Canada's 'housing bubble' deemed close to bursting

[LightingGuy]

Originally Posted by GenWhy?

I dunno I feel bad for all those renters in Ontario in buildings 2018 and newer that don't have rent control and are getting pillaged.

While our vacancy rate is still low, we have rental control since I think the mid-90s and have built more rental housing in the last 10 years than we have since the 70s. We can build rental no problem with rent control.

Removal of GST on rental construction, which I think was added in 1991, would go a long way.

I was referring to this quote from Swimmer:
"The government regulates things like building codes. They could add pricing of units in the mix too."

There's a stark difference between rent control, and price control of units (which is what I assume Swimmer meant).

Rent control limits how much landlords are allowed to increase the price every year for an existing tenant (currently 2.5% in Ontario which is laughably low).

Price control regulates how much a landlord can charge for their unit even when it is available.

I'm not a fan of either, they both constrain the supply, but Price control is a much much stupider idea.

[suburbanite]

Talking about price control is the epitome of doing anything to avoid confronting the obvious underlying causes, which is essentially what Swimmer has been doing for the past 20 odd pages by distorting the conversation with any number of obscure and half-baked tangents.

[swimmer_spe]

Originally Posted by GenWhy?

No I'd argue the real problem is that I can't build adequate housing in the geographical majority of my and adjacent cities. The potential for governments of any kind to mandate rental prices that are so restrictive that I can't build the housing is pretty low on my fear list. It gets voted down continuously here in Vancouver city council.

You are confirming the point. You should be able to afford to build low income housing. The fact you cannot means that there are bigger problems at play here. The fact that you fear that some sort of mandated low income units says that there is a bigger problem that needs to be fixed.

[GenWhy?]

Originally Posted by swimmer_spe

You are confirming the point. You should be able to afford to build low income housing. The fact you cannot means that there are bigger problems at play here. The fact that you fear that some sort of mandated low income units says that there is a bigger problem that needs to be fixed.

I don't fear mandated below-market units - I encourage it! I'm a renter myself. I just need the added height and density to make up for it.

We have it working here in Van. You can't have a normal market rental project that just works be forced to now include below-market and expect it to work. The success we have in Van is that bonus with a caveat. Of course the City's Real Estate Dept. goes some work beforehand, thankfully.

[GenWhy?]

Originally Posted by swimmer_spe

You should be able to afford to build low income housing. The fact you cannot means that there are bigger problems at play here.

I would add this is very true. We are limited to 6-storeys for woodframe construction and where we are allowed to build these is very limited. This leads to these select areas having high land costs.

We are also in a bit of a pinch for material and labour costs. If I could today build a 4-6 storey woodframe apartment on lots currently occupied y SF homes. That would take a lot of pressure off.

For construction financing, we are using CMHC because we mainly do rental. I would definitely like to see the GST get exempted again, and a return to some more of the pre-1975 rental construction policies by the Feds / CMHC.

[swimmer_spe]

Originally Posted by GenWhy?

I don't fear mandated below-market units - I encourage it! I'm a renter myself. I just need the added height and density to make up for it.

We have it working here in Van. You can't have a normal market rental project that just works be forced to now include below-market and expect it to work. The success we have in Van is that bonus with a caveat. Of course the City's Real Estate Dept. goes some work beforehand, thankfully.

Then start building up.

Originally Posted by GenWhy?

I would add this is very true. We are limited to 6-storeys for woodframe construction and where we are allowed to build these is very limited. This leads to these select areas having high land costs.

We are also in a bit of a pinch for material and labour costs. If I could today build a 4-6 storey woodframe apartment on lots currently occupied y SF homes. That would take a lot of pressure off.

For construction financing, we are using CMHC because we mainly do rental. I would definitely like to see the GST get exempted again, and a return to some more of the pre-1975 rental construction policies by the Feds / CMHC.

There are reasons why wood frame construction is limited in height. One is earthquakes, and the other is fires.

[GenWhy?]

Originally Posted by swimmer_spe

Then start building up.

There are reasons why wood frame construction is limited in height. One is earthquakes, and the other is fires.

I think we're talking past eachother at this point.

