Canada's 'housing bubble' deemed close to bursting

[Truenorth00]

No no. You don't get it. There's no crisis. Millennials are just spoiled whining brats. That's all. Everything is perfectly fine. They should just raise kids as senior citizens in condos.

It's unbelievable the lengths people will go and twist themselves into pretzels to justify as all this as acceptable and healthy.

[rousseau]

Originally Posted by niwell

Plus monthly maintenance fees of course.

Maintenance fees scare the 🞵🞵🞵🞵 out of me. Every time I casually glance at condos for sale in Toronto I can't help but wonder how the fug people are managing when they have to pay a tax of $8-12 thousand a year purely for the privilege of living there.

In 17 years of living in a detached single family we've spent nowhere near 17 x 8,000 = $136,000 on maintenance or renovations. The roof, front porch, side vestibule, back deck, fancy front garden and stone patio that we've done comes to under half that. Plus it's an investment that has raised the value of our house, not something that disappears into the ether.

[someone123]

Originally Posted by rousseau

In 17 years of living in a detached single family we've spent nowhere near 17 x 8,000 = $136,000 on maintenance or renovations. The roof, front porch, side vestibule, back deck, fancy front garden and stone patio that we've done comes to under half that. Plus it's an investment that has raised the value of our house, not something that disappears into the ether.

There's a lot of unavoidable bloat and compromise with condos. In BC the insurance rates for large residential condos went up by 2-4x recently so a lot of fees went up by 30-40% during 1-2 years. On the plus side even with the bloat the per unit cost of maintaining amenities like a gym or pool can be low. Of course during the covid era a lot of this stuff is indefinitely closed.

I'm not sure the way stratas work, at least here in BC, is appropriate for the function they serve, increasingly the only option for property ownership in a city with weak protections for tenants.

[SignalHillHiker]

Originally Posted by zoomer

With average and benchmark home prices now north of 1 million in Victoria, there is a rental building boom as most folks can’t even afford condos anymore. Being able to own a home, heck even a condo is becoming a pipe dream for young people.

The numbers are just that until you see a news story that puts things into perspective with the headline: Middle-income first time homebuyers gain access to nine homes in Victoria



These homes are not even houses, but small condo units along a busy road about 2 km from downtown.

https://www.vicnews.com/news/middle-inco...a/?utm_source=dlvr.it&utm_medium=twitter

That's terrifying. I'm so grateful to be so attached to such a seemingly undesirable area.

I mean, look at this...

Great location in terms of proximity to downtown. It is located where the street-walking 🞵🞵🞵 workers ply their trade, and it's surrounded by public housing, halfway housing, rentals, etc... but still... $89K for a five-bedroom house:

https://www.realtor.ca/real-estate/23327625/67-longs-hill-st-johns

And you can get something AMAZING here for $600K. Not as good a location, but much better neighbourhood, but still only 15 minutes walk to downtown:

https://www.realtor.ca/real-estate/23331490/92-patrick-street-st-johns

[someone123]

That Victoria story covers all the housing affordability tropes that amount to rearranging deck chairs on the Titanic while making people feel good about something being done. Government involvement on top of the huge amounts of existing red tape, tiny scale, still expensive and for households making up to $160k a year.

If Victoria is like Vancouver, most of the city will be zoned so that a a 6 storey building like that is illegal. And even if such a building were legal it could not be affordable because of the land costs.

[milomilo]

Originally Posted by someone123

That Victoria story covers all the housing affordability tropes that amount to rearranging deck chairs on the Titanic while making people feel good about something being done. Government involvement on top of the huge amounts of existing red tape, tiny scale, still expensive and for households making up to $160k a year.

If Victoria is like Vancouver, most of the city will be zoned so that a a 6 storey building like that is illegal. And even if such a building were legal it could not be affordable because of the land costs.

And yet no political party even attempts to fight on this issue. A self respecting pro-free market, small government party could have a field day with this, but they don't even try. And I don't know if the population would even vote for good policy if it was offered. The sort of house price policy the plebs want is exactly what they get - "affordable" housing components of development, rent controls, foreign buyer/empty home taxes, punishing developers any way possible. At best these policies are ineffective, and often they make the problem even worse.

[cabotp]

Originally Posted by thewave46

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.

They would have to be 🞵🞵🞵🞵🞵🞵 stupid to be investing and not realize they will be paying capital gains.

