Canada's 'housing bubble' deemed close to bursting

[Nashe]

Originally Posted by jigglysquishy

Both boomers. Vasty different circumstances and life experiences. The less we divide people into neat and illogical generations, the better.

I agree. There is a lot of variance within "generations". In the same way, some Gen X are quite a bit well off compared to others. Some boomers have big, empty houses with pools and a 3-car garage with a hobby car in it. And others are eating cat food after the death of an un-pensioned spouse. While it's attractive and gratifying to create generalities, it's a bit lazy to say "our economic woes are because of Boomers" when there's a lot more to it than that.

In the case where SOME of it is, you need to take into consideration that the "hang onto what you have for as long as possible" Boomer stereotype comes from a sincere place... their parents came through some TOUGH times (mid-20th was just war-central) and often that manifests in offspring who either overreact towards ("Hoard stuff! Scrimp! Save! You never know when it'll be gone!") or away form the mentality their parents had ("So much cool stuff now! I want to have all the things we never had before! I want to LIVE!").

Through the lens of the real estate market it's easy to assign blame... "Those greedy Boomers wanna keep their big houses... they don't need them!". Maybe that's just the CURRENT crisis. There will be another in a generation. And then Gen-yeet2 will be blaming Millennials for never giving them all the stuff their great grandparents had...

Life's tough. It always has been. The WAYS it's tough changes.

[Wigs]

The Canadian Real Estate Association says home sales across the country fell again in June, but the decreases are smaller than those seen in previous months.

The association says June home sales amounted to 48,176, a 24 per cent drop from 63,280 during the same month last year.

On a seasonally adjusted basis, sales were down almost six per cent from May.

The association says larger declines were seen in April and May, but activity in June still fell slightly below average levels.

The national average home price in June fell two per cent from the same month last year to $665,849 and, on a seasonally adjusted basis, was down four per cent from May.

New listings climbed by four per cent month-over-month and 10 per cent year-over-year as Montreal saw a spike in supply.

Canadian Press

[casper]

Originally Posted by Vorkuta

I agree. There is a lot of variance within "generations". In the same way, some Gen X are quite a bit well off compared to others. Some boomers have big, empty houses with pools and a 3-car garage with a hobby car in it. And others are eating cat food after the death of an un-pensioned spouse. While it's attractive and gratifying to create generalities, it's a bit lazy to say "our economic woes are because of Boomers" when there's a lot more to it than that.

In the case where SOME of it is, you need to take into consideration that the "hang onto what you have for as long as possible" Boomer stereotype comes from a sincere place... their parents came through some TOUGH times (mid-20th was just war-central) and often that manifests in offspring who either overreact towards ("Hoard stuff! Scrimp! Save! You never know when it'll be gone!") or away form the mentality their parents had ("So much cool stuff now! I want to have all the things we never had before! I want to LIVE!").

Through the lens of the real estate market it's easy to assign blame... "Those greedy Boomers wanna keep their big houses... they don't need them!". Maybe that's just the CURRENT crisis. There will be another in a generation. And then Gen-yeet2 will be blaming Millennials for never giving them all the stuff their great grandparents had...

Life's tough. It always has been. The WAYS it's tough changes.

Agreed. I am from Gen-X. I don't see much point in assigning blame for the economic state of the economy to a specific generation.

Where we are today, COVID has caused a large number of people to take early retirement. That has created opportunities for those in their 20-60 to move up into higher paying jobs much more quickly had COVID not occurred. The shortage of workers is having an upward pressure on salaries. We should be seeing the conditions for a lot of the Gen-X/Y/Z and Millennials as a result.

[Nashe]

Originally Posted by casper

Agreed. I am from Gen-X. I don't see much point in assigning blame for the economic state of the economy to a specific generation.

Where we are today, COVID has caused a large number of people to take early retirement. That has created opportunities for those in their 20-60 to move up into higher paying jobs much more quickly had COVID not occurred. The shortage of workers is having an upward pressure on salaries. We should be seeing the conditions for a lot of the Gen-X/Y/Z and Millennials as a result.

AND (rightly or wrongly) if all of that juicy Boomer cashola/house-ola is actually being hoarded... let's not forget that they, like their parents, won't be around forever. They're people. Generally they worked pretty hard, and made sacrifices for their kids. That "wealth" won't likely go to charity when they shuffle off the mortal coil.

