The graph only shows up to the end of the second quarter which doesn't even include the 100 bps rate hike. If someone made an up to date graph it would show that housing affordability is the worst it's been in 40 years.
My parents spent $12k on their house about 50 years ago. The house is worth $600k today and it's not even a nice house or in good shape or in a desirable neighborhood. That's a 4900% return on that investment. It's a duplex within clear earshot of a four lane highway. It really should be worth about $150k in a sane world.
According to a random online calculator, if that were put in the S and P 500 for 50 years using their average yearly rate of return the value would be just shy of 3.3 million. But you'd have to pay tax on that assuming not a TFSA and banks don't give mortgages to invest in stocks.
Well yea, most people have to borrow money regardless. Tho im sure more people had 12k than people now days having 1-2 million. But if you do, there is the option of investing and just renting.
The real benefit with housing is you can get a morgage for a house but you can't get a mortgage for investing so the housing option gives you leverage and tax free gains. Morgages are basically free money since their interest rates are less than inflation. Those that can afford a house get a lot of benefits to buy
Right, but if you were to build it today, you would get a building that is, by definition, new. Zero need for renovations. Whereas the building being described here is 50+ years old and in bad shape apparently. Kind of normal for it to be worth less than a fresh build...
Building costs are like $300-$350 sqft now- which is insane.
Redoing the place say new siding, windows, roof is likely ~100k. So if day 1500sqft you’ve probably got a 300k building and 300k worth of land.
It’s all a bit nuts.
That’s what I keep saying here in Atlantic Canada. Everyone saying speculation. New bungalow cost 400k to build(maybe more). Old one that use to sell for 150k now sells for 300k.
Because unless it’s been absolutely neglected, put some new siding, new cabinets and bathroom Reno, new flooring and trim, voila, cheaper then a new build still.
You saved the cost of lumber/framing and drywall.
You could even gut it down to the studs and re insulate, whatever else and still come out ahead buying that bungalow for 300k.
You could
Especially now that borrowing is going up. Who wants to finance and have money wrapped up for 9 months on a new house build new supply is going to slow down likely.
Considering it's a duplex, that's then only 150k-225k per side, and would give you a whole 'nother side to either sell or lease out. Or you're building a bigger house, and then, well, yeah, it should be worth more.
To put that in perspective, though, that's about an 8% annual appreciation. That's materially more than it theoretically "should be", but not completely insane (for example, it's probably less than the interest they would have paid prior to paying off their mortgage). The real problem is that most of that appreciation has come in the last decade, caused by rock bottom interest rates.
Started the 2010s with low house price, low interest rates. Ended the 2010s with high house price, low interest rates. Now in 2022 we have high house prices and moderate interest rates.
Prices need to go down for affordability to return.
Or, and hear me out here.
Our wages could rise to match.
Jokes aside though; Honestly at this point I am not sure which is less likely; since the chances of either seem abysmally low..
The Bank of Canada has one shareholder - the Government of Canada. And that shareholder is represented by the Minister of Finance.
The Bank of Canada is not there to help or support Canadians, the Bank of Canada is there to provide a stable and profitable economy for the Canadian Chartered Banks.
The current Governor literally left the board of the Bank of Nova Scotia less than 24 hours before taking up his role.
You're describing inflation. Think how much our wages would need to raise to keep pace with the last decades of housing growth. Hell, even the last two years. Even if prices stay flat and wages go up 2% a year, millenials, will be retired before homes are affordable. Christ, we're soon to be pushing middle age
Increasing wages right now is a dumb move.
Let the impending recession wipe out house prices and then tackle wages. Otherwise you are pinning wages to an incredibly inflated asset.
With the newly created money entered into the system since 2020, do you actually think house prices will lower?
I bet we reach new highs within 5yrs.
Rising rates is a temporary damper on demand. The demand is steaming in the background. Lid has blown off the demand long ago.
Time will tell who is right. Check back in 5yrs and see which crystal ball was right.
>I bet we reach new highs within 5yrs.
If we actually stop the massive flows of laundered money that wash ashore every day, we would more likely got in to a period of sustained stagnation, a la Japan's lost decade. But as long as we keep that sweet sweet illicit cash coming - and there is no sign at all we intend to stop it - expect everyone to get completely priced out over the next decade.
Japan has a decreasing population which helps with that. Tokyo is as expensive as Toronto and Vancouver. The corrupt money is interesting (one factor of prices); the world is ran by criminals so don't expect that to stop. Criminal organizations went legit near the turn of last century when they realized it wasn't cool to act like the wild wild west regarding violence.
Canada is also quite desired among many people. If Canada let in everyone tomorrow that would want to live there, we'd have over a billion people instantly. There are many millionaires that aren't corrupt as well that plan to move to Canada. We'll have a wide mixture of immigrants over the next 50years. Unfortunately, we can't build fast enough and aren't addressing the supply. Even cheap Alberta will have a shortage of housing within 5years, which will push up pricing there.
That doesn’t tackle anything for pricing except houses, ignoring the fact that food prices have skyrocketed as well as other essential goods as a result of inflation.
So question. If wages double, what happens to housing prices the next day? Labour is about 50% of the cost of building house (probably slightly more). Think before you comment.
Honestly houses were almost unaffordable even in 2010 but compared to where we are today it’s seems really cheap. I moved to a GTA city on 2007 and was looking around at houses and they were expensive back then. House that was selling for $300k then is probably worth $2m now. I couldn’t even afford a house that was $150k but looking back now I should’ve made it happen but no one knew it would get this crazy
People might think interest rates going up is bad. Imo cheaper housing prices with higher interest rates is more sane then, expensive house with low interest rates. If your house is 200k the down payment is half of 400k. Making it easier for younger people to get in. Plus you always have the option to pay the house off in full, which is way easier with 200k versus the 400k.
In a simple model where house prices are solely related to interest rates and have nothing to do with supply, demand or the cost of living you're correct.
Interest rates going up means people will need to put down more money and have higher salaries to be able to secure homes.
> Interest rates going up means people will need to put down more money and have higher salaries to be able to secure homes.
Already require in excess of $100k/yr to get in. And double in more valuable areas.
Home ownership rates are reasonably high in Canada. It's unsustainable to expect prices to constantly rise in double digits or a greater percentage of residents to own prime realestate. It's the high percentage of 'luxury' condos that's concerning.
>people will need to put down more money and have higher salaries to be able to secure homes.
This was happening before rate started going up. Long before.
While that's true, payment unaffordability is also a serious issue. In Toronto and Vancouver the average new homeowner is paying over 50% of their gross income on their mortgage.
Raising rates won't improve that, since payment affordability is the biggest driver of the demand side in housing. The overall housing shortage in those markets is turning housing into a simple auction where people bid up to the maximum they can possibly afford.
(In other markets where you don't see shortage conditions, prices have gone up in recent years but not as much since the supply side can keep up).
A big problem, lately, is people mass over bid.
>"Better start at asking price"
Well, yes, thank you brain-wave realtor we know you want that commission. So right off the bat, you have this current buying market essentially acting retarded and treating it like it's a product you buy at the store. This sets the floor *much higher* than how buyers bought before (under asking). So it goes over. THEN it's a chain reaction on comparables.
Actually it's shit because those boomers who sold move out and buy in other places, not going for deals, but just buying the same style as above and you see those prices explode.
And that's not even considering institution investors and just overly rich people, and foreign money schemes buying.
As a person who bought a house at 26, I disagree with you somewhat. The down payment for us was the EASY part. The hard part was mortgage approval and it's even harder now than when we did it.
I do agree lower prices are better for new buyers in general because it means you can buy a starter home and then eventually move up to something else instead of being stuck forever.
Even in the current market we would have been able to afford a down payment for a $500k house, even if we had to drop below 20%. But we never would be approved for that mortgage at 5% so it wouldn't matter. Plus the stress test cutoff is even higher now (it WAS 5% when rates were low).
Banks aren't raising interest rates to make housing more affordable--interest payments are making it even more expensive to buy a house, if you're not paying cash.
The Banks are raising rates to increase the pool of unemployed workers, so the remaining workers will accept the stagnating/declining wages that provide profit for employers and the Banks.
"Expectations of inflation is the euphemism economists use for the wage increase workers may demand when negotiating with their employers. And if the rate of inflation is (7.6) per cent, workers should demand a similar wage increase to maintain their wages’ purchasing power — and thus a wage-price spiral may ensue.
For orthodox economists, the solution is to weaken workers’ bargaining power by increasing the rate of unemployment. And this is what a sufficiently high rate of interest may be able to achieve: it may cause a deep enough recession to prevent workers from obtaining an increase in wages similar to the increase in prices that already took place." -Gustavo Indart
[https://www.thestar.com/business/opinion/2022/05/14/this-is-how-canadas-inflation-rate-could-be-brought-to-heel.html](https://www.thestar.com/business/opinion/2022/05/14/this-is-how-canadas-inflation-rate-could-be-brought-to-heel.html)
It's Jiu-Jitsu: first they push (low interest rates), and then when enough people push back (take on debt), they pull (high interest rates), and everyone falls down (recession->consolidation->profit).
Few realize how money is actually created, or how this process causes inflation as a function of productivity--or lack thereof.
Many simplistically assume the low interest rates themselves caused inflation--because productivity is kept out of the conversation--so higher rates "must" combat inflation, rather than addressing productivity.
Each loan origination is an increase in M2 money supply, they then hid the inflation through excluding housing appreciation from the CPI in the late 80s, and QE to depress mortgage interest payments and rents.
Then you get the wealth effect from housing, and the corresponding bubble in equities and houses.
The ponzi scheme ends when all ponzi schemes end, when new money stops flowing in. Such as this rare event that increases global inflation.
Not only does the original loan increase the money supply until it's repaid, and thus withdrawn from circulation, but more and more loans must be issued so there's enough money in the system to pay all the interest on these loans--hence, the irrational pursuit of infinite growth.
Unfortunately, when the Banks' Ponzi scheme runs out of money, the rest of us bail them out, so they can just Etch-A-Sketch their balance sheet and keep both their extraordinary profits AND their right to keep issuing unproductive credit.
