Canada's 'housing bubble' deemed close to bursting

[whatnext]

Originally Posted by Coldrsx

I don't disagree - Paris, London, NYC, Tokyo, HK come to mind, but Vancouver's $/sqft for residential is pushing more towards that.

Only Vancouver doesn't have anywhere near the economic or government activity of those major centres. I wonder what could be behind that when it is seemingly disconnected from local conditions? Anyone, anyone, Bueller, Bueller...?

[lio45]

It is the China-facing gateway of the only First World country that allows money laundering so easily. (I know you know it and your question was rhetorical.)

As I’ve always said, if China didn’t exist and it were instead Ireland that had all the billionaires needing to take their money out of the country, it would be St. John’s right now where a modest 1950s bungalow would cost several million dollars.

[lio45]

Originally Posted by Wigs

that's a bit different than sub 300 or sub 200! sq ft "units"

As someone that once lived in a micro (sub 400 sq ft) apartment thankfully new with huge windows, I'd say a single person in Canada needs at least ~550-600 sq ft minimum!

I mostly live nowadays in a pretty tiny apt, probably as small or smaller than your micro-unit, but the big difference is that I am doing it willingly, and I’m not stuck there — it’s not all I can hope to have unless I move to another place.

As I mentioned already, my rent in Vancouver while I was there was about $3,000 a month; I would have saved $13,000 by renting that $850 cell instead. I was nearly always at our factory, I used that $3,000 apt just to sleep. The savings would have made the cupboard-under-the-stairs worth it.

[Truenorth00]

It's beginning....

A lot of people have asked me for this chart.

TRREB saw 26 listings containing "power of sale" in the vendor name in December. It's not a big number, but as you can see below, it's a meaningful deviation from the previous trend.

At this rate Q1 & Q2 2023 will be pretty ugly.

https://twitter.com/daniel_foch/status/1606865049095753729?s=20&t=XVvg4QPhLfT8-Q1zrW2LzA

We haven't even gotten to the bulk of 5 yr fixed rolling over....

[swimmer_spe]

Originally Posted by Truenorth00

It's beginning....



https://twitter.com/daniel_foch/status/1606865049095753729?s=20&t=XVvg4QPhLfT8-Q1zrW2LzA

We haven't even gotten to the bulk of 5 yr fixed rolling over....

That will be for the next 2-3 years.

[lio45]

Florida is bubblier than Quebec at the moment but I am somewhat confident that the fact that Americans have their interest rates locked for the entire duration of their mortgages (unlike us here) (a concept I found really interesting when I discovered it …) will prevent a sharper correction caused by a glut of listings from people all unable to renew their mortgages.

If I had any TO/Van RE, I’d have exited as soon as the rates started to go up (last summer, more or less). Those bubbles were unsustainable unless money continued to be essentially free, it was easy to see the writing on the wall.

[Truenorth00]

Originally Posted by lio45

If I had any TO/Van RE, I’d have exited as soon as the rates started to go up (last summer, more or less). Those bubbles were unsustainable unless money continued to be essentially free.

The stories on how much mortgage payments are going up are just insane. I don't know how these people sleep at night.

https://www.reddit.com/r/PersonalFinance...uch_more_are_you_paying_in_mortgage_now/

[lio45]

Originally Posted by Truenorth00

The stories on how much mortgage payments are going up are just insane. I don't know how these people sleep at night.

https://www.reddit.com/r/PersonalFinance...uch_more_are_you_paying_in_mortgage_now/

It sucks for these people, sincerely, but, they totally are to blame — they bought properties at prices that, at absolutely unprecedented and completely ahistorical nearzero interest rates, already had the absolute maximum monthly payments they could afford. What the hell where they thinking?!?!?!?

The shortsightedness is almost similar to someone buying a home in Quebec during a rare January heatwave, and seeing that it was +8C on that day, decides they’re okay with having no heating nor insulation.

[WarrenC12]

It would be nice if that Power of Sale chart went back to at least the last recession or two.

[lio45]

Originally Posted by WarrenC12

It would be nice if that Power of Sale chart went back to at least the last recession or two.

I agree, I don’t like how it starts during the most drastic part of the Covid lockdowns, when nearly all aspects of society were on pause for a few months — making it look like it’s starting from a “normal” baseline of zero, when it’s not the case.

[WarrenC12]

Originally Posted by lio45

I agree, I don’t like how it starts during the most drastic part of the Covid lockdowns, when nearly all aspects of society were on pause for a few months — making it look like it’s starting from a “normal” baseline of zero, when it’s not the case.

Yeah, the numbers go from 0 to 25, which is just a rounding error on Toronto RE volume.

[Truenorth00]

The banks are booking higher loan loss margins. OSFI is mandating higher capital reserves and even demanding higher qualifications for alternative lenders today. Scotia came out the other day and said they think up to 2.5% of their borrowers could be in trouble. I don't think all the suits are panicking and tightening because they think everything is fine.

