Canada's 'housing bubble' deemed close to bursting

[Truenorth00]

We'll see more inventory in a few months. All those Airbnb "investors" and all the real estate amateurs who didn't understand cap rates will eventually capitulate.

[swimmer_spe]

Originally Posted by Truenorth00

We'll see more inventory in a few months. All those Airbnb "investors" and all the real estate amateurs who didn't understand cap rates will eventually capitulate.

Can you say that in laymans terms?

[Truenorth00]

Originally Posted by swimmer_spe

Can you say that in laymans terms?

Many of these people call themselves "investors". In reality they were speculators swallowing negative cash flow (expenses > income) on those properties hoping for a payout when they sell.

Now the interest rates are going up and the negative cash flow is getting to be more than they can handle. And for the Airbnb crowd, there's also the risk of a recession reducing income even further. Eventually, some will be forced to sell. And when they start selling, you will start seeing prices declining. Every lower sale sets a new comparable that only devalues everything else around it.

[swimmer_spe]

Originally Posted by Truenorth00

Many of these people call themselves "investors". In reality they were speculators swallowing negative cash flow (expenses > income) on those properties hoping for a payout when they sell.

Now the interest rates are going up and the negative cash flow is getting to be more than they can handle. And for the Airbnb crowd, there's also the risk of a recession reducing income even further. Eventually, some will be forced to sell. And when they start selling, you will start seeing prices declining. Every lower sale sets a new comparable that only devalues everything else around it.

Or, they turn that AirBnB back to a traditional rental apartment.

[thebasketballgeek]

Originally Posted by swimmer_spe

Or, they turn that AirBnB back to a traditional rental apartment.

Even that would be beneficial because it lowers the massive pressure faced by the rental market these days.

[lio45]

Originally Posted by swimmer_spe

Can you say that in laymans terms?

Honestly, anyone who’s at a loss at Truenorth’s extremely basic post is unlikely to ever have something worth contributing to this specific thread

It’s like if a SSPer in the Foreign Affairs thread started asking what “Russia” and what “Ukraine” are. Not exactly going to be a Truenorth-caliber contributor on the subject of that war

[lio45]

BTW, rents are at all-time highs in my neck of the woods, and show no signs of wanting to deflate, which helps investment real estate stay near its all-time highs despite rising interest rates.

[hipster duck]

Originally Posted by MonkeyRonin

Funny things happening in Toronto's real estate market: only 289 condo units and 45 houses sold in September 2022 - down 89% and 96% respectively from September 2021. Yet average prices are up 11.8% for condos (now sitting at a very reasonable $1,159,455) and 17.8% for houses.

https://www.blogto.com/real-estate-toronto/2022/10/toronto-home-sales-are-tanking-experts-worried/

Something about BILD's stats (the one quoted in the BlogTO post) doesn't seem right.

I'm looking at competing data and I don't see the same trends/figures at all.

TRREB: transaction volumes more like ~5,000 than ~300; prices down. This is for Greater Toronto, but even if BILD's data is just for the City, that would still be about half of all sales volumes.

MLS (you can download the .xls file): Both seasonally and non-seasonally adjusted prices across all housing types are down between August and September

It's worth mentioning that the MLS house price index regresses sale prices on a home's features, like square footage and number of bedrooms, etc., so it should - to some extent - control for wild swings in monthly prices due to overwhelmingly luxury products hitting the market.

TeraNet August-September prices down ~3%

I also checked HouseSigma, filtering for all homes sold in the past 30 days, and I get hundreds of listings for the City alone.


---

Knowing BlogTO, I bet they misquoted BILD's stats and didn't bother to fact check.

[whatnext]

Originally Posted by Truenorth00

We'll see more inventory in a few months. All those Airbnb "investors" and all the real estate amateurs who didn't understand cap rates will eventually capitulate.

To some degree they'll be bailed out by quickly rising rental rates in the big cities.

[swimmer_spe]

Originally Posted by thebasketballgeek

Even that would be beneficial because it lowers the massive pressure faced by the rental market these days.

Which was the case before most became an AirBnB.

Originally Posted by lio45

Honestly, anyone who’s at a loss at Truenorth’s extremely basic post is unlikely to ever have something worth contributing to this specific thread

It’s like if a SSPer in the Foreign Affairs thread started asking what “Russia” and what “Ukraine” are. Not exactly going to be a Truenorth-caliber contributor on the subject of that war

Some days my brain refuses to make sense. So, it is at that point where I need it said to me as though I am a 5 year old. He did a great job doing just that.

[whatnext]

I can't remember if this has been posted here before. US vs Canada housing prices:

FgbbleiaYAEfzvQ by bcborn, on Flickr

Credit: Martin Pelletier on Twitter
https://twitter.com/MPelletierCIO/status/1587197696053776384

[thurmas]

Originally Posted by whatnext

I can't remember if this has been posted here before. US vs Canada housing prices:

FgbbleiaYAEfzvQ by bcborn, on Flickr

Credit: Martin Pelletier on Twitter
https://twitter.com/MPelletierCIO/status/1587197696053776384

I believe Poilievre has under justinflation

[whatnext]

Originally Posted by thurmas

I believe Poilievre has under justinflation

An awful lot of that occurred when it would have been Harperinflation.

[Wigs]

Originally Posted by lio45

Honestly, anyone who’s at a loss at Truenorth’s extremely basic post is unlikely to ever have something worth contributing to this specific thread

It’s like if a SSPer in the Foreign Affairs thread started asking what “Russia” and what “Ukraine” are. Not exactly going to be a Truenorth-caliber contributor on the subject of that war

And yet this added nothing to the conversation... other than to apparently belittle a fellow forumer.

Last I checked asking questions is how humans understand things.

[whatnext]

Have no fear, Justin Trudeau and the Liberals have a plan to prop up housing prices and keep it out of reach of working Canadians:

Ottawa reveals plan to welcome 500,000 immigrants per year by 2025

[goodgrowth]

Originally Posted by whatnext

Have no fear, Justin Trudeau and the Liberals have a plan to prop up housing prices and keep it out of reach of working Canadians:

Ottawa reveals plan to welcome 500,000 immigrants per year by 2025

Interesting that the party which screams about populism doubles down on the main accelerant. The economics of 10 people crammed to a house to keep the food service industry afloat...I kidddd

But seriously municipalities will have to become much adaptive to handle this. Can't have endless discussions and studies and focus groups and on and on for urban planning anymore.

[whatnext]

Originally Posted by goodgrowth

Interesting that the party which screams about populism doubles down on the main accelerant. The economics of 10 people crammed to a house to keep the food service industry afloat...I kidddd

But seriously municipalities will have to become much adaptive to handle this. Can't have endless discussions and studies and focus groups and on and on for urban planning anymore.

But haven't you heard, it's a Supply problem, not a Demand problem...

[WarrenC12]

Originally Posted by whatnext

But haven't you heard, it's a Supply problem, not a Demand problem...

Are you trying to be sarcastic, or do you really not understand that supply and demand are linked?

[whatnext]

Originally Posted by WarrenC12

Are you trying to be sarcastic, or do you really not understand that supply and demand are linked?

LOL, it is the YIMBY wokesters apparently don't understand that Demand is half of that equation.

[casper]

Originally Posted by whatnext

But haven't you heard, it's a Supply problem, not a Demand problem...

Hosing starts in Canada are around 277,000 per year. Average number of people per household in Canada is around. 2.5

We should be able to accommodate 682k newcomers per year.