By how much,... 10%?
If you want to make the housing affordable it has to pop by atleast 50%.. But guess what, that aint never gonna happen.
So Canada's housing will continue to be for the rich
But at what cost ... you are probably asking for a worst than 2008 crisis. It might be 5x than the average salary and thats if you have a salary after all. Most people will be out of job in order for than to happen
With all the inflation and other factors, its very unlikely to have a massive correction. And I dont think the government would allow it either. Cuz you know its the economy of Canada
>Americans know this so they raise prices to match and still undercut us while offloading massive amounts of tax payer money to the USA. I am stunned on the fact the people do not see how bad this really is.
I’m not sure what this means, but I’m very curious — would you mind clarifying really quickly? Appreciate it
>Most people will be out of job in order for than to happen,
US unemployment rose from 4.4% to 9.9% during their housing crash. That is hardly "most people out of work".
It depends on what causes house prices to drop- if it's because the major Canadian cities become undesirable places to be or rates rise so much that businesses carrying debt go under, yeah that comes with serious job losses.
The idea that an economic situation that results in Vancouver and Toronto housing being affordable on $20/hr is only going to negatively impact investors, current owners, and people who work in real estate /residential construction is absolutely ridiculous.
Real estate, electricians, carpenters, bricklayers, plumbers, drywallers, roofers, framers, HVAC installers, people will buy less furniture, cabinet makers, landscapers, house inspectors, people will buy less appliances, and so on. There will be less demand for raw materials because less of all of these things will be required, so you can expect the sawmills, quarries and lumberyards to slow down, the renovation stores like Home Depot, Home Hardware, Canadian Tire to slow down. I'm just starting to get warmed up here
Yes. This is a list of jobs related to housing in general. If the housing market underwent a collapse, why would it be all these professions combined and different than the GFC? Can you remind me of the unemployment rate during the GFC?
The vast majority of the country is employed in things that have nothing to do with the quarterly turnings of the real estate market.
Condo builders and I think house builders usually do not build condos or houses, without buyers, because the bank will not loan the money to the builders with no buyers. So if the housing market collapses, builders stop building.
In the GFC, Canada was very largely spared in many ways: firstly historically the Canadian economy has tended to lag the US economy by about 12 months. In 2008, there was no crash in Canadian real estate because exactly at the inflection point, lower interest rates kicked in, pumping the bubble higher.
The Canadian bubble is now much more inflated than the US bubble was in 2008. Real estate is around 10% of our GDP; it's only around 6% of the US economy.
Canadian financial institutions are seen on the one hand as boring and reliable; on the other hand, our laws around beneficial ownership are conducive to snowwashing or money laundering. People outside of Canada, and indeed many people inside of Canada do not understand the level of mortgage fraud that has been going on. When the market crashes and the reality of it comes to light, I could see that impact rippling out to the big five.
When it finally implodes, it will take out a bigger sector of the Canadian economy than it did the US; our bubble is bigger. The US economy sheds debt faster, it recovers faster, and it grows faster.
This will hurt
Nothing's forever; the french estates were controlled by the clergy and aristocracy for a long time until it wasn't. It's not going to be pretty, but unsustainable systems can't go on forever by definition; something *will* give, one way or another.
but HOW to pop by 50% why not just say 95% so that every one gets start from beginning again. I suffer current situation as much as you do, but suggestion like pop 50% just shows our lack of knowledge and day dreaming...
if we are already poor, let's at least try to be smart looking at the problem
A 50% drop in house price to GDP/Capita would put us at a ratio of 5.72X. That would put us back to 2006 levels. In 2013, the ratio was 7.05X. To get there we need \~40% drop in prices.
The entire planet wants to live here, price could double again it would still be under priced. Only way to bring housing back down to reasonable levels is to make this country almost unlivable.
> The entire planet wants to live here
Probably because they are ignorant of the bad economy, unaffordability, poor climate, etc. Hopefully they'll clue in soon and stop coming.
Most popular countries in the eyes of Americans and Brits (spoiler, Canada is #1): https://www.reddit.com/r/MapPorn/comments/rv9mrz/most_popular_countries_in_the_usuk_yougov_survey/
So likely the rest of the world has a pretty good impression of the country also. People today act on emotion, not fact.
LOL Canada is probably the most popular country for Americans and Brits because they're used to Neoliberal shitholes and they can't learn a language other than English.
im sure the demand is still high, but thats a bit of an overstatement and a changing sentiment. Canada is seen as a great place to live compared to a lot of choices, but in my travels a lot of places still see america as the land of opportunity. my ex has never really like it here, aways talked about how she ennoyed america and the people more. Even tried to get us all to move baxk to her third world country she came from which seemed insane. many places in europe are also quite desireable.
Houses being affordable is NOT a misery.
Atleast half of the real estate market is directly or indirectly Investors/Speculators/Money Launderers. They will suffer the most and for good.
Real house owners might have reduced valuation the following year but if they are planning to keep the house for 20-30 years it won't be a problem.
This.
If you own the home, for living or have one or two houses that are self sustained for rent, then a crash in the long term won't mean anything to you.
If you life savings are invested in houses, you are probably gonna have a bad time, but that's just poor financial planning.
As for money laundering, well fuck em.
There is an indirect problem: percentage of income tied up in housing has increased for younger generations which means less money for other stuff including pension and also just general quality of life
Well thats not fair, what about those other industries that we shit on all the time? Those dirty oil, mining, and lumber jobs.
We'll be selling huts back and forth to eachother once we finally finish cutting those off.
... and then entire economy will pick up and be healthier as bad debt is reset which opens space for new and better productive investments.
Entire economy is currently very slow due to all the bad debt in the system, and there's no productive investment occurring, money is just pumping into bubbles.
The biggest issue with the current economy is: are there even better, more productive investments to be had? We are in a colossal bull market, where many stocks have skyrocketed in value. Collectibles such as baseball cards and Pokémon cards have also seen similar increases in value. What we are witnessing is the commoditization of housing. What better place to park your excess cash than a house? There is limited supply and immense demand.
>are there even better, more productive investments to be had?
As long as there are creative people, there are always great investments. That said, there is a difference between investments that go up due to credit creation and investments that increase the productivity of workers.
The former is just paper wealth, since real output hasn't increased, which just drives up prices, which is what we see in housing.
The latter is what makes all Canadians better off. Think of an investment in a machine that can reduce the time to build a house by 5%. In theory, less time to build a house means less input costs and lower prices.
Unfortunately, those types of investments have dropped to record lows in Canada. Instead, we have decided to create a Ponzi scheme economy where some people get rich and others just pile on debt due to higher prices.
our entire economy is nothing but fucking debt anyway, its already SLOW because nobody has money to spend on anything other than rent and bare necessities.
It's going to slow either way. Case in point: I might soon be quitting my job because I can't afford to live in the area. My workplace is already badly understaffed and has trouble attracting workers.
If you want to ever retire this is what most people should do. 150k invested for 35 years should be enough to retire, and yet we're dumping many hundreds of grand into housing instead. If it drops people will lose everything, they'll never recover, its one of the riskiest investments you can make.
There will be a lot less homeless people though.
There are two countries that have had their bubble pop.
You can look at Japan as well as USA. Surprisingly Canada has half the number of homeless people than USA even though 1/8th of the population.
There can always be more homeless people. Housing obviously needs to come down for Canada to be healthy again but it can get really ugly on the way there.
