Canada's 'housing bubble' deemed close to bursting

[SpongeG]

The Canadian Property Bubble Has Grown For 24 Years, Longer Than Any Other G7

AUGUST 6, 2021

Canadian real estate is perfectly efficient, and households never display signs of exuberance. That or it’s a ticking time bomb, waiting to go off. This year marks the 24th year of expanding home prices in Canada, and we’re two quarters into it. This isn’t just the longest expansion in Canadian history, it’s one of the longest in the world. The current expansion has lasted almost twice as long as the next G7 country. This one is going to take a little unpacking, so let’s get to it.

...

https://betterdwelling.com/the-canadian-...for-24-years-longer-than-any-other-g7/#_

[SpongeG]

It’s Official! The Canadian Property Bubbles Are Now Deflating

AUGUST 5, 2021
The largest property bubbles in Canada have officially begun to deflate. Last month we crunched the numbers on what it would take for Toronto and Vancouver housing to maintain its momentum. Failing an enormous monthly price increase in July, the previous month would be the peak.

Well, it didn’t hit the target rate of growth needed to keep the momentum going. Consequently, June was the peak for the annual rate of price growth. Now the rate is coming down faster than a billionaire after 8 minutes in space. This is going to have a big impact on consumer expectations going forward.

...

https://betterdwelling.com/its-official-the-canadian-property-bubbles-are-now-deflating/

[SpongeG]

Posthaste: Looks like Canada's hot, hot housing market has peaked — earlier than expected
The big question now is how fast are we going to tumble down that mountain.

Author of the article: Pamela Heaven
Publishing date:Jul 29, 2021

https://financialpost.com/executive/exec...-market-has-peaked-earlier-than-expected

[Metro-One]

Good. I plan to return to Canada in 3 years with family in tow, will likely become a high school teacher and hope to be able to afford to live in second tier market (the Okanagan, Kamloops, Nelson or Nanaimo areas).

[milomilo]

Who is Better Dwelling? They've been popping up in my newsfeed more and more, and seems to be all pushing one side of a narrative, and I don't trust their motives.

A property bubble bursting isn't going to magically produce millions more homes. If it "bursts", it will be because the economy is so fucked that people can no longer afford their homes. That won't be a good thing over all, even if some people (hopefully me), can profit off it. The only way out of this crisis is to build more homes, always has been, always will be and anyone who disagrees needs to bang their head against a wall.

[casper]

Originally Posted by milomilo

Who is Better Dwelling? They've been popping up in my newsfeed more and more, and seems to be all pushing one side of a narrative, and I don't trust their motives.

A property bubble bursting isn't going to magically produce millions more homes. If it "bursts", it will be because the economy is so fucked that people can no longer afford their homes. That won't be a good thing over all, even if some people (hopefully me), can profit off it. The only way out of this crisis is to build more homes, always has been, always will be and anyone who disagrees needs to bang their head against a wall.

But building more homes will cause an upturn in the economy and that will more more people can now afford their homes. That will be a disaster for those expecting the bubble to burst.

The reality is in Vancouver at least we are talking about single family detached. The number of these in the city of Vancouver are going down as more or them get replaced by multi-family. The same happening in Toronto and other major cities.

[jamincan]

Rates going down is not the end of a peak, it's just no longer accelerating.

[milomilo]

Originally Posted by casper

But building more homes will cause an upturn in the economy and that will more more people can now afford their homes. That will be a disaster for those expecting the bubble to burst.

The reality is in Vancouver at least we are talking about single family detached. The number of these in the city of Vancouver are going down as more or them get replaced by multi-family. The same happening in Toronto and other major cities.

It's essentially impossible for SFHs in Vancouver to be affordable ever again since there is practically no greenfield land left that is available for building on. What could be made somewhat more reasonable is housing, by building more high density units.

In other cities, like Toronto, there is plenty of land but the choice has been made to restrict it. This would be an OK trade off, except they also won't allow enough high density construction. People need to be aware of this, it's a deliberate choice to make housing unaffordable. If you don't allow sprawl, and you don't allow mass densification, then the result is expensive housing.

[samne]

Might be a current market stall. Dog days of summer. Things kinda opening up again and people taking advantage of the new "freedom". Offices planning back to work and people waiting to see.

Immigration has been basically closed past 18 months. Once opened up again I think market will pick right back up.

[WarrenC12]

Printing money and driving inflation suuuuure would help the governments of the world with their big deficits and debt. Just sayin.

[milomilo]

Originally Posted by WarrenC12

Printing money and driving inflation suuuuure would help the governments of the world with their big deficits and debt. Just sayin.

As much as people don't want to believe it, it could help the low income people too. Since we are incapable of taxing wealth, a potential alternative is to run inflation hot for a while, which would more speedily reallocate wages from low value sectors to higher value ones, and devalue the rich's savings relative to the earnings of low wage workers. If we print money to build infrastructure, at the expense of wealthy peoples savings, that's a good deal for Canadians too.

Of course, housing would remain unaffordable, because monetary inflation has very little to do with it.

[samne]

Businesses having hard time competing with CERB which may end up being permanent UBI. From what Im hearing staff retention is currently hard as well. Wage increases could end up being the bi-product of all this.

