Canada's 'housing bubble' deemed close to bursting

[giallo]

This guy always does great, topical videos.

Here's his take on the housing crisis.

• Video Link

[Peggerino]

Totally agreed, this guy rocks.

[jamincan]

Excellent video.

[Innsertnamehere]

agreed. great - informative without dropping too many opinions, and weighs all sides of arguments.

I think it all condenses down to that no matter how you cut the cake, when there is a cake shortage, you just need more cake. Changing how it's cut might change how much everyone gets, but ultimately there is still just as much cake.

[milomilo]

Originally Posted by Innsertnamehere

agreed. great - informative without dropping too many opinions, and weighs all sides of arguments.

I think it all condenses down to that no matter how you cut the cake, when there is a cake shortage, you just need more cake. Changing how it's cut might change how much everyone gets, but ultimately there is still just as much cake.

Yep.

I'm not a super huge fan of the incentives used to encourage rental only housing, as in the form of reduced regulation then if it's good for rentals it should be good for everything else. And if the incentives are in the form of reduced development fees then again, why apply this only to rental units? If the fees are a good thing, then they should be applied equally, and if they are a bad thing, they should be scrapped. What is definitely bad though is the enforced % of rental in buildings policy described.

What is needed is more houses. If incentives for rental only can sneak this through without people fighting it so much, then I guess that's OK.

[rousseau]

Originally Posted by rousseau

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.

I mean, look at this place:

https://www.realtor.ca/real-estate/23368377/150-prospect-street-unit-a-port-dover

But $1,200 a month in maintenance fees? Yikes.

[ssiguy]

A very good video but when get right down to it, the primary issue is interest rates.

Ultra low interest rates are a double whammy for affordable housing. Not only do they encourage people to buy but conversely discourage people to save. This is why places like BC have had a negative savings rate for the last 25 years.............savings no longer make you any money while spending does which is quite perverse when you think about it.

There is one key issue that was not mentioned specifically and it is a relatively new phenomenon..........home equity loans. Now that Boomers have made a fortune on their housing, they have the ability to buy more properties as investments at zero interest rates and zero taxation. In Vancouver every other add on the radio is about getting a home equity loan boasting it can be from 50k to 1.5 million.

[MonctonRad]

Originally Posted by rousseau
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.

But home ownership in general is like that. I pay $10k/yr in property tax for my house, and in the last three years, between replacing a roof and two heat pumps, it has cost me another $40k. Add in other costs for lawn care and pool maintenance services, and you're getting into the range of over $30,000/yr for the privilege of living in a house that I already own.

I feel like I'm treading water...…...

[rousseau]

Originally Posted by MonctonRad

But home ownership in general is like that. I pay $10k/yr in property tax for my house, and in the last three years, between replacing a roof and two heat pumps, it has cost me another $40k. Add in other costs for lawn care and pool maintenance services, and you're getting into the range of over $30,000/yr for the privilege of living in a house that I already own.

I feel like I'm treading water...…...

Crikey. We got no pool and practically no lawn. Did the roof in 2014. Bought a new furnace in 2008. Got a new dryer last year. Built a deck last year. New front porch in 2015. About ten new windows over the last couple of years.

But we've been here 17 years, and we're nowhere near 12 x 1,200 x 17 = $244,800 in maintenance and repairs. Which, even so, would have been money paid into the investment of our house, not money thrown out into the wind of how arbitrarily these rates seem to be set.

We pay $3,000 in property taxes per year, though it's not pedantic to point out that that's irrelevant to the issue of maintenance fees. You still need to pay property taxes on top of those maintenance fees.

[Architype]

Originally Posted by rousseau

Crikey. We got no pool and practically no lawn. Did the roof in 2014. Bought a new furnace in 2008. Got a new dryer last year. Built a deck last year. New front porch in 2015. About ten new windows over the last couple of years.

But we've been here 17 years, and we're nowhere near 12 x 1,200 x 17 = $244,800 in maintenance and repairs. Which, even so, would have been money paid into the investment of our house, not money thrown out into the wind of how arbitrarily these rates seem to be set.

We pay $3,000 in property taxes per year, though it's not pedantic to point out that that's irrelevant to the issue of maintenance fees. You still need to pay property taxes on top of those maintenance fees.

You pay much more in property taxes than the average condo around here, the maint. fees in older buildings may also include heat and building insurance, any shared amenities, virtually all other normal maintenance or repairs, and presumably are in a much better location than you have in most sfh areas.

[rbt]

Originally Posted by rousseau

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.

That level of property tax is very uncommon. A typical 1-bed condo is paying closer to $3000/year property taxes.

