Canada's 'housing bubble' deemed close to bursting

[Acajack]

Originally Posted by SignalHillHiker

I haven’t been in years but I never found Quebec City bad at all. I always tried to middle through French first but lots of people voluntarily spoke English, or said I could but replied in slower French. No one was ever rude, etc. I remember once flying back from Montreal to St. John’s and the flight attendant in his announcement said, in French, if you can speak English please do, sorry, as they had no one fluent.

Jeddy1989 (fluent in Spanish) just finished three months in Malaga and still isn’t ready to face a St. John’s spring so he’s now in Mexico. It’s been less than 24 hours and he’s already messaged us to say: “The Brits have a bad rep in Spain and I did see a bit of their arrogant behaviour but they have NOTHING on the Americans. I’ve already seen a man red-faced screaming at a waitress that they should have at least one staff member who speaks English at all times. She just replied, in Spanish, you’re in Mexico.”

I’m curious if anglophone Canadians get on with that in Quebec. I assume not as much, but it probably happens.

Well yeah everyone is different and has a different tolerance level for how much they're gonna want to feel like a fish out of water. (Some people even thrive on that.)

I don't think it's intolerable or insurmountable but I did give some real-life examples that I believe probably aren't the ideal conditions for a lot of Canadians to call a place "home" for a long time.

And yes if you live here you do see anglophones making a scene about "French" from time to time. Not every day mind you but it happens. I don't work in the service industry but I suppose you do see it more there - my kids work with the public and they report more incidents than I do. Still not that often mind you (plus my kids are bilingual) but it happens. There are some people who expect "seamless" service in English, not just a mix of bilingual and unilingual staff. So there is that too.

And then of course there is stuff like this in the media:

https://montreal.citynews.ca/video/2020/...enied-service-at-restaurants-drive-thru/

[thewave46]

Originally Posted by SignalHillHiker

I’m curious if anglophone Canadians get on with that in Quebec. I assume not as much, but it probably happens.

It sort of self-selects I imagine.

It's one thing to be an arrogant arsehole at a low-cost sun resort. It caters to a certain crowd. I would find it hard to imagine an Anglo-Canadian voluntarily going to Quebec and doing the tourist version of being a jerk. They'd likely just avoid the place. Self-selection kind of applies there.

Now an employee of an Anglo-Canadian business being temporarily assigned to a jobsite in Quebec for reasons, sure, I could see them being a dick about it, especially in deep Quebec.

[whatnext]

Originally Posted by thewave46

I think I'm attacking this from the standpoint of a upper middle-class person drawing semi-logical conclusions. When you're dealing with an upper crust throwing around money that I'll never be able to clear in a lifetime of effort, it's a whole different ballgame.

When renting is beyond the upper middle-class, I don't see how long momentum stays in Vancouver's favour. Sure, you can get people cruising on existing tenancies, or who got in early to a house, but I don't get how one stays there beyond a point. The bottom has to come out at some point, or stratify into an exclusive enclave of sorts.

Except as Giallo says, there's competition to get these rentals. So people are still coming for whatever reason.

[MonkeyRonin]

Canadian Real Estate Is “Worrisome,” “Grim,” and “Impossible” To Buy: RBC

Canadian real estate is disconnecting from reality at a breakneck speed. RBC updated its affordability index for Q4 2021, measuring the share of income needed to buy a home. Housing affordability across most of the country is now out of reach for most households. Buying a home is nearly an “impossible” feat, according to one of the largest lenders in the country. This sounds like great news.

Canadian Home Ownership Costs Pushed To An “Extreme”

The bank uses the share of income a household needs to determine affordability. More precisely, the share of income a median household needs to service a mortgage on a typical home. A home in Canada requires 49.4% of income as of Q4 2021, up 1.6 points from the previous quarter. Over the past year, the share climbed 7.2 points higher — the second fastest annual jump ever.

RBC Housing Affordability Measure
Ownership costs as % of median household income.



“The deterioration over the past year is a near-record 7.2 percentage points—exceeded only once in 1990,” said RBC.