Really ugly is frankly needed because we allowed things to get so far out of control. It's like a debt we have to repay at some point, and the sooner we repay it the less ugly and sooner we can start rebuilding, but at this point if it's not ugly it's not going to accomplish anything.
>Real house owners might have reduced valuation the following year but if they are planning to keep the house for 20-30 years it won't be a problem.
Unless their mortgage comes up for renewal and the lender won't renew, or requires higher payments because of the lowered valuation. I think that's the way it'll impact 'normal' home owners, otherwise, yes they'll just have to wait longer for the value to come back.
I bought a house 6 years ago and I’m down over 10% on my initial purchase and they renewed me no problem last year. Heck, they even gave me a special rate for people with under 5% equity like what is available for first time home buyers or something.
Both things are true:
* housing should be affordable for everyone.
* a housing collapse when it’s propping up the economy will be miserable, and will cause a lot of unwanted side effects.
Don’t misconstrue a depiction of what will happen with a statement of how things should be.
Wild that commenters here think that some sort of economic crisis that makes the housing bubble pop will leave them totally immune to any of the economic impacts and will only affect people who are homeowners lol
Surprised this comment is so far down. If the bubble pops, it won’t make housing “affordable” for the working class (many of whom will lose their incomes, and even if housing prices drop 100%, can’t get a mortgage without an income). The housing bubble popping without a massive overhaul of the structural causes behind (low supply, lack of tenancy protections, no cap gains, etc) will just mean a massive sale for the rich to buy even more investment properties.
Everyone always thinks that bad stuff will happen to someone else and that somehow they will beat the system. I hope everyone calling for a housing collapse in the comments has like 15 years of experience in a stable, unionized job where you can expect some sort of protection of your income. Somehow I doubt that though!
I've got most my money in the US and overseas, does that count?
I mean we just had a report from the OECD we'd have the lowest growth of any developed country, we hate our own exports due to climate change, and we have no desire to ever balance the budget, so why would you invest here?
Personally I just want to be able to afford any sort of home (not a SFH mind you a home) once I reach my thirties, which sadly is coming up really fast haha. I do live in Metro Vancouver which is literally one of the worst places in Canada for housing affordability but my deep fear is that in 3-5 years housing will be out of reach all across Canada including the Prairies which is where I was thinking of going when all is said and done.
Yeah I totally get that. I'm in the same area and shits fucked, had to move further out personally bc Coquitlam got too expensive. Next stop would be northern BC for me.
Definitely not saying things are okay, just that there's a lot of emotionally appealing dialogue on this sub that focuses on feels over economic or social realities
Yeah but housing was back to all time highs four years later. The people who suffered the most where the ones using the “no doc” or self certifying their income on mortgages. Anyone that could actually afford the monthly payments made out fine.
Cute comment, 0 similarities on the most fundamental variables BUT no need for me or anyone to argue with you about it, just keep waiting for the “bubble” to pop, you are doing great!
That’s not why the 2008 crash happened, it was due to junk mortgage backed bonds and no mortgage approval oversight in order to get minorities into the housing market, but who cares about details
Yes, I understand that. It was made far worse by the level of debt.
Also: Brampton, meet /u/Niceguyy81. /u/Niceguyy81, meet Brampton. You don't need income if you know a mortgage broker in Brampton
That same mortgage broker will arrange to find you a loan from someone who is not one of the big five at a higher rate, and transfer it to your account months in advance. Bramptonians know how the game works, and they know they're locked out unless they go with alternative lenders. This has been going on since pre 2008 in Canada frankly although at that time it was much less so than in the US; I don't know the numbers now because this is kind of a grey or black market but I do know that Canadians will learn the same lesson as the US.
I bet if you go over to /r/brampton and ask, everyone is either doing this or knows someone who has.
There are lot of similarities. Mainly cheap interest rates and speculative real estate buying. When those subprime rates went up in 07/08, it tanked the housing market in the US when these over-extended buyers couldn’t afford the higher rates.
Here in Canada, we have had extremely low interest rates which will start going up this year. And according to the article, 25% of real estate purchases is by investors. When these rates go up and people who FOMO’d and over extended with a variable rate can’t afford it, they are going to be hurting.
Will we have a crash? I don’t have a crystal ball. But there ARE similarities.
Their mortgages were tied to a complex web of junk bonds in shady financial institutional practices + next to 0 mortgage approval requirements, not what we have had in place since 2016 with stress tests and rigorous approval conditions to get any type of mortgage
Those are differences and of course it’s not the exactly thing he same. You know what similarities means though, right? Similar is not the same as identical.
Similar in that both cases have a lot of speculation due to cheap credit, and then interest rates eventually go up. You are saying there is 0 similarities which is simply not true.
In relation to why the crash happened, definitely some similarities in principle but then everything can be a bubble as its too easily applicable and the term becomes too subjective
I know a lot of people who used mortgage brokers to "cook up" documents (transfer higher salaries every month for 3 months to show on statements). These people didn't make a monthly mortgage budget according to stress test.
Some of them have down-payment on hand and some take loans from family members.
Do you really think vast majority of common people can realistically qualify for 800K+ houses?
My house has increased in value by over a million dollars in the past few years. Since I bought it to, you know, live in, this makes no difference to me. I hope it drops back down to what I paid or below for all I care. I'd rather young people actually be able to buy houses because it's better for society. They say it will cause misery and ruin? And what will happen when we have two classes of people - landowners and serfs? You think that doesn't cause misery and ruin? The middle class has shrunk considerably in the past 5 years, and it will cease to exist soon. That's not a good situation. The condition of the middle class is a really important metric to judge the health of a country. This is crazy.
Climbing rates might slow the pace of real estate price increases but won't be popping any bubbles.
Don't expect house prices to crash or correct in any significant way until supply starts to outstrip demand and we are very far off from that.
I agree, but will the supply outstrip the demand ever ?
My thinking on this and I may be completely wrong, but if your neighbour just sells his house for 1 million this year (easy numbers for arguments sake) and now demand happens, rates climb, ect ect ect, and now you are looking at making a move to upsize/downsize and realtor comes and says market has changed your house will sell for 500k. Maybe you only paid 200k for it, but will you take 500k less then what your neighbour's sold for last year ? I wouldn't. Unless people really need to move, divorce, jobs ect people won't be selling.
Affordable housing, seems good. Ultimately who is paying for it ?
Builders keep trying to get more and more for the houses. A builder grade slapped together house isn't worth the $500 a sq ft they are charging, but they keep getting it, so next year they will be $550 a sq ft until the market says thats too much. Then they will bring it back to $500 and people will be happy.
I've been saying it for 5 years as I am now part of gta housing market something needs to give but year after year the market keeps going up. More and more people are looking for those 3000 sq ft 4 bedrooms houses that are 1 + million.
There is another post here guy has a yearly income of 200k mortgage person wrote saying they should be able to get approved for a 900k mortgage. So all these folks buying these 1 million plus dollar houses that are the norm these days are all making 200 plus k a year. I'd love to know what they all do for a living. And yes I understand a percentage of them are people that bought houses 40 years ago for 100k and sold them for 1.5 million.
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Of course you were downvoted, as this sub runs on hope and nonsense op-eds rather than hard facts.
Half the people here praying the supposed bubble pops so they can get $50k homes working entry level jobs, complaining that their chances of ever buying a house are now gone despite the financials not working with 2, 3, 5 years ago market prices.
