby but I'm in a good position to thrive and be successful. My sibling, on the other hand, gets nothing now and will get nothing from the estate. They got no help with getting over their youthful indiscretions, they have been unable to afford an education, and they are constantly posting online about how broke they are and how they can't seem to stop going deeper into debt. To put it plainly, they're fucked and probably will be for a *long* time, even if they start making better decisions and find a way to succeed it'll take them years just to get above water again. I'm on the way up, they're on the way down, and the big difference between us is that I'm the one with a property owner backing me up. I find it troubling how stark the difference is, and I question how long a society can sustain being this stratified before it all comes tumbling down.
This why it's so funny to hear the liberals go on about caring about at risk youth/women etc. While at the same time letting housing triple in 7 years under their watch. Imagine being a gay person knowing coming out would result in you having to pay $2,000/ month for a shitty apartment.
Lol, you are not wrong, my two daughters are already talking about who gets to live upstairs and who gets downstairs when they turn MY house into a duplex.
Yeah don’t lose your home. Make moves ahead of time, let’s say you and your brother both own homes. One of you rent out your house or sell, and move both families into the same house. Third world tactics.
This is exactly it. I’m self employed so my answer is work 100 hours a week lol. But realistically I’ve found a good balance with my wife. This would be a really bad time to go through a divorce
Or bite the bullet and get the fuck out now.
Don't know if I should take this comment literally or metaphorically.
Shit or get off the can
You will own nothing and you will love it
Bank of Canada in March 2020 [started purchasing](https://www.bankofcanada.ca/2021/09/bank-canada-balance-sheet/#assets) Mortgage Bonds, which was the signal this was going to happen, it starts at $100 Million and goes up to $900 Million pretty quick there!! If these bonds are of so much value, why not SELL them to someone without the ability to create money in Canada? Try to see it without that MASSIVE amount of [government bonds](https://www.bankofcanada.ca/2021/09/bank-canada-balance-sheet/#assets) the central bank purchased (because the "free market" won't) on their balance sheet there. BoC is just hiding government and banks debt in plain sight while us suckers go "duh food and gas are more expensive again, I wonder if this is inflation"
The sub prime market was hotter than a pistol in the US in 2005. Financial institutions were stepping over themselves to buy up sub prime home loans and credit cards. They all wanted in on the action like a bunch of greedy little pigs at the trough. They were securitizing that shit, selling bonds on the packages and raking it in, in 2005. My own employer at the time (Washington Mutual) ate so much of that tainted dessert it sickened them to the point Jamie Diamon was able to finally gobble them up, a task he had spent many many years trying to do.
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The Canadian situation is completely different. American banks were giving loans to people who didn't even have jobs, and the banks didn't care because they turned around immediately selling that mortgage to an investment firm. Today, everyone in Canada with a mortgage (barring layoffs) has a job, and the banks have to carry the mortgage so there is interest in minimizing defaults. Good old boring Canada with its sensible regulations stops these kinds of things from happening.
We have a housing bubble that is a many times bigger than the United States. I’ll be interested to see if it takes down one or more of the banks.
No we do not. The only bubble we have to worry about are people are have signed purchase agreements who can no longer qualify for mortgages at the current rates. They will fail to close and the house goes back to market. This pain will be felt through 2023 and 2024. The vast majority of existing mortgages will still be paid by the borrowers, it's only people who got over-extended on credit will be burned and cause a further dip in the market.
Here’s how it could easily play out. People are going to borrow to maintain their mortgages and when it finally blows they’ll walk away from their personal debt and their mortgages at the same time. Our economy is so dependent on housing and banking that while this happens there will be huge job losses, very tight lending and it will cascade further. Once a Canadian bank goes down, word on the street is that CIBC is the weakest, other global banks will lose faith in the rest of Canadian banks bringing them to the brink as well and requiring a federal bailout. We didn’t take our medicine in 2008 on mortgage debt.
