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

[Nashe]

I can see some landlords bailing if the carrying costs of their buildings become too high, but I don't see that happening in areas where the vacancy rate is 2% and rent is not controlled. What is the rate in your area where you have 47 vacant units, Lio? Is it rent-controlled?

[YOWetal]

Originally Posted by Nashe

I can see some landlords bailing if the carrying costs of their buildings become too high, but I don't see that happening in areas where the vacancy rate is 2% and rent is not controlled. What is the rate in your area where you have 47 vacant units, Lio? Is it rent-controlled?

Ok so landlords bail. What is the problem with this? There is a problem of investors not buying precons thus stalling projects but that is already here because of rates and the uncertain future. Landlords selling what they own is irrevelant to housing supply. It was not the cause of the housing shortage and isnt' a solution to it either other than new construction which needs investors to be viable. Purpose built rentals are soaring with the removal of rent control and yet that isn't helping things much either. It is almost like letting in millions of new people swamps any changes we make.

[Nashe]

Originally Posted by YOWetal

Ok so landlords bail. What is the problem with this? There is a problem of investors not buying precons thus stalling projects but that is already here because of rates and the uncertain future. Landlords selling what they own is irrevelant to housing supply. It was not the cause of the housing shortage and isnt' a solution to it either other than new construction which needs investors to be viable. Purpose built rentals are soaring with the removal of rent control and yet that isn't helping things much either. It is almost like letting in millions of new people swamps any changes we make.

I guess it's possible we're talking past each other. Is your goal to make landlords "free up" held-but-not-rented inventory (like Lio)? Or is it to return more units to the market? Or both?
Otherwise it just kinda sounds like expropriation with extra steps.

[lio45]

Originally Posted by Nashe

I can see some landlords bailing if the carrying costs of their buildings become too high, but I don't see that happening in areas where the vacancy rate is 2% and rent is not controlled. What is the rate in your area where you have 47 vacant units, Lio? Is it rent-controlled?

The vacancy rate is ~0%. Also, after something's been vacant for a long time, it's easier to "update" the rent to closer to market. In my case though, I'm also considering demolishing some of those buildings so the fact that they're vacant is a step in the right direction. My behavior is an adaptation to the rules of the sector, I respond to financial stimuli, like all other rational investors.

Just to give you an idea, here are two of the few vacant lots in the area that are on the market:

https://www.centris.ca/fr/terrain~a-...w=Summary&uc=1

https://www.centris.ca/fr/terrain~a-...w=Summary&uc=2

In both cases they're nowadays worth a lot more as vacant land than with structures on them. The people who own lots like those aren't in a hurry to sell. You wouldn't ever see common Canadian situations like that in jurisdictions where there's significant negative cash flow from idle real estate (say, a LVT): https://www.cbc.ca/news/canada/briti...tery-1.3143211

[YOWetal]

Originally Posted by Nashe

I guess it's possible we're talking past each other. Is your goal to make landlords "free up" held-but-not-rented inventory (like Lio)? Or is it to return more units to the market? Or both?

Mine is neither. I think taxation should skew towards taxing winners involved in less economically valuable enterprises. I am skeptical of subsidized housing so my ideal solution would be to tax 100% of rental property capital gains and tax rental profits. Use this money to give more tax breaks for those entering their careers or enterring the housing market. Finding a balance could be tricky but taken to an extreme if we taxed rental profits at 70% most would sell. Meanwhile if we give first time homeowners $50k tax free the surge in new buyers should keep the market from crashing from those selling. Again it could overshoot easily in one direction. Point is less extreme examples in both directions could be good policy.

[Build.It]

^^
Tax 100% of capital gains for landlords?? Increase taxes on rental income?

It's almost as if you don't want more rental supply coming online and want rents to keep climibing higher.

Landlords aren't causing the problem. Shitty policies that block development are the primary, secondary and tertiary reasons. If you import millions of people and don't adjust your land use policies so that construction can keep at the same rate, you're going to get price surges.