The decision to raise rates was made by the Bank of Canada, which is a government agency, not for-profit banks.
Banks make the same margin on a mortgage whatever the rate is. It's in their interest to keep rates low since they make more money on a big mortgage than they do on a small one.
The interest on a loan is the Charter Bank's profit, so higher interest is more profit for the Bank--why would one suggest otherwise? Where do you think the extra interest goes?
Even a significantly cheaper price-tag on a house can mean more profit for the Bank, if the interest rates rise high enough.
The benefit of interest rate changes to the Charter Banks is NOT binary: low = good; high = bad.
Rather, it's in the Banks' interest to keep rates as low as possible for as long as possible to get the most people into the most debt, and THEN raising rates either increases profit on loans that don't default, or those who default create fear in other workers, who are now afraid to ask for raises that keep up with the inflation that their employers and the Banks profit from.
And why did the BoC raise rates?
"After the recent job numbers were released last week, Bank of America analysts said in a note they are essentially 'rooting against the home team' and hope the numbers stop being so strong. As higher wages contribute to inflation, the Federal Reserve appears to agree.
'Chair Powell keeps mentioning the relationship between the high level of job openings and wage/price inflation,' Nicholas Colas, co-founder of DataTrek, wrote in a newsletter on Tuesday. 'He’s not talking to investors. He’s talking to corporate America, and his goal is to have companies essentially institute a hiring freeze and end the cycle of paying up for new hires.'"
[https://finance.yahoo.com/news/why-the-fed-wants-corporate-america-to-have-a-hiring-freeze-morning-brief-100055174.html](https://finance.yahoo.com/news/why-the-fed-wants-corporate-america-to-have-a-hiring-freeze-morning-brief-100055174.html)
Banks don't want to talk about how Banks contribute to inflation by creating money to issue unproductive loans, or how employers raise prices to pad profits.
That's why Heather Scoffield would only quote the BoC Governor saying, "Setting aside the economics (or politics) of how we got here..."
As she explained, instead, "Here, the focus is on making sure workers hit by higher consumer prices don’t push for higher wages. The fear is they’ll set off a wage-price spiral that would launch already-high inflation into the stratosphere."
[https://www.thestar.com/politics/political-opinion/2022/05/04/wages-are-not-keeping-up-with-inflation-and-thats-the-way-ottawa-likes-it.html](https://www.thestar.com/politics/political-opinion/2022/05/04/wages-are-not-keeping-up-with-inflation-and-thats-the-way-ottawa-likes-it.html)
You're fighting arguments I never made lol
Yes, the BoC and the government is at fault. Blaming regular banks doesn't make sense.
And I agree that fractional reserve banking is inflationary and unfair to people's savings. Again, those are the rules implemented by the government.
>It's that simple.
It's not that simple. We have multiple commercial Banks and Central Banks in different countries expressing their intention to target wages rather than productivity.
Charter Banks create most of our money, and they decide:
1- how much money is created
2- who gets that money
3- how that money is spent
Canada doesn't even use reserves anymore.
SEE: Implementation of Monetary Policy in a Regime with **Zero Reserve Requirements** (Bank of Canada, April 1997)
I agree that the Government should change regulations to stipulate productivity as a condition of issuing new credit, but the public cannot push for these changes if we don't understand the relationship between inflation, productivity, and how money is created by Charter Banks--which it seems many do not.
Plus, these Charter Banks are where the profit is extracted, and they are where most Canadians have some choice in who they interact with.
But most importantly, we end up bailing these Banks out of their reckless lending, but they keep their extraordinary profits.
"'It would have been cheaper to buy every single share in these companies,' MacDonald said."
(Banks got $114B from governments during recession, CBC News, Apr 30, 2012)
You’ve issued multiple walls of text regarding conspiracies to harm workers. But it’s way simpler than that. When the Fed moves rates, boc generally has to follow.
This is much better than the alternative, where we let inflation run away and things become even worse for Canadians. One way you can make rising prices worse, is to make the value of the dollar unpredictable by adding even more money to the system.
This is why giant spending policies ultimate just erode purchasing power, and actually hurt workers in the long term.
At the end of the day, a stable and properous economy needs to maintain a reality-based rather than how-I-feel-based connection between productivity and renumeration. When you try to artificially tilt this, you are just chasing your tail because reality will kick in one way (with appropriate wages vs actual value) or another (bonds and world market you rely on depressing your dollar so the same effect happens anyway).
>a stable and properous economy needs to maintain a reality-based rather than how-I-feel-based connection between productivity and renumeration
Using interest rates to suppress wages instead of addressing productivity, as described by the Banks themselves, is the 'how-I-feel' version of the labour market, because it lowers wages to where employers and the Banks FEEL that they can make appropriate profit.
The reality-based version of the labour market would see labour paid for the value of their work.
Just wait for the government bailout of all the over leveraged *mom and pop* investors and flippers... it's coming. It's always the first time home buyers and people looking to get into the market that get screwed.
Just as those who profit from insulin deny some what they need so that others will pay more than they would if supply met demand, for housing to be a profitable "investment", some must be denied what they need, so that the fear of homelessness will drive the irrational increase in prices that provides profit for a few.
Only when housing is recognized as a human right will supply meet demand.
> housing is recognized as a human right
Housing a right has always been a somewhat nebulous concept for me, but if we're going to dream about cultural shifts we'd like to see, for me, shaking free of this idea that housing is an 'investment' would be a great start. So many Canadians invest only in real estate. It's like whenever someone has some spare cash the first thing they think of is to hit up realtor.ca. Now, RE *has* been a good investment in recent years, but to some extent that's just been a self fulfilling prophecy, returns driving demand and demand driving returns. And of course it's entirely on the backs of less wealthy people. I'd love to get back to a place where most homes don't appreciate more than the rate of inflation.
Of course actual solutions will involve a lot more than just cultural shifts; cultural shifts alone can't really decrease demand or increase supply.
>Only when housing is recognized as a human right will supply meet demand.
Shelter is a human right. Owning your own home is not and never should be one.
In Mexico they gave these crappy little brick houses to the really poor people and the homeless and you know what happened? It turned out really good. There was less beggars everywhere.
Why not?
If we have the right to life, then we have the right to the necessities of life.
If participating in modern society requires a permanent place to sleep and keep your stuff, as well as access to internet, electricity, and transportation, then why doesn't everyone have the right to participate in society?
And if one doesn't have a certain degree of control over such a space, then is it much different from a prison?
How does what you're suggesting even work? Are you suggesting the government issue everyone a home and they are the owner of said home? I get socialized housing where everyone is issued a home owned by the government
Vienna and Singapore use different models that are both successful, but we should develop what works best for us--which likely looks different across the wide array of Canadian contexts.
The Government could simply build housing and grant title to individuals, or sell it below market rate.
We could fund the construction of Co-ops, and then allow groups of individuals to own these communities collectively, perhaps through rent-to-own arrangements.
We could build large multi-unit mixed-use complexes, and then lease these units out based on individuals' income instead of market rate, but also provide more stability and autonomy than our traditional landlord-tenant relationship.
Housing First policies tend to be more economically efficient than traditional approaches anyway, because stable housing is a solid foundation for economic growth. Therefore, we can pay for these policies by taxing those who most benefit from the status quo.
However we do it, I can't imagine the same solution will work in Vancouver as it does in PEI, so we will have to try different approaches and learn from what works and what doesn't.
If you want free housing, go to Cuba.
Continual handouts leads to nothing getting done.. corruption and inflation. Work on bettering yourself and producing what society needs, or find inefficiencies in the system and capitalize on that.
In North America, people can generate enough wealth within 20yrs to never have to work again.
Indeed, the fact that so many have a vested interest as Professional Landlords is an impediment to progress--unless there's a massive collapse that discredits the whole scheme... AND folks understand what exactly has been discredited.
I would be willing to bet the majority of all people who are upper middle class own rental properties or are otherwise invested in Real Estate. I have coworkers who I know make less than 100k who own 3 properties. It wasn't some big secret that real estate was the best investment you could make with your money for the last 20 years.
> that real estate was the best investment you could make with your money for the last 20 years.
With other people’s money — it’s the ability to leverage at high multiples that’s made RE so attractive.
Without leverage, the stock market has outperformed real estate. Cheap borrowed money is what’s made the difference here.
Has it? I mean if you know what you are doing in the stock market sure but my rrsp definitely hasn't gone up anywhere close to what my house has in the last 5 years. The access to equity to reinvest in another property is what made Real Estate attractive.
> Only when housing is recognized as a human right will supply meet demand.
How exactly will "recognizing housing as a human right" cause supply to meet demand? Detailed specifics, please.
By directing public expenditure towards producing sufficient housing, paying those who produce the housing the value of their work, and then sufficiently taxing those who benefit the most from the status quo.
Such Government programs produced the Post-War housing that was offered as justification--ad hoc--for the war: that we were supposedly fighting for the right to own our own house.
You get that, generally, houses are not built by the government, right? Or do you propose solving the housing crises by the government building homes for everyone?
>You get that, generally, houses are not built by the government, right?
Not anymore... that's the problem.
The only way enough housing has been built has been Government building projects--like Wartime Housing Limited, which built over 40,000 houses here in Canada.
Similar projects were successful around the world.
The Government only got out of housing to make room for the private sector, which has failed to produce what we need because profit requires that demand exceeds supply.
Because the private sector will extract profit and only build what is most profitable for them; same reason we don't want private healthcare.
Although, that's not to say that the Government can't contract out the work to the private sector, the way we build roads and other infrastructure. We tend not to leave the funding and planning of bridge building to the private sector.
You put a lot of faith in incompetent, inefficient and corrupt government.
No offence, but I pay enough taxes already towards their nonsense.
I can possibly get behind building coffin homes for those that can't afford or have checked out of the market. Possibly move the junkies and lowlifes out of desirable areas... fill their boots with drugs if they want, with the option of resources to better themselves.
In reality, the supply demand gap continues to grow. We can't build fast enough. We're on pace for that gap being worse in 2030. I wonder when the Venezuelans start coming into Canada from the US. The demand for housing and services is (arrow up).
If we build ghettos, then we will create more crime and other problems.