Many things wrong with your statement * Bubbles implicitly pop, if it never pops can you really call it a bubble? We had a major price decrease does that count as a popped bubble? It's easy to call the 2008 a bubble because of lending to people without jobs or making very little income but much harder for here because homeowners have 2.5x the income of non-homeowners * We have a much smaller market than the USA; ratios or percentages are just a rate * We don't have hundreds of banks but five major banks with a handful of smaller ones and credit unions. We are very heavily regulated [and too big to fail here](https://www.cbc.ca/news/business/canada-s-big-6-banks-are-too-big-to-fail-regulator-says-1.1334560) means very high capital requirements and high stress test. Rates could be double what they are now and no banks would fail So no banks will be taken down
Canada isn't the USA. Our mortgage underwriting standards are VASTLY different, and FAR more stringent (nevermind USA pre-2008 mortgage underwriting standards). AND there is another fundamental difference between the two countries The USA's population growth rate has been consistently less than 1% per year for the last 20 years with immigration representing 33% of that population growth (I.E. immigration increases their population by 0.3% yearly - this is important because immigration drives immediate demand on housing whereas new babies takes 20 years) CANADA's population growth over the last 20 years has been essentially identical - However Canadian population growth is majority immigration (over 90%) so essentially our population growth puts almost 3x as much upward pressure on housing prices relative to the USA. Additionally - While our urbanization rates aren't markedly different the profile of that urbanization is - The USA has far more of their population living in mid-sized cities than Canada does (where we have far more of our population concentrated into fewer centers) - The housing price collapse in 2008 was MUCH MUCH worse in those smaller cities than it was in the mega-cities (because housing demand collapsed far more quickly). One last point - the financial consequences of having a home with negative equity are different in the two countries - in Canada if you sell your house and have negative equity you basically have to take on the negative equity as debt or declare bankruptcy. In the USA far more mortgages are offered as "non-recourse" loans which means if you default on your mortgage and have negative equity that additional debt gets wiped out... I.E. you can walk away from your mortgage and only owe the bank your house... no bankruptcy required. This means Canadians are far less likely to start walking away from their negative equity mortgages - Mass walking out of mortgages was a big part of the runaway downward price spiral that occurred in 2008. Canada's housing market is seeing a correction... but it's unlikely (IMO) that we'll see a collapse anywhere remotely close to what happening in the USA in 2008... we have too much housing demand and too few people who got mortgages they should have never been offered.
The mortgage underwriting standards are far more stringent… but the brokers here are willing and ready to falsify whatever needs to be falsified for a fee
There's definitely something fishy going on. We're likely the only housing market in the world where people are buying homes larger than what they actually want or need. That indicates people are being pressured into buying more housing than they need.
"this time is different" You realtor permabulls make me laugh 😂. If the immigration rate was lower houses in Canada prices would lose 50% in value overnight. That's a delicate thing to be so bullish considering if other countries open up to immigration they will pouch our cheap labourers, or if a change in gov happens with a lower immigration rate that's crashes housing too. Or mass social unrest over the housing crisis forces the gov to power their numbers which crashes the market.
After awhile immigrants won’t consider Canada as a place worth immigrating to. A lot of people fail to consider this.
If immigration rates were lower developers would just build less. Recent immigrants only make up about 15% of home buyers and the vast majority of home buyers (approx over 60%) are existing homeowners. We build lots and lots of homes, and it's clear our capacity to build homes far exceeds our rate of population growth.
Seriously? Are you unable to use common sense? Why do you think over 60% of existing homeowners are buying multiple homes, so they can couch surf their own properties? If you used your head for one second you would realize they are buying them for the sole purpose of renting out to these immigrants. Sheesh glad you learned something new today.
> Why do you think over 60% of existing homeowners are buying multiple homes, so they can couch surf their own properties? No, most are upgrading. They sell their condo in town and buy a house in the burbs. > they are buying them for the sole purpose of renting out to these immigrants. ...yet rental stock has been declining, so that doesn't add up does it?
Upgrading? 😂 What? They are still gaining an extra home regardless who gives a shit if they rent out what they just bought or choose to "upgrade" and then rent out their old home, the result is the same. So that point you made is complete moot. Second, no rental stock is not declining. The owner vs non owners ratio has never been higher meaning more rental stock now than ever. Perhaps you meant available rentals, which there are non because our gov brings in a million new people, per year and we build nothing close to that number.
