Canada's 'housing bubble' deemed close to bursting

[theman23]

Why no one is going to “fix” housing:
https://theline.substack.com/p/jen-gerson-no-one-is-going-to-fix?s=w

[casper]

Originally Posted by lio45

If you're working remotely, why on Earth do you need to be physically in Ontario?

I get that you'll earn your income in Ontario (and pay Ontario's income taxes, etc.) but there's no reason why it should need to be mandatory to be physically there. Your Ontario employer will do those "deductions at the source" anyway; it's easy for them to send their remote worker based in Newfoundland their net pay only, while sending the income tax portion of that person's gross pay to Queen's Park.

Unless it is different in Ontario, usually source deductions go to the federal government and then they figure it out. Like paying income tax. What is odd with source deductions is the employer does all the calculations figures out what the total for that month should be and send the total to the feds without the calculations as one lump sump. The feds don't even know the names of the employees at that point.
The feds only find out the split at the end of the year when the T4 are submitted by the employer.

It may also be an employer concerned at liability for the WSB and any other compliance issue. For example if your a BC company, you need to follow all the WorkSafe BC fees, rules about safety committees, BC employee safety rules, reporting, etc. If overnight you have employees who have Alberta as their "normal place of work", then you need to be compliant with Alberta's rules. Then add some employees in Saskatchewan and you need to be compliant with those as well. Overnight you end up with multiple safety committees, different conflicting rules and reporting requirements.

In BC there is also an employee tax (not source deduction based) for health care that applies to some larger employees.

This can become complex quickly.

[casper]

Originally Posted by thebasketballgeek

I don’t understand the last line. He even stated “Yes, we should do all we can to encourage housing supply; but clearly there is more at work here then that.”

So he admitted that housing supply is still a concern, but decided to right an article about it being a “myth.” If you post an article stating an issue is a “myth” it will take away from this being a concern for the general population and look at other factors that won’t have nearly the impact to prices as increasing supply does.

Also, using the UK, Australia, and the US as examples is foolish they are all struggling with housing affordability as well. France has 540 units per 1,000 residents for comparison and is more affordable then any of those countries listed. Japan is above the average and is renowned for its affordability. Again let’s focus on getting to the G7 average and build 1.8 million homes to catch up before making hypotheticals when the facts are right in front of us. I have brought up Canadian cities having absurdly low vacancy rates before. Not building more supply will just continue to exert massive pressure on existing housing stock.

Of course it’s a lot more then housing supply such as low interest rates, poor land use planning, infatuation for single-family houses, NIMBYism, too much red tape, parking requirements, high immigration, and housing acting as an investment are all prominent factors. However, lack of supply relative to demand still seems to be the prominent issue.

Imo this article, as usual of the Globe and Mail recently, falls flat on its message.

I agree we have a supply problem and we should fix the supply problem by building more units.

There may be other structural issues that also need to fixed. But that should not be a reason to not address supply.

We should leave the private sector along to build rental housing based on market pressures. However where the government can plan a role is helping to create options outside of the private market. Everyone who goes for one of these alternatives releases demand in the private market.

More co-op housing is good. More non-profit owned housing targeting indigenous, low-income, assisted living, new immigrants or what ever else group is all positive.

Off-campus student housing is another one. I don't think in Canada we do a great job of these. The private market forces students to get together, in many cases with people they have just meet days earlier to jointly sign a lease on a unit that was never designed for students in the first place.

Some other countries do a better job. Finland has a non-profit that is not tied to any specific institution, owns a bunch of building and rents to each student a room plus the a shared of common space in a shared apartment. Much better system:

• Video Link

[Truenorth00]

If we want to talk about housing, we should discuss our ridiculous car dependency too....

[lio45]

Originally Posted by theman23

Why no one is going to “fix” housing:
https://theline.substack.com/p/jen-gerson-no-one-is-going-to-fix?s=w

Great article. This girl gets it.

As I like to say, Canada is a giant Fort McMurray whose local politicians make vague promises of "helping ease the pain at the pump for the Average Joe" by saying they'll pull levers to deliberately make global oil prices crater permanently--but we all know they won't do it.

[lio45]

(An alternate title for that article could be "Why no one in Fort McMurray would "fix" the "pain at the pump" "problem" for guzzler-driving, burger-flipping Gen Z McMurrians, even if they could".)

[travis3000]

Originally Posted by lio45

Great article. This girl gets it.

As I like to say, Canada is a giant Fort McMurray whose local politicians make vague promises of "helping ease the pain at the pump for the Average Joe" by saying they'll pull levers to deliberately make global oil prices crater permanently--but we all know they won't do it.

