Canada's 'housing bubble' deemed close to bursting

[Wigs]

Originally Posted by Coldrsx

Nope. Housing is actually cheaper there due to the need to reside, although very similar.

I stand corrected.
I guess I forgot of all the Aussies and other TFWs that keep the town and ski lifts/tourism attractions afloat

[swimmer_spe]

Originally Posted by casper

Concerning. Some are predicting the market downturn may last until 2025.

You have to ignore the sensational language calling it a crash and bubble. But otherwise the article looks to have some detailed analysis.

https://betterdwelling.com/canadian-real...until-2025-as-indicator-flashes-warning/

What is wrong with a housing downturn that lasts a few years? Would you rather it drops like a rock in a few months?

[Truenorth00]

Originally Posted by casper

Concerning. Some are predicting the market downturn may last until 2025.

You have to ignore the sensational language calling it a crash and bubble. But otherwise the article looks to have some detailed analysis.

https://betterdwelling.com/canadian-real...until-2025-as-indicator-flashes-warning/

Why is this surprising? I keep saying the same thing only to get shot down here.

We built a massive bubble. And now the bubble will pop because the BoC needs to keep rates up to combat inflation. Our — regulators (OSFI) and government (CMHC, Finance, etc) should have thought about this when the bubble was really inflating in 2021. The correction would have been far less painful. They didn't impose any controls on lending. Now the chickens are coming home to roost.

And since so much of our economy is tied to the financialization of real estate, from the banks to the insurers to the lawyers and realtors, well it's going to be painful.

No sympathies. It was always bad to build an economy on a housing bubble. What a terrible allocation of both human and financial capital. We built an economy where it pays more to take a short real estate course than 4 years of engineering. We deserve the price we're about to pay.

[Truenorth00]

I'll just say too, I see a lot of hopium from people who think the BoC will accept higher inflation. They won't. Accepting 3% instead of 2% means a 50% increase in devaluation annually. They will not accept that.

[Innsertnamehere]

Originally Posted by casper

Concerning. Some are predicting the market downturn may last until 2025.

You have to ignore the sensational language calling it a crash and bubble. But otherwise the article looks to have some detailed analysis.

https://betterdwelling.com/canadian-real...until-2025-as-indicator-flashes-warning/

Better Dwelling is a real estate doomerism website that should just generally be completely ignored.

[Truenorth00]

Originally Posted by Innsertnamehere

Better Dwelling is a real estate doomerism website that should just generally be completely ignored.

I agree they are a doomer site. But they cite their sources and I'd like to see an actual rebuttal to Oxford Economics and RBC than simply saying we should dismiss those predictions because they are in Better Dwelling. It's not Better Dwelling calling the RE bottom in 2025. It's the analysts at RBC. If you think they are wrong, I'd like to hear the rebuttal.

[WarrenC12]

Originally Posted by Truenorth00

I agree they are a doomer site. But they cite their sources and I'd like to see an actual rebuttal to Oxford Economics and RBC than simply saying we should dismiss those predictions because they are in Better Dwelling. It's not Better Dwelling calling the RE bottom in 2025. It's the analysts at RBC. If you think they are wrong, I'd like to hear the rebuttal.

Here's an RBC article that says:

We think this will continue to be the case into the early part of 2023—conditional on the Bank of Canada halting its rate hiking campaign this month.

Now, the bank did hike rates since this article and will probably do another 0.25 next time, but it's hardly 2025.

https://thoughtleadership.rbc.com/housing-market-correction-widespread-across-canada/

TD says prices will rebound in 2024, AKA next year:

https://www.globest.com/2022/10/10/repor...ound-until-2024/?slreturn=20230024162516

Nationally, prices are already down 17%. I can't see that doubling before they start to move back up.

[Truenorth00]

I agree that bottom is probably 2024. That's what Oxford Economics had in the Better Dwelling article too. I'm just not a fan of dismissing views off hand just because somebody doesn't like the message.

[casper]

Originally Posted by Truenorth00

Why is this surprising? I keep saying the same thing only to get shot down here.

We built a massive bubble. And now the bubble will pop because the BoC needs to keep rates up to combat inflation. Our — regulators (OSFI) and government (CMHC, Finance, etc) should have thought about this when the bubble was really inflating in 2021. The correction would have been far less painful. They didn't impose any controls on lending. Now the chickens are coming home to roost.