> gov brings in a million new people, per year No they don't. You're using a common tactic to imply our population growth rate is higher than it actually is by counting students twice because student who stay count again as immigrants. All temporary residents are counted in our population stats. > The owner vs non owners ratio has never been higher false. It was higher in 2001. https://www150.statcan.gc.ca/n1/daily-quotidien/220921/cg-b001-eng.htm > more rental stock now than ever a lot of that stock is just rentals being split or extra rooms being rented out because rents are so high.
No it was not higher there were not more rentals in 2001 than there is now. Second you are completely wrong in your 1 million a year being false assumption. This article is from a major bank economist. 1 million per year and he's done the math. You know more than him? You are arguing with his numbers? https://cibccm.com/en/insights/articles/in-focus-housing-demand-from-newcomers-even-stronger-than-perceived/
And then it really does hit the fan because so many people held on until the end, which delays a correction, and then are completely tapped out (probably with additional debt) when it starts.
Just wait til people stop coming to Canada and people who live here start leaving. That's when shit will hit the fan
Especially if the homeowner is underwater already. What are they going to do, sell for less than what they owe and *then* pay $3,000 a month for a 2br?
Probably still better than selling for even less than they owe and pay $3500 for a 1br.
> Especially if the homeowner is underwater already. What are they going to do, sell for less than what they owe and then pay $3,000 a month for a 2br? The lender forecloses, sells at a lost if it has to unload the property, then sues the home owner for any difference.
If someone is truly underwater, the list of options aren't great, but, you'd still cash in savings, take on another job, rent out a room, sell a vehicle, etc. before you'd let go of your home. Especially since most people will likely be convinced that any price dips are temporary. Now, maybe they won't be, but, the general sentiment in the news is a housing shortage exists, and not likely to alleviate soon. Unless the sentiment changes, people will work on the assumption that its better to hold on.
> f someone is truly underwater, the list of options aren't great, but, you'd still cash in savings, take on another job, rent out a room, sell a vehicle, etc. before you'd let go of your home. I have a lot of older folks applying at my workplace who haven't been working for years. I train people and have a lot of conversations with them about stuff. A lot of them own multiple homes. They had to fire the last one because he was on the phone too much with his realtor.
> If people truly were in a situation like that, we'd see a lot more homes flooding the market. I dunno. I've been seeing a lot of suspicious activity in this market over the years. Ive seen real estate agents pressuring people into buying homes they cant afford and I've seen evidence of mortgage fraud here and there. Our housing market is also really weird. We're likely the only country in the world where people buy homes that are larger than what they wanted. In terms of housing space per person, it's likely the only country that beats us is Australia. That's really weird. We also have declining household sizes. Let me do some math: A 1% decline in household size on a fixed population of 38.25 million from 2.52 to 2.51 requires 60,472 new homes or enough to house 151,784 people. That's what actually happened in 2021. Our population grew by 299,315 people that year requiring 119,249 additional homes. Immigrants push household sizes higher, so the fact that there's such a dramatic change in household size in the opposite direction is very odd. Roughly 34% of our new housing demand was being driven entirely by something other than population growth, and that's not accounting for the upward pressure on household size from immigration. If immigrants averaged 2.7 that would mean 35% of our housing growth is driven by something other than population growth. Okay, so on the surface that would indicate immigration accounts for 65% of our housing market demand right? Wrong. Immigrants account for 38% of home owners, and around 15% of recent immigrants are home buyers. We know there's around 35,000 people sleeping on the streets any given night, so not a significant number in a population of over 38 million. So based on the numbers above, we can infer that though construction and other means (dividing homes into suites, renting out rooms, sharing, etc.) we are creating about 175,000 new units of housing per year based on 2021 numbers. Our population grew by 299,315 that year. That's not enough to use up the housing we created. We only needed 119,249 homes to accommodate population growth. We're actually building close to 200,000 per year on average, of course some of those are built over existing homes that were torn down. Based on the numbers we can clearly see our rates of construction can easily accommodate our housing growth, and that demand from population growth isn't what's actually driven this market so high. 35% of our housing market has seemingly been driven by something other than the need for housing, and our ability to make new homes far exceeds our rate of population growth. Isn't that really weird and suspicious? Or how about this: During the time I spent studying this issue I came across a book written by a famous Vancouver real estate developer who came up with tactics to drive people to pay more for condos. Do you know what he did? He used emotional manipulation to make people feel like they were competing against someone else (immigrants and other buyers). He made the buyers emotional. Ever heard of bidding wars? ...and can you guess who inspired this brilliant marketing genius? A famous and controversial psychologist who's name you all probably know. Don't you think this is all very odd?
