Canada's 'housing bubble' deemed close to bursting

[milomilo]

Correct.

[Truenorth00]

This is just entertaining to watch. It's not just Canada. The world's Central Banks are setting up a housing crisis later all to prevent a recession and stock market crash now.

Rate cuts to respond to a supply shock. All to paper over the bad debt that is floating around all over the corporate sector, housing and at banks.

[yaletown_fella]

Originally Posted by misher

It really doesn’t matter how much homes are because rents don’t rise with prices and most people can downsize or find ways to reduce housing expenses as long as they are still employed.

Rents for bachelor units have skyrocketed in the GTA over the past 4-5 years while prices of most things like electronics have actually become cheaper. And there is no way I can reduce housing expenses apart from winning the lottery.

And whats frightening there is there is too-low supply and now rent control has been scrapped, which is my biggest criticism of the Ontario govt.

I see your point about Canada responding to what the US is doing but the bank of Canada would have been fine keeping the rates as is, and postponing the much needed key interest rate increase for a year from now when this coronavirus thing settles down.

Lets not forget the idiot US president was calling for negative interest rates in November. We dont have to be lemmings. Lets start by stopping the rewarding of debt.

[WarrenC12]

The BoC rate is still higher than it was after the oil price crash of 2015. Were you all born yesterday?

[yaletown_fella]

^^I never said it wasnt a new problem. For the past decade, entities like TREB have been lobbying the BoC to keep the rate 2-3% lower than it should be

The winners in our economy are the ones who can't manage their finances, the losers are the ones who did

[milomilo]

Originally Posted by WarrenC12

The BoC rate is still higher than it was after the oil price crash of 2015. Were you all born yesterday?

No one understands the reasons the BoC sets the rates they do. I only recently chose to understand.

The BoC are not setting up a housing crisis, they are managing the interest rate to balance growth and inflation as they are instructed to do. If there are not enough houses supplied to meet the demand of Canadians, that is not the BoC's fault, it is the fault of incompetent municipalities and provinces for not making housing easy enough to build.

[misher]

Originally Posted by milomilo

No one understands the reasons the BoC sets the rates they do. I only recently chose to understand.

The BoC are not setting up a housing crisis, they are managing the interest rate to balance growth and inflation as they are instructed to do. If there are not enough houses supplied to meet the demand of Canadians, that is not the BoC's fault, it is the fault of incompetent municipalities and provinces for not making housing easy enough to build.

Correct, housing isn't even one of the key factors they are supposed to consider.

Btw I want to point out to all the housing loons that 50 years ago we built houses a lot smaller and simpler. Costs have gone up yes, but if you look per sqft the cost increase is less than you might think. One problem is that the average house went from 1200sqft to 3000sqft and people now complain about high values without considering the size increase. Thats the problem with looking at averages or medians, you can't compare a modern house and say it should cost the same to build as a 1920's house that was half the size and contained half the stuff and considered 1 bathroom sufficient.

https://www.rew.ca/properties/2558047/50...rchable_id=361&searchable_type=Geography

The cost to build alone in Vancouver is now around $250-500/sqft depending on how nice you want the finishings to be. Whats largely been ignored is the cost to construct a house in Vancouver which is sky high compared to the rest of Canada. A large piece of this is that Vancouver has the longest time to approve development in Canada (yeah I know we have a housing crisis but apparently thats not enough for us to go faster) and has a high number of taxes/fees on both development and materials. When prices went high Vancouverites didn't look at what we're doing wrong, they went and blamed foreigners for all our woes and pretended like we do everything perfectly while raising taxes/fees even higher. Both the BC government and Vancouver city have cashed in on Vancouvers 2+ year approval delays by now requiring developments waiting for approval to pay the speculation tax and the empty home tax during those 2 years, costs that are passed on to the buyers.

Cities of similar size and with similar levels of development like Richmond and Burnaby both maintain approval times 1/3rd of Vancouver's so obviously approving housing can be done quickly....if they want to.

The problem with Vancouver's housing crisis is twofold. One is that its self made. The other is that they refuse to admit they created it and instead double down on the factors causing the problem. More fees, more taxes, more delays, and more NIMBYness. When socialism and central planning fails, they increase it rather than admit they are wrong. Instead of welcoming more supply all they talk about is how greedy developers are and how we need to stop them from making money.



https://globalnews.ca/news/4208533/vancouver-detached-home-building-costs/



https://images.glaciermedia.ca/polopoly_...tives/original_size/fraser-institute.jpg

Interest rates increase the amount people can borrow. But in the end everyone has the decision whether to borrow or not and we're all adults. A lower/higher interest rate won't keep someone from maxing their credit card or jumping from a bridge.
If people want a loan to buy a house they will get one. And honestly lower rates tend to favor the poor in the housing market simply because a rich person can pay cash for a house and doesn't need a mortgage. Plus it favors locals over foreigners.