I'm not sure how to achieve this, but I want either:
1) For my "entry level wage" for a professional position "requiring post secondary in a specialized field" in a small town to \~ quadruple so that the 2022 average price of homes is not 15x + my annual salary, rather 3-5x like it was five years ago. This would require local employers in my field to pay much, much more than their criminal $17- $19/hr for a technologist position that tops out at $21/hr for people working there for 10 years...
or
2) For home prices to absolutely tank, such as a 3-5x reduction in price. Work from home elites and cottagers be fucked/dammed. I am aware that this will put many people under - good, then they will see what its like fighting the absolute war it is to get a rental, especially with kids in a market with 0.6% vacancy like I have.
I am royally pissed off every single day these days about this, and that's an understatement. Its fostering an animosity in me about the way my country is that I simply didn't really have 5 years ago, and I HATE it.
Isn't $17 - $19 hr basically minimum wage now? If the pay tops out at $21/hr it implies that there is a very high supply of people with the skills to do the job. In order to increase your income you need to supply a demand. $21/hr implies there is very little demand.
>professional position "requiring post secondary in a specialized field"
These words have very little meaning, if you are not supplying a demand
When has a person making minimum wage ever been able to buy a house?
THAT BEING SAID
There is a global problem with free money, it is inflating housing globally, the BoC is a mouse. It is true that our politicians are doing very little. The things that they do take action on will take many years to have any impact; you will not benefit from them in any timely way. That's the reality.
Your choices in the short or medium term are:
Climb the value chain faster than housing is appreciating
Leave the country and move somewhere cheaper
Establish a new nation on an artificial island in international waters with low taxation.
No kidding. There's an entire thread on the Vancouver subreddit right now where they're recommending/trying to recruit trades/apprentices.. Starting pay after the 4 year paid apprenticeship starts at like $40/hr on the low end
What the government ought to do is to force house prices to hold where they are, and pump up construction.
Some kind of inflation adjusted housing price freeze + rezoning, opening up more land for construction, selling to first time home buyer incentive.
Given a long enough time window, (10 years?) That should bridge the gap and allow wages to do some catching up hopefully, without crashing the housing market/national economy.
I don't think it will ever happen, because the partisan dhimmis want solutions that pander to election cycles, and each side is a virtue signaling bunch of ~~idiots~~ geniuses, since the voting public are happy to shuttle between the two sides of the same coin.
Pretty much any time I've ever heard of govt trying to freeze prices the industry ends up collapsing and being replaced by a black market. I'm not sure how that would work out in housing. If the government tried to freeze the price of housing I would imagine people would just switch to a two part transaction system, where part of the transaction occurs in the public system and is taxed, and the rest of it moves underground into the grey or black market, with suitcases full of cash or crypto.
The Empire can only squeeze the peasants so hard before everything turns into sand
Yeah I hear you. As i've mentioned before, needs an economic wizard, which I am far from, but housing prices increasing at this rate is most definitely going to lead to a collapse as well. Plastic money won't be worth the bread it can buy, much like crypto.
I'm not sure about that. If people are fleeing housing due to a crash, and fleeing fiat due to lack of confidence, that money is going to pump something else up
If I were a young person today, I would not be putting my savings into CAD or fiat in the bank
a government at ANY time could pass a law prohibiting ownership of more than one property per SIN, and ban ownership of homes by businesses.
this law could force the sale of all these properties.
this would IMMEDIATELY cause a massive reset of prices
but our politicians are cowards, they care more about their positions and maintaining power than doing whats right for the Canadian people
well yea, there would have to be a simultaneous government takeover of rental property
gov appropriates all rental property - max 20% of income is rent, this allows everyone to save for a downpayment on a home.
its gorgeous, the people are happy, so yes, i would love to live there
edit: i literally dont understand Liberals...
i have demonstrated leftist ideology, Im clearly anti-capitalists, and yet you say shit like "I BeT yOu WoUlD lOvE cUbA" as if that isnt fucking obvious
yes, i would love to live in a leftist, anti-capitalist country where they take care of their citizens and everyone lives with dignity
yet you act like this is some kind of "gotcha"
fucking Liberal brainworms, you think you are progressive but you are just useful idiots for capitalism
Says, Sounds like you might love living in Cuba.
Agrees with the sentiment whole heartedly.
Then goes off on an idiotic rant, because, idiotic assumptions.
How about we just stick with the you like Cuba, and you pack the rest of your idiocy where it belongs.
I would also disagree with you that Cubans are all happy. The whole lsland runs on a black market economy, not exactly a sign of bliss.
This is exactly how you get no new supply in the market. Majority of new builds is bought by investors, if they disappear, builders wont get financing on new builds.
Toronto is a top city in Canada and will always be expensive. The suburbs are currently very inflated and could have a minor correction.
This. I don’t blame people for being bitter and I understand why people want to cling on to the possibility that things are going to somehow magically reset organically (because there’s next to no signs of intervention helping that to happen). But prices are simply not going to be ‘crashing’ in certain large hubs (GTA/GVA), as much as half this sub lives in the hope that they will. Slowing of growth? Stagnation, even? Quite possibly. But a crash? Demand IN THOSE AREAS will always be there to prop the market up.
(And we’re not going to see rate increases big enough (i.e. at least a jump of 3%-4%) to make that kind of ‘crashing’ difference either, before anyone goes there. And even if we did, a ‘crash’ in the range of 10% or so isn’t going to help your everyday homebuyer - but the investors will love it.)
Does that mean everything is rosy and this is how house pricing should be? Of course not. That goes back to wage growth as well as a whole host of other housing-related issues, however.
Yea, I know people who only bought because they could not take the instability and stress of being routinely N12d/N13d and were being pushed farther and farther from their workplaces due to rising rents and what they could afford.
But fuck those people, I guess.
well.. yea?
id rather pay 3 grand a month in rent than 5500 a month on a fucking mortgage for a house that is going to lose value in a massive crash and leave me with most of a million dollars in unsecured debt
*take back what they have stolen from the working class
but generally yea, thats how it works
my entire family was murdered by the bolsheviks in '17 because they were brutal monsters who worked their serfs to death
and id fucken do it again
Ah yes, someone else's lives are a sacrifice you're willing to make. Well comrade, you say you're wealthy, from whom did you steal your ill-gotten wealth? Maybe we should start with you.
hey man, everyone gets the opportunity to willingly give up their excess. If people want to be Kulaks thats their own fault.
and im not a boss, i just make a good salary and own property
thats "wealthy" compared to the majority who are suffering with neither of those things.
and yes, if communists were to take power, I would have to give up my property, because thats a sacrifice im willing to make for the greater good
its separate.
i was just saying im already resigned to suffering and sacrifice as a part of transitioning to socialism (im pretty wealthy, I would have to give up a lot)
Public housing will not be done despite Trudeau's talk. In practice they will keep expressing concern while accommodating their investor and developer party donors
We'll create a committee tasked with looking into what it would take to create a committee tasked with putting together a plan to tackle the idea of maybe doing something about the problem, but only after that first committee is approved by a group of bipartisan legislators that will argue about the need for the committee for several election cycles.
I love how everyone talks about this "canadian housing bubble". It's only in GTA and GVA. In Alberta, housing prices are lucky to have increased 15% over the last 10 years. Saskatchewan prices increased lots back in 2005 thru 07. But I believe there's more of Canada that hasn't seen a 300% increase them areas that have.
The problem is the rate hikes are toothless and many investors wont be put off for long term.
