Canada's 'housing bubble' deemed close to bursting

[Truenorth00]

Originally Posted by 1overcosc

I'll probably get attacked on here for this, but honestly, this is one area where a Pollievre government might do some good - his "fire the gatekeepers" mantra is oversimplistic but there's a lot of merit behind it.

I'd buy your argument if I believed PP is sincere. As I pointed out elsewhere, that BS about lifting zoning policies only for cities above 500k shows that he is not. He's trying to have his cake and eat it too. 500k cap includes a whole lot of suburban municipalities. Essentially this is yet another play to try and own the libs while reassuring conservative voting areas that nothing will change for them. That's some sniveling two faced nonsense.

[1overcosc]

Originally Posted by Truenorth00

I'd buy your argument if I believed PP is sincere. As I pointed out elsewhere, that BS about lifting zoning policies only for cities above 500k shows that he is not. He's trying to have his cake and eat it too. 500k cap includes a whole lot of suburban municipalities. Essentially this is yet another play to try and own the libs while reassuring conservative voting areas that nothing will change for them. That's some sniveling two faced nonsense.

Oh, I definitely agree. There's no meaningful substance behind his complaints.

But my point is: he has the right complaints. Just not the right answers.

[Truenorth00]

Originally Posted by 1overcosc

Oh, I definitely agree. There's no meaningful substance behind his complaints.

But my point is: he has the right complaints. Just not the right answers.

The same could be said about Trudeau in 2015. You don't find too many politicians who will say there's no problem. They all say there's a problem. What we need are leaders who are courageous enough to enact the right solutions.

[Nouvellecosse]

Originally Posted by 1overcosc

It sounds radical, but I'm honestly wondering if what we need in this country is to abolish municipalities entirely, and just place all municipal services in the hands of provincial ministries.

I've long wondered if we should do the opposite. Instead of municipalities being purely subordinate offshoots of the provinces without any real independent power, they could be granted their own authority and protections. When the current governmental structure was being established the majority of the country was rural and cities weren't of particular importance. But now at least 4/5 of people live in cities, yet urban governments are subservient to the provinces who are often occupied with things like agriculture, natural resources, and regional transportation.

[ssiguy]

Originally Posted by WarrenC12

Pre-crash levels not counting for the inflated dollar. I think real values didn't return until around 2012-3.

I agree we'll probably see another 100bps but perhaps not much more. The debt levels of Canadians are such that they will be cripplied at 5%, we won't see 15-20 like before. Spending will completely dry up.

I'm curious how bad unemployment will get, given the current massive labour shortage.

The debt levels in Canada are indeed horrible and yes huge interest rate hikes will pound the economy but if you don't you are only avoiding the inevitable. The BoC has only 2 mandates: 1} to keep inflation in check and 2} to maintain the integrity of the currency. Yes they are mindful of the overall effects on the economy but that is not their mandate. The BoC MUST get inflation under control regardless of how high interest have to go to achieve it.

People think that COVID related supply chain issues and the war in Ukraine are the cause of inflation and that is absurd. Yes, those events have made the situation worse but inflation was inevitable because we have been printing and giving away money for a decade. It may make for quick excuses by our politicians but is not based in reality. There is no such thing as transitory inflation.............never has been, never will be. This is what everyone thought in the early 70s when the oil embargo started and sent gas prices soaring. When the embargo was over all of our politicians and Central Banks just assumed that inflation would subside {just like the Ukraine war} but of course as we now know inflation actually got worse.

When inflation becomes entrenched, people and businesses act accordingly.......workers demand higher wages expecting inflation to continue and businesses do the same expecting wage demands go up and it feeds on itself. It's called "fear inflation" and is actually measured and taken VERY seriously by Central Bankers. This is what happened in the 70s and the Central Banks slow reaction by calling the OPEC inflation transitory led to fear based inflation and hence it took 20% interest rates to finally wrestle inflation to the ground. When it comes to inflation and interest rates, you either increase them now and hurt the economy or really hike them later and crush the economy.

History may never exactly repeats itself but it rhymes.

[goodgrowth]

Originally Posted by Truenorth00

There's nothing wrong with BA and MAs. The problem is that it's not easy to tell voting Boomers that housing affordability cannot be solved without them making sacrifices. To some extent this is a zero sum game.

Just imagine a minister goes into a caucus meeting and tells their colleagues they have plan to bring down housing prices 50%. How do you imagine the rest of that meeting is going to go?

Again, go watch that reaction from John Tory to a Toronto housing advocate arguing that high development charges are bad for housing affordability. Then go watch the NIMBY housing association rep say that the problem is too much immigration.

Now imagine a platform that runs on, "we're going to bring down real estate prices 50%". How do you think that party will fair at the polls?

The political unpalatability of all this is why governments are reduced to trying to manage the bubble rather than going all out to try and solve it. The only sincere move happening now is provincial governments starting to blanket lift zoning restrictions. And even there many are dragging their feet.

I've already ranted enough about the NIMBYism issue that I can't rant anymore.