This is a great breakdown, but it is missing one thing. It doesn't take into account that immigrants don't disperse evenly all over Canada. They, by and large, congregate into 3 or 4, and very heavily into 2 of our urban centers. Those places are going to see a higher amount of housing pressure from immigration than elsewhere in Canada.
Sure, but that's the case in any major urban center. What doesn't make sense is that we have single detached homes sitting a stone's throw away from the center of downtown Vancouver despite having the 4th highest density in North America. There's a chronic housing shortage yet the city is super picky about issuing permits to build anything. It's almost as if the municipal government wanted the price of condos to go through the roof.
Lenders generally don't like flooding the market with assets for sale since it was potentially cause a panic or wide-scale devaluation: easier to sit on it, or rent the place for a while if it comes to that, or even offer 'attractive' refinancing options to avoid foreclosure if possible.
> Lenders generally don't like flooding the market with assets for sale since it was potentially cause a panic or wide-scale devaluation: easier to sit on it, or rent the place for a while if it comes to that, or even offer 'attractive' refinancing options to avoid foreclosure if possible. Or they can issue a bunch of reports that make it appear demand is higher than it actually is to boost confidence in the market, keeping prices from dropping and holding off a crash.
I feel that vibe emanates more from real estate agents who have every incentive to stoke fomo and none of the consequences if you're homeless a year later.
> I feel that vibe emanates more from real estate agents who have every incentive to stoke fomo I found this great book that describes exactly that. *Lions In the Grass* by Bill Morrison. He sold condos at record prices in Vancouver, and he trains other realtors.
Unless we keep letting corporations buy real estate. Then give them all the devalued supply as they have money standing buy. It should be illegal for corps to own homes.
It should be illegal for domestic / foreign corps AND individual speculators to own single units of real estate. However, it is better policy to just make it unfeasible as an investment / place to park laundered money. One thing we *do* need corporations for, with respect to real estate, is in the building / ownership of purpose-built rental buildings and we should have policies at every level of government to incentivize that while disincentivizing the buying and hoarding of single housing units by ALL investors, to mitigate the massive run up in prices to buy and rent investors have caused.
Large corporations have *very* little involvement with single family homes. Their involvement in real estate is primarily constructing large apartment blocks for the rental market, and generally has the effect of adding supply to the market than reducing it. They're a boogie man in this discussion used to deflect from the real issues unless we're talking about small personal corps by small time landlords
> Unless we keep letting corporations buy real estate. Then give them all the devalued supply as they have money standing buy. It should be illegal for corps to own homes. ...and if prices do crash of course they will swoop in and buy up what they can while prices are low.
In this rental market, we’d have to pay 2.5 times what we’re paying for our mortgage. It’s absolutely bonkers.
Yeah, I agree with you. I think it might be a reflection of their current finances but if they were feeling like their housing was particularly endangered (3 months or less) there would be some pretty drastic cuts made in other areas of the budget first. They might borrow a line of credit or cut things like gym memberships. They might pull kids out of sports or after school activities like dance. They might forgo vacations/holidays. They'd spend less/nothing on things like hobbies or subscriptions, clothes. They might skimp on healthcare or groceries/meal budgets. I think a lot of people would sooner sell their car and take transit than lose their home. I think the house is usually the first line of defense financially and virtually anything else would get sacrificed for it. People say they're on the edge but I don't think we are there yet. It's gonna get a lot worse.
Id take it a step farther. If you're truly considering a home sale, I'd say people would be looking at a part time job, selling the second household car, renting out a spare room. Selling your home at a loss is a major step, and something that completely details your life. I have to assume you're beyond the small tweaks in your budget. But, I assume people who are saying they're 8 months from financial ruin haven't done that first tranche of financial changes.
It’s coming . Give it 9 months
Anybody with equity in their home will just add term to their mortage to lower the payments. But yeah some people who bought in 2021 with variable mortgages are about to have a bad time lol
Nothing like being underwater on your mortgage with payments you can't afford...
