Canada's 'housing bubble' deemed close to bursting

[goodgrowth]

Originally Posted by thebasketballgeek

Generally the new subdivisions in Calgary and Edmonton range from 30-40 units per hectare which is definitely an improvement from what was previously being built. The problem is there are still many elements with the new subdivisions like the lack of mixed-uses, winding roads, and cul-de-sacs which still make the favoured mode of transportation the car. As a result the “town centres” in these developments don’t provide the desired effect of vibrant streetscapes and foot traffic to its full potential.

But yea Toronto and Vancouver McMansions are just as bad. They really need to look at Montreal which utilize middle housing like townhouses, row houses, and low rise apartments much more prominently to fill in the density.

Canada in general is quite behind the rest of the world in terms of housing variety which is ironic considering how diverse our population is.

I was more talking about infill in older suburban areas. I think cities like Calgary and Edmonton just have a inherent advantage with infill in that there is less housing deemed heritage and therefore less protectionism.

I'm convinced with mixed-use if you did nothing other than allow convenience/mini grocery stores to build/operate anywhere you solve like 50% of "walkability" problem. Throw in coffee shops and you'd probably bring it up to 75%.

Those two cover the majority of daily purchases.

[Innsertnamehere]

Originally Posted by goodgrowth

I was more talking about infill in older suburban areas. I think cities like Calgary and Edmonton just have a inherent advantage with infill in that there is less housing deemed heritage and therefore less protectionism.

I'm convinced with mixed-use if you did nothing other than allow convenience/mini grocery stores to build/operate anywhere you solve like 50% of "walkability" problem. Throw in coffee shops and you'd probably bring it up to 75%.

Those two cover the majority of daily purchases.

I mean I'm not sure that's true. Montreal and Quebec City sprawl quite a bit on their outer edges.

https://www.google.ca/maps/@45.7608535,-73.6149516,632m/data=!3m1!1e3

https://www.google.ca/maps/@46.9064131,-71.1402928,1641m/data=!3m1!1e3

They just generally have better, larger pre-war areas with lots of missing middle housing, and less post-war housing areas due to the slower growth rate through the second half of the 20th century. Quebec's modern suburbs are similar if not worse than Torontos or Calgarys.

A newer Calgary suburban area has a central shopping area with townhouses and apartments surrounding it for example, with lower density SFH's further out.
https://www.google.ca/maps/@51.1587131,-113.9528464,1128m/data=!3m1!1e3

Similar context in Toronto's suburbs - dense SFHs with townhouses and apartments closest to a central shopping area, even if the shopping area is still very suburban:

https://www.google.ca/maps/@43.4843609,-79.7242746,1130m/data=!3m1!1e3

Areas like Milton aren't quite as great for that, but generally the densities are still fairly high with higher density blocks along main arterials:

https://www.google.ca/maps/@43.4799586,-79.8474945,760m/data=!3m1!1e3


Honestly Canadian sprawl hasn't really been the old large-lot, low density SFH environment that people think of for several decades now. It's still overwhelmingly car-dependent, but some areas like Brampton are proving that doesn't have to be the case with fairly high transit ridership numbers in relatively low density areas.

[ssiguy]

Originally Posted by travis3000

We don't need any government interventions. The market will take care of itself. High interest rates and coming out a pandemic are more than enough to change the psyche of the Canadian home buyer/seller. Real estate like any investment is more emotional than logical.

Yes we do need regulations and if i had my way there would be a complete ban on all non-resident buyers.

Houses are suppose to be a place for PEOPLE to live and not foreigners to flip like a stock. Housing is an essential of life and if we can't provide affordable housing our own people then there is no way, in hell, we should let foreigners buy and outbid what little housing is left.

If these "investors" want to invest in Canada then they can do so by investing in our industry but not our housing sector. This is why in a time of a housing shortage,, we have tens of thousands of housing units sitting empty.