And since so much of our economy is tied to the financialization of real estate, from the banks to the insurers to the lawyers and realtors, well it's going to be painful.

No sympathies. It was always bad to build an economy on a housing bubble. What a terrible allocation of both human and financial capital. We built an economy where it pays more to take a short real estate course than 4 years of engineering. We deserve the price we're about to pay.

The length of the downturn being predicted here. Some have been predicting the downturn to be over by the end of 2023 or Q1 2024 then the start of a recovery.

I do agree being a realtor should not be the windfall that it has been in some markets.

[casper]

Originally Posted by Truenorth00

I agree they are a doomer site. But they cite their sources and I'd like to see an actual rebuttal to Oxford Economics and RBC than simply saying we should dismiss those predictions because they are in Better Dwelling. It's not Better Dwelling calling the RE bottom in 2025. It's the analysts at RBC. If you think they are wrong, I'd like to hear the rebuttal.

Better Dwelling just started to apear in my social media feed in the last few months. I have no strong opinion on their editorial capability. I shared it because they share sources that do look to be creditable.

[Truenorth00]

A preview from the US..... Sales have tanked. Prices are retreating. Cancellations are skyrocketing beyond 2008 levels. The math is the math. If you can't afford the price because of higher rates or change in employment, you're not buying.

• Video Link

Canada is not going to be immune this time. Last time around, Harper and Flaherty could throw in stimulus, loosen lending standards and extend amortizations to keep the housing market going. This time around the bond market might have a fit if the government does that, given debt levels.

[swimmer_spe]

Originally Posted by Truenorth00

A preview from the US..... Sales have tanked. Prices are retreating. Cancellations are skyrocketing beyond 2008 levels. The math is the math. If you can't afford the price because of higher rates or change in employment, you're not buying.



Canada is not going to be immune this time. Last time around, Harper and Flaherty could throw in stimulus, loosen lending standards and extend amortizations to keep the housing market going. This time around the bond market might have a fit if the government does that, given debt levels.

We will see an exodus out of the big cities if they can get work elsewhere when mortgages are set to renew. We may also see a real recession more so than we did in 2008. Maybe they will finally call it what it is, a depression.

[esquire]

Originally Posted by swimmer_spe

We will see an exodus out of the big cities if they can get work elsewhere when mortgages are set to renew. We may also see a real recession more so than we did in 2008. Maybe they will finally call it what it is, a depression.

"In economics, a depression is commonly defined as an extreme recession that lasts three or more years or which leads to a decline in real gross domestic product (GDP) of at least 10% in a given year."

Are we at that point yet?

[Harrison]

Originally Posted by swimmer_spe

We will see an exodus out of the expensive big cities if they can get work elsewhere when mortgages are set to renew. We may also see a real recession more so than we did in 2008. Maybe they will finally call it what it is, a depression.

Most Canadians can still easily afford to purchase house in Edmonton, Calgary and Winnipeg. There are jobs in all three cities as well, so if someone struggling to afford housing in the GTA or Lower Mainland does not care where they live as long as they can get a job that allows them to afford a home purchase, look to those three major cities.

[suburbanite]

There's still a lot of pain left to come as long as the BoC and feds have the stomach for it. I don't think we're ever going to get to U.S. 2008 levels of bad with our current levels of immigration for the simple fact that we have this backstop of a cash-rich, non interest rate sensitive buying class. The demographic fundamentals in the main bubble markets make it hard for a true reversion of median house prices that are in line with median incomes. That being said that doesn't mean we can't at least wipe out the ridiculous run-up in prices from the last 1-2 years.

Even as a condo owner, I say bring it on. We need a wake up call in some serious introspection into how we see ourselves progressing economically through the 21st century.

[swimmer_spe]

Originally Posted by esquire

"In economics, a depression is commonly defined as an extreme recession that lasts three or more years or which leads to a decline in real gross domestic product (GDP) of at least 10% in a given year."

Are we at that point yet?

Not yet. However, with housing dropping double digits, we could be in the start of one.

Originally Posted by Harrison

Most Canadians can still easily afford to purchase house in Edmonton, Calgary and Winnipeg. There are jobs in all three cities as well, so if someone struggling to afford housing in the GTA or Lower Mainland does not care where they live as long as they can get a job that allows them to afford a home purchase, look to those three major cities.

They have houses for under $200k? That is affordable.

