Canada's 'housing bubble' deemed close to bursting

[suburbanite]

Lol, just blow the whole thing up at this point.

[thewave46]

Originally Posted by suburbanite

Lol, just blow the whole thing up at this point.

Cults get craziest right before they implode.

[p_xavier]

I don't know how some people can sleep at night. I have a debt ratio of 23% and interest hikes still stress me out. At least I got a fixed mortgage at 1,74%.

[Innsertnamehere]

you would never get $19k of taxes on that - whenever MCAP reassessment occurs, tax assessment rates will adjust to current values. Unless the value of that property has improved substantially vs. the wider municipality since 2016, the property tax would remain similar.

1.275 for a townhouse like that in Crystal Beach is.. shocking though, for sure. Not sure what the thought is on that pricing. Comparable townhouses in Thorold are going for almost half that price right now.

hell, this townhouse in Crystal Beach is listed for $699 and is actually right next to Lake Erie. It's a little smaller, but it's not like the $1.275 place is big in the first place..

https://www.realtor.ca/real-estate/24178999/10-south-coast-circle-crystal-beach

[Truenorth00]

Originally Posted by p_xavier

I don't know how some people can sleep at night. I have a debt ratio of 23% and interest hikes still stress me out. At least I got a fixed mortgage at 1,74%.

Yep. I have a mortgage on a condo that is 180% of my gross income. I first got the mortgage at 5% over a decade and a half ago. Now at 1.6%. The mortgage payments are less than 20% of my take home pay. And all that math is without my wife's income. I can't even imagine taking on a mortgage where a quarter to half our combined family income is required to make the payments for three decades.

All the cheaper pre-approvals end in June. The summer is going to be a bloodbath. And I expect a lot more homes to hit the market if interest rates keep going up and people find out what living with the budget they were stress tested for actually means.

[WarrenC12]

I wonder how long they will let this sit before hiking rates again. It takes months for this type of thing to work it's way through the economy. They risk overdoing things if they go too fast.

[Wigs]

Originally Posted by Innsertnamehere

you would never get $19k of taxes on that - whenever MCAP reassessment occurs, tax assessment rates will adjust to current values.

well even if it's assessed at 675k, that's still $10,000, on a townhouse.

[Wigs]

Originally Posted by Innsertnamehere

hell, this townhouse in Crystal Beach is listed for $699 and is actually right next to Lake Erie. It's a little smaller, but it's not like the $1.275 place is big in the first place..

https://www.realtor.ca/real-estate/24178999/10-south-coast-circle-crystal-beach

Even though they are both in the Town of Fort Erie, the other one was technically "Ridgeway" which is seen as nicer than rough "townie" Crystal Beach, unless you have lakefront.
It might not seem like a difference to those outside the Region, but trust me, talk to locals

Build quality, fit and finish, and layout due to smaller size is worse as well. $575k worse, not so much

Since Jarvis St for what should be the "downtown" of Fort Erie is crap (Coffee Culture couldn't even make a go of it), and Crystal Beach still has the "rough" locals reputation, Ridge Road in Ridgeway functions as the defacto centre with a village feel. Garrison Road (Hwy 3) functions as the stroad of everything.

[Truenorth00]

Originally Posted by WarrenC12

I wonder how long they will let this sit before hiking rates again. It takes months for this type of thing to work it's way through the economy. They risk overdoing things if they go too fast.

I expect they'll wait till September. But if this hike doesn't change the trendlines, we might see another hike in July.

https://www.bankofcanada.ca/2021/07/bank...-policy-report-other-major-publications/

[thewave46]

Originally Posted by WarrenC12

I wonder how long they will let this sit before hiking rates again. It takes months for this type of thing to work it's way through the economy. They risk overdoing things if they go too fast.

In context, rates are still extremely historically low and unemployment is at rock bottom. The Bank of Canada has significant latitude to operate before 'overdoing it' comes into play.

Bringing rates up to at least 2% in the very near future will assure people that the BoC isn't going to let inflation run away.

Taking the idiot froth out of the housing market will be a bonus.

[someone123]

Originally Posted by goodgrowth

It's interesting that despite already being the most affordable of the large cities in Canada that Edmonton seems to be ahead on rethinking zoning as well.

It seems like sky-high and rapidly growing prices have become normalized in BC or ON whereas there's more willingness to implement new responses in some other places. It will be interesting to see how it plays out in Edmonton. NS seems to have taken things much more seriously than BC but it's impossible to tell yet if the measures taken will be effective. NS has a large capacity for development with lots of well-located land including waterfront that is simply untouched. For example there is a 12 km long lake maybe a 5-10 min drive from YHZ that looks like the Muskokas and hasn't even had road access or subdivisions built along half of it.