I think it's questionable though whether municipal governments should severely limit greenfield development before they have even started think about the politics of NIMBYism and upzoning and meeting housing demands. Which many seem to do.

It's "we've banned urban sprawl!" followed by "I have concerns about duplexes".

[someone123]

Originally Posted by Truenorth00

Yep. Make it $100k less for me by charging every neighbour on my floor $10k more. That's not solving anything. All it's doing is raising the general price by $10k.

Many of the households who don't need help actually pay disproportionately low taxes (e.g. retiree with home). So it is more like trying to make your housing affordable by having the government tax you then use that money to subsidize a housing unit for you. Really it will be the working class and middle class paying for housing while the truly wealthy don't chip in proportionately. In Vancouver, even the higher wage earners who are younger are somewhat excluded from the housing market, with a huge tax burden and no real estate windfalls. In theory a lot of doctors, lawyers, and well-paid software engineers could use housing affordability help.

[JHikka]

Originally Posted by Nouvellecosse

I've long wondered if we should do the opposite. Instead of municipalities being purely subordinate offshoots of the provinces without any real independent power, they could be granted their own authority and protections. When the current governmental structure was being established the majority of the country was rural and cities weren't of particular importance. But now at least 4/5 of people live in cities, yet urban governments are subservient to the provinces who are often occupied with things like agriculture, natural resources, and regional transportation.

Agreed. Once cities reach a specific size either as a bar or as a proportion of their province they should be granted additional powers to manage themselves. It's beyond time that Toronto outgrew the chains that Ontario places upon it.

[suburbanite]

Problem with diverting more power to the municipalities is that you also need to completely rework the tax framework from the top-down imo. The biggest issues that hit cities (like transit) are just completely outsized by municipal budgets under our current tax structure which is like an inverse pyramid from municipalities up to the feds.

Just handing more power to cities means they will still be subservient to the provinces when it comes to actually implementing a lot of the things they've been given the autonomy to handle.

[Acajack]

Originally Posted by JHikka

Agreed. Once cities reach a specific size either as a bar or as a proportion of their province they should be granted additional powers to manage themselves. It's beyond time that Toronto outgrew the chains that Ontario places upon it.

It's already extremely inefficient between the fairly equal feds and provinces. As we saw with what emerged from the recent Council of the Federation meeting.

Not sure it would be really beneficial or effective to have emboldened provinces with more gravitas entering the fray.

In any event, most if not all provinces would never go along with it. And they'd need to be willing to share more power.

[esquire]

Originally Posted by Truenorth00

Retired seniors used to move in with their kids in their 60s or move to an apartment. Boomers these days, insist that age in place means they stay in their empty 4 bedroom homes and that government has to re-organize social and health services to be delivered to their houses. Mostly paid for by younger tax payers of course.

It boggles my mind that so many Boomers literally have kids trying to raise grandkids in shoebox condos, while the Boomers live in their SFDs and they never make the connection that they are personally contributing to the problem.

When did retired seniors do those things? I remember visiting a lot of elderly relatives and close family friends back in the 80s and 90s and I don't think I can ever remember anyone voluntarily opting to live in an apartment. And I don't come from a wealthy family, there were lots of working class immigrants in the extended family. The only real exceptions were those who eventually needed an assisted living environment. People then, as now, prefer to stay in their home for as long as their finances and health will allow.

As much as it 🞵🞵🞵🞵🞵 for those people trying to raise kids in a small condo in a big city, it seems even more distasteful to implement measures aimed at pushing grandma and grandpa out of the home they built in the 1970s.

[Wigs]

In the Niagara housing market the prices have dropped compared to the last few months, and it's taking longer to sell in most municipalities:


https://www.mcgarrrealty.com/market-report

On a year-to-date basis, home sales totaled 4,110 units over the first six months of the year. This was a decrease of 27.6% from the same period in 2021.

The MLS® Home Price Index (HPI) tracks price trends far more accurately than is possible using average or median price measures. The overall MLS® HPI composite benchmark price was $753,200 in June 2022, a gain of 14.7% compared to June 2021.

The benchmark price for single-family homes was $769,400, increasing by 14.6% on a year-over-year basis in June.

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

More inventory/longer time to sell-- to me says it's transitioning from sellers to buyers market.

I read recently that somewhere in the GTA a couple bought a house for like $1.3M four or five months ago, and now the market rate for the house is $1.1M. Ouch!

Travis, what is your outlook for your area, and southern Ontario in general?

[le calmar]

I wonder if the people who bought those grossly overpriced abominations in Welland with crooked stairs have buyer regret?

[someone123]

Originally Posted by suburbanite

Problem with diverting more power to the municipalities is that you also need to completely rework the tax framework from the top-down imo. The biggest issues that hit cities (like transit) are just completely outsized by municipal budgets under our current tax structure which is like an inverse pyramid from municipalities up to the feds.

The interesting thing is I think that land and perhaps property taxes probably should be higher, and it might make sense to shift some tax burden off of income and sales taxes. This would have to be done in a coordinated way, but it wouldn't involve fundamentally changing who gets which taxes.

