Canada's 'housing bubble' deemed close to bursting

[swimmer_spe]

Originally Posted by theman23

https://www.visualcapitalist.com/cp/mapped-global-housing-prices-since-2010/

These pictures show that, just like inflation in the last year or so, Canada is not an outlier, but is part of the group. Generally speaking, it is the Western World that is having the problem of skyrocketing housing. We need to watch what others do or have done to see how to fix here.

[WarrenC12]

Russia -33%, they must be on the right track!

[whatnext]

Sad that governments aided and abetted this through their policies:


Households now owe more than Canada's entire GDP, housing agency warns
-Households in other countries are paying down debt, but that's not the case in Canada
Pete Evans · CBC News · Posted: May 23, 2023

Canadian households are more in debt than those in any other G7 country, and the amount they owe is now more than the value of the country's entire economy.

That was one of the main takeaways of a new report from Canada's housing agency, the Canada Mortgage and Housing Corporation, which backstops much of the country's housing market via mortgage insurance.

In a report published Tuesday, the CMHC's deputy chief economist Aled ab Iorwerth said Canada's economy is more at risk to whatever crises may arise because of how much debt Canadian households have racked up.

"Canada's very high levels of household debt — the highest in the G7 — makes the economy vulnerable to any global economic crisis," he said. "When many households in an economy are heavily indebted, the situation can quickly deteriorate, such as what was witnessed in the U.S. in 2007 and 2008.".

Household debt now sits at 107 per cent of Canada's GDP, the report notes, a ratio ab lorwerth said has marched "inexorably" higher in recent years. As recently as 2008, household debt in Canada was 80 per cent of GDP, before rising to 95 per cent by 2010 and eclipsing 100 per cent during the pandemic.

"By contrast, household debt in the U.S. fell from 100 per cent of GDP in 2008 to about 75 per cent in 2021," he said, adding that the ratio also dropped in places like the U.K. and Germany. "While U.S. households reduced debt, Canadians increased theirs and this will likely continue to increase unless we address affordability in the housing market."....

https://www.cbc.ca/news/business/household-debt-gdp-1.6852027

[lio45]

Originally Posted by WarrenC12

Russia -33%, they must be on the right track!

Indeed, one solution to help bring down our house prices would be to launch a Special Military Operation against our neighbor, forcing some ~150,000 conscripted young Canadians to die in human wave attacks against the strategically-important town of Rouses Point, NY while still failing to capture it.

... I'm not gonna vote for any politician who suggests this as a fix to the housing crisis, tho

[swimmer_spe]

Originally Posted by lio45

Indeed, one solution to help bring down our house prices would be to launch a Special Military Operation against our neighbor, forcing some ~150,000 conscripted young Canadians to die in human wave attacks against the strategically-important town of Rouses Point, NY while still failing to capture it.

... I'm not gonna vote for any politician who suggests this as a fix to the housing crisis, tho

We did it about 210 years ago. Maybe we should do it again.....

[ScreamingViking]

Originally Posted by swimmer_spe

We did it about 210 years ago. Maybe we should do it again.....

Did we? Or did they?

[swimmer_spe]

Originally Posted by ScreamingViking

Did we? Or did they?

They did it to themselves?

[LightingGuy]

Originally Posted by swimmer_spe

These pictures show that, just like inflation in the last year or so, Canada is not an outlier, but is part of the group. Generally speaking, it is the Western World that is having the problem of skyrocketing housing. We need to watch what others do or have done to see how to fix here.

That's your take from this chart?

This has to be the stupidest thing I've seen you say on here, and that list is already pretty long.

You are effectively saying:

"We're not the worst, look there are 5 countries that experienced higher growth. Let's see what these other countries do before we take any action."

All those other countries in the top 10 have severe land constraints either due to their size or environment. The only countries that don't have a severe land shortage that are on that list (aside from us) are Turkey and Chile. That's some rock solid company right there.

Canada is the second largest country in the world, with one of the lowest densities. Even discounting the tundra, we have more livable land per person than any other developed country in the world.