[WarrenC12]

Originally Posted by ssiguy

If these "investors" want to invest in Canada then they can do so by investing in our industry but not our housing sector. This is why in a time of a housing shortage,, we have tens of thousands of housing units sitting empty.

Then we tax those empty homes and use that revenue to build affordable housing for low income people.

[goodgrowth]

Yeah a lot of greedy investors forgoing $20K+ in annual rental income...

[Wigs]

Originally Posted by MolsonExport

A 30% correction and then a holding pattern for at least 4 years is what the Doctor ordered for SW Ontario. The price increases of the past two years are completely insane and unsustainable. When Welland has the eye-watering prices of the GTA from just a few years back, you know things are insane. Houses that fetched 200K in London back in 2005 (when I moved here) are going upwards of $1 million now. Insane.

Sadly, I think interest rates will continue to rise, clobbering those that got into the market recently (as well as a few of us old-timers, still paying off that 20 year mortgage...I am on a variable rate).

While for homeowners I don't want to see a correction, even though it's definitely needed if you want more people to not rent their entire lives, a holding pattern for 4 years is definitely needed in most of southern Ontario.
Let the market cool down a bit.

It looks like Niagara is finally starting to level off, with an average price of ~$862,000 as of March. In March, homes in Welland took only 10 days to sell, with 14 days being the average for Niagara.


Using a different metric:

The overall MLS® HPI composite benchmark price for the Niagara Region was $814,600 in April 2022. This was an increase of 26.6% compared to April 2021.
The characteristics of the HPI composite benchmark is a home between the age of 51 to 99 with three bedrooms and two bathrooms

https://creastats.crea.ca/board/stca


Median asking price based on listings in Welland appears to be in the $725-750k range. Cheapest townhouse is $420k, new townhouses asking $699-999k

If you told anyone 6 years ago "your 1,500 sf 1960s-1970s side-split will be worth $750k" they'd think you had lost your mind.

Where my folks live in Niagara, a house on a neighboring street recently sold for $800k, which is $300k more than my folks paid for their house in Sept 2019. And the house that recently sold is 700sq ft smaller than my parents.

I told my parents "Congrats, you now have a house worth at least $300,000 more than you paid in September 2019"

[thebasketballgeek]

Going back on the topic of housing starts the full report by CMHC provides info on Vancouver, Edmonton, Montreal, and Ottawa as well. I added the info for Winnipeg wherever possible.

Housing Supply Report - May 2022

[thurmas]

http://twitter.com/CanadianPolling/status/1522981793959268353/photo/1

[Martin Mtl]

Originally Posted by thurmas

http://twitter.com/CanadianPolling/status/1522981793959268353/photo/1

That is just insane.

[casper]

Originally Posted by Martin Mtl

That is just insane.

Shocking we have limited housing construction to this point. our major cities need for condo construction projects.

[samne]

Originally Posted by thurmas

http://twitter.com/CanadianPolling/status/1522981793959268353/photo/1

House price growth in Canada vs US is skewed partly because Canada is dominated by a handful of markets. The US just has so many options for work/live, while Canada is very limited.

Second, Canada receives higher percentage immigration.

[Nouvellecosse]

This timely video makes several great points about issues recently discussed in the thread including how the housing market isn't separate from general supply and demand principles and how adding new luxury units can be good for overall affordability by drawing high-end buyers away from existing stock they'd otherwise be competing for. I wonder if the creators are forum members.

• Video Link

[goodgrowth]

I find it interesting that there simultaneous complaints about "value engineering" and "luxury units" when it comes to residential developments in this country.

How much of what is called "luxury" in this country is just any new building that happens to have stainless steel appliances in the apartments.

[Innsertnamehere]

Stainless Steel appliances cost basically the same as white appliances anyway. At most like a $50 difference.

[hipster duck]

Blackstone is opening up a Canadian office in Toronto, and wants to diversify from the warehouses it currently owns in Canada towards commercial and residential properties.