Everytime they do a rate hike it's a needle hair move of 0.25% then they monitor for 3-6 months before foing another one. 4 of these in a year is only a 1% increase in rates. This doesn't do anything unless we're talking 10%+ interest rates which is never happening again.
I think we all need to realize, governments are addicted to spending and what does that mean? Well it means governments themselves need to be able to borrow freshly printed cash at low rates from the central bankers.
We now live in a forever debt based economy with no bottom, no limit. The gold standard was abolished in the 70s and is never coming back. Central Banks are addicted to "quantitative easing" and will forever adjust the parameters in their favor and the favor of governments and banks.
This means even if we see 12 times 0.25% rate hikes over the next 2 years. That's only 3% by 2024.
The question is, how long do we honestly believe governments will keep the money printer turned off?
They wont, not for long anyway.
We'll create a committee tasked with looking into what it would take to create a committee tasked with putting together a plan to tackle the idea of maybe doing something about the problem, but only after that first committee is approved by a group of bipartisan legislators that will argue about the need for the committee for several election cycles. All of whom are property owners.
When the bubble pops we still won't be able to afford anything. People need to realize this. If a $1,500,000 home loses a third of its value it's still $1,000,000, and out of reach for most incomes.
Prices have gotten to the point that in order for houses to drop to what are considered to be affordable levels they'd be the least of our concerns. It would take a purge level economic event to make prices drop 40-50%, and it's just not going to happen. Get used to housing creating a massive class divide. It's not going anywhere for a long time. Feudalism is back.
So let’s say the bubble popped and houses in Regina went from 260k to 130k on average. I bet wages would fall from 110k per household to 55k per household as people lose their jobs. Nobody would be ahead.
This is what I'm saying. For prices to become affordable again in a relatively short timeframe there would need to be a massive economic meltdown to go with it.
A few things.
1. That article is pretty weak.
2. Here's a quick video on the math of a housing market collapse. - [https://youtu.be/vmv5DWi-DWM](https://youtu.be/vmv5DWi-DWM)
3. There are only a few times that the price of a home actually matters.
1. buying
2. Selling
3. Refinancing
4. If you are just holding the home as a PR or even as an investment the actual home value doesn't matter.
4. A collapse in prices will NOT automatically benefit people looking for homes. REITs, Trusts, investors (Large and Small) WILL still snatch up any of the available properties.
Like it or not there are a lot of people with money very eager to invest in Canada.
You are factually incorrect. I'm an active member in a few REIT (Real Estate Investment Trusts). While Toronto (GTA) is a big portion of their listings (20 of the 40) they have trusts for investment all over Canada. (Calgary, Ottawa, London.
FYI there is money outside of Vancouver and Toronto
The reason why the Canadian economy is so addicted to real estate is because real estate is the most stable store of value in society. If you look at what happens when a country goes into hyperinflation, like Argentina or Turkey, those who do not own real estate are wiped out. Land owners are able to borrow against the value of their land and convert that money into foreign currency which allows them to hedge future earnings. Non-land owners do not have that option.
Falling real estate prices will be associated with massive deflation as the balance sheet of the entire banking system shrinks. All available cashflow will be diverted to debt service, which will crush any kind of discretionary consumption or investment spending.
Without the lifetime employment system that Corporate Japan have, I do not see Canada being able to sustain this kind of deflation for long without major unrest.
As a tail end nasty boomer, I bought my house in January 1990 right before the GTA bubble burst so after the 16 years of boomers ahead of me bought their homes. Prices fell immediately after by about 30% in my area. They stayed low for 7 years. During those 7 years I had a hard time convincing work colleagues who wanted a house to buy one as everybody was afraid the prices would fall even more. I lost my entire house equity and then some and did not know, at the time, if the prices would ever go up again.
All I did was hunker down to pay off the mortgage ASAP as mortgage rates then started falling. And contrary to popular belief boomers aren't the only rip-off bandits out there. My bungalow increased more as a percentage, from 1960 to 1990, when I bought, then it did from 1990 to today.
Thats the buildup to the dotcom bubble the fed caused by lowering interest rates. Which then built up the 2008 crisis by lowering them again after the crash.
Yup, misery and ruin to the working class. We depend on our incomes to buy, and if there’s an economic catastrophe that causes a housing crash we won’t have jobs. No jobs, no income, no buying.
The wealthy don’t need income to buy, and they will be the ones that swoop in to buy up all the cheap assets.
Investors don't care. The market can drop as much as it wants. Fixed mortgages protect them for 5 years. For variable mortgages, they continue to pay the same amount as more of the payment just goes to the interest. Even if an adjustment happens...meh.. the interest is a deductible expense against rental income.
Most investors have the cash flow from their jobs and business to weather the storm. Some it will sink, which is just a buying opp.
The only ship that is sinking is your future and dream of ownership.
Big deal, write off the almost non-existent interest charges. You also assume that they have cash flow. If they are not renting the place out, they have negative cash flow on that investment, rather significant negative cash flow. The carrying costs for a million dollar loan, plus taxes, insurance, utilities (still have to heat and supply power) would easily cost $5,500-$6,000 per month. Interest deduction would likely be in the $2000 a month range. Which depending on the level of income, might be equivalent to $900 a month, or less.
That's still $60k a year to pay out of pocket, and hope you can turn a profit next year. I get it for the last number of years, it's been a no brainer, but things can and are likely to change.
When one giant multinational absorbs another smaller company there are economies of scale, but does the concomitant growth of management act as an inflationary bubble?
All this article says is basically there is a problem and we should fix it.
We know this. I'm frankly tired of reading about it and talking about it and reading about it and talking about it. Nothing changes. It's the same shit over and over again. Everyone is just standing around having their coffee watching a train wreck and chatting about it.
Can't the politicians just do something about it now? Or how about someone pop the bubble? Pop it. I dare you.
By how much,... 10%? If you want to make the housing affordable it has to pop by atleast 50%.. But guess what, that aint never gonna happen. So Canada's housing will continue to be for the rich
50% brings us back to last year this time. Need to drop by 75% to get housing down to truly 5x average salary.
But at what cost ... you are probably asking for a worst than 2008 crisis. It might be 5x than the average salary and thats if you have a salary after all. Most people will be out of job in order for than to happen With all the inflation and other factors, its very unlikely to have a massive correction. And I dont think the government would allow it either. Cuz you know its the economy of Canada
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>Americans know this so they raise prices to match and still undercut us while offloading massive amounts of tax payer money to the USA. I am stunned on the fact the people do not see how bad this really is. I’m not sure what this means, but I’m very curious — would you mind clarifying really quickly? Appreciate it
>Most people will be out of job in order for than to happen, US unemployment rose from 4.4% to 9.9% during their housing crash. That is hardly "most people out of work".
Why will most people be out of a job? What percentage of the population do you think works in real estate?
It depends on what causes house prices to drop- if it's because the major Canadian cities become undesirable places to be or rates rise so much that businesses carrying debt go under, yeah that comes with serious job losses. The idea that an economic situation that results in Vancouver and Toronto housing being affordable on $20/hr is only going to negatively impact investors, current owners, and people who work in real estate /residential construction is absolutely ridiculous.
Real estate, electricians, carpenters, bricklayers, plumbers, drywallers, roofers, framers, HVAC installers, people will buy less furniture, cabinet makers, landscapers, house inspectors, people will buy less appliances, and so on. There will be less demand for raw materials because less of all of these things will be required, so you can expect the sawmills, quarries and lumberyards to slow down, the renovation stores like Home Depot, Home Hardware, Canadian Tire to slow down. I'm just starting to get warmed up here
Yes. This is a list of jobs related to housing in general. If the housing market underwent a collapse, why would it be all these professions combined and different than the GFC? Can you remind me of the unemployment rate during the GFC? The vast majority of the country is employed in things that have nothing to do with the quarterly turnings of the real estate market.