Hypothetically if some cities get this right while other cities keep the old planning regime, there might be a huge shift to the growth-friendly cities. Any modern attractive city that can offer convenient/functional and affordable housing for tech workers could in theory attract a ton of growth, because the baseline is so awful (almost everything being urban/attractive and ultra expensive or more affordable but suburban with gridlock).

[thewave46]

Originally Posted by someone123

Hypothetically if some cities get this right while other cities keep the old planning regime, there might be a huge shift to the growth-friendly cities. Any modern attractive city that can offer convenient and affordable housing for tech workers could in theory attract a ton of growth, because the baseline is so awful.

Tech is the industry that has the most mobility, yet its workers live in the highest-cost regions. San Francisco and Seattle are eye-watering in terms of housing cost, yet attract top tech talent.

[someone123]

Originally Posted by thewave46

Tech is the industry that has the most mobility, yet its workers live in the highest-cost regions. San Francisco and Seattle are eye-watering in terms of housing cost, yet attract top tech talent.

Seattle hasn't been eye-watering for that long (Bay Area has been for many years, including rents, but with good salaries) so I am not sure we've seen a rebalance happen yet. Most of the tech workers who live there moved to what was at the time a very affordable city for their salary level and they could easily afford a nice house (far higher material standard of living than here in metro Vancouver). Seattle traffic has also gotten much worse in recent years. The shift to greater acceptance of remote work only dates to the covid era. Tech companies and workers were very resistant to it even in 2019, apparently mostly for social reasons.

There aren't a lot of great alternatives nearby. There are not a lot of West Coast cities or even nice towns and they are spread far apart, so the cost of moving out of one of the major metros is high. However there are a lot of young people who make the decision of which city to move to within all of Canada or North America.

[Wigs]

Originally Posted by thewave46

Tech is the industry that has the most mobility, yet its workers live in the highest-cost regions. San Francisco and Seattle are eye-watering in terms of housing cost, yet attract top tech talent.

There's been at least one recent story where Canadians in the Tech industry particularly in Toronto are refusing to go to silicon valley or the US for a job so now those tech companies are expanding their offices in say Toronto or Kitchener - Waterloo.
Great for Waterloo or U of T grads that don't have to leave the area or Canada anymore!

I don't blame them, the quality of life is great in say San Fran (if you can afford it) , but there's not much appeal to the sprawlburbia where most of the companies are actuallylocated. Horrendous traffic with obscene housing prices and bland built landscapes.

[goodgrowth]

Originally Posted by someone123

It seems like sky-high and rapidly growing prices have become normalized in BC or ON whereas there's more willingness to implement new responses in some other places. It will be interesting to see how it plays out in Edmonton. NS seems to have taken things much more seriously than BC but it's impossible to tell yet if the measures taken will be effective. NS has a large capacity for development with lots of well-located land including waterfront that is simply untouched.

Hypothetically if some cities get this right while other cities keep the old planning regime, there might be a huge shift to the growth-friendly cities. Any modern attractive city that can offer convenient/functional and affordable housing for tech workers could in theory attract a ton of growth, because the baseline is so awful (almost everything being urban/attractive and ultra expensive or more affordable but suburban with gridlock).

I think in Edmonton's case you probably have a blend of politics/thinking that isn't typical in other places. You have progressivism/forward thinking of things + Alberta's pro-development/deregulate mentality coming together.

[kwoldtimer]

Originally Posted by WarrenC12

I wonder how long they will let this sit before hiking rates again. It takes months for this type of thing to work it's way through the economy. They risk overdoing things if they go too fast.

Expect another half percent in June.

[SignalHillHiker]

If any of ye were in my shoes, would you switch to a locked in rate now or wait it out a few years more? Maybe lock in before that locked-in rate rises above 3%? I’ve zero experience with variable rate mortgages. 1.7% right now.

[whatnext]

Originally Posted by 1ajs

howws all of this compare to the end of the 70's?

Forget the 70s, I'm petty sure I was paying around 9% on my first mortgage in the early Nineties.

The Bank of Canada has been disastrous for most of the 21st century, Carney included. They've kept rates way to low than has been necessary and now we have rampant housing unaffordability in most major cities.

[Truenorth00]

Originally Posted by SignalHillHiker

If any of ye were in my shoes, would you switch to a locked in rate now or wait it out a few years more? Maybe lock in before that locked-in rate rises above 3%? I’ve zero experience with variable rate mortgages. 1.7% right now.

From my one of my buddies at a big bank:

Our house view is 50bps hike in the next meeting in ca, next three meetings in us. Rates to peak around Dec/Jan next year. Then we will hit recession early next year.

So it depends what you can lock in for right now. If you're unsure, an alternate strategy is forced savings. Ask your broker to make your payments the equivalent of 3% interest rate. You will be paying down your principal faster and will not notice if rates rise because your actual payment won't change.

[Wigs]

Originally Posted by SignalHillHiker

We're trying to market it

If it weren't for elderly parents I might have seriously considered this move, b'y!