[cabotp]

Originally Posted by Truenorth00

That isn't going to change the policy argument though.

If you're a Zoomer with no dependents, trying to live on $50k a year, you're going to be asking why you have to pay higher taxes for homecare to people who have substantial wealth in their homes. And if it's intergenerational homes, there's even less reason for you to have to pay more. Their kids are inheriting the house. They should pay for that care.

This discussion is absolutely coming. And anybody who thinks whiny Millennials will be driving this, having talked to Zoomers who have it way worse.

Because one day those Millennials will be old as well and will need home care and such things.

[Truenorth00]

Originally Posted by someone123

That Victoria story covers all the housing affordability tropes that amount to rearranging deck chairs on the Titanic while making people feel good about something being done.

I just listened to a forum call of some housing advocates and planners from Toronto. And they pretty much view it as rearranging chairs on the Titanic. Literally used the same analogy to describe their concerns with what is transpiring.

And these aren't some set of hippie liberal advocates. They are planners, builders and developers who are actually alarmed at where this is going.

They made the point too that in Toronto, while the Ford government is less restrictive on sprawl, they are doing bizarre things like building regulatory regimes that will discourage densification around transit stations. The end result is that they are only supportive of density and development in areas where they don't have NIMBY supporters.

[Truenorth00]

Originally Posted by cabotp

Because one day those Millennials will be old as well and will need home care and such things.

Would you trust a government that hasn't acted in your interest your entire life, to take care of you in your old age?

[zoomer]

Originally Posted by someone123

That Victoria story covers all the housing affordability tropes that amount to rearranging deck chairs on the Titanic while making people feel good about something being done. Government involvement on top of the huge amounts of existing red tape, tiny scale, still expensive and for households making up to $160k a year.

If Victoria is like Vancouver, most of the city will be zoned so that a a 6 storey building like that is illegal. And even if such a building were legal it could not be affordable because of the land costs.

Absolutely - it’s a Titanic sized sham - politicians promoting feel good stories, like 9 ‘affordable’ condos for sale. Home lotteries are not an effective way of getting people into home ownership assuming it will be a random draw on who gets to purchase these. The so called Greens who have a lot of local power and influence on Victoria city council and the community associations are loath to approve anything over 15 stories while being opposed to all urban expansion - although that’s occurring outside their borders in Langford and Colwood.

Perhaps the worst offender is the wealthy neighbourhood of Oak Bay - crazy enough it’s an actual municipality, one of 13 in Greater Victoria each with their own mayor and city councils. It’s population has been 18,000 for decades, and is projected to decline slowly despite representing a large chunk of land near the core of the region. Surely higher density along major corridors would make sense, but nope, almost nothing gets built here.

Part of it is the dream of many to keep Victoria small and quaint, but they’re sacrificing the younger generation to keep others out and that will have serious consequences. Is a 2 million benchmark price the plan to protect the environment and pull up the draw bridge to the island?

Signal Hill Hiker - consider yourself lucky, a beautiful coastal location and affordable home prices!

[giallo]

Victoria definitely sounds a lot like Vancouver; chock full of selfishness and greed at the expense of making a better city for future generations.

[zoomer]

Perhaps greed by the well off and established and a widely held yet naive view that stopping growth is the only way to save the environment and 'not become like Vancouver'. Something will have to give very soon I feel.

On the other hand Victoria (well the city proper of Victoria, not Oak Bay and others ) is perhaps too generous and caring resulting in the highest percentage of homeless in the country. And we wonder why more homeless keep arriving from across the country, filling the city parks while waiting for their promised hotel room and services.

[niwell]

It's probably also worth talking about how there are increasingly fewer stable options for housing outside of ownership. We aren't really building "affordable" rentals anymore outside of a small amount of social housing and mandated units, - hell in some cases we're actually tearing them down! In terms of new units coming online this mostly leaves us with high end (read: expensive) builds and investors renting out their condo units. Neither of which are great options for everyone, and it's not surprising that people are being pushed towards ownership when this may not really be the best option.

You can still get a much better space in central Toronto by renting compared to the monthly cost for condos shown above, but have to deal with a lot of uncertainty. I know quite a few people that have upgraded over the pandemic - a spacious 2 bedroom that's usually 1-2 floors of an older house can go for $2500 all in if you're lucky. But I also know people who have been renovicted or had have had the owner want to move back.