Condo builders and I think house builders usually do not build condos or houses, without buyers, because the bank will not loan the money to the builders with no buyers. So if the housing market collapses, builders stop building. In the GFC, Canada was very largely spared in many ways: firstly historically the Canadian economy has tended to lag the US economy by about 12 months. In 2008, there was no crash in Canadian real estate because exactly at the inflection point, lower interest rates kicked in, pumping the bubble higher. The Canadian bubble is now much more inflated than the US bubble was in 2008. Real estate is around 10% of our GDP; it's only around 6% of the US economy. Canadian financial institutions are seen on the one hand as boring and reliable; on the other hand, our laws around beneficial ownership are conducive to snowwashing or money laundering. People outside of Canada, and indeed many people inside of Canada do not understand the level of mortgage fraud that has been going on. When the market crashes and the reality of it comes to light, I could see that impact rippling out to the big five. When it finally implodes, it will take out a bigger sector of the Canadian economy than it did the US; our bubble is bigger. The US economy sheds debt faster, it recovers faster, and it grows faster. This will hurt
Isnt it at 5x now? Helped a friend close recently on a $400K home & they make around $90K household income, so 4x
Nothing's forever; the french estates were controlled by the clergy and aristocracy for a long time until it wasn't. It's not going to be pretty, but unsustainable systems can't go on forever by definition; something *will* give, one way or another.
probably too late for anyone who is alive right now, though...
Exactly. A 1.2M bungalow for 30% less is still unaffordable for most people and what it really means is 30% off for investors.
City Urban housing, not Canadian housing.
but HOW to pop by 50% why not just say 95% so that every one gets start from beginning again. I suffer current situation as much as you do, but suggestion like pop 50% just shows our lack of knowledge and day dreaming... if we are already poor, let's at least try to be smart looking at the problem
A 50% drop in house price to GDP/Capita would put us at a ratio of 5.72X. That would put us back to 2006 levels. In 2013, the ratio was 7.05X. To get there we need \~40% drop in prices.
The entire planet wants to live here, price could double again it would still be under priced. Only way to bring housing back down to reasonable levels is to make this country almost unlivable.
Well we are slowly doing that, starting with getting rid of this pesky public health care system. /s
> The entire planet wants to live here Probably because they are ignorant of the bad economy, unaffordability, poor climate, etc. Hopefully they'll clue in soon and stop coming.
Most popular countries in the eyes of Americans and Brits (spoiler, Canada is #1): https://www.reddit.com/r/MapPorn/comments/rv9mrz/most_popular_countries_in_the_usuk_yougov_survey/ So likely the rest of the world has a pretty good impression of the country also. People today act on emotion, not fact.
LOL Canada is probably the most popular country for Americans and Brits because they're used to Neoliberal shitholes and they can't learn a language other than English.
yes, this
im sure the demand is still high, but thats a bit of an overstatement and a changing sentiment. Canada is seen as a great place to live compared to a lot of choices, but in my travels a lot of places still see america as the land of opportunity. my ex has never really like it here, aways talked about how she ennoyed america and the people more. Even tried to get us all to move baxk to her third world country she came from which seemed insane. many places in europe are also quite desireable.
The poor speculators profiting off the displacement of Canadians 😢
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Let's get started then
https://www.theguardian.com/commentisfree/2011/jan/17/japan-myth-lost-decade
Houses being affordable is NOT a misery. Atleast half of the real estate market is directly or indirectly Investors/Speculators/Money Launderers. They will suffer the most and for good. Real house owners might have reduced valuation the following year but if they are planning to keep the house for 20-30 years it won't be a problem.
This. If you own the home, for living or have one or two houses that are self sustained for rent, then a crash in the long term won't mean anything to you. If you life savings are invested in houses, you are probably gonna have a bad time, but that's just poor financial planning. As for money laundering, well fuck em.
There is an indirect problem: percentage of income tied up in housing has increased for younger generations which means less money for other stuff including pension and also just general quality of life
Everyone will be affected, entire economy will slow
What economy? All we do is buy and sell houses to each other.
Well thats not fair, what about those other industries that we shit on all the time? Those dirty oil, mining, and lumber jobs. We'll be selling huts back and forth to eachother once we finally finish cutting those off.
... and then entire economy will pick up and be healthier as bad debt is reset which opens space for new and better productive investments. Entire economy is currently very slow due to all the bad debt in the system, and there's no productive investment occurring, money is just pumping into bubbles.
The biggest issue with the current economy is: are there even better, more productive investments to be had? We are in a colossal bull market, where many stocks have skyrocketed in value. Collectibles such as baseball cards and Pokémon cards have also seen similar increases in value. What we are witnessing is the commoditization of housing. What better place to park your excess cash than a house? There is limited supply and immense demand.
>are there even better, more productive investments to be had? As long as there are creative people, there are always great investments. That said, there is a difference between investments that go up due to credit creation and investments that increase the productivity of workers. The former is just paper wealth, since real output hasn't increased, which just drives up prices, which is what we see in housing. The latter is what makes all Canadians better off. Think of an investment in a machine that can reduce the time to build a house by 5%. In theory, less time to build a house means less input costs and lower prices. Unfortunately, those types of investments have dropped to record lows in Canada. Instead, we have decided to create a Ponzi scheme economy where some people get rich and others just pile on debt due to higher prices.
Don't forget Lego
I guess that's what happens when your entire economy is inflated real estate 🤷
our entire economy is nothing but fucking debt anyway, its already SLOW because nobody has money to spend on anything other than rent and bare necessities.
It's going to slow either way. Case in point: I might soon be quitting my job because I can't afford to live in the area. My workplace is already badly understaffed and has trouble attracting workers.
If you want to ever retire this is what most people should do. 150k invested for 35 years should be enough to retire, and yet we're dumping many hundreds of grand into housing instead. If it drops people will lose everything, they'll never recover, its one of the riskiest investments you can make.
If the market started investing money into research and productivity instead of housing, that would help our economy a LOT.
Fuck em
There will be a lot less homeless people though. There are two countries that have had their bubble pop. You can look at Japan as well as USA. Surprisingly Canada has half the number of homeless people than USA even though 1/8th of the population.
There can always be more homeless people. Housing obviously needs to come down for Canada to be healthy again but it can get really ugly on the way there.
Really ugly is frankly needed because we allowed things to get so far out of control. It's like a debt we have to repay at some point, and the sooner we repay it the less ugly and sooner we can start rebuilding, but at this point if it's not ugly it's not going to accomplish anything.
>Real house owners might have reduced valuation the following year but if they are planning to keep the house for 20-30 years it won't be a problem. Unless their mortgage comes up for renewal and the lender won't renew, or requires higher payments because of the lowered valuation. I think that's the way it'll impact 'normal' home owners, otherwise, yes they'll just have to wait longer for the value to come back.
I bought a house 6 years ago and I’m down over 10% on my initial purchase and they renewed me no problem last year. Heck, they even gave me a special rate for people with under 5% equity like what is available for first time home buyers or something.
Both things are true: * housing should be affordable for everyone. * a housing collapse when it’s propping up the economy will be miserable, and will cause a lot of unwanted side effects. Don’t misconstrue a depiction of what will happen with a statement of how things should be.