There is absolutely zero practical reasons for us to be on that list. We don't have the same land constraint problems as Iceland, Estonia, New Zealand, Luxembourg, and Hong Kong.

Our problem is 100% the result of stupid government after stupid government making decisions to either accidentally or intentionally pump up the value of our houses. Mostly due to ideology.

But yes let's wait and see what Luxembourg and Hong Kong do to solve their housing crisis before we take any action.

Aside from their problem being a result of completely different cause (actual land shortages due to their geography), how about we be a god damn leader for once, stop pandering to environmentalists, stop pandering to NIMBYs, stop filling permit offices with a bunch of pointless jobs that jack up permit fees to hundreds of thousands of dollars, and just let things get built for once.

(On a side note: We were just told last week that our landlord is selling the house and now we have to move. Over the last year rent has gone up by 20%. House prices are up by $100K since January. So I'm especially sensitive to this right now. It's people such as yourselves' mentality of "let's do nothing to solve this a little bit longer" that are screwing over people such as me and my family. We need more houses to be built, plain and simple, and - aside from building codes - every single obstacle that is preventing that from being done needs to be removed.)

[YOWetal]

Originally Posted by LightingGuy

That's your take from this chart?


All those other countries in the top 10 have severe land constraints either due to their size or environment. The only countries that don't have a severe land shortage that are on that list (aside from us) are Turkey and Chile. That's some rock solid company right there.

Canada is the second largest country in the world, with one of the lowest densities. Even discounting the tundra, we have more livable land per person than any other developed country in the world.

There is absolutely zero practical reasons for us to be on that list. We don't have the same land constraint problems as Iceland, Estonia, New Zealand, Luxembourg, and Hong Kong.

Our problem is 100% the result of stupid government after stupid government making decisions to either accidentally or intentionally pump up the value of our houses. Mostly due to ideology.

But yes let's wait and see what Luxembourg and Hong Kong do to solve their housing crisis before we take any action.

Aside from their problem being a result of completely different cause (actual land shortages due to their geography), how about we be a god damn leader for once, stop pandering to environmentalists, stop pandering to NIMBYs, stop filling permit offices with a bunch of pointless jobs that jack up permit fees to hundreds of thousands of dollars, and just let things get built for once.

Yes let's exclude Hong Kong and Luxembourg as they are city states. Estonia and Iceland to a lesser extent saw a growth in real incomes either recovering from crisis or communism. Neither is particularly short of land. Neither is Australia or New Zealand who have very similar growth trajectories to us. The common thread a stable economy society and rule of law that attracts foreign money into real estate and more importantly a drop in interest rates. The US traditionally have lower rates than the rest of the commonwealth. In fact we have been paying less interest than the US over the past 10 years but as we have now discovered that was because we were taking a greater risk with short term rates.

I tend to agree there isn't a single example of government policies doing anything to go against these trends. We copied Aus/NZ restrictions that did nothing there and have been a drop in the bucket here.

What policy would do more help than harm and where has it been tried with success?

[niwell]

Originally Posted by LightingGuy

(On a side note: We were just told last week that our landlord is selling the house and now we have to move. Over the last year rent has gone up by 20%. House prices are up by $100K since January.

Just as an FYI you aren't required to move in Ontario just because the place you are renting goes up for sale. New owners inherit (legal) tenants, though they will often use various channels to vacate unless they intend to rent out the building as-is. Of course for single-family dwellings it's advantageous for a landlord to sell a place without existing tenants given it leads to a higher sales price, which also means they are often willing to provide generous pay-outs for people to leave. Our neighbours were able to secure about $20k (original offer was an extra month's rent and they said no).

Which is to say that this situation always sucks and it's usually in your best interest to move when it gets to this point, but you may also be able to at least get some cash out of the process.

Also damn, 20% annual increase on rent... definitely don't rent out anything built after 2018.

[niwell]

I can't imagine looking at that chart and drawing any real conclusions about "land scarcity". It does reinforce to me there are a set of broad government/economic policies that have monetized the housing market to a degree that encourages rampant speculative investment and in-turn demands ever-increasing prices.