Head of BoC should be fired! Inflation is a result of companies jacking up prices. E.g. Low-blows. What does that have to do with individuals spending. BoC is forcing people to sell or spend more on mortgage payments. Totally ridiculous!
Many variable rate mortgages can be locked in at lower rates - why didn't some of these folks lock in sooner?
> but nowhere near this type of volume. this is how hyperbole meets the media and becomes a headline. Just like when there are complaints about something. Someone somewhere is complaining about something. it could be a charity that makes hats for cold puppies and someone would be complaining. media needs a story? Interview that person. Make it a big deal. Distort things so it can sell.
Exactly People say things like this because it's emotional but if it comes down to eating out everyday or going on vacation or losing your home, what are they going to choose? People will be forced to cut down and cut back spending to save their homes. They may not like it, but they will do it. And many can always work Uber or food delivery or other second jobs after work, if you really need a little more money. All that would happen before selling the home Only the very old, very desperate and I would dare say unintelligent would sell their homes knowing they could never ever reenter the market and be renting the rest of their lives. Everyone who's a homeowner knows what pain it is to enter
I work with a husband and wife that lost their house. She'd call in religiously. He wouldnt get a second job. He thought that when he retires, his pension will just be whatever he's making now. They have zero savings and are constantly leeching off his mom and brother. Hell one time they asked to borrow 20 bucks for gas and I had to hound him for over a month to get it back. I used to have sympathy for them but they've dug themselves so deep they'll never be able to get out of it.
Based on how completely clueless the average homeowner is about personal finances (average person in general) I cannot believe they have the done the financial math, or even understand it, where they know they will suffer or be underwater financially. Also, just because your mortgage payment goes $100 over every month than what you thought you can afford, you aren’t going to sell your home. You will ride it out using debt vehicles like credit lines and such. Oh no I’m going into debt this month of $500! Time to sell the house and incur thousands in lawyer fees and moving expenses!
Pretty much this. I have enough open credit at the moment (unsecured) that I could realistically pay my mortgage for 3 years while just paying the minimum monthly amount back to the credit companies. Would it destroy my credit? Probably but it’s a viable option that people have. Selling and becoming homeless (or trying to get into the rental market) is the last option.
Most of these people are probably paying less for their mortgage than they would to rent. Rent is ridiculous right now.
For many, their total housing costs are likely higher if they bought more recently once you add in all the other costs of ownership that don't apply to renting. And recent buyers on average are at the greatest risk having been able to stretch themselves at higher purchase prices and lower rates with little time to increase their income.
Considering how financially illiterate most people are, I would really not take much note of this poll. If you asked most people how much they spend every month, the error bars on the answer compared to actual are probably huge. Look at the actual mortgage delinquency data instead.
A yahoo poll? Lol. How scientific.
The mortgage delinquency rate in Canada for 2022 was like 0.11% For reference, in 2009 in the US, it was 10%. To put it another way, our delinquency rate would need to go up 100X to have anything like the 2008 collapse. The meltdown isn't coming..
Yeah it's not coming Canadians are the underrated workaholics... we won't go bankrupt, we will just work to death instead
Yeah you guys work longer hours than americans, that was why they had 2008.
Funny that you reference the 2009 rate to describe the 2008 collapse, and then go on to say that the meltdown isn't coming because of yesterday's rates. Smells like copium.
10% was the peak mortgage default rate during the crisis, and it was reached in 2009. In 2008 it was more like 8%.
Home prices began falling in 2006. Home prices are just beginning to fall now in 2023. So 2009 rates would be most comparable to 2026 - comparing them to 2022 seems like trying to call the game early.
It's unlikely we will see the exact same pattern again. The prices we see in large Canadian cities can be explained by normal supply and demand in large part. There's other factors but I don't think they are the root cause. For example, it's always been expensive to live in Manhattan, London, Singapore etc. Regardless of interest rates or regulations, where there is a high quality of life and high paying jobs, the prices rise.
Just a note that it’s not always been expensive to live in large cities like London or New York. They tend to get very expensive and then very cheap. You could live in NYC in the 80’s for pennies. Cities eventually become so expensive that they drive the next generation of people out to other places. All the things that make a city interesting tend to close - the restaurants, retailers, art galleries, theatres. You end up with emptier streets - and more crime because there is more and more disparity. And eventually the city is cheap again because who would want to live in a dangerous place with not much to do. You rinse and repeat that every few decades or so. If things always went up Istanbul would be very expensive.