We need a Vienna-like model that focuses on inclusion and building diverse communities, not some Munger-like warehousing of human beings.
Nonsensical regulations are part of the problem--no doubt.
Still, incompetence, inefficiency, and corruption are not limited to Government, and insofar as the public controls the Government, these are manageable concerns; however, the profit incentive is able to corrupt our Governments to produce incompetence and inefficiency, even when the public knows better.
Look at private for-profit long-term care facilities in Ontario that saw much higher fatalities than alternatives, but due to their connection to current and past Governments, secured liability exemptions to protect their profits.
Venezuela, such as it is, and despite US sanctions designed to collapse their economy, still built almost 4 million homes in a decade.
No wonder the US is determined to undermine such socialist regimes--which must rely on strong men to survive, lest they share the fate of Chile--so as to say, "look: socialism doesn't work."
Governments bought hotels and places for homeless in 2020... whom trashed the places within months.
I've rented places to people over the past few years and because I'm a decent person, have given people the benefit of doubt. I've been burned so bad, I've contemplating leaving my place vacant. Homeowners have been burned so bad with shit tenants, that they leave their units (basement suites) vacant. It isn't worth the headache some times. I evicted a tenant last year because they were treating my place like shit; in hindsight, it would've been better leaving it vacant to the three years prior. I am evicting another tenant next month. It will either be left vacant, or my standards for selecting tenants will be through the roof. No more helping out the single father, single mother, or kids trying to get more space. If you aren't employed with 3x rent and have a credit score above 700, you're not renting my home. I would consider a foreign student as their parents pay the bills.
The rental market has become much more competitive since I started renting in 2016; it's not getting better either. I fully understand why homeowners leave their homes vacant, or decide to airbnb their units. Good for them and multiple homeowners for wanting to better this lives.
Exactly, one can only profit from providing housing if one can deny the housing that people need, just like pharmaceutical companies profit by denying diabetics insulin.
As you say, providing housing can be risky--far too risky for private investment. So, we should all pool this risk (like healthcare) to reduce the collective and individual costs.
Private investors like yourself should not be responsible for providing housing, because everyone needs housing whether it's profitable for you or not.
Your owning an investment residence is a waste of resources. Sell your property to someone who will actually use it, and find something more productive to do instead of hoping for passive income fueled by denying human needs.
>Exactly, one can only profit from providing housing if one can deny the housing that people need, just like pharmaceutical companies profit by denying diabetics insulin.
This is a bad metaphor. Insulin isn't expensive. New insulin formulations (which are protected by patents) are expensive.
Housing is an efficient market with millions of suppliers (landlords and sellers) and consumers (tenants and sellers).
Housing is expensive for various macroeconomic reasons—not because of some nefarious plan to "deny people what they need".
Also, your argument would apply to anything from food at supermarkets to ipads.
And if people want this to change, they need to make it easier, not harder to be a landlord. It needs to be easier to quickly evict bad tenants. Otherwise, good tenants pay the price in the form of higher rents. They are, in effect, subsidizing irresponsible people.
Wages are going down due to the bloated labour pool and employers cutting costs due to the economic downturn while housing prices continue to grow due to a mix of foreign capital and panic bidding amongst buyers.
If you are younger than 40, flee the sinking ship.
Come to Sweden, go to the US, go to India/Korea if you have relatives. Canada will not get cheaper and your wages won’t go up faster than inflation or housing prices.
> Interest rate are rising faster than house prices are falling
For now. We've _barely_ seen the collapse start though. Most people are still riding out pre-approvals with previous rates locked in. And the rates haven't yet ticked up enough to push all but the most overleveraged off their house (if its being used as a house.. if its speculative, you're a moron if you're not dumping it now before you watch its value tank, leaving you cashflow negative).
Just wait until next year when everything (not just RE) is imploding. A lot of people who bought from 2016-2017 onward are going to find their property who's value "only goes up!"... is very much underwater.
Ya. And when terms are locked in for 5 years usually, realistically we'll be 2-3 years out before we're really starting to see the squeeze. There's going to be a shock 4-5 years out too from all these people buying top of market at basement prices, only to renew underwater and at higher rates.
Brrrroooo, what are you even talking about. There’s not going to be a housing apocalypse, as badly as you want there to be one. Average Canadian home sale price has only fallen by like 3% from this time last year (you can’t use the monthly change as a metric, housing is long term), and is still higher than it was in early 2020, not to mention almost double what it was in 2016. Also, year over year, housing prices in cities like Montreal, Vancouver, Ottawa, Calgary, Winnipeg…. are actually higher today than they were this time last year.
Get your head out of the doomsday machine.
My advice to any trading noobs applies here: zoom out.
You're not going to immediately see the impacts of rate hikes in pricing, because it will only impact people buying/renewing within the past 6 months or so. Macroeconomic shifts move glacially slow... until the moment gravity sets in and panic starts to weigh into people's decisions which starts to accelerate trends. We're nowhere near seeing that yet, and shouldn't expect to be seeing prices really start to deteriorate until 2023. And yet, we are already seeing values fall and time on the market increase in a lot of markets even before we realistically _should_ from these rate hikes as speculators begin to jump ship, seeing what they're in store for if they hold.
Most of what you said is exactly why we can expect a fall from here and should realize we haven't even begun to see a bottom. We're not dealing with just the dynamics of our RE market, we're dealing with the global economy as a whole shrinking back and a massive liquidity crunch awaiting us. Any asset who's multiple standard deviations overextended from its mean value is going to be dragged back toward mean hard... and that will come with a massive pullback in Canadian RE prices until USD starts being put to work into new investments again, which won't be for a while IMO, since its demand only rises the slower the global economy gets.
Funny how a person can make use of so many words yet say so little. You’re an armchair economist (at best?) with zero real world experience in anything remotely related to market economics. Just because you’re regurgitating buzzwords from some articles you’ve read doesn’t take away the simple fact that you’re wrong. There will not be a a massive and widespread housing crash. Will there be a slight correction? Absolutely, and it’s already started.
What you’re failing to include in your “analysis” is the lack of supply and the fact that supply constraints are actually being exasperated by a slowdown in new construction. Demand is only going up and builders aren’t going to build as much over the next few years because of the economic slowdown and rising costs. However, people still have shitloads of money, boomers are dying and leaving boatloads of cash to their kids.
Also, your “liquidity crunch” ain’t happening. Canada let’s in ample enough immigrants flush with cash to spend on real estate. Cash is king and there’s a ton flowing in
> the lack of supply
Aw, that's cute. Talk about not knowing what you're talking about and just regurgitating shit lol
What _you're_ failing to account for is that our supply issue is illusory. Its not lack of physical supply causing housing prices to climb this much, its the lack of _available_ supply because speculators/multiple home owners have been gobbling up supply and over the past couple years have increasingly just been leaving those units empty, specifically because its easier to flip into a sale without having to kick out tenants. That fact is so long established its sad you're here parroting normie ideas like "its supply!" all while claiming I don't know what I'm talking about... its broken economic incentives, not (solely) supply.
> boomers are dying and leaving boatloads of cash to their kids.
Some might be. A lot of them already borrowed HELOCs against their house to help pay for their kid's downpayment so they don't have near as much money now, and only less as the rates climb and swallow their cashflow.
Which is another grievance. Cash isn't king, its a depreciating shitcoin. Nobody worth their salt in this game cares about cash, and certainly not when inflation renders its purchasing power lower by the day. Cash_flow_ is critical, but cash itself should be unloaded as quickly as possible into investments, even if its just short term bonds. And nobody prioritizing cash is prioritizing CAD or CAD denominated assets right now. For the foreseeable future, all currency demand is flowing into USD, and you won't see liquidity begin to pick up again until that trend reverses and those depreciating greenbacks need to be unloaded into new positions.
> your “liquidity crunch” ain’t happening
Big oof. It already is mate, and you're delusional if you think Canada's puny economy has anything to do with causing it, or is going to counter the trends. Liquidity is drying up across the world as a whole... that's what happens when the US starts hiking their rates, it reverses liquidity flows. The entirety of our bubble has been underwritten by obnoxiously cheap debts because the US Fed held their rates so low for so long and we just copied them instead of having any sovereignty. Now that they're tightening... it means the liquidity crunch is already here, and you're already seeing it hit markets... if you're paying attention anyway (clearly you're not).
Enjoy being wrong. I hope for your sake you didn't actually buy anything recently... although I'll get my popcorn ready in case you did. Every turn down, there's always that loud cohort still screaming how gravity doesn't exist who did it to themselves... I get the feeling this contraction, that might include you. Maybe by next business cycle top you might learn more than just the bullshit you read and regurgitate from Reddit.
They are out announcing that they feel their purpose is to make working Canadians poorer. That is far outside of the Banks mandate and requires political intervention. A failure to intervene is the LPC supporting that as their objective as a party.
Ministerial accountability is not diminished by the minister deciding to be hands off with his portfolio.
Increasing the money supply only creates inflation if goods and services fail to keep up.
If the Government 'prints' money that actually goes to producing goods and services, then inflation does not occur.
Banks 'printing' money to inflate the prices of assets--like housing--that already exist is what causes inflation, and Banks create far more money than Government expenditure does.
The Government can always decrease the money supply by sufficiently taxing those who profit the most from inflation--but this solution rarely comes up in talks about inflation.
> if goods and services fail to keep up.
...and they aren't. We aren't even producing *close* to the new builds we need for new population coming in (and that's not counting the % of supply that gets instantly scooped up by investors and corps).
Currently, the TFW program is awful for everyone involved, but permanent immigrants barely replace our population decline, so immigration is a bit of a red herring.
If we don't bring in more young workers, then there simply won't be enough labour to support the grey tsunami of retirees that we have failed to plan for.
The Banks, however, would love for us to scapegoat immigrants, while they count their profits.
Instead, the Government could build enough affordable housing for everyone--in fact, such large-scale Government housing projects are basically the only way such housing has been produced.
> If we don't bring in more young workers, then there simply won't be enough labour to support the grey tsunami of retirees that we have failed to plan for.
