Canada's 'housing bubble' deemed close to bursting

[goodgrowth]

Originally Posted by thewave46

I disagree.

Property owners are taxed on capital gains upon sale, so that's where the playing field is balanced. Someone unloading a rental property may be liable for large capital gains taxes.

They're also taxes on rental profit. Not that profit is usually large in the rental industry - it's mostly a capital gains game.

What are the capital gains on a primary residence in BC or Ontario now? Significant.

[thewave46]

Originally Posted by goodgrowth

What are the capital gains on a primary residence in BC or Ontario now? Significant.

Primary residences are capital gains exempt.

However, rental properties are not. I imagine that many landlords will be quite shocked when they sell their properties about how much money they owe Revenue Canada.

[Truenorth00]

Originally Posted by milomilo

Renovictions are a good thing. We need to stop focusing on individual grievances and look at the big picture.

They aren't individual grievances. It's become a substantial concern of renters everywhere. Especially now that rents are going up. Renovictions remove any stability with regards to rentals. Probably drives housing demand at the margins too as people feel pressured to buy, to get out of the renoviction cycle.

Originally Posted by milomilo

All these stories about perceived bad things happening are just a symptom of the single issue - there are not enough houses. Allow the market to be free, and the bad things will happen less.

If only it was actually a free market. Instead we have government backed agencies provide mortgage insurance and securitizing housing bonds for banks. We have municipalities restricting zoning to point of creating scarcity in some categories of housing. And we have the ultimate imbalance with Canadian families on Canadian wages have to compete with foreign investors who face no capital controls or tracing of their income or assets. Not to mention domestic investors who use their HELOCs to lever up.

One could argue that it will eventually end. But that eventually could well be 20-30 years, destroying the wealth creating ability of an entire generation. And that's aside from any political dynamics that are bound to emerge from all this. The rust belt gave the world Donald Trump. I'm curious what so much of Gen Y and Gen Z who feel trapped will eventually foist on Canada.

The CPC is actively targeting housing as a wedge issue now. Regular tweets from their accounts. Motions on the floor. Etc. Curious to see how many urban Liberal ridings this breaks.

[esquire]

What does the CPC want to do about housing? I would think some increased regulation would be appropriate and maybe the best way to gain control of the situation, but that would probably be the opposite direction that the CPC would want to move in.

[Truenorth00]

Originally Posted by esquire

What does the CPC want to do about housing? I would think some increased regulation would be appropriate and maybe the best way to gain control of the situation, but that would probably be the opposite direction that the CPC would want to move in.

I think it's mostly fluff. But they are smart to talk about it. The Liberals and NDP largely only talk about social housing or brag about token efforts on affordable housing (a co-op here or there). This is starting to sound as out of touch as Baghdad Bob to a lot of younger middle class folks who aren't poor, but yet don't have the income or wealth to enter the housing market.

CPC MP Brad Vis has become quite the vocal critic of the Liberals on housing:

https://twitter.com/BradleyVis

He also pushed this resolution:



There's also Pierre Poilievre banging the housing drum everyday, increasingly conflating stimulus spending with insinuations of the BoC and government secretly in cahoots to implement MMT and that this is inflating housing costs out of the reach of young Canadians.

Bad optics on the part of the Liberals, to be the only party voting against it, and then having it passed anyway. I get why Liberals have to vote against this. But I think they are really risking the next generation of voters, by increasingly coming off as out-of-touch. If those voters don't outright vote for the opposition, they may just become very apathetic, believing that the LPC has not real policies to offer them. And I don't doubt that this might well be some of the CPC game plan in highlighting the failure of the Liberals on this.

[esquire]

Interesting. Yeah, it is not really a top of mind issue for most here in Winnipeg but certainly in places like Toronto and Vancouver I can see housing affordability being a very big deal, especially for those under 50. If the CPC establishes a narrative of Liberal failure on that issue, it could be enough to move the needle in some ridings.

So far the Liberals have been really playing around the margins of this issue, which is understandable given how much is at stake. You don't want to make any missteps on housing. But I wonder when we'll start to see some more far-reaching action?