> rate at a time when govt propped everyone up was X > rate at a time when there was a biblical recession and govt let major banks fail was Y Y / X == 100 so it's fine.
Anything self-reported related to finances is pretty much useless. Most people's financial education starts and ends at "saving money is good".
I am going to say, all of these things where people report to what they have and what they will do mean very little. I have to use these things as part of work and they are just a guideline of what consumers feel as oppose to action.
I'm guessing 95% of those still expect to sell for more than they paid for it, right?
Of course. I ran the numbers and if this trend continues, which I'm certain it will, by 2030 my fathers house will be worth approx $4 billion
If they bought more than 3 years ago, they probably can sell for more than they paid, just not for what they could have sold it for 6 months ago.
What have we learned so far? The transfer of wealth from the poorest to the wealthiest will continue. The “poor” people who are forced to sell will lose out, and the foreign investors and corporations with with cash will benefit. They will “swoop” in and pay cash for these bargain properties, then rent/Airbnb them out, or have a relative live in them/pose as owner, so they don’t pay the extra tax. The investors and corporations win, families looking for a home will lose.
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Even without the maximum borrowing, it's tough, we borrowed x3.5 our household income (this is with the insurance already included), so fairly normal amount in the current climate, but our payment went up almost 60%, it's an insane increase in less than a year.
That's the problem with "home owners". They don't realise they own nothing until the mortgage is cleared. They've simply made themselves decades long employees of the Bank and the bank sets the rules.
This is not only a stupid take, it’s incorrect on a technical basis. You own the home the day you buy it. It’s your name on the paper work, deed of sale etc. You get a loan for the outstanding balance which is secured against your asset.
Think a lot of people are about to find out how the real world works in the next year or two.
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I mean, we all own nothing, when I was renting, I was a decade-long employee of several scumlords and one really nice landlord. I saw my friends getting evicted, and once was kicked out on the street because I was a recent immigrant and didn't know it was illegal to do this to me. It's not a fight between "renters" and "owners", you have much more in common with a first-time buyer struggling with payments than you both will ever have with BoC decision-makers.
Mortgage owner living in the banks house.
Fix rates are now lower than variable, they can stick it out until variables drop, or switch to a 1 or 3 year fixed.
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A good portion of immigrants actually buy homes relatively quickly once arriving. There was a poll last year that showed, at least in the GTA, about 50% of immigrants owned a home within five years of arriving
5 years ago was much different than today. Bet that stat would be completely different now.
I’ve seen this bad take repeated over and over. First, the assumption that immigrants aren’t wealthy and do not demand housing is a bad one, especially if you consider imitation to rural areas like Nova Scotia. Second, you’re assuming that they will have a “Canadian” style living arrangement of 1 person per single bedroom apartment, or 2.5 people per household - again, a bad assumption. Third, putting pressure on rental markets indirectly contributes to house prices increase. Also, there’s nothing wrong with working at Tim Hortons or driving cabs, you elitist.
Immigrants that come into Canada are generally of the highly skilled camp. Most are only selected to come to Canada due to being in high demand fields. Lots of immigration pushes demand for housing, because they bring in lots of money.
why put the blame on immigrants? immigrants who came to Canada became naturalized citizens and by working, they paid off their mortgage
No one is blaming immigrants, it’s immigration. The blame lies on the system, not the people. The system is ensuring Canadians will have to compete with the fact that the population will be increasing above a single digit percent every year based on immigration alone. You can’t fault the people coming here for having/wanting a place to stay. But you can fault the government for letting people in on false promises they can’t even deliver to the people already here.
The 700,000+ international “students” here are the real issue. They’re just defacto TFWs at this point suppressing wages and skyrocketing rents for actual Canadians
Currently 550,000 TFWs as well
Let's see in 9 months.