I'm not sure what their current strategy is, but Blackstone group was somewhat infamous for buying $10 billion worth of mostly single family homes right after the 2008 financial crisis, turning them into rental properties and jacking up rents. The UN's housing advisor, Leilani Farha, who I believe lives in Toronto, was quite damning about Blackstone's business practices and its effect on housing affordability in a number of places, not just in the US but in European countries as well.

I'd appreciate someone with more RE perspective weighing in on this, but I don't see Blackstone's post-2008 US approach working in Canada. The cap rates on buying freehold properties and renting them out as-is in most Canadian cities must be abysmal. Our home prices are stratospheric, but rents are fairly reasonable relative to incomes - even in Toronto and Vancouver. If you jacked up rents too much, people would just rent elsewhere - vacancy rates are reasonable (Toronto is about 5-8% officially, and is much more comfortable than it was earlier last decade when it was hovering around 1%).

[someone123]

Originally Posted by hipster duck

If you jacked up rents too much, people would just rent elsewhere - vacancy rates are reasonable (Toronto is about 5-8% officially, and is much more comfortable than it was earlier last decade when it was hovering around 1%).

That is interesting. I just assumed vacancies in Toronto were ultra low. Vancouver is around 1% and Halifax went down to about that too. But I think most Canadian cities are full of tenants who would happily move into highrise apartments that are relatively easy to supply (there is a single 3x30 storey apartment tower proposal in Dartmouth that would probably by itself shift the market a bit).

I was just in Toronto and have young relatives looking for apartments there and it's actually pretty good (maybe in part due to inner Toronto not being one of the most pressured areas during covid). They were renting OK apartments in the inner city areas for an affordable rate for somebody with an entry-level job and roommates. It's moving up beyond that that is the challenge. Lots of people are still stuck more or less at that level here in Vancouver into their 30's. They are nowhere near being able to afford their own 2 BR condo let alone a 3 BR or house.

[goodgrowth]

Originally Posted by hipster duck

If you jacked up rents too much, people would just rent elsewhere - vacancy rates are reasonable (Toronto is about 5-8% officially, and is much more comfortable than it was earlier last decade when it was hovering around 1%).

That's broken into income quartiles no?... So it's 5 and 8% vacancy for the top 2 quartiles not total....unless I am reading this wrong...

[hipster duck]

Originally Posted by goodgrowth

That's broken into income quartiles no?... So it's 5 and 8% vacancy for the top 2 quartiles not total....unless I am reading this wrong...

You’re right. I originally thought the columns were the quarter of the year, but that doesn’t make sense because then you’d have wild fluctuations by quarter.

[whatnext]

Originally Posted by samne

House price growth in Canada vs US is skewed partly because Canada is dominated by a handful of markets. The US just has so many options for work/live, while Canada is very limited.

Second, Canada receives higher percentage immigration.

So why just target supply? Reduce demand too.

Here's really scary graph from Martin Pelletier's Twitter feed:

[IMG]pelletier by bcborn, on Flickr[/IMG]

Credit Martin Pelletier https://twitter.com/MPelletierCIO/status/1522704947556483073

[swimmer_spe]

The solution to the skyrocketing houses is more supply. We can look to the past and the present for the solution.

The present? IKEA and others that sell flat pack furniture. They ensure it meets all regulations and you, or someone you ask puts it together following a set of reasonably clear instructions.

The past? Craftsman. Many know that name from the brand of tools that Sears sold. However, they made kits for houses that had everything. They were about $35k in today's money.

So, now if we combined the 2, we would get a flat pack house. Now a days, you cannot just buy a lot and build on it. Some developer is going to sell you the lot, but you must pick one of their plans. Maybe it is time to get rid of that and simply have the opportunity to buy the lot and build a home that you want.

I know there are companies like Beaver Homes, but part of the problem is the lot.