[misher]

Vancouvers seeing a 50% increase in condo sales in the first week of March, I assume similar stories are happening across the nation. (Up around 80% from March 2019).

Part of this might be the spring season but obviously interest rates are adding fire.

We talk about how the virus might scare people away or induce a recession. But I think most people miss that it’s also causing people to move out of asia. One example is that HK emigration, already way up since the start of the protests, went up again after the virus. With protests, the recent bomb plot, and the virus I suspect we will see that number go up even higher. HK residents are managing to sell at a 5-10% discount and most have Canadian PR or citizenship.

Also with the Australian fires I suspect many will be moving back here.

Anyway either our economy collapses come Spring or the real estate market will likely be up more than 200%+ from Jan 2020.

[misher]

Just finished the Big Short. It’s a great movie about the 2008 collapse. But I loved at the end something you should all consider when they say that rather than blame the banks or the government people blamed the usual targets, immigrants and foreigners.

Pretty much mirrors our own situation where the usual targets are always blamed rather than cheap easy credit.

• Video Link

[whatnext]

AirBnB bookings are crashing along with the rest of the travel industry. This is going to 🞵🞵🞵🞵 away the cash flow of all those amateur condo barons who bought with little down in TO. The look for their condo market to drastically slow as owners realize they have to pay the mortgage out of their own pocket.

Coming shortly behind will be the sales slump caused by lay-offs in multiple industries as the Covid-19 recession hits. People would be stupid to buy now.

[misher]

Originally Posted by whatnext

AirBnB bookings are crashing along with the rest of the travel industry. This is going to 🞵🞵🞵🞵 away the cash flow of all those amateur condo barons who bought with little down in TO. The look for their condo market to drastically slow as owners realize they have to pay the mortgage out of their own pocket.

Coming shortly behind will be the sales slump caused by lay-offs in multiple industries as the Covid-19 recession hits. People would be stupid to buy now.

Yeah my girl is visiting so I’m pretty happy about getting her a cheap Airbnb lol. Still not “cheap cheap” though.

[rousseau]

Got this in the mailbox today. We have a locked community mailbox, so I'm not exactly sure how it got in there.



At first glance it looks like some sort of scam, though I'm not sure about the angle. Maybe he's a low-balling flipper looking to get lucky with people in financial difficulty who need cash fast.

Which may be more common than not over the next year or so.

[ssiguy]

Sales are surging and months of inventory is plunging in Greater Vancouver which means, at least over the very short term, rising prices again. It tales more than a deadly worldwide pandemic to keep Vancouverites from their favorite pastime.

This could devastate the province's economy and much more importantly, Ottawa's finances. In BC tourism and travel make up a major portion of the private sector economy, second only to real estate. The sector is in complete freefall and employs hundreds of thousand in it's primary and {Ie entertainment, sports, conventions}secondary sectors. As the unemployment rate rises quickly, bankruptcies are sure to follow and all these massive CMHC backed mortgages are going to start showing up on Ottawa's finances. Remember, Vancouverites are much more likely to have to declare bankruptcy in times of unemployment than other Canadians.

This is because the rate of debt is staggering combined with the fact that BC has had a NEGATIVE savings rate for almost every one of the last 25 years. This means they have no money in the bank and have such huge mortgage payments that any reduction in income mean insolvency. In affordable areas one person losing their job and the other getting EI means they can probably muddle thru but not in Vancouver. Also when there is a plunge in real estate values, people that are the most indebted tend to be the same ones who are more likely to just give the keys back to the bank.........….being in the hole for $50k on a reasonable mortgage amount is distasteful but people will do but being in the hole for $500k and still having the same crushing mortgage payment is quite another. The rest of Canada is going to pay dearly for Vancouver's largess.

[whatnext]

I also wonder if tech companies like Google or Amazon will wonder why they are paying so much for a Vancouver office space if making their employees work from home doesn’t measurably reduce output.

[le calmar]

Originally Posted by rousseau

Got this in the mailbox today. We have a locked community mailbox, so I'm not exactly sure how it got in there.

At first glance it looks like some sort of scam, though I'm not sure about the angle. Maybe he's a low-balling flipper looking to get lucky with people in financial difficulty who need cash fast.

Which may be more common than not over the next year or so.

I get one of those about once every 2 months in my community box, so I suppose they pass as adverts. Sounds sketchy indeed.

