Canada's 'housing bubble' deemed close to bursting

[esquire]

^ Yikes. Although some might say it's like a glimpse into this country's future!

[Truenorth00]

Originally Posted by esquire

^ Yikes. Although some might say it's like a glimpse into this country's future!

That's exactly what the article was about. The author compared returning to Canada from NeW Zealand as getting out of the fire and into the frying pan.

[thewave46]

Originally Posted by Truenorth00

That's exactly what the article was about. The author compared returning to Canada from New Zealand as getting out of the fire and into the frying pan.

I'm curious as to how the unwinding will happen.

Interest rates are climbing. We are probably close to (or past) peak household formation, given what demographics are. The largest single group of homeowners in the country is beginning its inexorable decline. Their kids - the Echo Boom to use an archaic term - are in adulthood now, and they're the ones with the expectations of living like their parents. Not sure what the numbers look like for their ownership level.

New Canadians are much more likely to be of multi-family arrangements; the nuclear family was the aberration, not the historical norm. Birth rates are near all-time lows (I wonder if there's a difference between the birth rates of new versus old Canadians and what they are), so the demand for expensive SFH should be mitigated going forward.

I can't imagine landlording is working well for the amateurs who bought in the last few years. Or the flippers who imagined huge gains with paint and floors. How long can they bleed cash if appreciation isn't driving asset value?

Does the economy wither under higher interest rates and does a decline in immigration happen as a policy response to that? A labour shortage can end up in a labour surplus here pretty quickly when commodity prices fall.

One wonders.

[Innsertnamehere]

Hamilton, the original home of Tim Hortons, by my count has 75 Tim’s, or around 13 per 100k. Probably 5-6 of them are “institutional” locations in Tim Hortons Field, McMaster, Hospitals, etc.

Honestly lower than I expected. Wouldn’t be surprised if it’s the highest ratio for a larger city though. The city has got to get extra points for its CFL stadium being called “Tim Hortons Field” though

[urbandreamer]

Eyeopening? The author is describing Canada. All across Canada's RV campgrounds, the talk was about real estate. Bragging about investments, their rental income properties etc.

[swimmer_spe]

As the air is being let out of the housing bubble, I wonder if any government will do anything to keep the air from building in it. It is great to get housing back down to reasonable rates, but they need to stay down to reasonable rates.

[jonny24]

Originally Posted by Truenorth00

Where Canadian parents might bond over early-morning hockey practice, New Zealand parents talk about buying their kid’s first investment property. The only greater sign of parental achievement is a child showing promise on the cricket pitch.

https://www.theglobeandmail.com/opinion/article-new-zealand-housing-crisis/

Jeez, the All Blacks lose three in a row and suddenly rugby is no longer the national sport

[whatnext]

Originally Posted by swimmer_spe

As the air is being let out of the housing bubble, I wonder if any government will do anything to keep the air from building in it. It is great to get housing back down to reasonable rates, but they need to stay down to reasonable rates.

Keep the air from building in it? Gov't of all stripes have shown they're quite willing to neglect the best interests of the country to keep the real estate party going. If the Trudeau Liberals don't implement some policy to stop the slide the Tories will be quite happy to shriek about homeowners being abandoned and promise something equally as bad for long term housing affordability.

A shame neither will propose anything that increases the supply of rental units which provide homes but not speculative investment units. Why is it so hard for gov'ts and agencies like CMHC to look back at what worked so well spurring rental construction in the 1960-70s and implement something similar?

[swimmer_spe]

Originally Posted by whatnext

Keep the air from building in it? Gov't of all stripes have shown they're quite willing to neglect the best interests of the country to keep the real estate party going. If the Trudeau Liberals don't implement some policy to stop the slide the Tories will be quite happy to shriek about homeowners being abandoned and promise something equally as bad for long term housing affordability.

A shame neither will propose anything that increases the supply of rental units which provide homes but not speculative investment units. Why is it so hard for gov'ts and agencies like CMHC to look back at what worked so well spurring rental construction in the 1960-70s and implement something similar?

