Canada's 'housing bubble' deemed close to bursting

[swimmer_spe]

Originally Posted by thurmas

I would describe ours more as a layer cake of multiple — flavors creating a confluence of — that will leave us all heading to the toilet when we are done eating this real estate desert gone bad.

As we peal back the layers, they get stinkier and stinkier.

Originally Posted by whatnext

Can one get Kosher mortgage as well?

Maybe, but not the tip.

Originally Posted by Truenorth00

Islamic finance is substantially based on collateral than credit. Risk of default is lower.

Would that be a better way of doing things?

[Coldrsx]

Interesting reaction to the new foreign buyers ban here in Canmore for you can still buy in the smaller communities just east and even west in Banff (need to reside).

There are constitutional challenges forthcoming given that land ownership is a provincial jurisdiction and there are also many ways around things if you wish.

[swimmer_spe]

Originally Posted by Coldrsx

Interesting reaction to the new foreign buyers ban here in Canmore for you can still buy in the smaller communities just east and even west in Banff (need to reside).

There are constitutional challenges forthcoming given that land ownership is a provincial jurisdiction and there are also many ways around things if you wish.

Does this mean that the recent law that AB put in place can finally get a test?

[Coldrsx]

There are a few folks looking into it, yes.

Perhaps a little less controversial than oil or —.

[lio45]

Danielle Smith likes the idea of unrolling the red carpet for BCMLs, or is it just a baser TDS reaction (see what Trudeau wants to do, and whatever it is, adopt the diametrically opposite position)…?

[MonkeyRonin]

At least the provinces seem to be pushing back at the disconnect between federal immigration policy & our ability to provide enough housing:

B.C. housing minister calls on Ottawa to tie housing funding to immigrant arrivals

By Richard Zussman  Global News
Posted January 3, 2023 4:42 pm

B.C. Housing Minister Ravi Kahlon is calling on Ottawa to tie housing funding directly to the number of immigrants moving to each province.

On Tuesday, the federal government announced a record 431,645 permanent residents immigrated to Canada last year.

...

A significant increase in needed immigration has put additional pressure on housing and healthcare.

The time has come for the federal government to actually tie immigration numbers to affordable housing targets and as well as new housing starts so we can ensure the people here have the supports for healthcare and housing, and new immigrants are supported as well,” Kahlon said.

“We know how big a challenge this is in communities across the province.”

The federal government currently does not provide specific financial support to provinces based on how many people arrive in a province.

https://globalnews.ca/news/9385437/b-c-h...e-housing-funding-to-immigrant-arrivals/

[casper]

Originally Posted by swimmer_spe

Does this mean that the recent law that AB put in place can finally get a test?

Were the feds ever planning to even enforce that law in the first place? Or was this simply enabling a tool that the provinces could use.

The land registry and realtor professional standards are provincially administered. They are the people who would detect a controvention.

The feds basically don't have any real information on real-estate transactions.

[Truenorth00]

From a realtor in the GTA, data for Toronto:

The number of active listings (+169%) and property days on market (PDOM 110.5%) tell a story… the story that properties aren’t moving.
Yes, new supply isn’t coming on but how about the old supply just sitting?

https://twitter.com/agentgina1/status/1610985406123720707?t=iMW2G76ems8R23pM7A01jQ&s=19

She's actually an honest one who doesn't do business with investors and has campaigned for affordable housing. In case anybody is wondering why she's cheering on the crash.

Based on the above data, and the fact that a record 32000 condos are going to be finished this year, 2023 is going to be absolutely wild in the Toronto housing market. There's rumors that a lot of preconstruction flippers, especially in the condo space, are Realtors.

[Truenorth00]

Shot:

Canada in the middle of the pack for exposure to variable rate mortgages

https://twitter.com/jesse_kleine/status/1610300242288865280?t=gIrk9fqiIiKpZ4mYdqs14g&s=19

Chaser:

Inside Sweden’s collapsing housing market – and how Britain could be next

Swedish house prices are falling at the fastest rate in the world as high interest rates destroy the pandemic property boom.