[Acajack]

Originally Posted by le calmar

I get one of those about once every 2 months in my community box, so I suppose they pass as adverts. Sounds sketchy indeed.

I get something similar but they're from established real estate agents, delivered by Canada Post and printed on glossy paper with photos.

Basically they say they've got lots of clients looking for homes on my street, blablabla...

I've also gotten cold phone calls/messages from real estate offices asking if I wanted to sell.

[kwoldtimer]

Originally Posted by Acajack

I get something similar but they're from established real estate agents, delivered by Canada Post and printed on glossy paper with photos.

Basically they say they've got lots of clients looking for homes on my street, blablabla...

I've also gotten cold phone calls/messages from real estate offices asking if I wanted to sell.

Real estate agents being obliged to do their jobs. For the first time in years ...

[esquire]

Originally Posted by le calmar

I get one of those about once every 2 months in my community box, so I suppose they pass as adverts. Sounds sketchy indeed.

They're just advertisements. I guess someone figured that writing them out in ball point pen makes them seem more personal and might be more likely to compel a call back.

[misher]

Originally Posted by ssiguy

Sales are surging and months of inventory is plunging in Greater Vancouver which means, at least over the very short term, rising prices again. It tales more than a deadly worldwide pandemic to keep Vancouverites from their favorite pastime.

This could devastate the province's economy and much more importantly, Ottawa's finances. In BC tourism and travel make up a major portion of the private sector economy, second only to real estate. The sector is in complete freefall and employs hundreds of thousand in it's primary and {Ie entertainment, sports, conventions}secondary sectors. As the unemployment rate rises quickly, bankruptcies are sure to follow and all these massive CMHC backed mortgages are going to start showing up on Ottawa's finances. Remember, Vancouverites are much more likely to have to declare bankruptcy in times of unemployment than other Canadians.

This is because the rate of debt is staggering combined with the fact that BC has had a NEGATIVE savings rate for almost every one of the last 25 years. This means they have no money in the bank and have such huge mortgage payments that any reduction in income mean insolvency. In affordable areas one person losing their job and the other getting EI means they can probably muddle thru but not in Vancouver. Also when there is a plunge in real estate values, people that are the most indebted tend to be the same ones who are more likely to just give the keys back to the bank.........….being in the hole for $50k on a reasonable mortgage amount is distasteful but people will do but being in the hole for $500k and still having the same crushing mortgage payment is quite another. The rest of Canada is going to pay dearly for Vancouver's largess.

Seen a bunch of BC NDP supporters out online screaming about how the Liberals ignored money laundering and foreigners. Going to look pretty bad when prices rise under the NDP.

Either those two aren’t a significant factor or everything the NDP has done has no effect on them and it’s all just one giant tax grab with a fake justification.

The problem with political parties is they prey on the stupid. People who believe prices are 4x higher because a bunch of Chinese filled airplanes with illegal money and laundered it through local real estate.

Most have no idea what money laundering is and think most happens in casinos.....they go to development meetings and scream that we shouldn’t built more rentals/condos because they all go to foreigners.

[cabotp]

Originally Posted by ssiguy

Sales are surging and months of inventory is plunging in Greater Vancouver which means, at least over the very short term, rising prices again. It tales more than a deadly worldwide pandemic to keep Vancouverites from their favorite pastime.

This could devastate the province's economy and much more importantly, Ottawa's finances. In BC tourism and travel make up a major portion of the private sector economy, second only to real estate. The sector is in complete freefall and employs hundreds of thousand in it's primary and {Ie entertainment, sports, conventions}secondary sectors. As the unemployment rate rises quickly, bankruptcies are sure to follow and all these massive CMHC backed mortgages are going to start showing up on Ottawa's finances. Remember, Vancouverites are much more likely to have to declare bankruptcy in times of unemployment than other Canadians.

This is because the rate of debt is staggering combined with the fact that BC has had a NEGATIVE savings rate for almost every one of the last 25 years. This means they have no money in the bank and have such huge mortgage payments that any reduction in income mean insolvency. In affordable areas one person losing their job and the other getting EI means they can probably muddle thru but not in Vancouver. Also when there is a plunge in real estate values, people that are the most indebted tend to be the same ones who are more likely to just give the keys back to the bank.........….being in the hole for $50k on a reasonable mortgage amount is distasteful but people will do but being in the hole for $500k and still having the same crushing mortgage payment is quite another. The rest of Canada is going to pay dearly for Vancouver's largess.

I personally don't think the Governments and Banks will allow it to get that far.

I would not be surprised if they come up with the idea of all mortgage and loan payments being deferred for 2-4 weeks. Because the alternative is what you said which would be a total and complete colapse of the economy. That is far worse than the banks not getting their payments for a month.