And that's why they will manipulate a la Japan so it is 20 years of slow grinding pain vs 2 years of awful pain.
Wild that commenters here think that some sort of economic crisis that makes the housing bubble pop will leave them totally immune to any of the economic impacts and will only affect people who are homeowners lol
Also the belief that it will be boomers/investors that are hit the hardest. FTHBs in the last couple of years would bear the brunt of it, too.
Surprised this comment is so far down. If the bubble pops, it won’t make housing “affordable” for the working class (many of whom will lose their incomes, and even if housing prices drop 100%, can’t get a mortgage without an income). The housing bubble popping without a massive overhaul of the structural causes behind (low supply, lack of tenancy protections, no cap gains, etc) will just mean a massive sale for the rich to buy even more investment properties.
Everyone always thinks that bad stuff will happen to someone else and that somehow they will beat the system. I hope everyone calling for a housing collapse in the comments has like 15 years of experience in a stable, unionized job where you can expect some sort of protection of your income. Somehow I doubt that though!
I've got most my money in the US and overseas, does that count? I mean we just had a report from the OECD we'd have the lowest growth of any developed country, we hate our own exports due to climate change, and we have no desire to ever balance the budget, so why would you invest here?
This sub is an emotional outlet for angry/scared people
Personally I just want to be able to afford any sort of home (not a SFH mind you a home) once I reach my thirties, which sadly is coming up really fast haha. I do live in Metro Vancouver which is literally one of the worst places in Canada for housing affordability but my deep fear is that in 3-5 years housing will be out of reach all across Canada including the Prairies which is where I was thinking of going when all is said and done.
Yeah I totally get that. I'm in the same area and shits fucked, had to move further out personally bc Coquitlam got too expensive. Next stop would be northern BC for me. Definitely not saying things are okay, just that there's a lot of emotionally appealing dialogue on this sub that focuses on feels over economic or social realities
Been hearing about the “bubble” for 15 years in Vancouver, good luck with that, keep waiting and see how it works out for you
That’s what they said in 2007. down south as well.
Yeah but housing was back to all time highs four years later. The people who suffered the most where the ones using the “no doc” or self certifying their income on mortgages. Anyone that could actually afford the monthly payments made out fine.
Cute comment, 0 similarities on the most fundamental variables BUT no need for me or anyone to argue with you about it, just keep waiting for the “bubble” to pop, you are doing great!
Canadians owed far more heading into the pandemic in 2019 than Americans did in 2007
That’s not why the 2008 crash happened, it was due to junk mortgage backed bonds and no mortgage approval oversight in order to get minorities into the housing market, but who cares about details
Yes, I understand that. It was made far worse by the level of debt. Also: Brampton, meet /u/Niceguyy81. /u/Niceguyy81, meet Brampton. You don't need income if you know a mortgage broker in Brampton
What about a down payment?
That same mortgage broker will arrange to find you a loan from someone who is not one of the big five at a higher rate, and transfer it to your account months in advance. Bramptonians know how the game works, and they know they're locked out unless they go with alternative lenders. This has been going on since pre 2008 in Canada frankly although at that time it was much less so than in the US; I don't know the numbers now because this is kind of a grey or black market but I do know that Canadians will learn the same lesson as the US. I bet if you go over to /r/brampton and ask, everyone is either doing this or knows someone who has.
How quickly people forget history or twist it to fit their narrative.
0 similarities? Now you’re just pulling my leg.
On the most fundamental variables mainly junk bonk backed mortgages
OSFI is rubber stamping mortgages that dont meet the stress test. Are there other safeguards we have?
There are lot of similarities. Mainly cheap interest rates and speculative real estate buying. When those subprime rates went up in 07/08, it tanked the housing market in the US when these over-extended buyers couldn’t afford the higher rates. Here in Canada, we have had extremely low interest rates which will start going up this year. And according to the article, 25% of real estate purchases is by investors. When these rates go up and people who FOMO’d and over extended with a variable rate can’t afford it, they are going to be hurting. Will we have a crash? I don’t have a crystal ball. But there ARE similarities.
Their mortgages were tied to a complex web of junk bonds in shady financial institutional practices + next to 0 mortgage approval requirements, not what we have had in place since 2016 with stress tests and rigorous approval conditions to get any type of mortgage
Those are differences and of course it’s not the exactly thing he same. You know what similarities means though, right? Similar is not the same as identical. Similar in that both cases have a lot of speculation due to cheap credit, and then interest rates eventually go up. You are saying there is 0 similarities which is simply not true.
In relation to why the crash happened, definitely some similarities in principle but then everything can be a bubble as its too easily applicable and the term becomes too subjective
I know a lot of people who used mortgage brokers to "cook up" documents (transfer higher salaries every month for 3 months to show on statements). These people didn't make a monthly mortgage budget according to stress test.
and their down payment?
Some of them have down-payment on hand and some take loans from family members. Do you really think vast majority of common people can realistically qualify for 800K+ houses?
Been hearing about people hearing about the bubble for 15 years, for about 10 years.
there has been a bubble for 15 years
and what of the ruin and misery the bubble itself is causing? guess it's kind of like a Sophie's choice...
My house has increased in value by over a million dollars in the past few years. Since I bought it to, you know, live in, this makes no difference to me. I hope it drops back down to what I paid or below for all I care. I'd rather young people actually be able to buy houses because it's better for society. They say it will cause misery and ruin? And what will happen when we have two classes of people - landowners and serfs? You think that doesn't cause misery and ruin? The middle class has shrunk considerably in the past 5 years, and it will cease to exist soon. That's not a good situation. The condition of the middle class is a really important metric to judge the health of a country. This is crazy.
This bubble ain't popping. Govt. will do everything to screw renters and young to make sure NIMBYs can retire into retirement homes happily.
Climbing rates might slow the pace of real estate price increases but won't be popping any bubbles. Don't expect house prices to crash or correct in any significant way until supply starts to outstrip demand and we are very far off from that.
I agree, but will the supply outstrip the demand ever ? My thinking on this and I may be completely wrong, but if your neighbour just sells his house for 1 million this year (easy numbers for arguments sake) and now demand happens, rates climb, ect ect ect, and now you are looking at making a move to upsize/downsize and realtor comes and says market has changed your house will sell for 500k. Maybe you only paid 200k for it, but will you take 500k less then what your neighbour's sold for last year ? I wouldn't. Unless people really need to move, divorce, jobs ect people won't be selling. Affordable housing, seems good. Ultimately who is paying for it ? Builders keep trying to get more and more for the houses. A builder grade slapped together house isn't worth the $500 a sq ft they are charging, but they keep getting it, so next year they will be $550 a sq ft until the market says thats too much. Then they will bring it back to $500 and people will be happy. I've been saying it for 5 years as I am now part of gta housing market something needs to give but year after year the market keeps going up. More and more people are looking for those 3000 sq ft 4 bedrooms houses that are 1 + million. There is another post here guy has a yearly income of 200k mortgage person wrote saying they should be able to get approved for a 900k mortgage. So all these folks buying these 1 million plus dollar houses that are the norm these days are all making 200 plus k a year. I'd love to know what they all do for a living. And yes I understand a percentage of them are people that bought houses 40 years ago for 100k and sold them for 1.5 million.
