Canada's 'housing bubble' deemed close to bursting

[SignalHillHiker]

They're still trying.

[whatnext]

Yay!

Distressed Deals Pile Up in Canada’s Once-Booming Housing Market
Prices are falling in some of the urban markets that had the biggest increases over the past two years. That’s leading to broken and renegotiated deals.
By Ari Altstedter
June 17, 2022

Zohal Habibi hadn’t even moved into her new home in the suburbs of Toronto when she started regretting the purchase. “We took a very bad decision,” she says.

It’s not about the house itself. She and her husband are excited about the extra space it’ll give them and their two young kids. The problem is the price they agreed to pay for the three-bedroom home in March: C$920,000 ($711,000).

Not long after, prices started to slide, and quickly. By the time their lender got around to appraising the house in May, it marked the value down to C$800,000. A second appraisal a few weeks later was even grimmer -- C$740,000...

... In the US, 30-year mortgage rates have nearly doubled in a year, reaching levels not seen since 2008, while in New Zealand houses are failing to sell at auction since the central bank started raising rates.

In Canada, though, the market downturn is starting to develop a momentum of its own, and flashing a warning to policy makers elsewhere trying to use shock therapy to bring their own wild housing markets to heel...

https://www.bloomberg.com/news/articles/...market?srnd=premium-canada&sref=x4rjnz06

[casper]

Originally Posted by whatnext

Yay!

Distressed Deals Pile Up in Canada’s Once-Booming Housing Market
Prices are falling in some of the urban markets that had the biggest increases over the past two years. That’s leading to broken and renegotiated deals.
By Ari Altstedter
June 17, 2022

Zohal Habibi hadn’t even moved into her new home in the suburbs of Toronto when she started regretting the purchase. “We took a very bad decision,” she says.

It’s not about the house itself. She and her husband are excited about the extra space it’ll give them and their two young kids. The problem is the price they agreed to pay for the three-bedroom home in March: C$920,000 ($711,000).

Not long after, prices started to slide, and quickly. By the time their lender got around to appraising the house in May, it marked the value down to C$800,000. A second appraisal a few weeks later was even grimmer -- C$740,000...

... In the US, 30-year mortgage rates have nearly doubled in a year, reaching levels not seen since 2008, while in New Zealand houses are failing to sell at auction since the central bank started raising rates.

In Canada, though, the market downturn is starting to develop a momentum of its own, and flashing a warning to policy makers elsewhere trying to use shock therapy to bring their own wild housing markets to heel...

https://www.bloomberg.com/news/articles/...market?srnd=premium-canada&sref=x4rjnz06

Deeply concerning. This goes back to the bank being far to aggressive. I do hope they are now seeing that their actions were to much to quickly.

[whatnext]

Originally Posted by casper

Deeply concerning. This goes back to the bank being far to aggressive. I do hope they are now seeing that their actions were to much to quickly.

Hardly. This doesn't even bring housing prices remotely into line with incomes.

Bring the hammer down down and only those who were foolish enough to wildly overpay during the last 18 months get hurt.

[someone123]

Originally Posted by casper

Deeply concerning. This goes back to the bank being far to aggressive. I do hope they are now seeing that their actions were to much to quickly.

You mean the Bank of Canada? Inflation rates are still way above target and real interest rates in Canada are negative. The US raised rates by 0.75% and most people seem to think the BoC will do 0.5-0.75% in July.

I think it shows how much we are in la-la land with runaway inflation, insane asset prices, and lots of people freaking out at the prospect of going up past 1.5% interest rates or so, which are historically low (roughly just what we had in 2019?).

[thurmas]

Originally Posted by whatnext

Hardly. This doesn't even bring housing prices remotely into line with incomes.

Bring the hammer down down and only those who were foolish enough to wildly overpay during the last 18 months get hurt.

exactly this phony real estate economy bubble needs to end.

[whatnext]

Originally Posted by someone123

You mean the Bank of Canada? Inflation rates are still way above target and real interest rates in Canada are negative. The US raised rates by 0.75% and most people seem to think the BoC will do 0.5-0.75% in July.

Yep and if the BoC doesn't keep up with US rates the loonie will dive, making inflation even worse for Canadians.