This autumn, mainstream house prices in Sweden have fallen by 14pc since their 2022 market peak, according to Knight Frank. This was the biggest drop in any of the 56 countries tracked by the estate agent.

In December, the state-owned lender SBAB recorded a 17pc house price drop since the spring. And experts say it could be a sign of things to come in the UK.

....

Oxford Economics, an analyst, has forecast that prices in Sweden will fall by 20pc – one of the biggest drops in the world, and much larger than the 12pc drop it expects in Britain. The Swedish forecast is second only to Canada’s, where Oxford Economics has forecast a 30pc peak-to-trough fall, but the remarkable thing about Sweden is the speed of change.

....

Sweden is particularly exposed to the blow of high rates for three reasons, Mr Kral said.

First, it has extremely high levels of household debt – at 203pc of net disposable income, according to the OECD. In Britain, the figure in 2021 was 148pc - but this was still the 11th highest total in the OECD.

Second, the majority of mortgages in Sweden are on short-term fixed-rate or variable rate deals, meaning higher interest rates filter through very quickly into higher costs for homeowners.

More than half of mortgages issued in Sweden are on variable rates, compared to just 8pc in the UK, OECD data shows.

“Around 60pc of homeowners have a mortgage and 50pc of them will need to refinance this year. That will be a huge hit,” Mr Kral said.

This is because interest rates were falling in Sweden for so long after the financial crisis. “When rates are going down it makes sense to refinance frequently. The setup was for a really different macroeconomic situation,” Mr Kral said.

At the same time, the Swedish Government offers very little protection. “There is very limited fiscal support in Sweden because the Government doesn’t want to stoke inflation. Sweden has the lowest level of fiscal support by GDP in Europe,” Mr Kral said.
....

https://www.telegraph.co.uk/property/hou...apsing-housing-market-how-britain-could/

[lio45]

Originally Posted by MonkeyRonin

At least the provinces seem to be pushing back at the disconnect between federal immigration policy & our ability to provide enough housing:





https://globalnews.ca/news/9385437/b-c-h...e-housing-funding-to-immigrant-arrivals/

I confess I’d get a kick out of dleung’s temper tantrum if the program is designed so that all the immigrants “supposed” to go to Quebec translate into extra federal funding for Quebec, while in reality, they later end up moving to Vancouver

[dreambrother808]

Originally Posted by lio45

I confess I’d get a kick out of dleung’s temper tantrum if the program is designed so that all the immigrants “supposed” to go to Quebec translate into extra federal funding for Quebec, while in reality, they later end up moving to Vancouver

Just what the country needs, more reasons to resent each other, rather than building just and equitable relationships.

[lio45]

Originally Posted by dreambrother808

Just what the country needs, more reasons to resent each other, rather than building just and equitable relationships.

I think the policy floated in MonkeyRonin’s quote is a bad idea, the best way is the opposite IMO: we can’t force immigrants to spread to other places within the country, but the closest we can come to it is by leaving them to their own devices and letting them be miserable if they insist on cramming in overpriced urban TO/Van housing like it’s the only livable location that exists in the entire country.

[swimmer_spe]

Originally Posted by casper

Were the feds ever planning to even enforce that law in the first place? Or was this simply enabling a tool that the provinces could use.

The land registry and realtor professional standards are provincially administered. They are the people who would detect a controvention.

The feds basically don't have any real information on real-estate transactions.

I meant the AB law that says the province can just ignore federal laws if they do not agree with them.

[yaletown_fella]

Originally Posted by wg_flamip

There's this misconception that the Greenbelt starts right at the edge of the GTA's suburban fringe. In reality, there are vast tracks of undeveloped and unprotected "white belt" lands between the two that could absorb growth for years (even decades) before the Greenbelt is opened up to development.

There's also a misconception that large developers want to build as much as possible as quickly as possible, and that governments, their NIMBY backers and malicious heritage/environmental protectionists are to blame for the housing crisis. Private developers have no incentive to flood the market and reduce the value of their product and are therefore sitting on thousands upon thousands of approved yet unbuilt units.

Thats only because of the easy money policy of the last 14 years.