[rousseau]

Notes from the housing front:

My new neighbours are a pleasant couple in their fifties from Toronto who bought and updated the place across the street as a weekend getaway. They've long been fans of the Festival, so already know the city. For now they're spending weekends here going for bike rides and just generally relaxing and sitting on the porch. I presume that they'll sell their "weekday house" and retire here someday.

I'm used to my street having tourists strolling back to their B&Bs after dinner and a play, but actually being targeted for a pied-à-terre? Wild. I've also been told by numerous people, including tradesmen and real estate know-it-alls, that our house would probably sell for close to a million bucks.

Wild. Would be nice to have a crystal ball right about now. If we were cold-blooded people we'd sell our place and move to a house in a small town farther away from the Golden Horseshoe to bask in our windfall, but we like it here. And, well, small towns are small for a reason. Not to throw a blanket disparagement on them, but I know what they're like.

They're not like Stratford.

You know what might be interesting? To sell to an investor who would let us continue living here as renters for as long as we like. I'm no good at math though. With current inflation rates, would having a million dollar nest egg set you up for the next thirty years?

[Nite]

Canada has lowest housing units per capita in G7

“The bottom line is what’s driving the housing market is what’s been inconvenient of the government to acknowledge for years now, and that is the lack of supply."

[WarrenC12]

Originally Posted by rousseau

You know what might be interesting? To sell to an investor who would let us continue living here as renters for as long as we like. I'm no good at math though. With current inflation rates, would having a million dollar nest egg set you up for the next thirty years?

The 4% rule is a pretty reasonable metric considering people can't predict the future:

https://www.investopedia.com/terms/f/four-percent-rule.asp

$40k/year to live on. Doesn't sound like enough *if you are paying rent*.

[rousseau]

Originally Posted by WarrenC12

The 4% rule is a pretty reasonable metric considering people can't predict the future:

https://www.investopedia.com/terms/f/four-percent-rule.asp

$40k/year to live on. Doesn't sound like enough *if you are paying rent*.

Thanks for that, I wasn't aware. We're not realistically going to be able to retire soon, if ever, so we'll still have some income coming in. And we'd be investing most of the nest egg, not just letting it sit in a bank collecting interest.

Something to think about, anyway.

[casper]

Originally Posted by Nite

Canada has lowest housing units per capita in G7

“The bottom line is what’s driving the housing market is what’s been inconvenient of the government to acknowledge for years now, and that is the lack of supply."

So yes, we need to build more housing stock. If the private sector is not willing to do it, the feds should simply provide loans to co-ops to do it.

[milomilo]

Originally Posted by casper

So yes, we need to build more housing stock. If the private sector is not willing to do it, the feds should simply provide loans to co-ops to do it.

You have it backwards. The private sector wants to do it - their sole objective is to sell things and make money. But the government is telling them not to build, they are the problem. They need to get out the way.

The problem is, the governments are doing exactly what their voters want them to do. NIMBYs don't want any construction and homeowners don't want to lose value on their houses. And public servants want to keep their jobs so they justify their existence with pointless bureaucracy.

[JHikka]

When baby boomers in Toronto finally leave their current homes, it will free up space for hundreds of thousands of young homeowners. But will they be able to afford them?
By Victoria Gibson
Mon., June 14, 2021

The 1.6-square-kilometre slice of Markland Wood in Etobicoke is a twist of bungalows and other ’60s and ’70s era homes, tucked behind neatly groomed lawns and mature trees. It’s a neighbourhood that skews older than the rest of the city, with nearly twice as many seniors as the citywide rate. It skews wealthier, too, with a median household income nearly $20,000 higher than the city’s rate.

It’s here that sometime in the next three decades Toronto officials expect to house more than 1,000 extra residents without building a single new unit — as existing homes turn over to younger, larger households.

Markland Wood is part of a larger trend. A new city report estimates that 207,240 more people could be housed in the city by the year 2051, based solely on the turnover of existing homes from baby boomers and the generations before them — stating that many are currently, or will soon be, “empty nesters.”