[lio45]

Originally Posted by Build.It

If you import millions of people and don't adjust your land use policies so that construction can keep at the same rate, you're going to get price surges.

Obviously.

Just so it's clear, I'm not saying that taxing unproductive behavior more while taxing productive behavior less would solve the fundamental problem that we import a LOT more FNSs than our finite ability to build new housing -- only matching the intake of new warm bodies to the industry's ability to build (two ways of doing this, as there are two variables) can solve that one.

But it would help, that's all I'm saying. There are lots of empty real estate in this country, which worsens an already pretty acute crisis. And the only reason why there's so much empty real estate is that empty real estate is approximately cashflow neutral (as well as being hassle-free, but that one wouldn't be sufficient to make it interesting, it takes both).

[chowhou]

Originally Posted by Build.It

Landlords aren't causing the problem. Shitty policies that block development are the primary, secondary and tertiary reasons.

It's like taxing farms during a famine. Heaven forbid we let farmers profit off of a human right after all.

[lio45]

Originally Posted by chowhou

It's like taxing farms during a famine. Heaven forbid we let farmers profit off of a human right after all.

Speaking only for what I have been arguing, it's more like sharply raising the property taxes on all idle agricultural land, while making up for it by lowering the income taxes on the profits made by actually growing and selling crops.

During a famine, if I were in charge and there was a documented situation with lots of specuvestors sitting on high-quality farmland while not bothering to grow anything or rent it to anyone who'll grow stuff on it, it's certainly a measure I'd want to introduce, yes

[whatnext]

The body count in Canada's scammy property industry continues to rise:

Wife of Toronto gunman says two victims allegedly defrauded family of life savings
Jordan Omstead, The Canadian Press
Published Wednesday, June 19, 2024 11:45AM EDT

The gunman in a fatal Toronto shooting believed the two victims had defrauded his family, his wife said, as court records indicate the family was suing the pair after losing more than a million dollars in an alleged investment scam.

In a statement released by her lawyers, Alisa Pogorelovsky said her husband Alan Kats – who also died in the shooting – "could not handle losing our life savings and that is what lead to this tragic event."

"I hope someday my family will be able to recover," she wrote.

Police have identified the victims of Monday's shooting as 54-year-old Arash Missaghi and 44-year-old Samira Yousefi, but have not identified the 46-year-old shooter.

Court records detail how Pogorelovsky and her husband sued the two people killed in the shooting, and others, after losing $1.28 million in an alleged syndicated mortgage fraud.

The allegations against Missaghi and Yousefi had not been proven in court.

Missaghi faced charges in 2018 for his alleged role in a complex mortgage fraud scheme valued at $17 million, an investigation police dubbed as Project Bridle Path....

https://www.cp24.com/news/wife-of-to...ings-1.6932839

[Doady]

Originally Posted by whatnext

The body count in Canada's scammy property industry continues to rise:

Wife of Toronto gunman says two victims allegedly defrauded family of life savings
Jordan Omstead, The Canadian Press
Published Wednesday, June 19, 2024 11:45AM EDT

The gunman in a fatal Toronto shooting believed the two victims had defrauded his family, his wife said, as court records indicate the family was suing the pair after losing more than a million dollars in an alleged investment scam.

In a statement released by her lawyers, Alisa Pogorelovsky said her husband Alan Kats – who also died in the shooting – "could not handle losing our life savings and that is what lead to this tragic event."

"I hope someday my family will be able to recover," she wrote.

Police have identified the victims of Monday's shooting as 54-year-old Arash Missaghi and 44-year-old Samira Yousefi, but have not identified the 46-year-old shooter.

Court records detail how Pogorelovsky and her husband sued the two people killed in the shooting, and others, after losing $1.28 million in an alleged syndicated mortgage fraud.

The allegations against Missaghi and Yousefi had not been proven in court.