This debate has been going on ad nauseum and I can't see how anyone could still think that simply cutting some red tape on zoning and development would immediately solve things.

[goodgrowth]

Originally Posted by niwell

I can't imagine looking at that chart and drawing any real conclusions about "land scarcity". It does reinforce to me there are a set of broad government/economic policies that have monetized the housing market to a degree that encourages rampant speculative investment and in-turn demands ever-increasing prices.

This debate has been going on ad nauseum and I can't see how anyone could still think that simply cutting some red tape on zoning and development would immediately solve things.

Why are condo prices lower than detached homes?

[niwell]

Originally Posted by goodgrowth

Why are condo prices lower than detached homes?

One of the stupidest things said here. Why are tiny homes cheaper than mansions? There are a multitude of reasons why detached homes would remain more expensive than condos in a speculative market even beyond looking at unit size.

The real question is - why did the price of condos (in the GTA at least) begin to increase exponentially despite the construction shift from detached homes to multi-unit construction? If this were simply based on land constraints one may expect the price of detached homes to be high yet condos remain relatively affordable*. As we all know that's not what's happened.

*The beginnings of this trend can sort of be observed before things went wild.

[swimmer_spe]

Originally Posted by LightingGuy

That's your take from this chart?

This has to be the stupidest thing I've seen you say on here, and that list is already pretty long.

You are effectively saying:

"We're not the worst, look there are 5 countries that experienced higher growth. Let's see what these other countries do before we take any action."

All those other countries in the top 10 have severe land constraints either due to their size or environment. The only countries that don't have a severe land shortage that are on that list (aside from us) are Turkey and Chile. That's some rock solid company right there.

Canada is the second largest country in the world, with one of the lowest densities. Even discounting the tundra, we have more livable land per person than any other developed country in the world.

There is absolutely zero practical reasons for us to be on that list. We don't have the same land constraint problems as Iceland, Estonia, New Zealand, Luxembourg, and Hong Kong.

Our problem is 100% the result of stupid government after stupid government making decisions to either accidentally or intentionally pump up the value of our houses. Mostly due to ideology.

But yes let's wait and see what Luxembourg and Hong Kong do to solve their housing crisis before we take any action.

Aside from their problem being a result of completely different cause (actual land shortages due to their geography), how about we be a god damn leader for once, stop pandering to environmentalists, stop pandering to NIMBYs, stop filling permit offices with a bunch of pointless jobs that jack up permit fees to hundreds of thousands of dollars, and just let things get built for once.

(On a side note: We were just told last week that our landlord is selling the house and now we have to move. Over the last year rent has gone up by 20%. House prices are up by $100K since January. So I'm especially sensitive to this right now. It's people such as yourselves' mentality of "let's do nothing to solve this a little bit longer" that are screwing over people such as me and my family. We need more houses to be built, plain and simple, and - aside from building codes - every single obstacle that is preventing that from being done needs to be removed.)

Who says who can build where? I hate to break it to you, it is not the Federal Government. Hasn't been for over a century. So, none of the housing is the federal government's fault. Immigration blah blah blah..... The federal government is ensuring immigration matches the needed warm bodies working in the economy. If they don't, our economy fails.

So, who is to blame for our housing problem? The provinces and local governments. They are the ones dictating what the land can be used for and who can own it. They will tell me I cannot build in crown land. They will tell me how many stories or even the type of building I can build. Why aren't we hearing as much blame on the provinces and local politicians? Simply put, because they are not the evil JT. People like you have shown me that civics needs to be better taught in school. People seem to have not learned about the separation of powers between the federal government and provinces.

Now, when you ask yourself what that graph says, to me it says that with our current housing stock, we are doing no worse than many other places. We have members of this forum who admit on here they own vacant land and they will not build on it. We have landlords on here who openly state they have jacked up their rates when there was no need to. And yet you think I am stupid to see that we are doing as well as other countries who do similar things? Thank you for the complement. At least I am not a forum member on here that is making that graph a reality.