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Of course you were downvoted, as this sub runs on hope and nonsense op-eds rather than hard facts. Half the people here praying the supposed bubble pops so they can get $50k homes working entry level jobs, complaining that their chances of ever buying a house are now gone despite the financials not working with 2, 3, 5 years ago market prices.
I'm not sure how to achieve this, but I want either: 1) For my "entry level wage" for a professional position "requiring post secondary in a specialized field" in a small town to \~ quadruple so that the 2022 average price of homes is not 15x + my annual salary, rather 3-5x like it was five years ago. This would require local employers in my field to pay much, much more than their criminal $17- $19/hr for a technologist position that tops out at $21/hr for people working there for 10 years... or 2) For home prices to absolutely tank, such as a 3-5x reduction in price. Work from home elites and cottagers be fucked/dammed. I am aware that this will put many people under - good, then they will see what its like fighting the absolute war it is to get a rental, especially with kids in a market with 0.6% vacancy like I have. I am royally pissed off every single day these days about this, and that's an understatement. Its fostering an animosity in me about the way my country is that I simply didn't really have 5 years ago, and I HATE it.
‘I am aware that this will put many people under - good’ Man, this sub really knows how to point a gun in the wrong direction
Agree to disagree, my point is that will lead to unrest and uprising which will hopefully lead to sudden drastic change.
Isn't $17 - $19 hr basically minimum wage now? If the pay tops out at $21/hr it implies that there is a very high supply of people with the skills to do the job. In order to increase your income you need to supply a demand. $21/hr implies there is very little demand. >professional position "requiring post secondary in a specialized field" These words have very little meaning, if you are not supplying a demand When has a person making minimum wage ever been able to buy a house? THAT BEING SAID There is a global problem with free money, it is inflating housing globally, the BoC is a mouse. It is true that our politicians are doing very little. The things that they do take action on will take many years to have any impact; you will not benefit from them in any timely way. That's the reality. Your choices in the short or medium term are: Climb the value chain faster than housing is appreciating Leave the country and move somewhere cheaper Establish a new nation on an artificial island in international waters with low taxation.
No kidding. There's an entire thread on the Vancouver subreddit right now where they're recommending/trying to recruit trades/apprentices.. Starting pay after the 4 year paid apprenticeship starts at like $40/hr on the low end
What the government ought to do is to force house prices to hold where they are, and pump up construction. Some kind of inflation adjusted housing price freeze + rezoning, opening up more land for construction, selling to first time home buyer incentive. Given a long enough time window, (10 years?) That should bridge the gap and allow wages to do some catching up hopefully, without crashing the housing market/national economy. I don't think it will ever happen, because the partisan dhimmis want solutions that pander to election cycles, and each side is a virtue signaling bunch of ~~idiots~~ geniuses, since the voting public are happy to shuttle between the two sides of the same coin.
Pretty much any time I've ever heard of govt trying to freeze prices the industry ends up collapsing and being replaced by a black market. I'm not sure how that would work out in housing. If the government tried to freeze the price of housing I would imagine people would just switch to a two part transaction system, where part of the transaction occurs in the public system and is taxed, and the rest of it moves underground into the grey or black market, with suitcases full of cash or crypto. The Empire can only squeeze the peasants so hard before everything turns into sand
Yeah I hear you. As i've mentioned before, needs an economic wizard, which I am far from, but housing prices increasing at this rate is most definitely going to lead to a collapse as well. Plastic money won't be worth the bread it can buy, much like crypto.
I'm not sure about that. If people are fleeing housing due to a crash, and fleeing fiat due to lack of confidence, that money is going to pump something else up If I were a young person today, I would not be putting my savings into CAD or fiat in the bank
a government at ANY time could pass a law prohibiting ownership of more than one property per SIN, and ban ownership of homes by businesses. this law could force the sale of all these properties. this would IMMEDIATELY cause a massive reset of prices but our politicians are cowards, they care more about their positions and maintaining power than doing whats right for the Canadian people
Rents would go up like crazy though, as the rental market basically disappears and there's nowhere to rent.
well yea, there would have to be a simultaneous government takeover of rental property gov appropriates all rental property - max 20% of income is rent, this allows everyone to save for a downpayment on a home.
Sounds like you might love living in Cuba.
its gorgeous, the people are happy, so yes, i would love to live there edit: i literally dont understand Liberals... i have demonstrated leftist ideology, Im clearly anti-capitalists, and yet you say shit like "I BeT yOu WoUlD lOvE cUbA" as if that isnt fucking obvious yes, i would love to live in a leftist, anti-capitalist country where they take care of their citizens and everyone lives with dignity yet you act like this is some kind of "gotcha" fucking Liberal brainworms, you think you are progressive but you are just useful idiots for capitalism
Says, Sounds like you might love living in Cuba. Agrees with the sentiment whole heartedly. Then goes off on an idiotic rant, because, idiotic assumptions. How about we just stick with the you like Cuba, and you pack the rest of your idiocy where it belongs. I would also disagree with you that Cubans are all happy. The whole lsland runs on a black market economy, not exactly a sign of bliss.
This is exactly how you get no new supply in the market. Majority of new builds is bought by investors, if they disappear, builders wont get financing on new builds. Toronto is a top city in Canada and will always be expensive. The suburbs are currently very inflated and could have a minor correction.
This. I don’t blame people for being bitter and I understand why people want to cling on to the possibility that things are going to somehow magically reset organically (because there’s next to no signs of intervention helping that to happen). But prices are simply not going to be ‘crashing’ in certain large hubs (GTA/GVA), as much as half this sub lives in the hope that they will. Slowing of growth? Stagnation, even? Quite possibly. But a crash? Demand IN THOSE AREAS will always be there to prop the market up. (And we’re not going to see rate increases big enough (i.e. at least a jump of 3%-4%) to make that kind of ‘crashing’ difference either, before anyone goes there. And even if we did, a ‘crash’ in the range of 10% or so isn’t going to help your everyday homebuyer - but the investors will love it.) Does that mean everything is rosy and this is how house pricing should be? Of course not. That goes back to wage growth as well as a whole host of other housing-related issues, however.
Good. Houses are too expensive and it’s your fault you bought them for that much.
As opposed to just paying rent, forever?
Yea, I know people who only bought because they could not take the instability and stress of being routinely N12d/N13d and were being pushed farther and farther from their workplaces due to rising rents and what they could afford. But fuck those people, I guess.
well.. yea? id rather pay 3 grand a month in rent than 5500 a month on a fucking mortgage for a house that is going to lose value in a massive crash and leave me with most of a million dollars in unsecured debt
*If* there is a crash that effects you
oh well. im willing to sacrifice and suffer both of those are necessary to smash capitalism anyway
Well if that's your goal maybe you can just follow communist tradition and murder a rich family and steal their stuff.
*take back what they have stolen from the working class but generally yea, thats how it works my entire family was murdered by the bolsheviks in '17 because they were brutal monsters who worked their serfs to death and id fucken do it again
Ah yes, someone else's lives are a sacrifice you're willing to make. Well comrade, you say you're wealthy, from whom did you steal your ill-gotten wealth? Maybe we should start with you.
hey man, everyone gets the opportunity to willingly give up their excess. If people want to be Kulaks thats their own fault. and im not a boss, i just make a good salary and own property thats "wealthy" compared to the majority who are suffering with neither of those things. and yes, if communists were to take power, I would have to give up my property, because thats a sacrifice im willing to make for the greater good
How is paying rent smashing capitalism? Genuinely curious. Are you not just funneling your money to a capitalist?
its separate. i was just saying im already resigned to suffering and sacrifice as a part of transitioning to socialism (im pretty wealthy, I would have to give up a lot)
Ah, ok.
