Canada's 'housing bubble' deemed close to bursting

[rofina]

Originally Posted by WarrenC12

Increasing population, density, and demand means you can't live the lifestyle you grew up in, unless you have been able to move up into a different socio-economic bracket as compared to your parents.

I think this is the reality in big Canadian cities and a tough mental pill to swallow.

Its a tough pill to swallow because there were ways of avoiding it; the outcome was not inevitable.

Ultimately our housing crisis is a crisis of poor (but deliberate) policy making.

[suburbanite]

Originally Posted by esquire

Yes, I can appreciate the financial driver behind letting developers build subdivisions to their specifications. It's an easy, hands-off, low-cost way to get it done, even if the results are less than stellar.

But hear me out... what if cities set a small amount of land aside just to do things differently? Build a 50 to 100 hectare grid, service and zone it appropriately, and sell individual parcels to developers? If the the results are good, perhaps it could be expanded? If it doesn't work, that could be the end of the experiment.

As our standards of living have increased, so have the servicing costs to build acceptable housing. Water, utilities, telecommunications, road paving, etc. are all things that raise the barriers of entry to large-scale home building. For example, I'm looking at a pro forma right for a 100 acre site, of which about 77 acres are net usable. The total costs to get the lots ready to sell are estimated at $150 million. A portion of that is development charges which would probably be netted out if the city was the developer, but it's still no small cost for a municipality to take on. Now it's an extremely profitable endeavor, net sales revenue from the serviced lots is forecasted at $500 million, but municipalities aren't really in the business of speculating on real estate, and this land has been sat on by the developer since 2006.

We also have to remember that the vast majority of our taxpayers are pretty happy with their subdivisions. Trying to explain why the city is spending $100 million to "build better neighbourhoods" when developers are doing it for free would require a pretty brave politician. It would only take one market crash or project management disaster for the city to be left holding the bag. It would be jet fuel for any opposing politician trying to prove that top-down city planning of that nature will never work.

[WarrenC12]

Originally Posted by rofina

Its a tough pill to swallow because there were ways of avoiding it; the outcome was not inevitable.

Ultimately our housing crisis is a crisis of poor (but deliberate) policy making.

The only way to avoid it would be to keep the population at a fixed number.

[esquire]

Originally Posted by suburbanite

We also have to remember that the vast majority of our taxpayers are pretty happy with their subdivisions. Trying to explain why the city is spending $100 million to "build better neighbourhoods" when developers are doing it for free would require a pretty brave politician. It would only take one market crash or project management disaster for the city to be left holding the bag. It would be jet fuel for any opposing politician trying to prove that top-down city planning of that nature will never work.

I take your point but it's not as though governments don't get involved in suburban housing developments. One of the biggest subdivisions in Manitoba, Waverley West, was developed by the provincial government.

https://news.gov.mb.ca/news/index.html?archive=&item=9804

[suburbanite]

Originally Posted by esquire

I take your point but it's not as though governments don't get involved in suburban housing developments. One of the biggest subdivisions in Manitoba, Waverley West, was developed by the provincial government.

https://news.gov.mb.ca/news/index.html?archive=&item=9804

I was strictly speaking at the municipal level of government. I do think this type of exercise would be much better handled at the provincial level with the ability to expand urban settlement areas and pick up land before private speculators.

[JHikka]

Originally Posted by suburbanite

I was strictly speaking at the municipal level of government. I do think this type of exercise would be much better handled at the provincial level with the ability to expand urban settlement areas and pick up land before private speculators.

As Ontario balloons I think there's legit cause for discussion wrt Ontario's provincial government makeup and how it handles larger urban cities, particularly Toronto. It feels like we're entering waters where a city is becoming too large and too complex for a provincial government to keep tabs of and administer and thus could conceivably become its own administrative unit outside the realm of province.

[Nouvellecosse]

Originally Posted by rofina

And how often does Canada spring up a new major City?