[MolsonExport]

I can't be happy about higher interest rates, even if I agree, in theory, that they were far too low for far too long. I am paying a variable rate, and while I bought my home awhile ago (2014, 8 years after purchasing my first home), I still have a substantial mortgage, and every half point rise adds years to paying off my mortgage, and thus extra years that I need to work beyond normal retirement age. Do I really want to have to work 3-5 extra years? Is that better than high inflation?

[whatnext]

Originally Posted by MolsonExport

I can't be happy about higher interest rates, even if I agree, in theory, that they were far too low for far too long. I am paying a variable rate, and while I bought my home awhile ago (2014, 8 years after purchasing my first home), I still have a substantial mortgage, and every half point rise adds years to paying off my mortgage, and thus extra years that I need to work beyond normal retirement age. Do I really want to have to work 3-5 extra years? Is that better than high inflation?

Without knowing how old you are, very few of us were adults during the last period of high inflation when the cost of goods would increase monthly. A constant erosion of your salary and for retirees on fixed incomes it can be devastating.

[MolsonExport]

I'm 52, and I recall the stagflation of the 70s/80s very well.

[theman23]

Originally Posted by MolsonExport

I can't be happy about higher interest rates, even if I agree, in theory, that they were far too low for far too long. I am paying a variable rate, and while I bought my home awhile ago (2014, 8 years after purchasing my first home), I still have a substantial mortgage, and every half point rise adds years to paying off my mortgage, and thus extra years that I need to work beyond normal retirement age. Do I really want to have to work 3-5 extra years? Is that better than high inflation?

I lived in London until 2014 and recall you could get a genuinely nice house there around that time for 300k. Surely you’ve built up quite a bit of equity since then? Might be a good idea to sell and move back to a cheaper jurisdiction like Quebec when you’re ready to retire.

[canucklehead2]

Rural Canada renaissance could be great. With investment in housing stock. So much cheaper land so close to the city. Especially in old railroad suburbs. The best bones. Vegreville is 1H from downtown Edmonton on a direct to downtown CN line. But mostly abandoned. Prices are 1/3 the city. Reopen Vegreville subdivision to passenger service and boom! Town!

[canucklehead2]

How would I know? My old hometown. It's quirky charming and was damn near made the capital in 1905. It finished 3 to Edmonton and Calgary and has had a complex about it ever since. It also used to have the most important county fair besides Calgary in Alberta. All for a town that maxed out at 5700 souls since the 1970's

[yaletown_fella]

Originally Posted by MolsonExport

I'm 52, and I recall the stagflation of the 70s/80s very well.

We are heading into another period of stagflation, when you account for how the formula to calculate the CPI has been manipulated. It's not the same CPI that was used in the 70s-80s.

Central banks will never be able to achieve real positive interest rates due to unprecedented levels of debt.

Interest rates that are 9-10% lower than the real double digit inflation % is still extremely dovish. All the hawks are extinct.

[goodgrowth]

West Vancouver illustrates how local governments contribute to Canada’s housing woes

https://www.theglobeandmail.com/opinion/article-vancouver-canada-housing-crisis-policy/

The result is that three-quarters of the people who work in West Van don’t live here, according to estimates by the district. Only 9 per cent of our municipal staff – including firefighters, police officers, bus drivers and librarians – live in the community. Among major employers, fewer than 10 per cent of workers with BC Ferries’ Horseshoe Bay terminal in the west and less than a quarter of public school teachers live in West Van, according to figures I received from the district.

[TorontoDrew]

I hope this threads title finally makes sense. I'm feel8ng pressures from family in B.C to pack up and move there from Toronto. I really don't want to leave Toronto for tge Sunshine Coast. If only the name was the reality of the climate.

[Denscity]

Well hey at least they have the mildest winters in the country lol.

[TorontoDrew]

True but put me down as someone that likes all 4 seasons, though I'm usually good with a short winter. Fall being my favorite season can't be beat in eastern Canada.

[Denscity]

Ya in Fall everything on the West Coast is still green.

[lio45]

Originally Posted by Denscity

Well hey at least they have the mildest winters in the country lol.

They're the tallest midget