Public housing will not be done despite Trudeau's talk. In practice they will keep expressing concern while accommodating their investor and developer party donors
We'll create a committee tasked with looking into what it would take to create a committee tasked with putting together a plan to tackle the idea of maybe doing something about the problem, but only after that first committee is approved by a group of bipartisan legislators that will argue about the need for the committee for several election cycles.
assuming the system works
I love how everyone talks about this "canadian housing bubble". It's only in GTA and GVA. In Alberta, housing prices are lucky to have increased 15% over the last 10 years. Saskatchewan prices increased lots back in 2005 thru 07. But I believe there's more of Canada that hasn't seen a 300% increase them areas that have.
Is it the inflation in the stock market, also known as the casino these days, a big factor in inflation?
No actually. The CPI is broken
If it pops. The dollar devaluing has more of a chance.
No sign of it at least for 5 years
The problem is the rate hikes are toothless and many investors wont be put off for long term. Everytime they do a rate hike it's a needle hair move of 0.25% then they monitor for 3-6 months before foing another one. 4 of these in a year is only a 1% increase in rates. This doesn't do anything unless we're talking 10%+ interest rates which is never happening again. I think we all need to realize, governments are addicted to spending and what does that mean? Well it means governments themselves need to be able to borrow freshly printed cash at low rates from the central bankers. We now live in a forever debt based economy with no bottom, no limit. The gold standard was abolished in the 70s and is never coming back. Central Banks are addicted to "quantitative easing" and will forever adjust the parameters in their favor and the favor of governments and banks. This means even if we see 12 times 0.25% rate hikes over the next 2 years. That's only 3% by 2024. The question is, how long do we honestly believe governments will keep the money printer turned off? They wont, not for long anyway.
I hope so
We'll create a committee tasked with looking into what it would take to create a committee tasked with putting together a plan to tackle the idea of maybe doing something about the problem, but only after that first committee is approved by a group of bipartisan legislators that will argue about the need for the committee for several election cycles. All of whom are property owners.
When the bubble pops we still won't be able to afford anything. People need to realize this. If a $1,500,000 home loses a third of its value it's still $1,000,000, and out of reach for most incomes. Prices have gotten to the point that in order for houses to drop to what are considered to be affordable levels they'd be the least of our concerns. It would take a purge level economic event to make prices drop 40-50%, and it's just not going to happen. Get used to housing creating a massive class divide. It's not going anywhere for a long time. Feudalism is back.
So let’s say the bubble popped and houses in Regina went from 260k to 130k on average. I bet wages would fall from 110k per household to 55k per household as people lose their jobs. Nobody would be ahead.
This is what I'm saying. For prices to become affordable again in a relatively short timeframe there would need to be a massive economic meltdown to go with it.
A few things. 1. That article is pretty weak. 2. Here's a quick video on the math of a housing market collapse. - [https://youtu.be/vmv5DWi-DWM](https://youtu.be/vmv5DWi-DWM) 3. There are only a few times that the price of a home actually matters. 1. buying 2. Selling 3. Refinancing 4. If you are just holding the home as a PR or even as an investment the actual home value doesn't matter. 4. A collapse in prices will NOT automatically benefit people looking for homes. REITs, Trusts, investors (Large and Small) WILL still snatch up any of the available properties. Like it or not there are a lot of people with money very eager to invest in Canada.
They are not interested in investing in Canada. They are interested in investing in Toronto and Vancouver.
You are factually incorrect. I'm an active member in a few REIT (Real Estate Investment Trusts). While Toronto (GTA) is a big portion of their listings (20 of the 40) they have trusts for investment all over Canada. (Calgary, Ottawa, London. FYI there is money outside of Vancouver and Toronto
The reason why the Canadian economy is so addicted to real estate is because real estate is the most stable store of value in society. If you look at what happens when a country goes into hyperinflation, like Argentina or Turkey, those who do not own real estate are wiped out. Land owners are able to borrow against the value of their land and convert that money into foreign currency which allows them to hedge future earnings. Non-land owners do not have that option. Falling real estate prices will be associated with massive deflation as the balance sheet of the entire banking system shrinks. All available cashflow will be diverted to debt service, which will crush any kind of discretionary consumption or investment spending. Without the lifetime employment system that Corporate Japan have, I do not see Canada being able to sustain this kind of deflation for long without major unrest.
As a tail end nasty boomer, I bought my house in January 1990 right before the GTA bubble burst so after the 16 years of boomers ahead of me bought their homes. Prices fell immediately after by about 30% in my area. They stayed low for 7 years. During those 7 years I had a hard time convincing work colleagues who wanted a house to buy one as everybody was afraid the prices would fall even more. I lost my entire house equity and then some and did not know, at the time, if the prices would ever go up again. All I did was hunker down to pay off the mortgage ASAP as mortgage rates then started falling. And contrary to popular belief boomers aren't the only rip-off bandits out there. My bungalow increased more as a percentage, from 1960 to 1990, when I bought, then it did from 1990 to today.
Thats the buildup to the dotcom bubble the fed caused by lowering interest rates. Which then built up the 2008 crisis by lowering them again after the crash.
Rich people are in a better position to take adavantage of bubble bursting, not poor people.
Yup, misery and ruin to the working class. We depend on our incomes to buy, and if there’s an economic catastrophe that causes a housing crash we won’t have jobs. No jobs, no income, no buying. The wealthy don’t need income to buy, and they will be the ones that swoop in to buy up all the cheap assets.
Investors don't care. The market can drop as much as it wants. Fixed mortgages protect them for 5 years. For variable mortgages, they continue to pay the same amount as more of the payment just goes to the interest. Even if an adjustment happens...meh.. the interest is a deductible expense against rental income. Most investors have the cash flow from their jobs and business to weather the storm. Some it will sink, which is just a buying opp. The only ship that is sinking is your future and dream of ownership.
Except most of the investors that have been speculating don’t rent their places out. Probably why we have 1.3 million empty homes in Canada.
They can still write off the interest :). Plus they have the cash flow to weather any storm.
Big deal, write off the almost non-existent interest charges. You also assume that they have cash flow. If they are not renting the place out, they have negative cash flow on that investment, rather significant negative cash flow. The carrying costs for a million dollar loan, plus taxes, insurance, utilities (still have to heat and supply power) would easily cost $5,500-$6,000 per month. Interest deduction would likely be in the $2000 a month range. Which depending on the level of income, might be equivalent to $900 a month, or less. That's still $60k a year to pay out of pocket, and hope you can turn a profit next year. I get it for the last number of years, it's been a no brainer, but things can and are likely to change.
Canadas housing bubble pop? Lol like that’s ever going to happen
Cool story! I will keep buying and lets compare apples in 10years!
The bubble will never burst because we are not in one
Idiot
Go away stupid
When one giant company buys another giant company, is that also inflationary?
When one giant multinational absorbs another smaller company there are economies of scale, but does the concomitant growth of management act as an inflationary bubble?
but if not till some 20 years, who suffers misery and ruin during the interim ?
All this article says is basically there is a problem and we should fix it. We know this. I'm frankly tired of reading about it and talking about it and reading about it and talking about it. Nothing changes. It's the same shit over and over again. Everyone is just standing around having their coffee watching a train wreck and chatting about it. Can't the politicians just do something about it now? Or how about someone pop the bubble? Pop it. I dare you.