[esquire]

Originally Posted by swimmer_spe

They have houses for under $200k? That is affordable.

It might not be the house of your dreams, but it is definitely possible in Winnipeg!

https://www.realtor.ca/real-estate/25179023/514-daer-boulevard-winnipeg-westwood

https://www.realtor.ca/real-estate/25201547/393-boyd-avenue-winnipeg-north-end#view=neighbourhood

https://www.realtor.ca/real-estate/25192589/592-valour-road-winnipeg-polo-park

https://www.realtor.ca/real-estate/25187773/1398-lincoln-avenue-winnipeg-weston

https://www.realtor.ca/real-estate/25182214/766-college-avenue-winnipeg-north-end

Those are just a few.

Of course, the options expand significantly once you start including townhouses, condos, duplexes, etc. at that price point.

[swimmer_spe]

Originally Posted by esquire

It might not be the house of your dreams, but it is definitely possible in Winnipeg!

https://www.realtor.ca/real-estate/25179023/514-daer-boulevard-winnipeg-westwood

https://www.realtor.ca/real-estate/25201547/393-boyd-avenue-winnipeg-north-end#view=neighbourhood

https://www.realtor.ca/real-estate/25192589/592-valour-road-winnipeg-polo-park

https://www.realtor.ca/real-estate/25187773/1398-lincoln-avenue-winnipeg-weston

https://www.realtor.ca/real-estate/25182214/766-college-avenue-winnipeg-north-end

Those are just a few.

Of course, the options expand significantly once you start including townhouses, condos, duplexes, etc. at that price point.

That is good to see. Two adults in a decent job can afford those.

[ssiguy]

Originally Posted by Harrison

Most Canadians can still easily afford to purchase house in Edmonton, Calgary and Winnipeg. There are jobs in all three cities as well, so if someone struggling to afford housing in the GTA or Lower Mainland does not care where they live as long as they can get a job that allows them to afford a home purchase, look to those three major cities.

This is exactly right. It's not so much that people are desperate to flee the big cities for the sake of it but rather for affordability. Cal/Edm/Win offer the bigger city amenities that urbanites will still demand but will do so leaving them money at the end of the month so they can actually enjoy those amenities.

Calgary will be the primary destination as it is the biggest of the 3, close to the Rockies, has the mildest winter climate, the lowest crime rate, the best connected in terms of transportation, the best transit system, and the best reputation. Edmonton will be a respectable 2nd as it too is an Alberta city which has always been tomorrow's country with it's job opportunities, low taxes, and high wages. Winnipeg will not even be a consideration for most as many others are heading to Halifax and the Maritimes.

For those not wanting to go as far afield, they will head to other regional centres still within striking distance of family and friends. This we have already see with the explosive growth of KW, London, and Kelowna and to a lesser {but still respectable} extent, Vic/Kam/Nan and Wind/Nia/King.

[whatnext]

Well, there goes any hope for affordability here:

Exodus of Wealthy Chinese Accelerates With End of Covid Zero
China could face at least $150 billion capital flight: Natixis
Resumption of travel opens gates for China’s wealthy to leave
By Bloomberg News
January 25, 2023

President Xi Jinping’s decision to dismantle Covid travel restrictions is accelerating an exodus by wealthy Chinese, who could fuel billions in capital outflows as they plow cash into property and assets abroad.

Since the end of Covid Zero in December, many rich Chinese have begun traveling overseas to check out real estate or firm up plans to emigrate, immigration consultants said in interviews....

....Canadian immigration law firm Sobirovs is seeing a growing urgency from Chinese clients seeking to migrate to the North American country. “I would say the past six months people really got fed up. And so we see a spike on consultation bookings,” said Feruza Djamalova, a senior lawyer at Sobirovs. “Now our clients from China, they’re willing to do relocation and they want to as soon as possible.”...

....Among those looking to leave is Dahua, whose family runs a pharmaceutical business in central China. This isn’t her first try, but she’s more hopeful she can get out now since it’s possible to travel. A previous attempt to obtain a US green card was thwarted when she returned to China before the pandemic and could no longer travel back to the US, failing to spend the required time there.

Dahua, who asked that only her first name be used, is now looking at a program in Canada that allows applicants to study there and ultimately acquire permanent residence after working for a few years.... (bold mine)

https://www.bloomberg.com/news/articles/...oney-with-covid-zero-s-end?sref=x4rjnz06