[lio45]

Originally Posted by niwell

One of the stupidest things said here. Why are tiny homes cheaper than mansions? There are a multitude of reasons why detached homes would remain more expensive than condos in a speculative market even beyond looking at unit size.

The real question is - why did the price of condos (in the GTA at least) begin to increase exponentially despite the construction shift from detached homes to multi-unit construction? If this were simply based on land constraints one may expect the price of detached homes to be high yet condos remain relatively affordable*. As we all know that's not what's happened.

*The beginnings of this trend can sort of be observed before things went wild.

Exactly, and the answer is pretty obvious: even when you sorta remove the land constraint part from the equation, there are STILL other very real constraints that prevent supply from equaling demand, ESPECIALLY if the Feds decide to make demand outrageously/disproportionately large (which they can, at the stroke of a pen).

[lio45]

Originally Posted by swimmer_spe

Who says who can build where? I hate to break it to you, it is not the Federal Government. Hasn't been for over a century. So, none of the housing is the federal government's fault. Immigration blah blah blah..... The federal government is ensuring immigration matches the needed warm bodies working in the economy. If they don't, our economy fails.

You would only be correct here if the Feds said "we will let you in because our economy needs you as a warm body, BUT you WILL be living in a tent on the sidewalk of East Hastings for the entirety of your time in Canada; you will NOT contribute to increasing demand for Canadian housing in any way shape or form while you're here, and if you're ever caught trying to, you'll be immediately deported".

[swimmer_spe]

Originally Posted by lio45

You would only be correct here if the Feds said "we will let you in because our economy needs you as a warm body, BUT you WILL be living in a tent on the sidewalk of East Hastings for the entirety of your time in Canada; you will NOT contribute to increasing demand for Canadian housing in any way shape or form while you're here, and if you're ever caught trying to, you'll be immediately deported".

Are you one of those land owners that refuses to build and also a landlord that jacked up their prices for no other reason than because others did?

[lio45]

Originally Posted by LightingGuy

That's your take from this chart?

This has to be the stupidest thing I've seen you say on here, and that list is already pretty long.

Seconded. My take from that top ten was that Canada immediately stands out as the only significant first world country on it. Everyone else on the list is either tiny or not-First-World (Turkey, Chile).

[lio45]

Originally Posted by swimmer_spe

Are you one of those land owners that refuses to build and also a landlord that jacked up their prices for no other reason than because others did?

More or less. (Way "less" than "more", FYI.) However, the important thing here is that I did not vote for a government who thinks it's a good idea to import 1,000,000+ fresh new suckers-who'll-all-want-a-roof-over-their-heads-in-Canada per year, therefore I am in no way responsible for contributing to the current Ponzi Scheme (despite greatly benefiting from it.)

[suburbanite]

Originally Posted by swimmer_spe

Who says who can build where? I hate to break it to you, it is not the Federal Government. Hasn't been for over a century. So, none of the housing is the federal government's fault. Immigration blah blah blah..... The federal government is ensuring immigration matches the needed warm bodies working in the economy. If they don't, our economy fails.

So, who is to blame for our housing problem? The provinces and local governments. They are the ones dictating what the land can be used for and who can own it. They will tell me I cannot build in crown land. They will tell me how many stories or even the type of building I can build. Why aren't we hearing as much blame on the provinces and local politicians? Simply put, because they are not the evil JT. People like you have shown me that civics needs to be better taught in school. People seem to have not learned about the separation of powers between the federal government and provinces.

Now, when you ask yourself what that graph says, to me it says that with our current housing stock, we are doing no worse than many other places. We have members of this forum who admit on here they own vacant land and they will not build on it. We have landlords on here who openly state they have jacked up their rates when there was no need to. And yet you think I am stupid to see that we are doing as well as other countries who do similar things? Thank you for the complement. At least I am not a forum member on here that is making that graph a reality.

Where in his post does he talk about the federal government being solely responsible. Talking about civics classes lol. I'm pretty sure if we take a poll here on who has the worst takes in this thread there will be a fairly unanimous response.