Canada's 'housing bubble' deemed close to bursting

[1overcosc]

Originally Posted by Truenorth00

Pick your poison....

All 3 can exist in a scenario where there's little to no services at all. The most rural areas of Eastern Ontario have no water/sewer, no curbside garbage pickup, volunteer fire, roads off the main road are private lanes where residents have to do their own snowclearing, etc.

Of course only rural areas can function that way; a suburb needs these services. So for the point of view of urban development, the Venn diagram is true.

[swimmer_spe]

Originally Posted by niwell

That Venn diagram is largely accurate, though I think ignores that while the relationship between density and service costs exists, it isn't always as simple as often presented. Generally speaking - yes, higher density areas will result in lower service costs per resident. If starting from a blank slate I'd say it's an absolute.

But - and this can be crucial - in an existing urban area the addition of density beyond a threshold can not only have diminishing returns but in fact be counterproductive (from a servicing cost perspective only - not talking about urban vibe/feel). We've reached a point in some places where land costs and the state of existing infrastructure results in exorbitant expense to scale up beyond a certain point. Neglecting this results in the situation that's already being felt in certain parts of central Toronto - schools are full, the sewer system is near peak capacity, traffic is atrocious and transit is lagging. The latter is partially being rectified but as we all know it's not cheap!

I'm not trying to do a NIMBY "no more towers!!" thing, but rather highlighting that we've dug ourselves into a bit of a hole that's becoming increasingly difficult to get out of. I don't have the answer, but I can't foresee success with any magic bullet solution. Higher taxes - whether it be at the municipal or provincial level will no doubt need to be part of it.

The issue is that development costs are also kept low so that people will build SFHs over anything else. Imagine if the development cost was not based on the building, but based on the potential use. Imagine a SFH development had to pay the same as that tower for the same square meter of property? We have been shortchanging ourselves for decades and now it is clearly being seen by most. I feel that the municipalities will have to bite the bullet and jack all costs of properties. I am expecting to see my property taxes double within 5-10 years, if we are to get ourselves out of this mess.

Originally Posted by Truenorth00

The problem in a lot of low density areas is the lack of turnover. So a lot of these neighbourhoods are at risk of actually losing services. See the discussion about Mississauga from a few months ago.

Meanwhile, we actually do build density. In haphazard and unplanned ways. See all the illegal basement apartments in neighbouring Brampton.

We'd all be better off if we just let builders build more quadplexes and let homeowners put up ADUs.

Goes back to the idea that we need to do away with the zoning bylaws.

Originally Posted by goodgrowth

The answer is do all of the above. New greenfield developments should be allowed and upzoning should happen.

Some of the upzoning that is happening is lagging what is actually needed...and you can tell by the pricing.

If you look at what is actually being built in greenfield areas now days it's probably just as dense if not more than what is being allowed with some of these new rules for infill.

Plexes/townhouses may not even cut in some of these inner city areas..

We also need to build on brown fields faster.Go anywhere and there are empty lots in the city that have sat empty for decades.

Originally Posted by 1overcosc

All 3 can exist in a scenario where there's little to no services at all. The most rural areas of Eastern Ontario have no water/sewer, no curbside garbage pickup, volunteer fire, roads off the main road are private lanes where residents have to do their own snowclearing, etc.

Of course only rural areas can function that way; a suburb needs these services. So for the point of view of urban development, the Venn diagram is true.

That diagram is for a city or town. Middle - of - nowhere - where - your - neighbour - is - beyond - shotgun - range is irrelevant to development.

[lio45]

Originally Posted by 1overcosc

All 3 can exist in a scenario where there's little to no services at all. The most rural areas of Eastern Ontario have no water/sewer, no curbside garbage pickup, volunteer fire, roads off the main road are private lanes where residents have to do their own snowclearing, etc.

Of course only rural areas can function that way; a suburb needs these services. So for the point of view of urban development, the Venn diagram is true.

As you kind of admitted in your own post, that’s not “all three”, that’s “only the bottom-right two”.

Taking your nitpicking into consideration, the diagram for the top left should simply say “I want decent services” and for the intersection of bottom and right, “no or almost no services” rather than use the word “cut”.

(Still the same idea, and as true as always…)

[1overcosc]

Originally Posted by lio45

Taking your nitpicking into consideration, the diagram for the top left should simply say “I want decent services” and for the intersection of bottom and right, “no or almost no services” rather than use the word “cut”.

