Housing Bubble II: The Quest To Build Enough Homes Where People Actually Need Them

[WarrenC12]

Originally Posted by Build.It

This has got to be the least talked about housing crash of all time. The media is barely reporting on it. Only independent outlets are focusing on it.

This country is obsessed with housing. It's not being talked about because it's only happening in a few markets right now.

[urbandreamer]

Inflation is still high. Galen Weston says they're raising prices this year. Gas prices will be going up, real estate up, take a look at cars, for eg that ugly but popular Elantra 2023 model $24k vs 2024 $27k base price. So really there's no reason to cut rates. Hold them then perhaps a few more bumps to 8% by 2027. Interest rates are still ridiculously low considering the greed that's still out there.

It's not being talked about because the MSM is clearly biased in supporting the wealthy narrative. Look at Reddit Toronto, a shell of its former self, so many topics are no longer allowed. It's almost like it's 1984.

[Nite]

Originally Posted by Truenorth00

We weren't taking in 1.6M new residents per year in the 90s during that crash. So it's hard to say what will happen this time around.

It's also very possible that affordability collapses due to job losses and income stagnation, even while prices drop. There's nothing that says lower prices have to make housing more affordable.

YoY wages just increased 5.4% so no sign of income stagnation in fact it's the opposite.

On a year-over-year basis, average hourly wages rose 5.4% (+$1.78 to $34.45) in December, following an increase of 4.8% in November (not seasonally adjusted).

https://www150.statcan.gc.ca/n1/dail...40105a-eng.htm

[Nite]

Originally Posted by Build.It

This has got to be the least talked about housing crash of all time. The media is barely reporting on it. Only independent outlets are focusing on it.

Lower rates aren't going to cause prices to go up any time soon. Jon Flynn who is a realtor in Niagara region did an excellent job showing what happened to house prices during the previous crashes (80s and 90s) after the BoC lowered interest rates. You can watch the whole video here, but the cliffnotes version is:
- Rates drop
- Listings go up
- Unemployment goes up
- Prices continue to drop for a another year or so

https://www.youtube.com/watch?v=YCAB0rQ84AU

It because a certain group wants to blame high immigration for high housing prices, so now try to explain a housing crash with high immigration to these people and they can't fathom it.

As I have always said interest rates is by far the great part that controls housing prices not immigration which is showing more and more.

[whatnext]

Originally Posted by urbandreamer

Inflation is still high. Galen Weston says they're raising prices this year. Gas prices will be going up, real estate up, take a look at cars, for eg that ugly but popular Elantra 2023 model $24k vs 2024 $27k base price. So really there's no reason to cut rates. Hold them then perhaps a few more bumps to 8% by 2027. Interest rates are still ridiculously low considering the greed that's still out there.

It's not being talked about because the MSM is clearly biased in supporting the wealthy narrative. Look at Reddit Toronto, a shell of its former self, so many topics are no longer allowed. It's almost like it's 1984.

Did the woke take over r/Toronto they way they did r/Vancouver?

[yaletown_fella]

I am actually hoping for inflation on non-housing related items to rip higher, which will put pressure on the BOC to tighten or at least keep rates where they are longer.

Many mortgages turnover in 2025 , so we still have quite a ways to go and quite a lag effect.

[urbandreamer]

^It's dreadfully dull. I think Reddit has turned into a sort of Now/Alternative weekly: mostly porn, fluffy entertainment,
useless hysteria and hardly any real news.

[suburbanite]

Your guys definition of a housing crash is hilarious.

Asset prices down 15-20%, monthly holding costs flat or increasing? Housing crash!

[yaletown_fella]

Originally Posted by urbandreamer

Inflation is still high. Galen Weston says they're raising prices this year. Gas prices will be going up, real estate up, take a look at cars, for eg that ugly but popular Elantra 2023 model $24k vs 2024 $27k base price. So really there's no reason to cut rates. Hold them then perhaps a few more bumps to 8% by 2027. Interest rates are still ridiculously low considering the greed that's still out there.

It's not being talked about because the MSM is clearly biased in supporting the wealthy narrative. Look at Reddit Toronto, a shell of its former self, so many topics are no longer allowed. It's almost like it's 1984.

Very good point. From 2008-2022 real rates have been negative when you consider the flawed metrics of the CPI.

Unfortunately the real estate industry has done a great job of indoctrining Canadians into repeating talking points such as low rates being good or "relief" for consumers, when it overwhelming benefits those who own real estate at the direct expense of renters (most of whom will never even be able to afford a 1 bedroom in Toronto or Vancouver)

Over the past 2 decades they've brilliantly manufactured a sort of entitlement mentality centered around the notion that "real estate always goes up" and pressured central banks and government into easing policy to rediculous extents in order to manufacture this fantasy. Or that "real estate is the only way to build intergenerational wealth" This dogma became so prevalent that it became central to shaping monetary and fiscal policy in North America.

[Nite]

Originally Posted by suburbanite

Your guys definition of a housing crash is hilarious.

Asset prices down 15-20%, monthly holding costs flat or increasing? Housing crash!

As long as the BoC keeps interest rates above 4% prices will continue to fall.