[WarrenC12]

Originally Posted by samne

Businesses having hard time competing with CERB which may end up being permanent UBI. From what Im hearing staff retention is currently hard as well. Wage increases could end up being the bi-product of all this.

What CERB? Isn't it long over?

[samne]

Originally Posted by WarrenC12

What CERB? Isn't it long over?

From what I understanf CERB is extended til end of september.

I think simething else was happening around that time....

[Hali87]

^ I think you're both right. CERB was retooled and renamed CRB after the first few months, and CRB + some of the related programs have been extended through September 2021.

[rofina]

Originally Posted by SpongeG

The Canadian Property Bubble Has Grown For 24 Years, Longer Than Any Other G7

AUGUST 6, 2021

Canadian real estate is perfectly efficient, and households never display signs of exuberance. That or it’s a ticking time bomb, waiting to go off. This year marks the 24th year of expanding home prices in Canada, and we’re two quarters into it. This isn’t just the longest expansion in Canadian history, it’s one of the longest in the world. The current expansion has lasted almost twice as long as the next G7 country. This one is going to take a little unpacking, so let’s get to it.

...

https://betterdwelling.com/the-canadian-...for-24-years-longer-than-any-other-g7/#_

This is dumb, and the headline defeats it self.

The term bubble gets throw about too much, its lost meaning. Its like calling anyone you don't like a Nazi - these terms once had meaning and carried sufficient weight.

To call a over 2 decade cycle a bubble is silly. People weren't born when this started that are entering the housing market now. Entire generations were shaped by this property market.

Its not a bubble when it lasts a quarter of a lifetime, or we may as well call Western Civilization a bubble because that's likely to implode and crash at some point too.

This is the results of a series of domestic policies. Many civic level. Some monetary, with some globalization sprinkled in for good measure.

Its a ignorant and damaging to keep on calling this a bubble. Bubbles pop and return to mean. If anyone was actually to believe CAD RE is about to return to 3X local incomes, then you are signing up for a complete financial collapse of this country, or a complete re organization of how fiat money works, which is a total and complete guess to know how that would work out.

[SignalHillHiker]

House-shopping downtown. Second house I’ve liked enough to see (hopefully tomorrow). It’s is a rough neighbourhood, which is no issue for me, I like the working class ones. There’s a crackhouse across the street but NOT attached, which is wonderful.

My parents know a municipal enforcement officer and he’s a suburban goodie who tried to put the fear of God into them that it’s all drugs and hookers. So mom texted concerned. I told her it’s fine and then explained the hookers are actually a couple of blocks away.



“Hookers everywhere” needs to be a piece of wall art for this new house if I take it haha.

The backyard is insanely huge for that close to DT, and backs onto a little park.

[yaletown_fella]

Originally Posted by milomilo

As much as people don't want to believe it, it could help the low income people too. Since we are incapable of taxing wealth, a potential alternative is to run inflation hot for a while, which would more speedily reallocate wages from low value sectors to higher value ones, and devalue the rich's savings relative to the earnings of low wage workers. If we print money to build infrastructure, at the expense of wealthy peoples savings, that's a good deal for Canadians too.

Of course, housing would remain unaffordable, because monetary inflation has very little to do with it.

But here you're assuming low or lower middle income people don't have savings or are incable of saving. Higher rates would be a great equalizer by bringing down the value of real estate and assets held by the rich and incentivizing the lower and middle classes to save.

Allowing the stock market to go into a recession by hiking rates would also allow regular people to buy stocks at fire sale prices. Crashing the housing market would also help bring down rents to 80s/90s levels.

REITS perform reasonably well in both low and high rate environments, especially companies with a focus on purpose built rental. But right now too many people are focused on the performance and well-being of irrationally exuberant growth stocks like Tesla which are completely reliant on cheap money and low rates.

[rofina]

Originally Posted by yaletown_fella

But here you're assuming low or lower middle income people don't have savings or are incable of saving. Higher rates would be a great equalizer by bringing down the value of real estate and assets held by the rich and incentivizing the lower and middle classes to save.

Allowing the stock market to go into a recession by hiking rates would also allow regular people to buy stocks at fire sale prices. Crashing the housing market would also help bring down rents to 80s/90s levels.

REITS perform reasonably well in both low and high rate environments, especially companies with a focus on purpose built rental. But right now too many people are focused on the performance and well-being of irrationally exuberant growth stocks like Tesla which are completely reliant on cheap money and low rates.

Valid point.

But this ignores the real fact that nearly 70% of Canadians own RE.

That means as much as we all talk about it, incentives remain to keep the game going, as is, or close to it.

Allowing a collapse would also be pulling the rug on an entire generation of retirees. I know we like to hate on Boomers and older folks for burning it all down, but doesn't mean that the vast majority deserve bankruptcy in retirement.

[jamincan]

Originally Posted by rofina

Valid point.

But this ignores the real fact that nearly 70% of Canadians own RE.

That means as much as we all talk about it, incentives remain to keep the game going, as is, or close to it.

Allowing a collapse would also be pulling the rug on an entire generation of retirees. I know we like to hate on Boomers and older folks for burning it all down, but doesn't mean that the vast majority deserve bankruptcy in retirement.

I think it's less a concern of bankruptcy in retirement as it is slightly less enormous gains than otherwise. If they are going bankrupt from a housing correction, they were probably overleveraged in the first place.