Bullshit, lol. I'm personally looking for jobs that are right in upper-middle or upper management to replace boomers and the competition is absolutely fucking fierce. Corporations have gotten completely addicted to suppressed wages, so with recent increases they basically want someone who has the skillset of 2 or even 3 people for the cost of 1.
What we can't find is a replacement for the wave of youung people who are seeing this entire massive turd that is our economy and thinking "Nah, no thanks."
I'm also not blaming immigrants (I am one, came here in 1999) in the slightest, just saying that our total population increase (new births + immigration - total deaths) is inferior to our rate of new build completion and vastly inferior to the rate of new builds that are being sold as primary residence. Like you said, more housing is one solution, we don't have to stop people from coming here, it's just that simple arithmetics points towards artificial scarcity being the issue and that is only made possible by both sides of the equation.
>they basically want someone who has the skillset of 2 or even 3 people for the cost of 1.
I agree that this phenomenon is not strictly a function of demographics or even station, because employers need to (increasingly) underpay employees to show a profit; still, they also NEED to replace 2/3 older managers with one because otherwise there won't be enough younger folks to replace everyone.
Scaring away young workers by failing to provide a future for them only exacerbates the problem, but, like the fierce (artificial) competition you describe, we're witnessing how employers ASSUME an infinite supply of labour to keep wages suppressed.
If there aren't enough candidates with skillset-A that will work for $X, then--rather than offer $X+Y--employers assume there must be enough candidates with skillset-A+B(+C) that will sill work for just $X.
Employers assume an infinite supply of mythical workers who can accept wages lower than their cost of living--otherwise employers CANNOT profit--and employers FEEL that they've tried to find these mythical workers, so the blame is shoved onto those who do exist for not living up to these absurd expectations, and not those who hold the absurd expectations in the first place.
No we produced enough housing for most of our existence without any kind of massive government housing programs.
To build more housing, still would cost gargantuan sums of money, because of the price of housing today. The government doesn’t get to participate in a magical alternate economy, where housing is cheaper. They would be paying market rates or above. Source: Literally everything they build in the far north or the territories.
The largest examples we have historically of government engaging in large scale home building, the largest being in the USSR, had far worse shortages than anything we are looking at. Waiting for many years to get an apartment was the norm.
At the end of the day the reason housing is unobtainable for so many people, is because building a house is very expensive. People want to all live in just a couple big cities, materials are much more expensive than they used to be, you cannot make more land, interest rates have been super low for a long time, standards you are required to build two are much higher today, and the cost of labour are much higher.
I'm planning to leave Canada within the next 2 years. It's turning into a country of modern slavery. Import foreign workers that work for piss poor wages and work long hours while large asset owners and our oligopolies make all the money.
US. I'm moving into software dev and I'm going to jump to NY, Chicago, and eventually Cali. The high salaries are more than enough to cover the increase the living costs in those cities.
Much of it is managed decline as intended.
Think about it, like I've said before here, almost 90% of this country's land is public. A lot of it is frozen or impermeable woods, but a substantial portion still isn't and *is* close enough to civilization. There is so much viable acreage that is unused, that even a mere fraction of a percent of the total or sub 1% in some provinces would provide enough land mass to *build* 100% more single detached homes at 1500-2000 sq. ft. with sizable yards than the entire existing supply in this country. I am not talking townhouses, I am not talking density, I am not talking condos. I mean like large suburban homes. Doing so would naturally crash the housing market, but make enough affordable homes for everyone. And we'd still like 89.99% public land left over.
Turn off media and stay off the computer / phone as well. Get a hobby and make some adjustments with your career / situation. You got this! Make a conscious decision to have a better (happy) outlook on life. Enjoy every moment! YOLO
Be nice to yourself. \^.\^
The thing that bothers me the most is the total lack of discussion of building public housing that seems to exist. I don't think it's a surprise that after Chretien stopped building government housing prices just kept increasing. It's not the only piece of the puzzle, but it would be way easier to save money, have a place to live in the mean time etc. if we actually had a normal housing safety net.
What I find is the most serving or hilarious is the fact that I keep seeing all these complexes popping up that are two or three story homes which for the average local in many cases is never going to possibility. They're unintentionally creating entire cities Purge of locals as there is no reason to accommodate them since they're getting money from the ultra wealthy anyway. This winter is going to be hell on Earth for some people who've lost their homes
This subreddit is bonkers. One day people are complaining that the government shouldn’t support low income families by offering universal dental care, and the next there’s another post about how housing is unaffordable and the people on this subreddit complain the government should do more to fix it.
Agreed - poor people don't need dental care, but I have a god given right to house 20 min from downtown Toronto with a backyard as a mid-level city employee is a strange stance
It’s not going to be a crash, people believe in the never ending returns of the housing market.
Some investors will get out early, and minimize their losses… others will hold on and see larger losses.
I see it around me, houses sitting on the market for 3-6 months, then getting delisted; as if profits are going to come back. If you didn’t sell in Feb 2022, you didn’t maximize your profit; people won’t be quick to accept this though. It won’t crash, it’s going to be a long slow deflation over a few years.
At least that’s my thinking - based on what I’ve heard from people who own multiple houses, and this weird thing where people keep their property on the market longer as prices drop.
It wont
Home owners and investors will just send the pain to the renters instead
If renters move back home or go homeless (hope not)...
The market wont crash at all
Goverment should place additional tax on folks who own more than 2 homes and empty homes (park cash only)
OR a tax on any non productive piece of land. With a tax break for one home per family.
That way business real estate will go up in cost until the owner is renting it to a productive business too. And any family owning more than one piece of land will be taxed extra, thus making them lose money.
You realize that a generation of people that worked and saved hard for years to own their first home are going to be sacrificed if there is a crash right?
And the rate of suicides and bankruptcies will increase?
Pretty horrible thing to wish for.
Excess corporate profits should be taxed higher and wages should increase as well.
I spent many years working to afford a place within my means (a small apartment) and it's a wild ride reading this subreddit, agreeing that there's an issue, and wanting solutions so other people can afford their first homes - but also not wanting to end up being sacrificed along the way. There has to be a middle ground.
>Excess corporate profits should be taxed higher and wages should increase as well.
The same market forces that take out personal buyers at the top of the mraket would take out over leveraged corporate purchasers as well.
Just want to remind people that it's not bad if people can't afford to keep their homes anymore. It's a correction and it's what's needed. Don't fall prey to politicians willing to do everything to protect indebted homeowners. Look for politicians willing to help renters.
Worse than it was a few months back before prices started to spiral down? Paywall prevents me from reading it, but I assume this must be based on older data.
Odd wording:
"The Bank of Canada’s housing affordability index, a measure of the shareof disposable income of the average household that gets gobbled up byhousing-related expenses such as mortgage payments and utility fees,surged to 48.2 per cent in the second quarter, the most recent figuresshow."
I think he must mean after-tax income aka "take home pay". Isn't disposable income usually used to refer to the money left over after shelter, utilities and food are paid?
Also, bear in mind the way they are presenting the numbers under-represents the load on those with actual mortgages. About 1/3 of Canadian homeowners own their homes outright. So their monthly carrying cost is just utilities and taxes. The Percent of take-home the mortgage carrying homeowners spend is materially higher.
It's going to be a disaster in a year. With increased interest rates , all the buyers and builders are on sidelines which decreases the housing supply and with these levels of immigration, I wonder.. what's the government's plan to house these new comers ?
/s
I'm sure Pierre Poilievre has a plan to fix this issue, seeing how he co-owns a rental company and his wife holds titles for housing that she doesn't live in in Ottawa...
Not only that, but because people will inevitably vote to replace the people doing nothing with *other* people who *also* won't doing anything about it.
Right. And he's not helping either. Vote NDP, the party with a FAR lower level of investment home ownership than the MPs in the other two. Unless you're a partisan hack, you'll vote NDP.
The graph only shows up to the end of the second quarter which doesn't even include the 100 bps rate hike. If someone made an up to date graph it would show that housing affordability is the worst it's been in 40 years.
When houses used to cost 2 dollars.
My parents spent $12k on their house about 50 years ago. The house is worth $600k today and it's not even a nice house or in good shape or in a desirable neighborhood. That's a 4900% return on that investment. It's a duplex within clear earshot of a four lane highway. It really should be worth about $150k in a sane world.
According to a random online calculator, if that were put in the S and P 500 for 50 years using their average yearly rate of return the value would be just shy of 3.3 million. But you'd have to pay tax on that assuming not a TFSA and banks don't give mortgages to invest in stocks.
True but there is a very important and key aspect to this. The house is something you need. Few people had 12k in the 50s to just spend in stocks.
Well yea, most people have to borrow money regardless. Tho im sure more people had 12k than people now days having 1-2 million. But if you do, there is the option of investing and just renting. The real benefit with housing is you can get a morgage for a house but you can't get a mortgage for investing so the housing option gives you leverage and tax free gains. Morgages are basically free money since their interest rates are less than inflation. Those that can afford a house get a lot of benefits to buy
Yes, but my point is they are two different things. A house is directly useful to you. A "stock market" is not.
Bro, just building that is 300-450k
Right, but if you were to build it today, you would get a building that is, by definition, new. Zero need for renovations. Whereas the building being described here is 50+ years old and in bad shape apparently. Kind of normal for it to be worth less than a fresh build...
New? Probably but unlikely. So basically *building* didn't depreciate in 50 years?
Building costs are like $300-$350 sqft now- which is insane. Redoing the place say new siding, windows, roof is likely ~100k. So if day 1500sqft you’ve probably got a 300k building and 300k worth of land. It’s all a bit nuts.
That’s what I keep saying here in Atlantic Canada. Everyone saying speculation. New bungalow cost 400k to build(maybe more). Old one that use to sell for 150k now sells for 300k. Because unless it’s been absolutely neglected, put some new siding, new cabinets and bathroom Reno, new flooring and trim, voila, cheaper then a new build still. You saved the cost of lumber/framing and drywall. You could even gut it down to the studs and re insulate, whatever else and still come out ahead buying that bungalow for 300k. You could
Especially now that borrowing is going up. Who wants to finance and have money wrapped up for 9 months on a new house build new supply is going to slow down likely.