Toronto and Vancouver Real Estate Are Approaching Records

Remember, those are home prices across Canada — it’s much worse if you’re looking at Toronto and Vancouver. A median household in Toronto needs to spend 68.6% of their income in Q4 2021, up 10.8 points from a year before. According to the bank, the jump in servicing costs is second only to one made in 1990.

Vancouver makes Toronto look like a deal at this point, with RBC saying it’s the “worst” in Canada. A median household needs to spend 73.9% of their income to carry a mortgage for a typical home as of Q4 2021. This is a jump of 9.9 points from the previous year, and they expect it to get worse in the near term.

https://betterdwelling.com/canadian-real-estate-is-worrisome-grim-and-impossible-to-buy-rbc/

[GenWhy?]

Canada average of "49.4% of income as of Q4 2021" (I assume just the mortgage reading the rest of the article). Who in their right mind would do that?

The Vancouver number is hilariously skewed from investors - though this year we did get a lot more offers from downsizers and well-off mid-aged folks than 2019, which was almost 70% investor based.

[thewave46]

New Pixar movie details fantastical story of being able to afford living in Toronto

I chuckled more than I should have.

[whatnext]

Originally Posted by thewave46

New Pixar movie details fantastical story of being able to afford living in Toronto

I chuckled more than I should have.

It's sad though. Think of those Ukrainian refugees, "Welcome to Canada! Do you actually think you can afford to live here?"

It's sad how our governments have led us into this situation.

[Wigs]

of course Canadian real estate is worrisome.

My folks bought their retirement house 2.5 years ago. It's already increased in value by ~59%, as per a smaller house on a smaller lot that just sold on an adjacent street for (what 1-2years ago would have been considered) an absolute crazy sum

[theman23]

Originally Posted by MonkeyRonin

https://betterdwelling.com/canadian-real-estate-is-worrisome-grim-and-impossible-to-buy-rbc/

It’s amazing how bad Toronto has gotten since COVID. The usual real estate shills on this board will hand wave this, but we’re talking about people needing to spend 3/4 of their pre tax income on housing. Even if you choose not to eat and not heat your house, that’s literally impossible.

[travis3000]

Originally Posted by theman23

It’s amazing how bad Toronto has gotten since COVID. The usual real estate shills on this board will hand wave this, but we’re talking about people needing to spend 3/4 of their pre tax income on housing. Even if you choose not to eat and not heat your house, that’s literally impossible.

We 100% have a problem. My heart goes out to everyone who wishes to enter the real estate market and can't. I can only imagine how aggravating and hopeless it must feel. Prices won't stay this high forever. As interest rates rise and we resume a more normal lifestyle prices will begin to trend down over the next two years. How much is anyones guess. If I were betting I'd say anywhere between 10 and 25%. Still quite high based on historical standards, but it's a start.

Unfortunately right now real estate in Southern ON is basically for 1) people who are already in the game, 2) have exceptional jobs earning 200K+ or 3) have major help from parents/inheritances. It shouldn't be this way. But we have to be careful not to wreck the savings/retirements of millions of people just to make it "fair" for younger people. It's a very delicate balance. If it were an easy solution it would have been done already.

[Truenorth00]

Originally Posted by theman23

It’s amazing how bad Toronto has gotten since COVID. The usual real estate shills on this board will hand wave this, but we’re talking about people needing to spend 3/4 of their pre tax income on housing. Even if you choose not to eat and not heat your house, that’s literally impossible.

Remarkably, this urgentcy isn't reflected in voting. And there's no penalties for parties who don't make housing a serious policy priority.

See the debate in Ontario right now. It's incredible. Not one of the major three parties promising to implement the recommendations of the housing taskforce, most significantly the recommendation to scrap the yellow belt.

[thebasketballgeek]

This reminds me of an article I read today.

Ford government left key strategies out of housing legislation, critics say

The government of Premier Doug Ford shied away from including key measures in its housing affordability plan that would make the goal a reality, critics say.