(Still the same idea, and as true as always…)

True, my whole thing is cancelled out by this one small change

[SignalHillHiker]

This one on my former street is a bit of a fixer-upper It was ruined the entire near-decade I lived there.



Meanwhile, across the backyard from that place, the price goes up a lot for something livable

[Nashe]

Originally Posted by SignalHillHiker

This one on my former street is a bit of a fixer-upper It was ruined the entire near-decade I lived there.



Meanwhile, across the backyard from that place, the price goes up a lot for something livable

"Edwina, luv... you's any relation to da Corina what is sellin' odder house?"

[SignalHillHiker]

Originally Posted by Vorkuta

"Edwina, luv... you's any relation to da Corina what is sellin' odder house?"

Close. Women that age would probably refer to each other as "maid" instead of "love"; the former is more intimate. I don't think we do the "person what is" here, but maybe. I have encountered people who never use 'him/her' but always say 'he/she'. ("You going with she?" etc.). My fave ever was meeting my cousin's fiance's relatives or something, I don't even remember the circumstances, but it was in Grand Bank and when we showed up buddy at the door called back to the people in the house, "Scott and theys are here!"

[Wigs]

Thank goodness Niagara (like all of southern Ontario) is cooling down!
gone are the days of asking practically whatever you want, bidding wars, and houses selling in less than a week.

Meanwhile, my best friend in Buffalo/Western NY just bought a house (small bungalow on a nice lot with no rear neighbours/trees in the back) in the eastern suburbs of Buffalo for $150k USD, a whopping $210 CAD

Welcome home to your cozy, well maintained ranch... All you need to do is move in and enjoy your fully fenced yard, beautiful concrete patio, and brand new floating deck. No rear neighbors! Beautiful open kitchen with tile backsplash and large pantry. Newer kitchen appliances, washer and dryer 2021, all included. Numerous updates to the home including refinished wood floors and custom pine molding throughout. Updated bathroom includes new tile floor and tile bath surround. New A/C 2020, new hot water tank 2021, newer furnace 2016. New front door and storm door 2021. Playset and shed included. Close to many amenities!

[lio45]

I never had to think about how a personal residence is treated tax-wise in the US but someone on this forum recently was talking about the net after-taxes gains from selling it, driving home that here in Canada we have made real estate a special, tax-favored asset class, to the detriment of other more productive investments (don’t wonder why we’re lagging behind the Americans there).

As long as all profits made on flipping residential real estate are entirely tax-free (unless you failed to have your mail sent there for 366 days, but who’s stupid enough for that?) don’t expect this particular investment sector to stop being artificially boosted by this super advantageous taxation.

[lio45]

Just noticed, upon reflecting on the fact that of course someone123 would be among those who’d back me up with my post above, that he’s been MIA for two weeks now, which is AFAIK unprecedented and worrying; hope he’s all right :/

[WarrenC12]

Originally Posted by lio45

I never had to think about how a personal residence is treated tax-wise in the US but someone on this forum recently was talking about the net after-taxes gains from selling it, driving home that here in Canada we have made real estate a special, tax-favored asset class, to the detriment of other more productive investments (don’t wonder why we’re lagging behind the Americans there).

As long as all profits made on flipping residential real estate are entirely tax-free (unless you failed to have your mail sent there for 366 days, but who’s stupid enough for that?) don’t expect this particular investment sector to stop being artificially boosted by this super advantageous taxation.

Well, Americans are allowed tax deductions on mortgage interest (and other expenses I believe) for their primary residence. So, there are tax advantages in buying giant homes, and it favors the rich, as they can get the biggest advantages.

Both countries wanted to encourage home ownership. It's hard to compare.

In our system we've made home ownership part of peoples' retirement plans. It's difficult to unwind it all fairly (and politically it's basically impossible).

[casper]

Originally Posted by WarrenC12

Well, Americans are allowed tax deductions on mortgage interest (and other expenses I believe) for their primary residence. So, there are tax advantages in buying giant homes, and it favors the rich, as they can get the biggest advantages.

Both countries wanted to encourage home ownership. It's hard to compare.

In our system we've made home ownership part of peoples' retirement plans. It's difficult to unwind it all fairly (and politically it's basically impossible).

I don't think it is deliberate and it certainly is not uniform across the country. We just have a large number of people who have lucked out on real estate due to the geography of Vancouver and Toronto.

[Wigs]

lio,
the downside to Canada's real estate as investment vehicle and retirement nest egg is that you get scenarios like when shoddily built new vinyl houses in Welland were asking $1M!
glad that period is over for now.