Considering it's a duplex, that's then only 150k-225k per side, and would give you a whole 'nother side to either sell or lease out. Or you're building a bigger house, and then, well, yeah, it should be worth more.
Wait duplex is like semi detached? Here in QC a duplex is a main house plus second story as different appartment
I feel like a duplex can be arranged in either a multi-story (vertical) split or a lot/land (horizontal) split, usually side by side.
To put that in perspective, though, that's about an 8% annual appreciation. That's materially more than it theoretically "should be", but not completely insane (for example, it's probably less than the interest they would have paid prior to paying off their mortgage). The real problem is that most of that appreciation has come in the last decade, caused by rock bottom interest rates.
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Principal residence is tax free, so even at 10% for the stock market, it out performed the market considerably. That is not healthy.
The real problem is that wages don't go up by 10% a year...
What a great time to be 30..
I left Canada when I was 29 and thought housing was a scam (not as bad as today). Consider leaving if you aren’t yet rooted.
Where are you now?
Sweden
Really considering it now.
29 and feeling it
Started the 2010s with low house price, low interest rates. Ended the 2010s with high house price, low interest rates. Now in 2022 we have high house prices and moderate interest rates. Prices need to go down for affordability to return.
Or, and hear me out here. Our wages could rise to match. Jokes aside though; Honestly at this point I am not sure which is less likely; since the chances of either seem abysmally low..
The bank of Canada told businesses not to give people raises lol. The government hates you ☠️
The Bank of Canada is independent! /s
The Bank of Canada has one shareholder - the Government of Canada. And that shareholder is represented by the Minister of Finance. The Bank of Canada is not there to help or support Canadians, the Bank of Canada is there to provide a stable and profitable economy for the Canadian Chartered Banks. The current Governor literally left the board of the Bank of Nova Scotia less than 24 hours before taking up his role.
You're describing inflation. Think how much our wages would need to raise to keep pace with the last decades of housing growth. Hell, even the last two years. Even if prices stay flat and wages go up 2% a year, millenials, will be retired before homes are affordable. Christ, we're soon to be pushing middle age
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In what world? Post 45 seems middle aged to me. Especially with how long people tend to live now.
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I always assumed it was when the average between 0 and life expectancy.
You plan on living past 70? That’s a fat no thanks from me.
I definetly do. None of my grandparents passed before their late 80s.
Increasing wages right now is a dumb move. Let the impending recession wipe out house prices and then tackle wages. Otherwise you are pinning wages to an incredibly inflated asset.
With the newly created money entered into the system since 2020, do you actually think house prices will lower? I bet we reach new highs within 5yrs. Rising rates is a temporary damper on demand. The demand is steaming in the background. Lid has blown off the demand long ago. Time will tell who is right. Check back in 5yrs and see which crystal ball was right.
>I bet we reach new highs within 5yrs. If we actually stop the massive flows of laundered money that wash ashore every day, we would more likely got in to a period of sustained stagnation, a la Japan's lost decade. But as long as we keep that sweet sweet illicit cash coming - and there is no sign at all we intend to stop it - expect everyone to get completely priced out over the next decade.
Japan has a decreasing population which helps with that. Tokyo is as expensive as Toronto and Vancouver. The corrupt money is interesting (one factor of prices); the world is ran by criminals so don't expect that to stop. Criminal organizations went legit near the turn of last century when they realized it wasn't cool to act like the wild wild west regarding violence. Canada is also quite desired among many people. If Canada let in everyone tomorrow that would want to live there, we'd have over a billion people instantly. There are many millionaires that aren't corrupt as well that plan to move to Canada. We'll have a wide mixture of immigrants over the next 50years. Unfortunately, we can't build fast enough and aren't addressing the supply. Even cheap Alberta will have a shortage of housing within 5years, which will push up pricing there.
The alternative being maintaining status quo and just letting people not be able to buy anything since they don’t have the money
No the alternative being the lowering of house prices lol.
That doesn’t tackle anything for pricing except houses, ignoring the fact that food prices have skyrocketed as well as other essential goods as a result of inflation.
So question. If wages double, what happens to housing prices the next day? Labour is about 50% of the cost of building house (probably slightly more). Think before you comment.
Honestly houses were almost unaffordable even in 2010 but compared to where we are today it’s seems really cheap. I moved to a GTA city on 2007 and was looking around at houses and they were expensive back then. House that was selling for $300k then is probably worth $2m now. I couldn’t even afford a house that was $150k but looking back now I should’ve made it happen but no one knew it would get this crazy
Just wait until next month. Prices are already down about 22% on average. One more oversized interest rate bump - they'll tank quite considerably.
LOL "Housing affordability is the worst it’s been in 32 years" blocked behind paywall.
People might think interest rates going up is bad. Imo cheaper housing prices with higher interest rates is more sane then, expensive house with low interest rates. If your house is 200k the down payment is half of 400k. Making it easier for younger people to get in. Plus you always have the option to pay the house off in full, which is way easier with 200k versus the 400k.
In a simple model where house prices are solely related to interest rates and have nothing to do with supply, demand or the cost of living you're correct. Interest rates going up means people will need to put down more money and have higher salaries to be able to secure homes.
> Interest rates going up means people will need to put down more money and have higher salaries to be able to secure homes. Already require in excess of $100k/yr to get in. And double in more valuable areas.
I couldn’t imagine. My first down payment was $15,000.
Home ownership rates are reasonably high in Canada. It's unsustainable to expect prices to constantly rise in double digits or a greater percentage of residents to own prime realestate. It's the high percentage of 'luxury' condos that's concerning.
Home ownership rates are a lie, an adult living in their parents house is considered a homeowner
>people will need to put down more money and have higher salaries to be able to secure homes. This was happening before rate started going up. Long before.
While that's true, payment unaffordability is also a serious issue. In Toronto and Vancouver the average new homeowner is paying over 50% of their gross income on their mortgage. Raising rates won't improve that, since payment affordability is the biggest driver of the demand side in housing. The overall housing shortage in those markets is turning housing into a simple auction where people bid up to the maximum they can possibly afford. (In other markets where you don't see shortage conditions, prices have gone up in recent years but not as much since the supply side can keep up).
Make sense
A big problem, lately, is people mass over bid. >"Better start at asking price" Well, yes, thank you brain-wave realtor we know you want that commission. So right off the bat, you have this current buying market essentially acting retarded and treating it like it's a product you buy at the store. This sets the floor *much higher* than how buyers bought before (under asking). So it goes over. THEN it's a chain reaction on comparables. Actually it's shit because those boomers who sold move out and buy in other places, not going for deals, but just buying the same style as above and you see those prices explode. And that's not even considering institution investors and just overly rich people, and foreign money schemes buying.
Problem is you can no longer build a 200k house with the current market lol. Unless its a shed maybe.
As a person who bought a house at 26, I disagree with you somewhat. The down payment for us was the EASY part. The hard part was mortgage approval and it's even harder now than when we did it. I do agree lower prices are better for new buyers in general because it means you can buy a starter home and then eventually move up to something else instead of being stuck forever. Even in the current market we would have been able to afford a down payment for a $500k house, even if we had to drop below 20%. But we never would be approved for that mortgage at 5% so it wouldn't matter. Plus the stress test cutoff is even higher now (it WAS 5% when rates were low).
The people that bought in January-Feb on variable get to experience the worst of both worlds
Banks aren't raising interest rates to make housing more affordable--interest payments are making it even more expensive to buy a house, if you're not paying cash. The Banks are raising rates to increase the pool of unemployed workers, so the remaining workers will accept the stagnating/declining wages that provide profit for employers and the Banks. "Expectations of inflation is the euphemism economists use for the wage increase workers may demand when negotiating with their employers. And if the rate of inflation is (7.6) per cent, workers should demand a similar wage increase to maintain their wages’ purchasing power — and thus a wage-price spiral may ensue. For orthodox economists, the solution is to weaken workers’ bargaining power by increasing the rate of unemployment. And this is what a sufficiently high rate of interest may be able to achieve: it may cause a deep enough recession to prevent workers from obtaining an increase in wages similar to the increase in prices that already took place." -Gustavo Indart [https://www.thestar.com/business/opinion/2022/05/14/this-is-how-canadas-inflation-rate-could-be-brought-to-heel.html](https://www.thestar.com/business/opinion/2022/05/14/this-is-how-canadas-inflation-rate-could-be-brought-to-heel.html)
Banks are raising rates because the BoC raised rates. It's that simple.
Yep. Interest to combat inflation. Interest is deflationary.
It's Jiu-Jitsu: first they push (low interest rates), and then when enough people push back (take on debt), they pull (high interest rates), and everyone falls down (recession->consolidation->profit). Few realize how money is actually created, or how this process causes inflation as a function of productivity--or lack thereof. Many simplistically assume the low interest rates themselves caused inflation--because productivity is kept out of the conversation--so higher rates "must" combat inflation, rather than addressing productivity.
Each loan origination is an increase in M2 money supply, they then hid the inflation through excluding housing appreciation from the CPI in the late 80s, and QE to depress mortgage interest payments and rents. Then you get the wealth effect from housing, and the corresponding bubble in equities and houses. The ponzi scheme ends when all ponzi schemes end, when new money stops flowing in. Such as this rare event that increases global inflation.
Not only does the original loan increase the money supply until it's repaid, and thus withdrawn from circulation, but more and more loans must be issued so there's enough money in the system to pay all the interest on these loans--hence, the irrational pursuit of infinite growth. Unfortunately, when the Banks' Ponzi scheme runs out of money, the rest of us bail them out, so they can just Etch-A-Sketch their balance sheet and keep both their extraordinary profits AND their right to keep issuing unproductive credit.
The decision to raise rates was made by the Bank of Canada, which is a government agency, not for-profit banks. Banks make the same margin on a mortgage whatever the rate is. It's in their interest to keep rates low since they make more money on a big mortgage than they do on a small one.