Where the report stops short, though, is measuring affordability — if these homes empty out, will larger, younger households be able to be scoop them up? Though the median value of homes in the area was $501,328 in 2016, a home currently up for sale in the neighbourhood — with five bedrooms and six bathrooms — was listed for $2.4 million.

https://www.thestar.com/news/gta/2021/06...TA&utm_content=babyboomerstorontohousing

[Berklon]

^ The only way baby boomers will leave their home is in a body bag.

I know so many baby boomers and even older who just wont give up their home. They want to die there. Hell, I know some who have upgraded homes recently and a bunch of them still have a mortgage in their 70s.

Younger people better get used to renting. This will be their only way.

[milomilo]

Originally Posted by Berklon

^ The only way baby boomers will leave their home is in a body bag.

Yep. Brings to light what a mistake it is to place so much value in home equity, given that it is useless until the house is sold. The idea of downsizing won't be such a good plan in reality, since everywhere else you want to live went up so much in price too, thanks to the boomers.

[davee930]

Originally Posted by milomilo

Yep. Brings to light what a mistake it is to place so much value in home equity, given that it is useless until the house is sold. The idea of downsizing won't be such a good plan in reality, since everywhere else you want to live went up so much in price too, thanks to the boomers.

Yeah. I'll live with it. Just cut us some slack 🞵🞵🞵🞵🞵🞵🞵 Boomers

[rbt]

Originally Posted by WarrenC12

The 4% rule is a pretty reasonable metric considering people can't predict the future:

https://www.investopedia.com/terms/f/four-percent-rule.asp

$40k/year to live on. Doesn't sound like enough *if you are paying rent*.

Certainly true in an urban area, though $40k/year goes a long way if are mortgage free in a typical downtown Toronto condo (so $1.7M; $700k in real-estate). You could live pretty comfortably in a place like Kirkland Lake or Rouyn-Noranda on $1 Mil if you are outdoors type of person. Lots of accessible trails, lakes, rivers, and downhill skiing nearby.

[le calmar]

Originally Posted by rbt

Certainly true in an urban area, though $40k/year goes a long way if are mortgage free in a typical downtown Toronto condo (so $1.7M; $700k in real-estate). You could live pretty comfortably in a place like Kirkland Lake or Rouyn-Noranda on $1 Mil if you are outdoors type of person. Lots of accessible trails, lakes, rivers, and downhill skiing nearby.

I am ok with the idea of living in a smaller town at some point, but those places are way too remote for my liking. One can do outdoors activities in a lot of places much closer to Southern Ontario. Sadly those may eventually become the only options for affordable living.

[esquire]

Originally Posted by Berklon

^ The only way baby boomers will leave their home is in a body bag.

I know so many baby boomers and even older who just wont give up their home. They want to die there. Hell, I know some who have upgraded homes recently and a bunch of them still have a mortgage in their 70s.

That's nothing really new though, who has ever been eager to leave their homes when they get old? Most people usually only do so once they have no choice, typically because a SFH no longer meets their needs.

For example, my mom is now in her 70s and she's been living in the same house for almost 50 years that was purchased brand-new. She is by herself and she doesn't need all the space, but it's hers, it was paid off sometime in the 1970s and she isn't planning to go anywhere. I'm sure many boomers are of the same mindset.

[thewave46]

Originally Posted by esquire

That's nothing really new though, who has ever been eager to leave their homes when they get old? Most people usually only do so once they have no choice, typically because a SFH no longer meets their needs.

For example, my mom is now in her 70s and she's been living in the same house for almost 50 years that was purchased brand-new. She is by herself and she doesn't need all the space, but it's hers, it was paid off sometime in the 1970s and she isn't planning to go anywhere. I'm sure many boomers are of the same mindset.

More importantly, people rely on their families. I doubt that many Boomers will pack up for the wilderness of Northern Ontario (or even small town Southern Ontario) simply because their kids are in the city. Being close to family is huge.

When they're youngish, Boomers might see some advantage to having the cash, but eventually the high-life of retirement gives way to reality - they're getting older and will need more help.

In another sense, Boomers are also helping their kids with child-rearing too - it's hard to help if you're far away.