Also we screwed over a huge chunk of Gen Z (and younger) from home ownership unless they're willing to move to less desirable areas, live in tiny condos, have privilege in receiving a fat downpayment from their parents, or inherit the family home.

[SignalHillHiker]

A lot will receive a nice down payment from their parents. But many won't have that privilege.

I think we just need some sort of formal recognition of rental payment history in lieu of down payment. Doesn't address the high prices, but does ensure that people who are paying $1,300 for a one-bedroom apartment in St. John's and can't save a down payment will be eligible for a mortgage of $895 on their own home

[Wigs]

Originally Posted by SignalHillHiker

A lot will receive a nice down payment from their parents. But many won't have that privilege.

I think we just need some sort of formal recognition of rental payment history in lieu of down payment. Doesn't address the high prices, but does ensure that people who are paying $1,300 for a one-bedroom apartment in St. John's and can't save a down payment will be eligible for a mortgage of $895 on their own home

It's quite nonsensical that people can afford and are essentially stuck in ridiculously priced rentals for years if not forever, but then go to a bank and can't get approved for a mortgage when the mortgage payments are way less, like your example!

Capitalism f**** over the hard working and lower middle class at every turn.

Where's George Bailey and his Savings and Loan bank when ya need 'em!

[thebasketballgeek]

As an actual Gen Z user here it is true that older generations have “screwed” us out of homeownership. However, I personally would prefer renting because it doesn’t tie me down to one location and in most cases is generally cheaper and requires far less risk then homeownership.

Homeownership is not even supposed to be an investment tool in the first place, and if the Canada wakes up and starts treating housing like a commodity (ala Japan) then there’s no point in having that depreciating asset in the first place. It’s never the house itself that appreciates rather the land the house occupies.

Also, if I were ever to go the homeownership path that requires probably setting up camp at the edge of the city or a suburban commuter town too make it a viability. This is the trap that a lot of Gen X fell for. Those single-family houses that are all over Canadian inner cities will NEVER be affordable unless they are completely dilapidated. The land is simply too valuable and the appropriate land use would be a higher density type of housing anyway.

Once I start a family if I had too make the choice between settling in a walkable neighbourhood with schools, groceries, and parks within walking distance but the caveat of living in a smaller dwelling. Or a 2500 sq ft house at some edge of city sprawl wasteland I’d much prefer the first option.

[whatnext]

Originally Posted by WarrenC12

Well, Americans are allowed tax deductions on mortgage interest (and other expenses I believe) for their primary residence. So, there are tax advantages in buying giant homes, and it favors the rich, as they can get the biggest advantages.

Both countries wanted to encourage home ownership. It's hard to compare.

In our system we've made home ownership part of peoples' retirement plans. It's difficult to unwind it all fairly (and politically it's basically impossible).

There was a CBC Vancouver piece not long ago on a local female renter who had been forced to move 7 times (unit sold, landlord’s family moving in). She pointed out that government wares way too much resources on helping “first time home buyers”. If they can afford to buy already do they need more help than renters? She pointed out the current emphasis means the poor will never get ahead.

It’s time governments go full throttle into increasing the supply of clean affordable rentals. Why doesn’t CMHC concentrate on that instead of making the Big Banks life easier by insuring mortgages?

[swimmer_spe]

Originally Posted by SignalHillHiker

A lot will receive a nice down payment from their parents. But many won't have that privilege.

I think we just need some sort of formal recognition of rental payment history in lieu of down payment. Doesn't address the high prices, but does ensure that people who are paying $1,300 for a one-bedroom apartment in St. John's and can't save a down payment will be eligible for a mortgage of $895 on their own home

The problem is no down payment mortgages leave banks vulnerable to larger losses. However, maybe some sort of approval should be available for those that have shown a certain length of time as a renter.

[casper]

Originally Posted by swimmer_spe

The problem is no down payment mortgages leave banks vulnerable to larger losses. However, maybe some sort of approval should be available for those that have shown a certain length of time as a renter.

Best option would be to expand what can be borrowed from an RRSP for a first time home buyer.

[yaletown_fella]

The median price in Niagara is still $200,000 higher than its January 2020 pre covid bubble price.

Hopefully the BOC is actually serious about tightening and ditches the dual mandate. There were periods in the 90s and early 2000s when Canada had a much higher key interest rate than the US and the country did just fine.