[Loco101]

I can't believe that this thread has existed since June 20, 2011!!!

It's getting close to the 12th anniversary. Some of the comments from the first bunch of pages of this thread are quite entertaining to read. The Harper government was in power for the first four years on here. A number of people thought a bubble burst was imminent at every moment during the lifespan of this thread.

[swimmer_spe]

Originally Posted by Loco101

I can't believe that this thread has existed since June 20, 2011!!!

It's getting close to the 12th anniversary. Some of the comments from the first bunch of pages of this thread are quite entertaining to read. The Harper government was in power for the first four years on here. A number of people thought a bubble burst was imminent at every moment during the lifespan of this thread.

Didn't it kind of pop with the "great recession"?

I guess if we do not have a common understanding of what a burst will mean, we cannot know whether it will or wont.

[Architype]

Originally Posted by swimmer_spe

Didn't it kind of pop with the "great recession"?

I guess if we do not have a common understanding of what a burst will mean, we cannot know whether it will or wont.

While the chart only goes to 2019, there have not been many serious bubble formations that didn't smooth out eventually.


https://globalnews.ca/news/5020704/lower-mainland-real-estate-cooldown/

[SignalHillHiker]

We’ve introduced a new Tourism Accommodations Act to crack down on short-term rentals. All must be registered with the province by April 24 and follow the same municipal and provincial regulations as motels, hotels, etc. including fire/safety inspections. There is an exception for owners who live in the unit and rent out a room.

Registration is free. We will also be working with the platforms to ensure unregistered rentals cannot be advertised. We’ll see how it goes. If Montreal’s abundance of rentals in disallowed areas is any indication, probably not well lol

[suburbanite]

Originally Posted by swimmer_spe

Didn't it kind of pop with the "great recession"?

I guess if we do not have a common understanding of what a burst will mean, we cannot know whether it will or wont.

It started with the great recession...

[lio45]

Originally Posted by suburbanite

It started with the great recession...

Exactly. My Canadian real estate more than doubled in value overnight when interest rates fell to the floor in 2008, and I'm sure I'm a very typical case.

Now, rates are going back up (though not quite where they were in 2005-2006) but real estate hasn't deflated much; as a result, it's the most expensive (when looking at total cost) i.e. least attainable (same idea, different words) it's ever been.

Why? Very simple: Supply and demand. We let in way more newcomers every year than we can house. (For a myriad of reasons, some valid, we don't/can't build anywhere near enough.)

The Ponzi-Trudeau Scheme is actually kinda sustainable in the long run (there are billions of people in shithole countries who'd like to come here, and when they do, they'll want a roof over their head) so I think I wouldn't call it a bubble anymore, actually.

(Also, putting my money where my mouth is: if I thought my areas were in an obvious bubble, I'd liquidate my assets.)

[thewave46]

Originally Posted by lio45

The Ponzi-Trudeau Scheme is actually kinda sustainable in the long run (there are billions of people in shithole countries who'd like to come here, and when they do, they'll want a roof over their head) so I think I wouldn't call it a bubble anymore, actually.

Bonus: the people coming here have much lower expectations than the domestics, so the dream of one owned SFH per family quietly dies a just a little more as Canada changes.

So, one can make them hugely expensive and limit supply so only a handful of the 'new elite' can afford the things without large chunks of people getting too angry as if they are being robbed of some birthright.

Finally, it papers over the hilarious hole in most people's retirement savings. It's actually kind of clever in a mad way.

[LightingGuy]

Originally Posted by suburbanite

It started with the great recession...

In Ontario it started with the Places To Grow Act + Greenbelt legislation in 2005, which greatly limited where development could take place. It created an artificial scarcity of land and gave NIMBYs the most influence over how much new housing could be built.

Then after the Great Recession we had 14 years of ultra low interest rates and QE, ultimately making it much much worse. This basically took it from a small bushfire and turned into an uncontrollable wildfire.

[niwell]

Originally Posted by LightingGuy

In Ontario it started with the Places To Grow Act + Greenbelt legislation in 2005, which greatly limited where development could take place. It created an artificial scarcity of land and gave NIMBYs the most influence over how much new housing could be built.