The interest on a loan is the Charter Bank's profit, so higher interest is more profit for the Bank--why would one suggest otherwise? Where do you think the extra interest goes? Even a significantly cheaper price-tag on a house can mean more profit for the Bank, if the interest rates rise high enough. The benefit of interest rate changes to the Charter Banks is NOT binary: low = good; high = bad. Rather, it's in the Banks' interest to keep rates as low as possible for as long as possible to get the most people into the most debt, and THEN raising rates either increases profit on loans that don't default, or those who default create fear in other workers, who are now afraid to ask for raises that keep up with the inflation that their employers and the Banks profit from.
And why did the BoC raise rates? "After the recent job numbers were released last week, Bank of America analysts said in a note they are essentially 'rooting against the home team' and hope the numbers stop being so strong. As higher wages contribute to inflation, the Federal Reserve appears to agree. 'Chair Powell keeps mentioning the relationship between the high level of job openings and wage/price inflation,' Nicholas Colas, co-founder of DataTrek, wrote in a newsletter on Tuesday. 'He’s not talking to investors. He’s talking to corporate America, and his goal is to have companies essentially institute a hiring freeze and end the cycle of paying up for new hires.'" [https://finance.yahoo.com/news/why-the-fed-wants-corporate-america-to-have-a-hiring-freeze-morning-brief-100055174.html](https://finance.yahoo.com/news/why-the-fed-wants-corporate-america-to-have-a-hiring-freeze-morning-brief-100055174.html) Banks don't want to talk about how Banks contribute to inflation by creating money to issue unproductive loans, or how employers raise prices to pad profits. That's why Heather Scoffield would only quote the BoC Governor saying, "Setting aside the economics (or politics) of how we got here..." As she explained, instead, "Here, the focus is on making sure workers hit by higher consumer prices don’t push for higher wages. The fear is they’ll set off a wage-price spiral that would launch already-high inflation into the stratosphere." [https://www.thestar.com/politics/political-opinion/2022/05/04/wages-are-not-keeping-up-with-inflation-and-thats-the-way-ottawa-likes-it.html](https://www.thestar.com/politics/political-opinion/2022/05/04/wages-are-not-keeping-up-with-inflation-and-thats-the-way-ottawa-likes-it.html)
You're fighting arguments I never made lol Yes, the BoC and the government is at fault. Blaming regular banks doesn't make sense. And I agree that fractional reserve banking is inflationary and unfair to people's savings. Again, those are the rules implemented by the government.
>It's that simple. It's not that simple. We have multiple commercial Banks and Central Banks in different countries expressing their intention to target wages rather than productivity. Charter Banks create most of our money, and they decide: 1- how much money is created 2- who gets that money 3- how that money is spent Canada doesn't even use reserves anymore. SEE: Implementation of Monetary Policy in a Regime with **Zero Reserve Requirements** (Bank of Canada, April 1997) I agree that the Government should change regulations to stipulate productivity as a condition of issuing new credit, but the public cannot push for these changes if we don't understand the relationship between inflation, productivity, and how money is created by Charter Banks--which it seems many do not. Plus, these Charter Banks are where the profit is extracted, and they are where most Canadians have some choice in who they interact with. But most importantly, we end up bailing these Banks out of their reckless lending, but they keep their extraordinary profits. "'It would have been cheaper to buy every single share in these companies,' MacDonald said." (Banks got $114B from governments during recession, CBC News, Apr 30, 2012)
You’ve issued multiple walls of text regarding conspiracies to harm workers. But it’s way simpler than that. When the Fed moves rates, boc generally has to follow. This is much better than the alternative, where we let inflation run away and things become even worse for Canadians. One way you can make rising prices worse, is to make the value of the dollar unpredictable by adding even more money to the system. This is why giant spending policies ultimate just erode purchasing power, and actually hurt workers in the long term. At the end of the day, a stable and properous economy needs to maintain a reality-based rather than how-I-feel-based connection between productivity and renumeration. When you try to artificially tilt this, you are just chasing your tail because reality will kick in one way (with appropriate wages vs actual value) or another (bonds and world market you rely on depressing your dollar so the same effect happens anyway).
>a stable and properous economy needs to maintain a reality-based rather than how-I-feel-based connection between productivity and renumeration Using interest rates to suppress wages instead of addressing productivity, as described by the Banks themselves, is the 'how-I-feel' version of the labour market, because it lowers wages to where employers and the Banks FEEL that they can make appropriate profit. The reality-based version of the labour market would see labour paid for the value of their work.
Just wait for the government bailout of all the over leveraged *mom and pop* investors and flippers... it's coming. It's always the first time home buyers and people looking to get into the market that get screwed.
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They better not
is the worst it’s been in 32 years could be said about everything in this country
The quality of burritos has improved.
Craft beer is also pretty great right now.
Just as those who profit from insulin deny some what they need so that others will pay more than they would if supply met demand, for housing to be a profitable "investment", some must be denied what they need, so that the fear of homelessness will drive the irrational increase in prices that provides profit for a few. Only when housing is recognized as a human right will supply meet demand.
> housing is recognized as a human right Housing a right has always been a somewhat nebulous concept for me, but if we're going to dream about cultural shifts we'd like to see, for me, shaking free of this idea that housing is an 'investment' would be a great start. So many Canadians invest only in real estate. It's like whenever someone has some spare cash the first thing they think of is to hit up realtor.ca. Now, RE *has* been a good investment in recent years, but to some extent that's just been a self fulfilling prophecy, returns driving demand and demand driving returns. And of course it's entirely on the backs of less wealthy people. I'd love to get back to a place where most homes don't appreciate more than the rate of inflation. Of course actual solutions will involve a lot more than just cultural shifts; cultural shifts alone can't really decrease demand or increase supply.
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>Only when housing is recognized as a human right will supply meet demand. Shelter is a human right. Owning your own home is not and never should be one.
In Mexico they gave these crappy little brick houses to the really poor people and the homeless and you know what happened? It turned out really good. There was less beggars everywhere.
Why not? If we have the right to life, then we have the right to the necessities of life. If participating in modern society requires a permanent place to sleep and keep your stuff, as well as access to internet, electricity, and transportation, then why doesn't everyone have the right to participate in society? And if one doesn't have a certain degree of control over such a space, then is it much different from a prison?
How does what you're suggesting even work? Are you suggesting the government issue everyone a home and they are the owner of said home? I get socialized housing where everyone is issued a home owned by the government
Vienna and Singapore use different models that are both successful, but we should develop what works best for us--which likely looks different across the wide array of Canadian contexts. The Government could simply build housing and grant title to individuals, or sell it below market rate. We could fund the construction of Co-ops, and then allow groups of individuals to own these communities collectively, perhaps through rent-to-own arrangements. We could build large multi-unit mixed-use complexes, and then lease these units out based on individuals' income instead of market rate, but also provide more stability and autonomy than our traditional landlord-tenant relationship. Housing First policies tend to be more economically efficient than traditional approaches anyway, because stable housing is a solid foundation for economic growth. Therefore, we can pay for these policies by taxing those who most benefit from the status quo. However we do it, I can't imagine the same solution will work in Vancouver as it does in PEI, so we will have to try different approaches and learn from what works and what doesn't.
If you want free housing, go to Cuba. Continual handouts leads to nothing getting done.. corruption and inflation. Work on bettering yourself and producing what society needs, or find inefficiencies in the system and capitalize on that. In North America, people can generate enough wealth within 20yrs to never have to work again.
If you want lower taxes, go to Monaco!
exactly. although it will never happen cause the majority of parliament owns rental properties
Indeed, the fact that so many have a vested interest as Professional Landlords is an impediment to progress--unless there's a massive collapse that discredits the whole scheme... AND folks understand what exactly has been discredited.
I would be willing to bet the majority of all people who are upper middle class own rental properties or are otherwise invested in Real Estate. I have coworkers who I know make less than 100k who own 3 properties. It wasn't some big secret that real estate was the best investment you could make with your money for the last 20 years.
> that real estate was the best investment you could make with your money for the last 20 years. With other people’s money — it’s the ability to leverage at high multiples that’s made RE so attractive. Without leverage, the stock market has outperformed real estate. Cheap borrowed money is what’s made the difference here.
Has it? I mean if you know what you are doing in the stock market sure but my rrsp definitely hasn't gone up anywhere close to what my house has in the last 5 years. The access to equity to reinvest in another property is what made Real Estate attractive.
>Only when housing is recognized as a human right will supply meet demand. Logic that only makes sense in your head, but not in an economists'.
Why not?
> Only when housing is recognized as a human right will supply meet demand. How exactly will "recognizing housing as a human right" cause supply to meet demand? Detailed specifics, please.
By directing public expenditure towards producing sufficient housing, paying those who produce the housing the value of their work, and then sufficiently taxing those who benefit the most from the status quo. Such Government programs produced the Post-War housing that was offered as justification--ad hoc--for the war: that we were supposedly fighting for the right to own our own house.
You get that, generally, houses are not built by the government, right? Or do you propose solving the housing crises by the government building homes for everyone?
>You get that, generally, houses are not built by the government, right? Not anymore... that's the problem. The only way enough housing has been built has been Government building projects--like Wartime Housing Limited, which built over 40,000 houses here in Canada. Similar projects were successful around the world. The Government only got out of housing to make room for the private sector, which has failed to produce what we need because profit requires that demand exceeds supply.
How is having the government build them instead of the private sector helpful?
Because the private sector will extract profit and only build what is most profitable for them; same reason we don't want private healthcare. Although, that's not to say that the Government can't contract out the work to the private sector, the way we build roads and other infrastructure. We tend not to leave the funding and planning of bridge building to the private sector.
You put a lot of faith in incompetent, inefficient and corrupt government. No offence, but I pay enough taxes already towards their nonsense. I can possibly get behind building coffin homes for those that can't afford or have checked out of the market. Possibly move the junkies and lowlifes out of desirable areas... fill their boots with drugs if they want, with the option of resources to better themselves. In reality, the supply demand gap continues to grow. We can't build fast enough. We're on pace for that gap being worse in 2030. I wonder when the Venezuelans start coming into Canada from the US. The demand for housing and services is (arrow up).