[CivicBlues]

Originally Posted by Vorkuta

AND (rightly or wrongly) if all of that juicy Boomer cashola/house-ola is actually being hoarded... let's not forget that they, like their parents, won't be around forever. They're people. Generally they worked pretty hard, and made sacrifices for their kids. That "wealth" won't likely go to charity when they shuffle off the mortal coil.

That's IF the Old Person Warehousing, sorry "Senior Care Industry" doesn't siphon off all of that "wealth" the intervening years.

[Nashe]

Originally Posted by CivicBlues

That's IF the Old Person Warehousing, sorry "Senior Care Industry" doesn't siphon off all of that "wealth" the intervening years.

Well, then we can blame GenX or Millennials, at least.

[swimmer_spe]

Originally Posted by Truenorth00

That is actually not true. The most space efficient retail you can have is stores in walkable areas. Malls require a ton of parking and then a whole pile of internal walkways to recreate that walkable retail area inside. It's no accident that Canada and the US have multiples of the amount of square footage per capita compared to other countries and we have so many malls and big box stores.

I would love to see the number of malls cut down to low double digits in this country. And all the rest effectively turned into mixed use neighborhoods.

Something like most urban malls where parking is within the footprint of the building and there usually is condo developments around it? Yes, that would be good.

Originally Posted by jigglysquishy

Most of the blame that gets put onto boomers, should really be put onto the 1935-1950 generation. As always, Boomer as a sociological concept is very weak.

Those born in 1945 were children in the high quality 50s, had access to cheap education, and were established in their careers when the 1973 oil crisis hit. Most had their houses paid off or close to it during the 80s interest peak. And enjoyed their early retirement with widespread DB pension. 2008 hurt, but was mild as most were already retired.

They remember FLQ, were young during the cultural revolution of the late 60s, and saw the Leafs winning the Cup. They largely voted for Mulroney.

The person born in 1960 entered a depressed work environment and was buying a house in the high interest market. They were in their peak earning years during the 90s austerity time. And 2008 delayed their retirement.

FLQ was a history lesson, they were children during the era of Beatles, Civil Rights, and Vietnam. They were the hardest hit by the 80s 90s dark financial times.

Both boomers. Vasty different circumstances and life experiences.

The less we divide people into neat and illogical generations, the better.

Cutting up people into groups that they best fit with makes sense for a variety of reasons. The Boomers go to 1965 and in general, yes they are all the problem.The voted for trickle down economics and for tax cuts with spending increases.

Originally Posted by mikevbar1

I think he’s alluding to the opportunity cost of developing the land, and how it’s not worth the expense when you can retain your capital for less risk. Add in taxes, and now the cost of the status quo grows- it’s time to develop.

Oh I know what he is trying to allude to, but that does not change what he actually is doing, which is causing more problems than good. If it were not in an area where housing isn't needed, I would be fine with sitting on it, but it sounds like that isn't the case.

[jigglysquishy]

Originally Posted by swimmer_spe

Cutting up people into groups that they best fit with makes sense for a variety of reasons. The Boomers go to 1965 and in general, yes they are all the problem.The voted for trickle down economics and for tax cuts with spending increases.

This is factually incorrect.

Mulroney was voted in by the 1920 to 1950 birth years.

1965 births were 19 and 23 in those two elections. Like other 19 and 23 years throughout postwar history, they voted for left wing parties.

https://bdp.parl.ca/sites/PublicWebsite/default/en_CA/ResearchPublications/2016104E#a4

From a voting pattern standpoint, post ~1958 is the end of "boomer" voting patterns. 1958 to 1970 births had higher youth voting apathy that the 1945 to 1959 births.

[casper]

There is a call for the Bank of Canada to leave some breadcrumbs on what it plans to do. That would be a good idea.

Good to see the realization that they are moving to fast and need to pause to assess the impact of their previous rate increases. We do need smaller slower moves.

https://www.bnnbloomberg.ca/boc-could-leave-breadcrumbs-to-pause-rate-hikes-desjardins-1.1790920

[kwoldtimer]

Originally Posted by casper

There is a call for the Bank of Canada to leave some breadcrumbs on what it plans to do. That would be a good idea.

Good to see the realization that they are moving to fast and need to pause to assess the impact of their previous rate increases. We do need smaller slower moves.

https://www.bnnbloomberg.ca/boc-could-leave-breadcrumbs-to-pause-rate-hikes-desjardins-1.1790920

Breadcrumbs stretching out into 2023 seems a bit ambitious to me.

[casper]

Originally Posted by kwoldtimer

Breadcrumbs stretching out into 2023 seems a bit ambitious to me.