NO IT DIDN'T.

Multiple people on this site (including myself) have shown endless stats and figures proving that this isn't the primary driver. At this point I honestly don't know if you're being intentionally obtuse or your reading comprehension is that bad. Because you keep spouting the same nonsense over and over again regardless of the evidence presented contrary.

[1overcosc]

Originally Posted by niwell

NO IT DIDN'T.

Multiple people on this site (including myself) have shown endless stats and figures proving that this isn't the primary driver. At this point I honestly don't know if you're being intentionally obtuse or your reading comprehension is that bad. Because you keep spouting the same nonsense over and over again regardless of the evidence presented contrary.

The problem isn't the Greenbelt per se, it's that there was no zoning reform done at the same time. The long overdue banning of SFH only zoning that Doug Ford is now implementing should have been done at the same time.

Provincial policy restricted sprawl but then failed to allow enough development to happen in existing areas to make up for that. The core idea, that we can accommodate the bulk of growth in a handful of upzoned density nodes, was a fantasy. It was never going to work without addressing the yellow belts.

[Innsertnamehere]

Originally Posted by niwell

NO IT DIDN'T.

Multiple people on this site (including myself) have shown endless stats and figures proving that this isn't the primary driver. At this point I honestly don't know if you're being intentionally obtuse or your reading comprehension is that bad. Because you keep spouting the same nonsense over and over again regardless of the evidence presented contrary.

It's definitely a driver of SFH price increases, not necessarily the rest.

Up until a few years ago Condo prices had been inflation adjusted quite stagnant, even as demand increased dramatically for them, as enough supply could enter the market.

SFHs have significantly declined in market share over the last 18 years as a result of provincial policy changes, and this has understandably lead to price increases in those market segments as they are artificially limited in supply.

Given shrinking households and other factors, the supply gap is smaller than the market shift may otherwise imply (apartment construction has increased in the US in the last decade as well, unrestricted by growth policies), but it's there and it's influencing the price of SFHs and other low-rise housing stock.

Trudeau's twisting of the growth dial is what has caused the last few years of wild increases across all market segments. Demand has shot through the roof and supply has barely even ticked upwards in response.

If you minus off the Growth Plan, you get a more sprawling GTA with more affordable low-rise stock, more easily attained by middle class households, but similar overall supply constraints that can't meet the incredible housing demand which has been thrown on the market overnight with record immigration levels.

There are also a whole lot of other factors going on, including increased liquidity in homebuyers from the pandemic, a rapid shift of market demand from rental to ownership through the same time frame and an equally rapid shift back, the advent of WFH opening up massive outlying markets that were previously in low demand, shrinking households placing even more demand on housing demand than just population growth would imply, supply being throttled by increased construction costs, etc.

The Growth Plan is far from being able to be blamed for the entire housing crisis. Like most complex problems, there isn't a single easy cause. It's definitely a contributing factor however, especially in critical submarkets.

[niwell]

I'm not trying to claim the Growth Plan / PPS etc has zero effect, but the claims that it's *the* primary driver of housing costs are unfounded, at best. Restrictions on land were always overstated. Even SFH prices really only started rising unsustainably well after all of the various amendments were signed off on - for a long time it was a linear growth rate. A lot of these land-use patterns were also shifting before policies were in place.

Also worth keeping in mind that despite the rhetoric today, developers weren't exactly opposed to Places to Grow or even the Greenbelt. They had specific issues about certain lands, but were very much part of the process the whole way through. Lots of links between major developers and both Ontario's Liberal and PC governments.

[svlt]

Originally Posted by thewave46

Bonus: the people coming here have much lower expectations than the domestics, so the dream of one owned SFH per family quietly dies a just a little more as Canada changes.

So, one can make them hugely expensive and limit supply so only a handful of the 'new elite' can afford the things without large chunks of people getting too angry as if they are being robbed of some birthright.

Finally, it papers over the hilarious hole in most people's retirement savings. It's actually kind of clever in a mad way.

Like it or not it's time to put that dream of owning a SFH with a garage to bed for millennials or younger unless they have a generational handout. There realistically shouldn't be this expectation anymore unless we revolt France style.