As a hypothetical scenario it doesn't seem crazy to me to pay $10,000 a year in property taxes to the municipality/region (would include GVRD/TransLink) and take away maybe $6,000 from the feds and $4,000 from the province. Regional transportation spending is far, far more useful to me per dollar than what the feds or province do on average, and I think that people with mid-range incomes pay too much in taxes while the wealthy pay too little. Land taxes are probably the best kind of wealth tax available.

[Wigs]

Originally Posted by le calmar

I wonder if the people who bought those grossly overpriced abominations in Welland with crooked stairs have buyer regret?

They will be screwed, unless they hold for 20-30 years.
I honestly don't understand those ones. New, 🞵🞵🞵🞵 quality house on postage stamp lot vs older house in good shape on a large lot in established tree-lined neighborhood (possibly with inground pool) for hundreds of thousands less!

They'll probably turn it into rental and cram as many Niagara college students in as possible @ $550-600/month

[MolsonExport]

Originally Posted by Wigs

In the Niagara housing market the prices have dropped compared to the last few months, and it's taking longer to sell in most municipalities:


https://www.mcgarrrealty.com/market-report


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

More inventory/longer time to sell-- to me says it's transitioning from sellers to buyers market.

I read recently that somewhere in the GTA a couple bought a house for like $1.3M four or five months ago, and now the market rate for the house is $1.1M. Ouch!

Travis, what is your outlook for your area, and southern Ontario in general?

Same deal here in London. Houses couldn't keep the sales sign on their property: they sold so quickly, often way over asking. 5 months later, there is a lot of unsold inventory and prices are dropping fast.

[Wigs]

Originally Posted by MolsonExport

Same deal here in London. Houses couldn't keep the sales sign on their property: they sold so quickly, often way over asking. 5 months later, there is a lot of unsold inventory and prices are dropping fast.

The Southern Ontario R/E market cooling down has begun

[casper]

Originally Posted by Truenorth00

Do we live in the same country? Homes have stopped being places to live and become primarily wealth creation vehicles for at least two decades now. An LVT would recognize this reality.



Wrong. Some Boomer couple staying in their four bedroom house as empty nesters is absolutely terrible. It's bad for housing affordability for families. It's bad for the environment and it makes it hard (and expensive) to support that ageing couple with health and social services. They should be downsizing in their 60s at the latest. But most absolutely refuse to do so. Hence our housing crisis and falling birth rate. Every empty bedroom in a seniors home is one that could be housing a future grandkid if they moved.

Your defence is the same BS John Tory was ranting about, to the young housing advocate who complained about rising development fees. See link I posted above. The tyranny of gerontocracy is destroying our country's future.

My only complaint against an LVT is that it does little to prompt developers to build, other than in very desirable locations that attract high LVT. Which they might develop anyway. Also an LVT without zoning reform doesn't really change the supply of developable land.

My parents purchased their home about 50 years ago. They finally moved out into a care facility after living their 48 years. That is in Vancouver. They outlived their peers, but most of them stayed in their homes until they just could not do it any more. That is just normal. Yes, this is in Vancouver which has some fairly high property tax bills. Here in BC if your over 65 you do get several hundred dollars in rebates each year on your property tax.

Who would want to encourage people to house jump other than someone who works for the retailer association. The only people that benefit form house sales are realtors and the government who have these silly land transfer taxes.

Yes, these days I live in Victoria. But I have lived in Vancouver, Ontario, Saskatchewan and briefly Manitoba. I am rare most of the people I know have not moved around anywhere near the level I have.

[Truenorth00]

Originally Posted by esquire

When did retired seniors do those things? I remember visiting a lot of elderly relatives and close family friends back in the 80s and 90s and I don't think I can ever remember anyone voluntarily opting to live in an apartment. And I don't come from a wealthy family, there were lots of working class immigrants in the extended family. The only real exceptions were those who eventually needed an assisted living environment. People then, as now, prefer to stay in their home for as long as their finances and health will allow.

As much as it 🞵🞵🞵🞵🞵 for those people trying to raise kids in a small condo in a big city, it seems even more distasteful to implement measures aimed at pushing grandma and grandpa out of the home they built in the 1970s.

Cool. Do nothing then and accept that we have absolutely fucked the next 2-3 generations. At this point, it's not just Millenials. This will have fucked Zoomers and possibly Alphas too.

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[esquire]

Originally Posted by Truenorth00

Cool. Do nothing then and accept that we have absolutely fucked the next 2-3 generations. At this point, it's not just Millenials. This will have fucked Zoomers and possibly Alphas too.

As if pushing Boomers out of their homes is the only way out of this. Besides, it'll happen soon enough naturally anyway, you don't really need to encourage it.

It is downright absurd that a country this large and with so much physical space could have a housing situation like this. Governments won't relent on greenbelts and zoning restrictions, consumers won't relent on wanting to live in the three or four largest markets in the country... we put all these handcuffs on ourselves and not surprisingly, this is the natural result.