Yes. However it is needed, as the media is describing what the Bank of Canada did as "Going Nuclear". Clearly a more restrained response is called for....

https://financialpost.com/moneywise-pro/...1-interest-rate-hike-will-the-fed-follow

[swimmer_spe]

Originally Posted by casper

There is a call for the Bank of Canada to leave some breadcrumbs on what it plans to do. That would be a good idea.

Good to see the realization that they are moving to fast and need to pause to assess the impact of their previous rate increases. We do need smaller slower moves.

https://www.bnnbloomberg.ca/boc-could-leave-breadcrumbs-to-pause-rate-hikes-desjardins-1.1790920

They are going to raise interest rates till inflation ends and the housing market becomes affordable again. What more should they say?

[casper]

Originally Posted by swimmer_spe

They are going to raise interest rates till inflation ends and the housing market becomes affordable again. What more should they say?

I don’t think affordability is a consideration for the bank. I agree interest rates need to go up. But they should be slow incremental changes up and down. Not one percent jumps.

The only thing that will impact affordability is housing starts and increasing supply. It is not like interest rates are going to
Impact the number of people who need a home.

[swimmer_spe]

Originally Posted by casper

I don’t think affordability is a consideration for the bank. I agree interest rates need to go up. But they should be slow incremental changes up and down. Not one percent jumps.

The only thing that will impact affordability is housing starts and increasing supply. It is not like interest rates are going to
Impact the number of people who need a home.

The problem is, that is not federal jurisdiction. That is part of the problem.

[cabotp]

Originally Posted by esquire

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.

The problem isn't the lack of land it is that the vast majority wants to live in a very small portion of that land.

[cabotp]

Originally Posted by Architype

Keep these posts handy for when you get older and retire.

I always find it amusing when a younger person acts like the older person is screwing them yet when said younger person is older they sure as hell will be doing the same thing.

[cabotp]

Originally Posted by Truenorth00

I don't think a Boomer owes me anything. I do think we have societal issues because of their preferences as a cohort. I think it should be concerning to people that our national situation is so bad that the OECD says Canada will be dead last in economic growth for the next 40 years. Are we not supposed to discuss the macro effects because a bunch of old farts get triggered?



I actually agree. I encourage most young people who have talent to leave the country. The indicators are rather poor in the long run. I hope that changes and I advocate for it. But I'm not optimistic.

Keep in mind said old farts will one day be dead farts.

[theman23]

Originally Posted by casper

There is a call for the Bank of Canada to leave some breadcrumbs on what it plans to do. That would be a good idea.

Good to see the realization that they are moving to fast and need to pause to assess the impact of their previous rate increases. We do need smaller slower moves.

https://www.bnnbloomberg.ca/boc-could-leave-breadcrumbs-to-pause-rate-hikes-desjardins-1.1790920

This was from before the most recent rate hike, and they did the exact opposite.

[niwell]

Ok, so. Hypothetically, we open up all lands in urban areas and surrounding "protected" areas. Allow all yellow-belt builds. What's the demand? How long will it take to satiate? What part of the demand is people wanting to live and what is latent investment? Given current housing costs, to what extent will the mass of people owning real estate be willing to allow new builds to go for less? Hell, if given land for *free* what would it cost to build a new house given trades costs (which I am all too well aware of)?

I could see things going down slowly, but a complete free market solution isn't going to solve anything in the short term. Maybe it would if we did it 10 years ago but I think it's too late. Not saying we shouldn't allow a lot of this because it won't hurt but it's no silver bullet.

[swimmer_spe]

Originally Posted by niwell

Ok, so. Hypothetically, we open up all lands in urban areas and surrounding "protected" areas. Allow all yellow-belt builds. What's the demand? How long will it take to satiate? What part of the demand is people wanting to live and what is latent investment? Given current housing costs, to what extent will the mass of people owning real estate be willing to allow new builds to go for less? Hell, if given land for *free* what would it cost to build a new house given trades costs (which I am all too well aware of)?

I could see things going down slowly, but a complete free market solution isn't going to solve anything in the short term. Maybe it would if we did it 10 years ago but I think it's too late. Not saying we shouldn't allow a lot of this because it won't hurt but it's no silver bullet.

There is no silver bullet solutions.

I would assume that if if building starts were double what they were pre covid every year for at least a decade, we might see demand plateau. You want it to be fixed faster? Freeze all immigration. That includes temporary workers. That may speed up the time it takes to plateau.