I read that article yesterday. Makes some great points.

[someone123]

Originally Posted by lio45

Great article. This girl gets it.

As I like to say, Canada is a giant Fort McMurray whose local politicians make vague promises of "helping ease the pain at the pump for the Average Joe" by saying they'll pull levers to deliberately make global oil prices crater permanently--but we all know they won't do it.

If you look at Canadian policy as a tool to implement Boomer desires it makes more sense than if you look at it from a blended demographic perspective or Millennial perspective. The goal is high returns on housing and investments in retirement. Education, infrastructure and quality jobs don't matter so much because you're rich and retired. Cheap labour is important because you want to hire servants to do your chores and look after you if you become infirm. You are older and concerned about healthcare and covid, which disproportionately affects you, while you already had your days of going out and dating. You want to feel good about your life, so you focus on philosophical issues and the activism from your childhood (green including anti-nuclear, etc.).

Many supposed pro-house-affordability measures like handing out small bonuses/rebates to buyers do not actually help with housing affordability at all. Such policies drive up costs a tiny bit and they just get added to the debt which younger people will collectively be paying off more than older people who have a much lighter tax burden.

People will complain that this is insensitive and it's discriminatory. Okay, I will trade places. Give me a $2M house, make all of the government policies for Millennials, and you can make fun of my generation.

[WarrenC12]

BMO Chief Economist doesn't believe in supply and demand. That's a new one.

In Vancouver we've had the uninformed tell us that housing is expensive because offshore buyers are buying up condos, letting them sit empty, and reaping the profits.

Multiple levels of government have now instituted "empty homes" taxes, as well as foreign buyer taxes. Both of those have revealed this issue to be minimal and on par with other major cities. The money is nice to build a few subsidized homes, but there is no magic extra supply out there.

Why wouldn't we try building more homes next? We don't need to force or incentivize developers to do so, they are happy to build more right now.

[lio45]

Originally Posted by someone123

People will complain that this is insensitive and it's discriminatory. Okay, I will trade places. Give me a $2M house, make all of the government policies for Millennials, and you can make fun of my generation.

It's mostly Gen Z that's getting screwed. I think a good approximate cutoff is who owned detached Canadian urban property(ies) before the 2008 market crash and who didn't, and older Millenials were in their mid/late 20s by then; some of them did.

I'm an older Millenial and all my friends from my school cohort currently own, at the very least, one nice SFH that they live in, in a Sherbrooke-or-larger sized city. (And some of them invested in real estate a bit, so they have even more than their own house.)

I'm sure we won't be able to say the same at all for Gen Z when they're our age.

[someone123]

Originally Posted by lio45

It's mostly Gen Z that's getting screwed. I think a good approximate cutoff is who owned detached Canadian urban property(ies) before the 2008 market crash and who didn't, and older Millenials were in their mid/late 20s by then; some of them did.

I agree. The housing market even in the 2010's was dramatically more affordable than today. Middle class people in Vancouver used to complain that they would never afford a house, but they'd end up in 2 BR condos that are now $800,000. It's a stretch for a household with an average income to purchase any decent housing in Vancouver today. They could maybe afford a small-ish condo in Surrey or farther out. Their Boomer-aged equivalent could buy a house in East Van. I have Gen Z/young Millennial friends who are both "professionals" and are looking at stretching a bit to buy 1 BR condos for 2 people. The ones who have so-so jobs are renting run down apartments into their 30's and I'm not sure they'll ever be able to accumulate much wealth.

I don't consider myself a victim (mid-age Millennial who owns a condo) but I'm far behind where I'd be if I were 10-20 years older, given my income percentile. It is kind of a strange feeling because you can be well off in some ways while upgrading beyond modest Vancouver real estate remains not really worth it.

[lio45]

Originally Posted by someone123

The ones who have so-so jobs are renting run down apartments into their 30's and I'm not sure they'll ever be able to accumulate much wealth.

The irony is that the Gen Z "doomed to rent for life" cohort nonetheless had their own generation-specific paths to significant wealth (cryptocurrency, Tesla stock, etc.) that were totally accessible to them (and some still are, though we can't tell which ones absent a crystal ball).

[someone123]

Originally Posted by lio45

The irony is that the Gen Z "doomed to rent for life" cohort nonetheless had their own generation-specific paths to significant wealth (cryptocurrency, Tesla stock, etc.) that were totally accessible to them (and some still are, though we can't tell which ones absent a crystal ball).