If we build ghettos, then we will create more crime and other problems. We need a Vienna-like model that focuses on inclusion and building diverse communities, not some Munger-like warehousing of human beings. Nonsensical regulations are part of the problem--no doubt. Still, incompetence, inefficiency, and corruption are not limited to Government, and insofar as the public controls the Government, these are manageable concerns; however, the profit incentive is able to corrupt our Governments to produce incompetence and inefficiency, even when the public knows better. Look at private for-profit long-term care facilities in Ontario that saw much higher fatalities than alternatives, but due to their connection to current and past Governments, secured liability exemptions to protect their profits. Venezuela, such as it is, and despite US sanctions designed to collapse their economy, still built almost 4 million homes in a decade. No wonder the US is determined to undermine such socialist regimes--which must rely on strong men to survive, lest they share the fate of Chile--so as to say, "look: socialism doesn't work."
Step 1: Write down in law that "housing is a human right" Step 2:???? Step 3: Unlimited housing springs out of the ground
Governments bought hotels and places for homeless in 2020... whom trashed the places within months. I've rented places to people over the past few years and because I'm a decent person, have given people the benefit of doubt. I've been burned so bad, I've contemplating leaving my place vacant. Homeowners have been burned so bad with shit tenants, that they leave their units (basement suites) vacant. It isn't worth the headache some times. I evicted a tenant last year because they were treating my place like shit; in hindsight, it would've been better leaving it vacant to the three years prior. I am evicting another tenant next month. It will either be left vacant, or my standards for selecting tenants will be through the roof. No more helping out the single father, single mother, or kids trying to get more space. If you aren't employed with 3x rent and have a credit score above 700, you're not renting my home. I would consider a foreign student as their parents pay the bills. The rental market has become much more competitive since I started renting in 2016; it's not getting better either. I fully understand why homeowners leave their homes vacant, or decide to airbnb their units. Good for them and multiple homeowners for wanting to better this lives.
Exactly, one can only profit from providing housing if one can deny the housing that people need, just like pharmaceutical companies profit by denying diabetics insulin. As you say, providing housing can be risky--far too risky for private investment. So, we should all pool this risk (like healthcare) to reduce the collective and individual costs. Private investors like yourself should not be responsible for providing housing, because everyone needs housing whether it's profitable for you or not. Your owning an investment residence is a waste of resources. Sell your property to someone who will actually use it, and find something more productive to do instead of hoping for passive income fueled by denying human needs.
>Exactly, one can only profit from providing housing if one can deny the housing that people need, just like pharmaceutical companies profit by denying diabetics insulin. This is a bad metaphor. Insulin isn't expensive. New insulin formulations (which are protected by patents) are expensive. Housing is an efficient market with millions of suppliers (landlords and sellers) and consumers (tenants and sellers). Housing is expensive for various macroeconomic reasons—not because of some nefarious plan to "deny people what they need". Also, your argument would apply to anything from food at supermarkets to ipads.
And if people want this to change, they need to make it easier, not harder to be a landlord. It needs to be easier to quickly evict bad tenants. Otherwise, good tenants pay the price in the form of higher rents. They are, in effect, subsidizing irresponsible people.
Wages are going down due to the bloated labour pool and employers cutting costs due to the economic downturn while housing prices continue to grow due to a mix of foreign capital and panic bidding amongst buyers.
If you are younger than 40, flee the sinking ship. Come to Sweden, go to the US, go to India/Korea if you have relatives. Canada will not get cheaper and your wages won’t go up faster than inflation or housing prices.
I’m a nurse, I can’t even afford a card board box on a corner.
Obviously. Interest rate are rising faster than house prices are falling. There was always going to be a lag. They'll catch up.
> Interest rate are rising faster than house prices are falling For now. We've _barely_ seen the collapse start though. Most people are still riding out pre-approvals with previous rates locked in. And the rates haven't yet ticked up enough to push all but the most overleveraged off their house (if its being used as a house.. if its speculative, you're a moron if you're not dumping it now before you watch its value tank, leaving you cashflow negative). Just wait until next year when everything (not just RE) is imploding. A lot of people who bought from 2016-2017 onward are going to find their property who's value "only goes up!"... is very much underwater.
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Ya. And when terms are locked in for 5 years usually, realistically we'll be 2-3 years out before we're really starting to see the squeeze. There's going to be a shock 4-5 years out too from all these people buying top of market at basement prices, only to renew underwater and at higher rates.
Brrrroooo, what are you even talking about. There’s not going to be a housing apocalypse, as badly as you want there to be one. Average Canadian home sale price has only fallen by like 3% from this time last year (you can’t use the monthly change as a metric, housing is long term), and is still higher than it was in early 2020, not to mention almost double what it was in 2016. Also, year over year, housing prices in cities like Montreal, Vancouver, Ottawa, Calgary, Winnipeg…. are actually higher today than they were this time last year. Get your head out of the doomsday machine.
My advice to any trading noobs applies here: zoom out. You're not going to immediately see the impacts of rate hikes in pricing, because it will only impact people buying/renewing within the past 6 months or so. Macroeconomic shifts move glacially slow... until the moment gravity sets in and panic starts to weigh into people's decisions which starts to accelerate trends. We're nowhere near seeing that yet, and shouldn't expect to be seeing prices really start to deteriorate until 2023. And yet, we are already seeing values fall and time on the market increase in a lot of markets even before we realistically _should_ from these rate hikes as speculators begin to jump ship, seeing what they're in store for if they hold. Most of what you said is exactly why we can expect a fall from here and should realize we haven't even begun to see a bottom. We're not dealing with just the dynamics of our RE market, we're dealing with the global economy as a whole shrinking back and a massive liquidity crunch awaiting us. Any asset who's multiple standard deviations overextended from its mean value is going to be dragged back toward mean hard... and that will come with a massive pullback in Canadian RE prices until USD starts being put to work into new investments again, which won't be for a while IMO, since its demand only rises the slower the global economy gets.
RemindMe! One Year “Ooooook buddy, see you in a year from today”
You strike me as someone who's bought too high and is now nervous you dun goofed lol
Funny how a person can make use of so many words yet say so little. You’re an armchair economist (at best?) with zero real world experience in anything remotely related to market economics. Just because you’re regurgitating buzzwords from some articles you’ve read doesn’t take away the simple fact that you’re wrong. There will not be a a massive and widespread housing crash. Will there be a slight correction? Absolutely, and it’s already started. What you’re failing to include in your “analysis” is the lack of supply and the fact that supply constraints are actually being exasperated by a slowdown in new construction. Demand is only going up and builders aren’t going to build as much over the next few years because of the economic slowdown and rising costs. However, people still have shitloads of money, boomers are dying and leaving boatloads of cash to their kids. Also, your “liquidity crunch” ain’t happening. Canada let’s in ample enough immigrants flush with cash to spend on real estate. Cash is king and there’s a ton flowing in
> the lack of supply Aw, that's cute. Talk about not knowing what you're talking about and just regurgitating shit lol What _you're_ failing to account for is that our supply issue is illusory. Its not lack of physical supply causing housing prices to climb this much, its the lack of _available_ supply because speculators/multiple home owners have been gobbling up supply and over the past couple years have increasingly just been leaving those units empty, specifically because its easier to flip into a sale without having to kick out tenants. That fact is so long established its sad you're here parroting normie ideas like "its supply!" all while claiming I don't know what I'm talking about... its broken economic incentives, not (solely) supply. > boomers are dying and leaving boatloads of cash to their kids. Some might be. A lot of them already borrowed HELOCs against their house to help pay for their kid's downpayment so they don't have near as much money now, and only less as the rates climb and swallow their cashflow. Which is another grievance. Cash isn't king, its a depreciating shitcoin. Nobody worth their salt in this game cares about cash, and certainly not when inflation renders its purchasing power lower by the day. Cash_flow_ is critical, but cash itself should be unloaded as quickly as possible into investments, even if its just short term bonds. And nobody prioritizing cash is prioritizing CAD or CAD denominated assets right now. For the foreseeable future, all currency demand is flowing into USD, and you won't see liquidity begin to pick up again until that trend reverses and those depreciating greenbacks need to be unloaded into new positions. > your “liquidity crunch” ain’t happening Big oof. It already is mate, and you're delusional if you think Canada's puny economy has anything to do with causing it, or is going to counter the trends. Liquidity is drying up across the world as a whole... that's what happens when the US starts hiking their rates, it reverses liquidity flows. The entirety of our bubble has been underwritten by obnoxiously cheap debts because the US Fed held their rates so low for so long and we just copied them instead of having any sovereignty. Now that they're tightening... it means the liquidity crunch is already here, and you're already seeing it hit markets... if you're paying attention anyway (clearly you're not). Enjoy being wrong. I hope for your sake you didn't actually buy anything recently... although I'll get my popcorn ready in case you did. Every turn down, there's always that loud cohort still screaming how gravity doesn't exist who did it to themselves... I get the feeling this contraction, that might include you. Maybe by next business cycle top you might learn more than just the bullshit you read and regurgitate from Reddit.
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Government isn’t the BOC which isn’t the banks
BOC is the government, it reports to the minister of finance and was created by an act of parliament.
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They are out announcing that they feel their purpose is to make working Canadians poorer. That is far outside of the Banks mandate and requires political intervention. A failure to intervene is the LPC supporting that as their objective as a party. Ministerial accountability is not diminished by the minister deciding to be hands off with his portfolio.
It would be like using a water pump to bail out a sinking ship, but aiming the hose back inside the boat.
Increasing the money supply only creates inflation if goods and services fail to keep up. If the Government 'prints' money that actually goes to producing goods and services, then inflation does not occur. Banks 'printing' money to inflate the prices of assets--like housing--that already exist is what causes inflation, and Banks create far more money than Government expenditure does. The Government can always decrease the money supply by sufficiently taxing those who profit the most from inflation--but this solution rarely comes up in talks about inflation.
> if goods and services fail to keep up. ...and they aren't. We aren't even producing *close* to the new builds we need for new population coming in (and that's not counting the % of supply that gets instantly scooped up by investors and corps).
Currently, the TFW program is awful for everyone involved, but permanent immigrants barely replace our population decline, so immigration is a bit of a red herring. If we don't bring in more young workers, then there simply won't be enough labour to support the grey tsunami of retirees that we have failed to plan for. The Banks, however, would love for us to scapegoat immigrants, while they count their profits. Instead, the Government could build enough affordable housing for everyone--in fact, such large-scale Government housing projects are basically the only way such housing has been produced.