812k in 2 years is bigger than the City of Vancouver added every 2 years.

I doubt too many really think of the scale of this.

But 812k is only about a 2.2% increase on a baseline of 37 million. And spread over 2 years that's only 1.1% per year. Given that, like many MDCs (Most Developed Countries) our birthrate is only at around replacement level or slightly less, so newcomers count for our entire growth. And 1.1% per year isn't a particularly high growth rate so i don't see how the scale is that exceptional. The issue is that the growth isn't evenly distributed, and the metro areas receiving the most growth are resistant to some of the changes needed to accommodate it - at least at the necessary magnitude.

[WhipperSnapper]

Resistence? It's monetary. There is no way these metros can afford the infrastructure (especially at the endless real estate bubble pricing) to provide a high quality of life. The Feds ahave been useless for generations in this regard. The only difference between now and then is the cap and screening process have been loosened similar to the early 1990s. Paying to house people in hotel room should be a sign to either institute a policy that strongly encourages people girth to locate to centres desperate for people or reduce the cap to allow things to settle down and infrastructure to catch up. This growing mess doesn't affect the Feds monetarily so it's just going to get worse.

This cannot be summarized as a housing supply demand concern.

[someone123]

It's important to consider economic growth as well. This has been pretty flat in Canada for the past 10-20 years, with real GDP and wages stagnating.

If the pie is growing by 7% a year and you add 2% more people, that is very different from 0.3% per year economic growth and 1% population growth. When Canada had high immigration in the past, like in the early 1900's, it was in high growth mode.

Originally Posted by WhipperSnapper

This growing mess doesn't affect the Feds monetarily so it's just going to get worse.

I don't think there's any way out within the system of interest rates, etc. If anything it has gotten worse lately due to the pandemic. Less growth, more borrowing, low interest rates forever.

[rofina]

Originally Posted by WarrenC12

The only way to avoid it would be to keep the population at a fixed number.

Agree to disagree. I don't think population growth is a problem at all.

[WhipperSnapper]

Torontonians leaving Toronto (anecdotally, appears to be accelerating) have a propensity to overpay when they see something they like elsewhere. Paying $800,000 for something valued at $600,000 is all good when you are selling something for $1.5 million. That's a windfall for locals that own property. It's not good for locals that intend to enter the market in the future.

[Wigs]

By Anthony Urciuoli
Published December 2, 2021 at 10:37 am

If you were hoping for some relief from the skyrocketing housing costs in 2022, the latest report looks bleak.


According to the Remax 2022 Canadian Housing Market Outlook, Hamilton will see a jump of 16 per cent over the next several months. The average home is projected to cost $909,502.64, up from $784,054 in 2021 and $622,470 in 2020.


Hamilton is, again, expected to be a seller’s market in 2022 with “move-up and move-over” buyers driving demand.

Townhomes saw the largest increase in average price year-over-year in 2021 at 24 per cent.

$287,000 price increase in 2 years.

https://www.insauga.com/hamilton-housing...urpass-900000-on-average-in-2022-report/

[rofina]

Originally Posted by Nouvellecosse

But 812k is only about a 2.2% increase on a baseline of 37 million. And spread over 2 years that's only 1.1% per year. Given that, like many MDCs (Most Developed Countries) our birthrate is only at around replacement level or slightly less, so newcomers count for our entire growth. And 1.1% per year isn't a particularly high growth rate so i don't see how the scale is that exceptional. The issue is that the growth isn't evenly distributed, and the metro areas receiving the most growth are resistant to some of the changes needed to accommodate it - at least at the necessary magnitude.

1.1% sounds like a low growth rate in an internet discussion.

And the point I was making is precisely that growth is not distributed. Its all going to Cities, few cities at that.

The actual reality is that this growth is happening on top of what is effectively nearly 0% vacancy across our Metros.

So the practical reality is that we are adding Vancouver and then some every 2 years.

Be that a 1% growth rate or not.