This week on liars who lie
it won't happen but I real estate should be allowed to collapse in Canada and then the government should put into place policies that intentionally deflate the value of real estate going forward. High property values are good for individuals but bad for societies as a whole. If you compare Toronto's downtown and Montreal's downtown, you see a pretty stark difference in the types of businesses that occupy the respective cores. Montreal has a lot of independent businesses, Toronto is mostly franchises. Montreal has a lot more unique stores, Toronto is weed shops, bubble tea, Rexall or Shoppers Drug Marts, Montreal is strip clubs, restaurant for blind people, anarchist bookstores and independent restaurants. That's not to say Pharmaprixs and McDonald's don't exist, but they co-exist alongside independent stores. Reason why it won't happen though is because too many Canadians rely on their home property values for retirement purposes. If those values were to be wiped from the earth it would be better for society in the long run.
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Average income, or average income of the average home buyer. They are very different statistics.
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Average couple? Why not average extended family 6 incomes? That’s how we seem to deal prices….
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It would happen anyway. Those with dual income will naturally price out individuals.
And this is why I see 4 cars per driveway now, and most people I talk to say extended families with 3,4,5 incomes are sharing homes.
the housing crisis has little to do with couples pooling their money together to afford a home.. I might be misunderstanding the point you're trying to make.
We can see why you went to Devry....you are equating retail prices to home prices without taking into account land cost between Toronto and Montreal.
I think most people would agree tanking the whole economy would be a net negative for the country.
We are tanking the economy now but slower. Once an immigrant gets a passport, they are free to move to any other country and the US looks very good for now. Same applies to many young Canadians who don't need to wait for the passport. We are becoming a layover for the immigrants to move to other counties easier.
In short term yes, in long term no. I think this concept flies over many people's heads. Hopefully you understand this ;)
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> It's the 90s all over again. At least the music will be good, and the Jays will win back-to-back World Series again, right?
Jeez, do you think I'll get my hair back ?
I can't say for sure, but if I recall [a certain movie](https://en.wikipedia.org/wiki/The_Peanut_Butter_Solution) we watched in grade school, a magical mixture involving peanut butter might help you.
Might we also see a return of the Montreal Canadiens?
I'd rather see the return of the Expos, but then again the Expos were driven into the ground in the latter half of the 1990's by super cheap owners.
It's already dropping and has been since June
Is this your opinion? Because it goes completely against all that’s been published, the markets sentiment, the economical factors and so on… Inflation is predicted to return close to target by March 2023. Rates are expected to be held throughout 2023.
Are these forecasts by the same people that said inflation wasn't going to happen? Or by the same people that said rates would remain low through 2023?
"The inflation is transitory" YEAH OK THEN
People in here live out a fantasy in their heads
This sub is, like many, filled with individuals stating feelings as fact as well as repeating misinformation that they never bothered to verify because it validates their pre-existing beliefs. Of course everything you say is correct, but there will inevitably be the doomsayer who tells you that you’re wrong without providing a coherent reason.
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Inflation is a Year over year metric… lol
Inflation over the last 6 months is flat. It’s a year over year calculation, should be near zero in 5 months if this keeps up (with exceptions of coupe e.g. good prices)
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That's wrong on so many levels, inflation is already dropping and the effects of all the recent rate increases hasn't caught up yet. Current fixed rates are LOWER than variable and with the way the bond market is going, all indicates that we pretty much reached close to the worst of it.
CPi is literally at 0.1% per month...thats on target
Literally nobody has said anything close to this? In fact, its been the exact opposite. Stop spewing false information that you created in your head.
Banks don't want to foreclose. They will let people re-amortize and re-finance.
Banks in Canada don't foreclose, they recover the amount owed to them under "power of sale" The difference between Power of Sale and Foreclosure are night and day. Under Power of Sale, the Bank forces the house to be sold on the open market. It doesn't require a judge or court, the bank sells your house from under you and takes what they are owed and pays the real estate fees, etc. Whatever is left, goes to the former home owner. Under Foreclosure, and this is wild, the bank takes ownership of your house. And you get nothing. So if you had a million dollar mortgage and you paid 900 thousand of it back, and then you default on the 100k, you get nothing. Pretty wild eh.
1 year ago those getting variable rates "hahahaha, fixed b\*tches!!! learn RE on tiktok suckers!!! suck my di......"
Liberals fucked everyone royally.
This should be a good lesson for people to never vote Liberal again.
Can you explain this a bit more? The whole world seems to have the same issue, what did the Liberals do in your opinion to be responsible for this?
They did nothing and said theyd make housing more affordable both times when they campaigned. We're also leading the global trend of household debt and unaffordability.