Ontario's Progressive Conservative government has tabled a bill that, in part, takes aim at delays within planning at the municipal level, suggesting the approval process in place slows down home construction and drives up prices, which have jumped 28 per cent over last year in the Greater Toronto Area, with the average home price reaching $1.3 million in the region in February.

"It's mostly just disappointing," said Ramsey Kilani of More Neighbours Toronto, an organization advocating more density in single-family neighbourhoods by allowing more multi-unit dwellings — just one of the strategies the new bill doesn't include.

Speeding up approvals for home developments is one of the key goals in the More Homes for Everyone Act. Municipalities can use a new "Community Infrastructure and Housing Accelerator" tool to speed up approvals when building non-profit housing, community centres, hospitals and long-term care homes. Ontario Housing Minister Steve Clarke can also directly approve development projects

What isn't in the act is many of the 55 recommendations from a report by the Housing Affordability Task Force released in February. The task force was aimed at reining in home prices by boosting the supply of housing, considering the cost of buying the average home in Ontario has nearly tripled over the past 10 years, according to the report.

Some of the key task force recommendations that were not part of Wednesday's legislation include:

Increasing density in neighbourhoods zoned exclusively for single-family homes.
Limiting the time spent consulting the public on housing developments.
Legislating timelines for development approvals, and if the municipality misses the deadline, the project gets an automatic green light.
Kilani said those measures should have been in the bill.

"The Ford government loves to talk about cutting red tape," he said. "But, more meetings, more consultations — that's more red tape."

Recommendations 'too bold'

Kilani wonders whether the Ford government excluded those task force recommendations to avoid stirring the pot in the vote-rich suburban 905 area surrounding Toronto with an election just three months away.

Ontario's Big City Mayors group applauded the legislation, saying portions will "provide more opportunities to build much needed housing, in partnership with municipalities," according to the group's chair, Cam Guthrie, who is the mayor of Guelph, about 94 kilometres west of Toronto.

And some of the measures in the task force report that the PCs left out of the bill were also hugely unpopular with municipalities.

"I rejoice whenever a dumb idea doesn't make it to the table," said Oakville Mayor Rob Burton. "You were just going to willy-nilly add density anywhere and that's just crazy."

"We're not out of the woods yet," said Burlington Mayor Marianne Meed Ward, who says her city supports the idea of creating affordable housing but worries the task force's suggestions take some decision-making power away from municipalities.

"What are [the PCs] going to do after the election if they're re-elected?

"Clark has dismissed accusations the changes are related to the June 2 election, but the housing minister admitted Wednesday the lack of support from cities was the key reason the government held off on including the task force's recommendations in the first phase of the plan.

"The recommendations were a bit too bold for some communities," Clark said

"I couldn't bust forward … when municipalities are so adamantly opposed. I have to get them onside."

In a release, advocacy group Environmental Defence criticized Clark's comments, saying they signal the "provincial government does not intend to act before it is too late."

However, in a fireside chat with the Ontario Real Estate Association Wednesday afternoon, Premier Doug Ford said municipalities are also responsible for driving development.

"Unfortunately, not all of them are using the tools we're giving them," he said. "Use the tools."

The "tools" Ford was referring to are zoning changes included in a 2019 bill aimed at boosting the Ontario's housing supply. The province says some municipalities are still restricting the use of those measures.

'Little fixes without a strategy'

But the legislation does not really help people trying to buy a home, say housing experts like Luisa Sotomayor, an associate professor in the faculty of environmental and urban change at Toronto's York University,

"These are little fixes without a real strategy," said Sotomayor, pointing out the new measures are friendly to developers.

Sotomayor wants the government to focus on strategies that will encourage projects including non-profit housing developments.

She says the plan has to "look at the needs of households that cannot access what the government is saying is affordable."

Elementary school tantrums from elected officials, key recommendations taken off the legislation, and the lack of spine from the conservative party to implement this because they are scared of suburban voters switching sides has me left speechless.

[WarrenC12]

Originally Posted by theman23

It’s amazing how bad Toronto has gotten since COVID. The usual real estate shills on this board will hand wave this, but we’re talking about people needing to spend 3/4 of their pre tax income on housing. Even if you choose not to eat and not heat your house, that’s literally impossible.