[rofina]

Originally Posted by WhipperSnapper

Torontonians leaving Toronto (anecdotally, appears to be accelerating) have a propensity to overpay when they see something they like elsewhere. Paying $800,000 for something valued at $600,000 is all good when you are selling something for $1.5 million. That's a windfall for locals that own property. It's not good for locals that intend to enter the market in the future.

This is BC in a nutshell.

Victoria and Kelowna are the "cheap" opt outs.

The reality is that houses are nearly at a million there.

That's only cheap when compared to $2 million in Vancouver.

Worse, houses in the middle of nowhere BC are $300,000+. Were talking dying towns that you and I cant name or locate without Google maps.

[MolsonExport]

I am kind of curious what real estate agents have to do when it is a complete sellers market. I know there is the usual paperwork, posting on MLS, comparing competing bids, etc., etc. but as to showing the house in times when a house may sit on the market for only a couple of hours...and buyers cannot easily put in conditions when they simply won't be in the running.

[WhipperSnapper]

Originally Posted by rofina

Agree to disagree. I don't think population growth is a problem at all.

I don't know the context of this discussion.

i'll jsut sya, My impression is Canadians, in general, are very pro population growth which is backed by politics. Consequences of population growth are seldom considered. Stability favour low/stagnant growth in the near term. It's a delicate balancing act as too much seldom works out in its favour at any time.

[suburbanite]

Originally Posted by MolsonExport

I am kind of curious what real estate agents have to do when it is a complete sellers market. I know there is the usual paperwork, posting on MLS, comparing competing bids, etc., etc. but as to showing the house in times when a house may sit on the market for only a couple of hours...and buyers cannot easily put in conditions when they simply won't be in the running.

Before I left my old job to try this new opportunity in NY, we had an engagement to sell off a bunch of excess land for a utility company in Southwestern Ontario. A lot of it was farmland, but also a bunch of houses that had been vacant since they built the transmission lines 5-10 years ago. I'm talking houses with dead flies lying all over the floor, a dead squirrel in the basement of one, multiple break-ins and in one case, used needles in a bedroom. There was like 40+ properties that we offered to do as a bulk engagement for lower fees, selling them as-is, and without the "personalized" process of a local agent. Ended up selling over $35 million worth of land/houses without ever even meeting an agent, buyer, or touring the properties with them. Posted a listing on MLS, set a bid deadline two weeks out, and sold every single one over email/phone for over asking price. It is insane right now.

[WarrenC12]

Originally Posted by rofina

Agree to disagree. I don't think population growth is a problem at all.

How? I'm talking about people having SFHs at middle class wages. It's just not possible as we densify and allow immigration.

I think our currently immigration levels are fine. NIMBYs are standing in the way of reasonable densification, and people who can't think critically think we can all live in white picket fence homes if only "the government would do something".

[WhipperSnapper]

Originally Posted by MolsonExport

I am kind of curious what real estate agents have to do when it is a complete sellers market. I know there is the usual paperwork, posting on MLS, comparing competing bids, etc., etc. but as to showing the house in times when a house may sit on the market for only a couple of hours...and buyers cannot easily put in conditions when they simply won't be in the running.

I struggle with the standard 5% commission on a $1.5 million dollar house that can be sold by an inexperienced agent over the 5% commission on the $50,000 property I purchased in 1995 sold by an agent that knew everything about the neighbourhood. It doesn't surprise me something like 1 in 12 (shot in the dark. I can't remember. It's was crazy number like this) Torontonians have a real estate license.

[WarrenC12]

Originally Posted by MolsonExport

I am kind of curious what real estate agents have to do when it is a complete sellers market. I know there is the usual paperwork, posting on MLS, comparing competing bids, etc., etc. but as to showing the house in times when a house may sit on the market for only a couple of hours...and buyers cannot easily put in conditions when they simply won't be in the running.

Real Estate is ripe for disruption. They have a strangehold like Dairy farmers though.