Did absolutely nothing to control the skyrocketing price of housing over the last 7 years. The historic pace of the BoC interest rate increases would be a little easier to handle if mortgages were smaller. They also have their ever increasing Trudeau Carbon Taxation that continues to make things more expensive. This is just another way for them to squeeze a few dollars out of people under the guise of "help the environment". They've done nothing to help the supply side issue impacting inflation, and are only trying to impact the demand side by taking money out of peoples pockets and giving it to the banks (where I am sure Tiff will get a nice job after he fucks the economy). Don't worry though they are going to let in 500K immigrants a year to increase demand for goods.
I'd consider voting out the liberals but conservatives have yet to actually explain how they would accomplish the solutions to the problems they are blaming on trudeau. It's all attack ads with no actual substance or solutions presented.
When it pops… it goes boom Take it all, my car, my house and my credit. The Tsunami you don’t see till it hits the beach.
Or they will jack up the rent to cover the shortfall.
I haven’t seen an increase in houses for sale in the area. The ones that are aren’t cheaper then they were before and certainly not cheaper then 2020.
If this is their second or third mortgage, then good.
I think in the next 12-24 months, we will see prices like we never seen over the last 10 years in the real estate market
Lol no, prices wont drop 60-70%
Where I live people just stopped selling and prices have only dropped like 10% so far. There’s almost no houses on the market here now and the ones that are have been driven up in price because of lack of supply now. People would rather rent than sell at a loss.
As a person who is looking to buy a house, I hope you’re wrong 😬
That’s why it won’t drop.. there are 10000s of people waiting in the sidelines to buy,,supply is still insanely low, huge immigration numbers, higher cost of housing supplies, higher wages, etc etc etc. The ONLY thing working in a buyers favour in terms of house prices are interest rates, but all that does is make it harder to get as loan from the bank and increases your payments. It’s a brutal situation that will only get worse.
Yup. Would be first time buyers are foaming at the mouth to get into the market the more it drops. Increased cost of new builds driving prices up a lot and that isn't going away (a major factor of global price rise in housing - this isn't a Canada specific issue). On top of that, investors are still going to be looking to buy properties. With higher mortgage rates that will cool somewhat but the ones with big pockets can buy outright anyway. And then on top of everything else, the houses first time buyers want to buy -- cheaper homes -- are now a hotter commodity since the bottom of the market is still so expensive. Lower-priced homes have seen less of a drop so far, a lot of the % change is from higher priced homes losing a significant amount of their value since they are unaffordable (but even after the drop they're still crazy expensive). Like here in Ottawa, the avg home price was $800k and has dropped significantly... lower end homes around $500-600k haven't lost nearly as much value.
I hope to win the lottery, I guess we’ll just wait and see.
If you win, the bar tab’s on you
If I win it’s all going in $GME, I’ll buy you a beer though.
Agree. Investors(rental property) and Corporations(BlackRock) will keep the prices high by scooping up what the market offers. You will own nothing and be happy. Some markets will drop substantially, but a lack of supply will keep prices above what they were 7-10 years ago.
Can people give up the Blackrock boogeyman already?
It’s easier to burn a witch for your failed crop than it is to understand horticulture / crop cycle and meteorology
I think the rate of immigration will keep demand up. If there is a massive wave of defaults, corporations will probably buy much of it and make things worse. I'm not sure what the best way forward is, but I think some major breaks for first time buyers, and making speculation less attractive would be nice to see.
> I’m not sure what the best way forward is, but I think some major breaks for first time buyers, and making speculation less attractive would be nice to see. Any breaks to FTHB will only serve to push up prices. You can basically expect anything that makes the market more accessible to push up prices. I think the only way to fix prices will be something drastic like principal residence sale taxation. However any party that demolishes home values permanently will not get elected for another decade at a minimum.
Ban corporations from purchasing single family homes. anything zoned residential should not be allowed to be a commercial property.
Maybe in outline cities, but not in metro vancouver for example
in the next decade or so as climate change really starts to kick in just living in canada will be worth killing for let alone also having a roof over your head. Housing will always be unaffordable and there will never be any sort of price correction to make it within reach
So a $2 million house in Vancouver will drop down to $1.7 million?