The elephant in the room is the bad monetary policy has made it lucrative for developers to flip land while building nothing. If there was no artificially induced land appreciation, then the burden of the carrying costs would push incentives towards building more units.

This is why, before 2008, the ratio of homes&condos to number of permanent residents was so much higher.

Land values outside of a major growing city should never actually be rising on their own. Thats purely the result of the cheap money era. Yet the whole real estate lobby has brainwashed people into thinking that the land their house is built on should intrinsically appreciate faster than the broader stock market index or any reinvested dividend stock or REIT. It's partially because many of the people pushing this narrative havent been working in the industry before the stupid money era.

I respected Canada in the 90s for sticking to our — and not slashing interest rates like the US was. Yes , exports may suffer in the short term if we did this now, but it would be better for society overall in the long term.

[rbt]

Originally Posted by Truenorth00

... There's rumors that a lot of preconstruction flippers, especially in the condo space, are Realtors.

This is true.

If you get into flipping, and are not a Realtor, you quickly realize for 6 months OREA courses you can nearly double your profit by reducing Realtor listing fees and collecting the developer commissions yourself. This group is more investor and less Realtor; they may never have a client other than themselves.


If you are a Realtor with many clients who have expressed interest in a certain building, and have cash on hand, you can lock-in commissions on high value buildings by submitting signing the AP&S yourself and selling that contract later. A sold-out building does not pay commissions. Reliably buying 4 or 5 units also gets noticed by developers who will offer you first crack at the nicer units.

Many times these units are sold at cost (contract price) just to guarantee the 3% commission, but the clever ones get them assigned to clients within days of purchasing the unit in their name. So they're only making a 5% deposit for a week or two as the client pays the rest of the deposit structure. These Realtors typically negotiate free-assignment from the developer instead of trying to cap closing costs or asking for free upgrades. Developers often restrict public MLS listings but they do not restrict direct contacts.

[thebasketballgeek]

Originally Posted by yaletown_fella

Thats only because of the easy money policy of the last 14 years.

The elephant in the room is the bad monetary policy has made it lucrative for developers to flip land while building nothing. If there was no artificially induced land appreciation, then the burden of the carrying costs would push incentives towards building more units.

This is why, before 2008, the ratio of homes&condos to number of permanent residents was so much higher.

Land values outside of a major growing city should never actually be rising on their own. Thats purely the result of the cheap money era. Yet the whole real estate lobby has brainwashed people into thinking that the land their house is built on should intrinsically appreciate faster than the broader stock market index or any reinvested dividend stock or REIT. It's partially because many of the people pushing this narrative havent been working in the industry before the stupid money era.

I respected Canada in the 90s for sticking to our — and not slashing interest rates like the US was. Yes , exports may suffer in the short term if we did this now, but it would be better for society overall in the long term.

Bingo. I remember there used to be a very famous saying that actually held credibility before this housing craze.

I think it was something to the effect of “location, location, and location.” Now with home prices declining substantially throughout the whole GTA. And condo prices in Toronto, while overvalued, haven’t fluctuated as much because at the end of the day living in Downtown Toronto is highly desirable with more logical reasoning.

[Truenorth00]

There's 32 000 condos about to come online in Toronto this year. And there's rumours that the majority are owned by specuvestors under water. I think you're going to see Toronto condo prices drop substantially.

[thebasketballgeek]

Originally Posted by Truenorth00

There's 32 000 condos about to come online in Toronto this year. And there's rumours that the majority are owned by specuvestors under water. I think you're going to see Toronto condo prices drop substantially.

Yea I would tend to agree with that. My point was that house prices in places like Brampton and Sauga are going to drop much faster and more intensely then house prices in Toronto because of location.

It’ll be interesting though to see what house prices will look like even by the end of this year.

[whatnext]

With the release of low unemployment figures today, it’s clear interest rates won’t be headed down anytime soon.

[yaletown_fella]

Originally Posted by whatnext

With the release of low unemployment figures today, it’s clear interest rates won’t be headed down anytime soon.

I hope you're right but I dont trust the BOC. All theyve done for the past 15 years is paper over short terms problems , and 'you cant teach an old dog new tricks'