[theman23]

Originally Posted by Nite

As long as the BoC keeps interest rates above 4% prices will continue to fall.

You’re hardly an authority figure with a great track record. What are you basing this prediction on?

[suburbanite]

Originally Posted by Nite

As long as the BoC keeps interest rates above 4% prices will continue to fall.

It's easy to make unscrupulous claims like this when you know the powers that be will not go down this path.

[Nite]

Originally Posted by theman23

You’re hardly an authority figure with a great track record. What are you basing this prediction on?

Well I have always said interest rates are the main determinant of house prices when you and other were clamming it was high immigrations. So as the BoC interest rate stay above 4% house prices will fall regardless of the levels of immigrations.

[suburbanite]

Originally Posted by Nite

Well I have always said interest rates are the main determinant of house prices when you and other were clamming it was high immigrations. So as the BoC interest rate stay above 4% house prices will fall regardless of the levels of immigrations.

The interesting thing about Canada is that we have a certain neighbour to the south that serves as a great control sample. We've also acted in lockstep with them in regards to interest rates for over a decade.

I'd be curious as to how you would explain the difference between say Toronto and Chicago when it comes to asset prices vs. Median Incomes. Keeping in mind that Americans have access to 30 year fixed rate mortgages.

[Build.It]

For those that need a little more convincing and continue to think that adding more poor people to the country is going to keep propping up home prices, since there will be less houses per capita.

South Africa has 64% as many houses per capita as Canada and builds 20% as many new houses as Canada (measured relative to the existing stock in each respective country).
https://www.oecd.org/els/family/HM1-...nstruction.pdf

South Africa's population has also grown by roughly 1M people per year for the past decade.

Yet, real house prices in South Africa have fallen by 19%.
https://www.globalpropertyguide.com/.../price-history

The only thing that matters is affordability. South Africa keeps getting poorer despite all the new people they're adding, and so prices have fallen.

Canada is getting poorer too, and higher interest rates make houses even less affordable, and you guys seriously think prices are going to keep going up?

[urbandreamer]

Yes, because there's dozens of well capitalized companies like Core Development Group who keep buying up all the smaller affordable homes, renovating and adding additions turning them into unaffordable 4/6/8/12 plex to be rented out to the endless streams of immigrants and students. For every huge rental company, there's hundreds of smaller investor groups buying and doing likewise.

[Truenorth00]

Originally Posted by Build.It

Okay so they pull $4K rent out of the house rather than $3K. They're still not making a return. And the maintenance on room rentals is a lot higher, so your costs go up.

Most of them don't care. They aren't out to get substantial returns. They aim to be cash flow neutral, build equity and hopefully flip higher eventually.

What's relevant here is that they set the price. Just like a falling price sets a new comparable, so does the specuvestor bidding up. And in an environment with any sort of recession and higher rates, they are the ones with the most capital. They'll be bidding out working families.

By the way, this isn't just my opinion. Prof Mike Moffat has been warning about this for months. And says Summer 2024 is going to be an absolute disaster with the flood of foreign students. Housing affordability is going to fall even if prices fall.

[urbandreamer]

Mike Moffat is probably paid by the industry, and has little credibility. It took some big report he wrote a few years ago to state the obvious: smaller towns, driven by high housing costs, a boom in housing-related jobs like Mennonite furniture manufacturers, contractors, stone and framing businesses, have exploded in population since 2008. Driven by a combination of condokids growing up, Mexican and Filipino and South Asian immigrants working in small town service and transportation industries, and especially large conservative Christian families like Mennonites, Dutch Reformed and Evangelical Christians moving into large country homes, the majority of them working in ag & contracting/housing-related businesses. Dude probably rarely leaves his London mcmansion or UWO office to see what's actually happening within 50 miles of his ivory tower.

[Nite]

Originally Posted by suburbanite

The interesting thing about Canada is that we have a certain neighbour to the south that serves as a great control sample. We've also acted in lockstep with them in regards to interest rates for over a decade.

I'd be curious as to how you would explain the difference between say Toronto and Chicago when it comes to asset prices vs. Median Incomes. Keeping in mind that Americans have access to 30 year fixed rate mortgages.

i think you just explained it, Canada interest rate effect the market much more than Americans because in Canada interest rate changes will eventually affect everyone in the property market while in the US it will only affect new buyers. That why house prices in the US are still going up rapidly while coming down in Canada. so both increase and decrease in interest rates have a more immediate effect on Canadian house prices.
Patrick Boyle does a good job explaining US house prices are currently increasing

• Video Link

[suburbanite]

So interest rates are the biggest determinant of prices, and Americans could previously lock in 2% rates. Chicago also has higher median incomes than Toronto. In theory we should be able to go back and see Chicagoans bidding up all the supply in Chicago and actually reaching real prices in excess of what Toronto saw during 2020-2022. All that matters is that they basically had the ability to lock in free money for the entirety of their 30 year mortgage right?

I'd love to see the graph for that. Or maybe, just maybe, Chicago actually has a relatively healthy balance of supply and demand and so people don't unnecessarily bid up assets and overindebt themselves when there isn't the level of competition to necessitate it.