Sadly, I feel you are right, If anything, JT and Singh will just say they will do things, but not actually announce anything substantive.

[swimmer_spe]

https://calgary.ctvnews.ca/occupancy-exc...tm_medium=trueAnthem&utm_source=facebook

This screams at how things really are broken. Resort towns cannot support themselves.

[casper]

Originally Posted by whatnext

Keep the air from building in it? Gov't of all stripes have shown they're quite willing to neglect the best interests of the country to keep the real estate party going. If the Trudeau Liberals don't implement some policy to stop the slide the Tories will be quite happy to shriek about homeowners being abandoned and promise something equally as bad for long term housing affordability.

A shame neither will propose anything that increases the supply of rental units which provide homes but not speculative investment units. Why is it so hard for gov'ts and agencies like CMHC to look back at what worked so well spurring rental construction in the 1960-70s and implement something similar?

Best outcome is home value stay put for a few years. Then let inflation at 8% a year do what it does. You effectively achieve the same goal without the pain.

[whatnext]

Originally Posted by casper

Best outcome is home value stay put for a few years. Then let inflation at 8% a year do what it does. You effectively achieve the same goal without the pain.

Yes, that's one way. If you look at what BC implemented around 2016-17 in terms of foreign buyers taxes etc. you can see prices effectively stayed flat until the sugar rush of ultralow Covid interest rates in 2020.

But that is also another argument for ensuring that workers continue to have some power over winning wage increases and not trying to flood the labour market with TFW etc.

[GenWhy?]

Originally Posted by whatnext

A shame neither will propose anything that increases the supply of rental units which provide homes but not speculative investment units. Why is it so hard for gov'ts and agencies like CMHC to look back at what worked so well spurring rental construction in the 1960-70s and implement something similar?

Even though it's a great idea and would have the same impact as the 60s and 70s, I just don't see tax breaks to rental construction on a large scale during the economic times we currently have going over well for the electorate. Which is sad.

[casper]

Originally Posted by whatnext

Yes, that's one way. If you look at what BC implemented around 2016-17 in terms of foreign buyers taxes etc. you can see prices effectively stayed flat until the sugar rush of ultralow Covid interest rates in 2020.

But that is also another argument for ensuring that workers continue to have some power over winning wage increases and not trying to flood the labour market with TFW etc.

Continued immigration is needed to deal with the changing demographics and to drive economic growth. That said, wages will still go up.

[WarrenC12]

Interesting that this is still happening in NZ. Their PM has been one of the most progressive in the western world. Yet even she won't act here?

[ssiguy]

Originally Posted by casper

Best outcome is home value stay put for a few years. Then let inflation at 8% a year do what it does. You effectively achieve the same goal without the pain.

No you don't because you are assuming that wages will keep up with inflation. Besides that, even if they do {which they won't} Ontario prices are twice what they should be and BC triple.

This is the housing crash Canada desperately needs.

[ssiguy]

Originally Posted by casper

Continued immigration is needed to deal with the changing demographics and to drive economic growth. That said, wages will still go up.

Immigration adds to the GDP, Haiti could manage that. It's not whether they add to the GDP but rather if they add to per-capita GDP and productivity. That is what results in a higher standard of living as opposed to just a bigger pie divided by more people.

[SignalHillHiker]

Buddy took a picture of the line to view an apartment available on his block. More arriving all the time. It’s still possible to get into the housing market here if you’re fortunate enough to have a down payment, but if you’re trying to rent and want to be anywhere even remotely close to the core, good luck.

[yaletown_fella]

Toronto City Council has voted to double development fees.

So if condo units come down in price by 3% , this deflation will just be offset by the fees.

It's a huge disincentive to increase supply.

I think the city should be increasing the general tax levy on homeowners instead, as homeowners sitting in SFH are the biggest beneficiaries of services and least efficient use of space.

The one silver lining is purpose built rental , afaik, is exempt from this tax increase. Although Im a fan of purpose built rental, and live in one,,, I dont think it makes up enough of the aggregate to help cool the overall market

[giallo]

^ That seems really counterproductive unless, as you mentioned, it's to promote building more rentals.