It's been happening in Vancouver for years. Only when it's Toronto is it a big deal.

[Harrison]

Thankfully there are other places to live in Canada other than the Lower Mainland, Vancouver Island and Southern Ontario.

[GenWhy?]

Originally Posted by Harrison

Thankfully there are other places to live in Canada other than the Lower Mainland, Vancouver Island and Southern Ontario.

True, but all the Tamarack's, Allard's and Summerside's won't decrease the cost of housing in the largest employment areas of the country.

[someone123]

Originally Posted by GenWhy?

True, but all the Tamarack's, Allard's and Summerside's won't decrease the cost of housing in the largest employment areas of the country.

Also Toronto + Vancouver alone are a huge share of the national market by value, particularly minus Francophone areas, and so any housing dollars that spill out of those 2 regions cause prices to shoot up elsewhere (such as the +50% price swing that happened in Halifax, which stood out enough that the Economist did an article on it). We don't have the depth of alternate markets of say the United States.

[someone123]

Originally Posted by travis3000

But we have to be careful not to wreck the savings/retirements of millions of people just to make it "fair" for younger people.

A lot of the problems are due to poor infrastructure planning, municipal and provincial level construction bans, and a failure to train or attract appropriate labour to meet demands. It would be pretty weird to argue we need to keep those problems around so we don't hurt retirement savings, and if they were fixed house prices would fall.

In general it's up to savers or retirement fund managers to decide what to invest in and the Canadian government has a limited ability to prop up many types of assets, nor is that a good path to go down.

[GenWhy?]

Houses in my old neighbourhood in Edmonton for a 60 year old house are about $400k, and new are about $700-$800k

[MonkeyRonin]

Originally Posted by someone123

A lot of the problems are due to poor infrastructure planning, municipal and provincial level construction bans, and a failure to train or attract appropriate labour to meet demands. It would be pretty weird to argue we need to keep those problems around so we don't hurt retirement savings, and if they were fixed house prices would fall.

In general it's up to savers or retirement fund managers to decide what to invest in and the Canadian government has a limited ability to prop up many types of assets, nor is that a good path to go down.

Return on a single investment should never be taken as a given, yet home buyers now act like it's their god-given right to 25% annual appreciation in perpetuity. This is a pretty new phenomenon too - someone who's seen 2000% appreciation on a home purchased 40 years ago certainly couldn't have been banking on that as being their retirement plan; and anyone doing that today is taking a huge risk.

If this sort of entitlement were to be made into policy, it would obviously lead to eventual financial ruin for the country. Aside from being "unfair" to prospective homeowners, it's a drag on the economy as it diverts money from being invested or spent on more productive sectors of the economy and suppresses innovation; while new buyers are left in often precarious positions.

[Wigs]

Originally Posted by MonkeyRonin

Return on a single investment should never be taken as a given, yet home buyers now act like it's their god-given right to 25% annual appreciation in perpetuity. This is a pretty new phenomenon too - someone who's seen 2000% appreciation on a home purchased 40 years ago certainly couldn't have been banking on that as being their retirement plan; and anyone doing that today is taking a huge risk.
...

This is my Uncle's scenario. He bought his home in the early? 70s (unsure of exact date let's say 1973) for approximately $23,000.
Now in 2022 it's worth minimum $725,000, or 3052%+ appreciation.

With recent improvements during Covid, nice landscaping, new pool liner, it would probably would sell for closer to $800k right now.
He's still healthy and active and currently will live in his house until he's absolutely no longer able to.

He thinks the real estate market is ludicrous and did not intend for his home to be his retirement like so many today are banking on.

His grandkids are ~20, 22, and 27. He sees no future for them to be able to buy their own houses with the way the RE market is heading.
That's a grim future where so many Millennials/GenZ currently between ages 18-40 that do not own property might not ever able be able to, unless one moves Provinces away to the Maritimes or Prairies.

Who are future homes going to be sold to, if the pool of buyers keeps dwindling as prices keep soaring?
If there's no crash certainly there got to be a point where things level off, no?