[WarrenC12]

Originally Posted by Truenorth00

The banks are booking higher loan loss margins. OSFI is mandating higher capital reserves and even demanding higher qualifications for alternative lenders today. Scotia came out the other day and said they think up to 2.5% of their borrowers could be in trouble. I don't think all the suits are panicking and tightening because they think everything is fine.

They are signaling to the government to prepare for a bailout.

I don't doubt that some homeowners will be in trouble, but this period is shaping up to be a bit unique, as the jobs market is still very strong. People will go to great lengths to keep their home, and they will be able to if they have a job (or get a 2nd one, or whatever).

Death and Divorce will always make sure some homes get put up for court ordered sale.

It's also in the banks' best interest that people keep making payments. They'll want the Feds to allow longer mortgages, re-amortizations, etc.

[someone123]

Originally Posted by lio45

It sucks for these people, sincerely, but, they totally are to blame — they bought properties at prices that, at absolutely unprecedented and completely ahistorical nearzero interest rates, already had the absolute maximum monthly payments they could afford. What the hell where they thinking?!?!?!?

It is complicated. It would be great if everybody were knowledgeable about that stuff but all humans are emotional sometimes ("I have to buy now or I'll never be able to buy a place to have a family") and it can be hard to see who does or doesn't represent your interests, with banks and real estate agents preying on that attitude. I have spoken to quite a few people who think the bank is a good place to go for advice, whether it's how much mortgage to get (great time to buy, let's see how much you qualify for) or what investments to make (look at how much our mutual fund went up).

The mean IQ in Canada is 100 or so and the standard deviation is 15. There are a lot of average-ish people out there who get by okay in their day to day but aren't necessarily equipped to deal with this stuff and it makes sense to put in guardrails. BC implemented a 3 day cooling off period and that's probably a step in the right direction.

More fundamentally we should be aiming for sane markets in Canada in the long run. Not housing that goes up to nosebleed levels over a decade or more and then tanks. Some people like volatility as it provides investment opportunities but I don't think it's actually good for society.

[goodgrowth]

What's Tiff Macklem's IQ I wonder...?

• Video Link

[MonkeyRonin]

Originally Posted by Wigs

As someone that once lived in a micro (sub 400 sq ft) apartment thankfully new with huge windows, I'd say a single person in Canada needs at least ~550-600 sq ft minimum!

It really depends how well the space is used. I've lived alone in a couple 400-450 sqft units with good floorplans and never felt cramped or like the size impeded my lifestyle. There's a great architecture channel on YouTube that's dedicated to small space living, which also features a bunch of beautiful & very livable homes under 500 sqft: https://www.youtube.com/@nevertoosmall. I'd happily take any one of these places!

On the other hand, most of the <500 sqft condo units I've seen on the market here either have terrible floorplans with too much wasted space, or are just uncomfortably (like, under 300 sqft) small. I've been keeping an eye on Toronto real estate listings and I've actually been seeing a lot of micro/studio apartments on the market lately. Most are still asking in the $500,000 range; but I think the owners will be in for a rude awakening when they find out that no one other than investors are willing to shell out half a million to actually live in a place like this:


https://www.realtor.ca/real-estate/25142442/1004-58-orchard-view-blvd-toronto-yonge-eglinton


Or this one, which is literally just a hallway with a kitchen & a bathroom: (the "148 days on the market" should be a good indicator of how many people are willing to pay nearly half a million for something like this!)




https://www.realtor.ca/real-estate/24774621/509-1-belsize-dr-toronto-mount-pleasant-east

[Coldrsx]

^bingo!

Also, not all at once folks, but...

https://why.edmonton.ca/

[yaletown_fella]

Thats a shit kitchen layout with zero counter space. Hate those pathetic little refrigerators. The fomo buyers paying a premium for this junk are jokers.

Give me the outdated 1997-2007 kitchen over this, any day of the week.

[Wigs]

Originally Posted by yaletown_fella

Thats a shit kitchen layout with zero counter space. Hate those pathetic little refrigerators. The fomo buyers paying a premium for this junk are jokers.

Give me the outdated 1997-2007 kitchen over this, any day of the week.

I can't see anyone besides a college/university student with wealthy parents living in this

[MonkeyRonin]

Originally Posted by yaletown_fella

Thats a shit kitchen layout with zero counter space. Hate those pathetic little refrigerators. The fomo buyers paying a premium for this junk are jokers.

Give me the outdated 1997-2007 kitchen over this, any day of the week.

The kitchen is the least of my concerns considering you can't even fit a bed in there. (seriously...the room looks to be about 7' wide x 12' long)

The kitchen at least seems functional enough at least, if a bit on the small side. I don't see anything wrong with that fridge though - it actually looks identical to the 24" one I've got. Which, even for two people is plenty unless you're buying things in bulk.

Originally Posted by Wigs

I can't see anyone besides a college/university student with wealthy parents living in this

I can't see anyone living in this - speculators & Airbnb hosts are obviously the target demographic. It's for use as physical Bitcoin moreso than an actual place to live.