Missaghi faced charges in 2018 for his alleged role in a complex mortgage fraud scheme valued at $17 million, an investigation police dubbed as Project Bridle Path....

https://www.cp24.com/news/wife-of-to...ings-1.6932839

"Diversity is our strength."

- Justin Trudeau

[Nite]

Average house sold price fall below $700,000 as of May 2024


https://wowa.ca/reports/canada-housing-market

[Coldrsx]

Calgary's metro-area population grew by nearly 96,000 people last year.

Edmonton, meanwhile, added more than 63,000 people.

[ssiguy]

Thanks for the graph Nite but remember they only tell half the story.

These are average home sales but homes include everything from SFH to row to condo and in very expensive cities like Vancouver a disproportionate are condos as opposed to SFH in a cheaper area. Also, any home you do purchase will be much smaller in Vancouver. You may have 2 cities where a condo sells for $600k but in a cheap area that would get you a 1300 sq foot penthouse in a desirable area while in Vancouver it would get you a glorified walk-in-closet in a dump of a neighbourhood.

A far better metric is not only the median price but also price per sq foot so one can make fairer comparisons. This is why you never hear realtors/developers talking about it.

[Truenorth00]

Originally Posted by Nite

Average house sold price fall below $700,000 as of May 2024


https://wowa.ca/reports/canada-housing-market

And yet sales are hitting record lows in some segments. Why do you think that is?

• Video Link

[Nite]

Originally Posted by Truenorth00

And yet sales are hitting record lows in some segments. Why do you think that is?

• Video Link

Yes demand is down due to interest rates, so the prices of these units will continue to fall until interest rates lower to a point where it makes renting these units profitable again. At that point sales will pickup. Rents are also falling in Toronto so it may take a while.

[YOWetal]

Originally Posted by Doady

"Diversity is our strength."

- Justin Trudeau

Native born Canadians don't scam people or shoot people who scam them?

I don't like the sentiment that they got what they deserved. The penalty for fraud isn't death.

[whatnext]

Originally Posted by YOWetal

Native born Canadians don't scam people or shoot people who scam them?

I don't like the sentiment that they got what they deserved. The penalty for fraud isn't death.

Mortgage and mortgage scams are an equal opportunity game and seemingly rampant in Canada. No surprise with an out of control housing bubble and a government with little apparent concern:

Lawyer couple accused of stealing millions from homebuyers while law society stalled
Quicker action could have prevented millions from going missing, clients and experts say
Zach Dubinsky, Jocelyn Shepel, Lori Ward, Aloysius Wong · CBC News · Posted: Jun 20, 2024 4:17 PM PDT | Last Updated: June 20

A husband-and-wife law firm in Toronto has been shut down, lenders have moved to seize their family homes, and they're facing 15 lawsuits and a police investigation after millions of dollars in client money went missing from the firm's trust accounts.

The saga of Nicholas Cartel and his wife, Singa Bui, has plenty of twists and turns, not the least of which is what happened to the huge sums of money allegedly embezzled from Cartel & Bui LLP.

But it also reveals a part of the homebuying process that's vulnerable to financial manipulation but isn't closely scrutinized, and the inadequacy of the compensation for homebuyers or sellers who do fall victim.

In interviews and again during a court hearing on Thursday, Cartel asserted he never had a role in financially managing the firm that bears his name, never had access to the trust account and maintained a separate non-real-estate practice. His wife, he said, handled all that.

Neither of them has filed any statements of defence in the lawsuits against them.

One of the plaintiffs, Anthony Ingarra, a Toronto-area mortgage agent whose family says it lost more than $310,000 in their dealings with Cartel & Bui, said the experience has shaken him.

"I'm almost afraid now to make another real estate transaction," he said. "The general public needs to know that their money isn't safe in a lawyer's trust account."..

https://www.cbc.ca/news/canada/toron...-lso-1.7240756