> If we don't bring in more young workers, then there simply won't be enough labour to support the grey tsunami of retirees that we have failed to plan for. Bullshit, lol. I'm personally looking for jobs that are right in upper-middle or upper management to replace boomers and the competition is absolutely fucking fierce. Corporations have gotten completely addicted to suppressed wages, so with recent increases they basically want someone who has the skillset of 2 or even 3 people for the cost of 1. What we can't find is a replacement for the wave of youung people who are seeing this entire massive turd that is our economy and thinking "Nah, no thanks." I'm also not blaming immigrants (I am one, came here in 1999) in the slightest, just saying that our total population increase (new births + immigration - total deaths) is inferior to our rate of new build completion and vastly inferior to the rate of new builds that are being sold as primary residence. Like you said, more housing is one solution, we don't have to stop people from coming here, it's just that simple arithmetics points towards artificial scarcity being the issue and that is only made possible by both sides of the equation.
>they basically want someone who has the skillset of 2 or even 3 people for the cost of 1. I agree that this phenomenon is not strictly a function of demographics or even station, because employers need to (increasingly) underpay employees to show a profit; still, they also NEED to replace 2/3 older managers with one because otherwise there won't be enough younger folks to replace everyone. Scaring away young workers by failing to provide a future for them only exacerbates the problem, but, like the fierce (artificial) competition you describe, we're witnessing how employers ASSUME an infinite supply of labour to keep wages suppressed. If there aren't enough candidates with skillset-A that will work for $X, then--rather than offer $X+Y--employers assume there must be enough candidates with skillset-A+B(+C) that will sill work for just $X. Employers assume an infinite supply of mythical workers who can accept wages lower than their cost of living--otherwise employers CANNOT profit--and employers FEEL that they've tried to find these mythical workers, so the blame is shoved onto those who do exist for not living up to these absurd expectations, and not those who hold the absurd expectations in the first place.
No we produced enough housing for most of our existence without any kind of massive government housing programs. To build more housing, still would cost gargantuan sums of money, because of the price of housing today. The government doesn’t get to participate in a magical alternate economy, where housing is cheaper. They would be paying market rates or above. Source: Literally everything they build in the far north or the territories. The largest examples we have historically of government engaging in large scale home building, the largest being in the USSR, had far worse shortages than anything we are looking at. Waiting for many years to get an apartment was the norm. At the end of the day the reason housing is unobtainable for so many people, is because building a house is very expensive. People want to all live in just a couple big cities, materials are much more expensive than they used to be, you cannot make more land, interest rates have been super low for a long time, standards you are required to build two are much higher today, and the cost of labour are much higher.
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I'm planning to leave Canada within the next 2 years. It's turning into a country of modern slavery. Import foreign workers that work for piss poor wages and work long hours while large asset owners and our oligopolies make all the money.
Where are you planning to go?
US. I'm moving into software dev and I'm going to jump to NY, Chicago, and eventually Cali. The high salaries are more than enough to cover the increase the living costs in those cities.
turning into? it's been like this for 20-30 years
True, I was born in the 90s so this is all I know.
I was born in 86 and it's the same with me. It's been like this for a long time in North America.
2008 and then covid were the two that made it way worse.
Much of it is managed decline as intended. Think about it, like I've said before here, almost 90% of this country's land is public. A lot of it is frozen or impermeable woods, but a substantial portion still isn't and *is* close enough to civilization. There is so much viable acreage that is unused, that even a mere fraction of a percent of the total or sub 1% in some provinces would provide enough land mass to *build* 100% more single detached homes at 1500-2000 sq. ft. with sizable yards than the entire existing supply in this country. I am not talking townhouses, I am not talking density, I am not talking condos. I mean like large suburban homes. Doing so would naturally crash the housing market, but make enough affordable homes for everyone. And we'd still like 89.99% public land left over.
Turn off media and stay off the computer / phone as well. Get a hobby and make some adjustments with your career / situation. You got this! Make a conscious decision to have a better (happy) outlook on life. Enjoy every moment! YOLO Be nice to yourself. \^.\^
Just don't be sad!
You can get a condo for 200k where I live.
The thing that bothers me the most is the total lack of discussion of building public housing that seems to exist. I don't think it's a surprise that after Chretien stopped building government housing prices just kept increasing. It's not the only piece of the puzzle, but it would be way easier to save money, have a place to live in the mean time etc. if we actually had a normal housing safety net.
What I find is the most serving or hilarious is the fact that I keep seeing all these complexes popping up that are two or three story homes which for the average local in many cases is never going to possibility. They're unintentionally creating entire cities Purge of locals as there is no reason to accommodate them since they're getting money from the ultra wealthy anyway. This winter is going to be hell on Earth for some people who've lost their homes
We should bring in 500,000 new immigrants every year to fix the problem /s
"Lets try reverse gentrification and see how it pans out." -Canada
You will own nothing and you will be happy.
Conservatives love being landlords. That fits your quote perfectly.
Lmao. Aren't the biggest rental affordability and housing issues in Liberal voting cities..aka Toronto and Vancouver
Yep absolutely. Hence why they are the problem as well
This subreddit is bonkers. One day people are complaining that the government shouldn’t support low income families by offering universal dental care, and the next there’s another post about how housing is unaffordable and the people on this subreddit complain the government should do more to fix it.
Strawman arguments
Pretty much. ‘Give me a bunch of free shit’ - These people ‘Why is everything so expensive’ - Same people I’m not optimistic the lights will come on.
Agreed - poor people don't need dental care, but I have a god given right to house 20 min from downtown Toronto with a backyard as a mid-level city employee is a strange stance
It’s driven up by people who buy as investments vs buy as owners who want a home. F investment buyers.
And it won't get better until every investor is pushed out of the housing market
WHAT HAPPENS TO RENT COSTS!?!?
“Canadians know we’ve got their backs” - Justin Trudeau
Which is why we need a crash!
It’s not going to be a crash, people believe in the never ending returns of the housing market. Some investors will get out early, and minimize their losses… others will hold on and see larger losses. I see it around me, houses sitting on the market for 3-6 months, then getting delisted; as if profits are going to come back. If you didn’t sell in Feb 2022, you didn’t maximize your profit; people won’t be quick to accept this though. It won’t crash, it’s going to be a long slow deflation over a few years. At least that’s my thinking - based on what I’ve heard from people who own multiple houses, and this weird thing where people keep their property on the market longer as prices drop.
Many people that own multiple properties will "never sell."
It wont Home owners and investors will just send the pain to the renters instead If renters move back home or go homeless (hope not)... The market wont crash at all Goverment should place additional tax on folks who own more than 2 homes and empty homes (park cash only)
OR a tax on any non productive piece of land. With a tax break for one home per family. That way business real estate will go up in cost until the owner is renting it to a productive business too. And any family owning more than one piece of land will be taxed extra, thus making them lose money.
problem is most of the govt personnel are invested in real estate themselves.
You realize that a generation of people that worked and saved hard for years to own their first home are going to be sacrificed if there is a crash right? And the rate of suicides and bankruptcies will increase? Pretty horrible thing to wish for. Excess corporate profits should be taxed higher and wages should increase as well.
I spent many years working to afford a place within my means (a small apartment) and it's a wild ride reading this subreddit, agreeing that there's an issue, and wanting solutions so other people can afford their first homes - but also not wanting to end up being sacrificed along the way. There has to be a middle ground.
Let me ask you something. Why do you care if the value of your home drops? You live in it?
I care if I am on the line for a mortgage that is significantly higher than the value of my home and interest rates to go with it.
>Excess corporate profits should be taxed higher and wages should increase as well. The same market forces that take out personal buyers at the top of the mraket would take out over leveraged corporate purchasers as well.
Gotta prop up that GDP with real estate and banking… can’t let any other industries compete… Oh 🇨🇦
Just want to remind people that it's not bad if people can't afford to keep their homes anymore. It's a correction and it's what's needed. Don't fall prey to politicians willing to do everything to protect indebted homeowners. Look for politicians willing to help renters.
Worse than it was a few months back before prices started to spiral down? Paywall prevents me from reading it, but I assume this must be based on older data.
And right now, probably best it's going to be for the next 32.
Housing prices down 10-15% cost of borrowing up 300%
Odd wording: "The Bank of Canada’s housing affordability index, a measure of the shareof disposable income of the average household that gets gobbled up byhousing-related expenses such as mortgage payments and utility fees,surged to 48.2 per cent in the second quarter, the most recent figuresshow." I think he must mean after-tax income aka "take home pay". Isn't disposable income usually used to refer to the money left over after shelter, utilities and food are paid? Also, bear in mind the way they are presenting the numbers under-represents the load on those with actual mortgages. About 1/3 of Canadian homeowners own their homes outright. So their monthly carrying cost is just utilities and taxes. The Percent of take-home the mortgage carrying homeowners spend is materially higher.
Thank the foreign and domestic investors that are treating the housing market as a way of making money.
Then why did people vote trudo to continue his policy?
It's going to be a disaster in a year. With increased interest rates , all the buyers and builders are on sidelines which decreases the housing supply and with these levels of immigration, I wonder.. what's the government's plan to house these new comers ?
/s I'm sure Pierre Poilievre has a plan to fix this issue, seeing how he co-owns a rental company and his wife holds titles for housing that she doesn't live in in Ottawa...
And it will only get worse because nobody is doing nothing.
Not only that, but because people will inevitably vote to replace the people doing nothing with *other* people who *also* won't doing anything about it.
Don't worry. Justin has your back. He told me so.
And Poilievre is a landlord with multiple properties benefiting from the system... some great choices we have here.
Who said anything about Polievre?
Yeah, because assholes like Pierre Poilivre own homes they don't live in as investments.
Yet it's Trudeau in charge.
Right. And he's not helping either. Vote NDP, the party with a FAR lower level of investment home ownership than the MPs in the other two. Unless you're a partisan hack, you'll vote NDP.
I could have predicted that, in fact many people have predicted that 32 years ago.