[rousseau]

Originally Posted by rbt

That level of property tax is very uncommon. A typical 1-bed condo is paying closer to $3000/year property taxes.

By "tax" I meant maintenance fee, meaning that the money disappears into thin air, gone forever. The lowest fees you're going to find are $300-400 a month, so with $3,000 in property taxes it comes to about $7,000 a year for the privilege of living in that tiny 1-bed condo (not including your mortgage payments).

Terrifying!

[lio45]

Originally Posted by rousseau

I mean, look at this place:

https://www.realtor.ca/real-estate/23368377/150-prospect-street-unit-a-port-dover

But $1,200 a month in maintenance fees? Yikes.

That's nuts. FWIW it's why I'll never own condos. (I looked at some in the past, but every time, the idea that I wouldn't control my maintenance expenses was a deal-breaker.)

[rbt]

Originally Posted by rousseau

By "tax" I meant maintenance fee, meaning that the money disappears into thin air, gone forever. The lowest fees you're going to find are $300-400 a month, so with $3,000 in property taxes it comes to about $7,000 a year for the privilege of living in that tiny 1-bed condo (not including your mortgage payments).

Terrifying!

Oh. yeah. Absolutely. But it's worth noting half or more of that fee is staff to do nearly all of the work. Hiring someone to do your gardening, snow shovelling, cleaning, window washing, handyman tasks (change filters, flush vents, ...), pool maintenance, etc. adds up quickly in a house too. My grandparents did the condo thing in their early 70's to save money as maintenance was well beyond their ability at that point and staffing costs crept-up between 8+ different services (they lived there for about 20 years). Condos do provide economies of scale for those who don't (or can't) treat house maintenance as a hobby.

That said, if you want condo-type downtown-living without the overhead of staff (like a house owner who does everything themselves), then you can join a cooperative where owners are expected to share the work and staff is minimal (often just accounting and legal). Low-staff co-op maintenance fees are closer to $175/month in downtown (utilities are ~$100 of that), and those are "high" as they're now older buildings regularly doing major repairs.

I'm kinda surprised hipster downtown-living millennials haven't been building modern co-operatives.

[WarrenC12]

Originally Posted by rbt

I'm kinda surprised hipster downtown-living millennials haven't been building modern co-operatives.

I think there are a lot of legal loopholes to jump through for this. Vancouver has seen a few modern versions of "shared living" like this, but it's more like a townhouse complex with shared outdoor space.

Regarding condo maintenance fees and life, it's a trade off for sure. One thing to consider is that if you want immediate proximity to downtown life, there's no other option (you can rent of course). It's not like there are SFHs in Yaletown.

I'm fully aware of the cost, and I like the benefits of condo life. Security is far higher. You're trading money for time (as with everything). I can walk away and hop on a plane for 2 weeks and not worry very much about anything.

[rofina]

Just a fun question after all this conversation;

Will Canada see a decline in RE prices greater than 15% at any point before 2030?

Yes/No?

[p_xavier]

Originally Posted by MonctonRad

But home ownership in general is like that. I pay $10k/yr in property tax for my house, and in the last three years, between replacing a roof and two heat pumps, it has cost me another $40k. Add in other costs for lawn care and pool maintenance services, and you're getting into the range of over $30,000/yr for the privilege of living in a house that I already own.

I feel like I'm treading water...…...

Well at 10k/y in property taxes that's 5x as my house! You must have a 15000sf home. Heat pumps installed is about 5k$. I do my own lawn and pool work, you have 5 acres of land?! I'm just flabergasted by your costs.

I paid nearly 700$ in condo fees per month. The insurance part of that was about 300$ (insurance is a big issue in a condo building). Insurance for the house is 115$ a month.

[Berklon]

Originally Posted by rofina

Just a fun question after all this conversation;

Will Canada see a decline in RE prices greater than 15% at any point before 2030?

Yes/No?

Nope.

[SignalHillHiker]

This made me giggle.

The innermost streetcar suburb in St. John’s gets drone shots…



The downtown core gets a regular photographer…



And the working class ring of rowhouses in between gets Google screengrabs lol



That middle one is actually in my budget but it’s just too huge (four huge bedrooms, I want two max). So excited but still nothing I actually want here. A couple of good options but they all have things wrong with them that I hate lol

[milomilo]

Originally Posted by rofina

Just a fun question after all this conversation;

Will Canada see a decline in RE prices greater than 15% at any point before 2030?

Yes/No?

I wish to be wrong but:

No.

Unless something drastically changes.

I think we'll see a moderate correction from this current lunacy, but it won't be a huge crash. Because the fundamentals remain the same. It couldn't be more simple, we aren't building enough homes every year to house a growing population.