If we were building purpose built, affordable rentals that include large units like we were in the 60s/70s a lot of this could be ameliorated. No need for them to be tower in the park, but the basic idea is there. There's almost no way this could be done without some form of government intervention of course.

[milomilo]

Originally Posted by niwell

It's probably also worth talking about how there are increasingly fewer stable options for housing outside of ownership. We aren't really building "affordable" rentals anymore outside of a small amount of social housing and mandated units, - hell in some cases we're actually tearing them down! In terms of new units coming online this mostly leaves us with high end (read: expensive) builds and investors renting out their condo units. Neither of which are great options for everyone, and it's not surprising that people are being pushed towards ownership when this may not really be the best option.

You can still get a much better space in central Toronto by renting compared to the monthly cost for condos shown above, but have to deal with a lot of uncertainty. I know quite a few people that have upgraded over the pandemic - a spacious 2 bedroom that's usually 1-2 floors of an older house can go for $2500 all in if you're lucky. But I also know people who have been renovicted or had have had the owner want to move back.

If we were building purpose built, affordable rentals that include large units like we were in the 60s/70s a lot of this could be ameliorated. No need for them to be tower in the park, but the basic idea is there. There's almost no way this could be done without some form of government intervention of course.

Government intervention (in the form of telling developers what to build and making it easy to block projects) got us into this mess, it cannot get us out. Any policy that further restricts what developers can build will decrease supply and increase prices, there's no way around that. Further "intervention" must be to relax regulation and allow more housing.

[Innsertnamehere]

New units are inherently expensive - in a healthy market older units should constitute the affordable stock in a city. The problem is Toronto (and a lot of southern ontario for that matter) is seeing older stock renovated and brought up-market as there is a shortage of higher end rental housing.

Inevitably when shortages occur those on the bottom of the market get pushed out.

Big spacious units for cheap just isn't possible without massive government subsidy as the economics have changed for development. Land costs are high, construction costs are higher, municipalities have strict expectations in terms of concession for buildings that drive up costs per sq ft even higher, etc.

The one way to affordably construct larger units is with stick construction in ground related unit types like stacked towns, duplexes, etc., but planning regulations make these extremely challenging to construct in significant numbers.

Affordable housing has a role in every market, specifically for households that fall below the price point that market housing can provide. Unfortunately in Toronto this level is much higher than it would be in a non-supply constrained market. The real solution to housing affordability is as much supply as humanely possible and a healthy amount of affordable housing to support the lowest tiers of incomes.

[niwell]

Originally Posted by milomilo

Government intervention (in the form of telling developers what to build and making it easy to block projects) got us into this mess, it cannot get us out. Any policy that further restricts what developers can build will decrease supply and increase prices, there's no way around that. Further "intervention" must be to relax regulation and allow more housing.

Removing restrictions is still a form of intervention!

That being said, I fear we are well past a point where telling developers to simply go at it will really solve the problem. There's too much money tied up in the game and too many people who aren't going to be a fan of the potential for depreciated assets.

[milomilo]

Originally Posted by niwell

Removing restrictions is still a form of intervention!

Fair, but IMO that's a deletion of previous intervention. And the bulk of housing policy has been the problematic kind - emplacing restrictions. See that Victoria example, the government deliberately made housing more expensive by forcing the developer to put in "affordable" housing. They chose to make the problem worse, and the worst thing is the population thinks this is the correct policy.

[milomilo]

Originally Posted by niwell

Removing restrictions is still a form of intervention!

That being said, I fear we are well past a point where telling developers to simply go at it will really solve the problem. There's too much money tied up in the game and too many people who aren't going to be a fan of the potential for depreciated assets.

We're not telling developers to go at it though, at all. Housing development is about the most restricted market there is. Imagine if the government only allowed grocery stores in specific locations, and you could only sell certain types of food at each one. And locals could block it for any reason. That sounds absurd, but it is how we force the housing market to function.

[Innsertnamehere]

Originally Posted by niwell

Removing restrictions is still a form of intervention!

That being said, I fear we are well past a point where telling developers to simply go at it will really solve the problem. There's too much money tied up in the game and too many people who aren't going to be a fan of the potential for depreciated assets.

No one solution is going to work and we are so far deep into the hole it's not going to be fixed overnight.

A response, including increased supply, increased affordable housing, and potentially even trying to deflect demand side growth (perhaps trying to shift growth to lower cost markets for example) is needed to actually fix the issue.