You can say this for any generation since WWII and most since about 1600 in North America. Baby Boomers could have done much better than buying a Vancouver house. The real question is what the outcome is for the median person doing average things. In the 70's and 80's it yielded a middle class lifestyle with eventual wealth. For Gen Z it yields a working class lifestyle around here.

[Innsertnamehere]

aren't homeownership rates at record levels more or less, despite the talk about how impossible it is to get into the market?

I mean, I'm sure the type of housing owned is a lot smaller than it was (a lot more condos and a lot less houses), primarily because of changes in land use policies in major cities, but ownership in itself is still very common.

Gen Z of course aren't really at homeownership age yet. We'll have to see what the 2021 census says.

[thewave46]

Originally Posted by someone123

If you look at Canadian policy as a tool to implement Boomer desires it makes more sense than if you look at it from a blended demographic perspective or Millennial perspective. The goal is high returns on housing and investments in retirement. Education, infrastructure and quality jobs don't matter so much because you're rich and retired. Cheap labour is important because you want to hire servants to do your chores and look after you if you become infirm. You are older and concerned about healthcare and covid, which disproportionately affects you, while you already had your days of going out and dating. You want to feel good about your life, so you focus on philosophical issues and the activism from your childhood (green including anti-nuclear, etc.).

Many supposed pro-house-affordability measures like handing out small bonuses/rebates to buyers do not actually help with housing affordability at all. Such policies drive up costs a tiny bit and they just get added to the debt which younger people will collectively be paying off more than older people who have a much lighter tax burden.

People will complain that this is insensitive and it's discriminatory. Okay, I will trade places. Give me a $2M house, make all of the government policies for Millennials, and you can make fun of my generation.

Canada as a Boomer retirement scheme. If the shoe fits, I suppose.

Note to aspiring Gen Z: All aboard the Boomer gravy train of healthcare. It will the last castle to be breached, the last place where one can reasonably get a pension/benefits, the ultimate part of our identity that we have built as a replacement for culture, and one we’ll impale the rest of our society to hold onto. Choo-choo.

[theman23]

Originally Posted by Innsertnamehere

aren't homeownership rates at record levels more or less, despite the talk about how impossible it is to get into the market?

I mean, I'm sure the type of housing owned is a lot smaller than it was (a lot more condos and a lot less houses), primarily because of changes in land use policies in major cities, but ownership in itself is still very common.

Gen Z of course aren't really at homeownership age yet. We'll have to see what the 2021 census says.

you're right, nothing to look at here folks.

[thewave46]

Originally Posted by Innsertnamehere

aren't homeownership rates at record levels more or less, despite the talk about how impossible it is to get into the market?

I mean, I'm sure the type of housing owned is a lot smaller than it was (a lot more condos and a lot less houses), primarily because of changes in land use policies in major cities, but ownership in itself is still very common.

Gen Z of course aren't really at homeownership age yet. We'll have to see what the 2021 census says.

Right, because our population is basically loaded towards those from age 30-70. The Baby Boom’s early years had lower ownership rates because children tend not to own homes. Most of those people got in prior to this bubble.

The curious thing would be to see how Gen Z/Millennial ownership level correlates to their Gen X/Boomer parents at a given age. My bet is that it is much lower and gets lower the younger the demographic.

[MolsonExport]

We need to move towards building the type of housing stock that offers high density as well as family living quarters, and neighborhoods that are not completely organized around the automobile. Skyscraper condos are fabulous, until you have children.

More of this:


less of this:

[someone123]

I don't think the home ownership rate captures what is going on very well. You would need to know the living space area per person and amount spent on housing. There is rarely one simple cause or factor that underlies a problem like the housing crisis. Instead there are many factors that all deteriorate somewhat (new units are smaller, they're subdivided more, traffic gets worse, people spend more on housing, etc.) that are additive or worse.

I'd guess that BC clocks in around Mexico or Brazil on these metrics, and Ontario is probably headed there.

I would also note that in Canada we seem to have given up on the notion of "progress". The bar went from generation-over-generation improvement to trying to argue that we are not stagnating or declining. Of course Canada is stagnating. Our real GDP per capita hasn't gone up much if at all since 2008 or so, while asset prices have shot up.

[suburbanite]

Originally Posted by MolsonExport

We need to move towards building the type of housing stock that offers high density as well as family living quarters, and neighborhoods that are not completely organized around the automobile. Skyscraper condos are fabulous, until you have children.

People have to vote with their wallet. I'm willing to bet you live in a place that looks far more like the second picture than the first.