Canada's 'housing bubble' deemed close to bursting

[theman23]

Its an amazing coincidence that all of the municipalities and provinces across this country implemented policies in 2016 that led to this housing crisis.

Sitting at the top of that chart doesn't tell us we're doing "as good" as everyone else. Those are the worst countries in the world. The initial response was to casper, who often tries to handwave away the housing affordability issues in this country with cheap anecdotes. The 90% increase seen in Canada is a wee bit larger than the 20% increase seen in the UK.

And yes - if the only way for our national economy to function is to import a never ending stream of warm bodies that have led to a housing crisis, then the feds are the most responsible. Not to mention the slew of other federal policies that have led to this demand imbalance.

[savevp]

Originally Posted by lio45

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).

New Zealand isn't actually that tiny but your point stands.

[niwell]

Originally Posted by lio45

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).

Yep.

Even if the Provinces of Ontario and BC removed ALL land-use constraints today there's a limit as to how much would be built and where. Limits on how much trades can actually build is obvious (and it seems we are near or at that limit), but there's financing to take into account, land acquisition, transportation constraints and actual servicing of land - to name a few. A developer isn't going to build on greenfield land unless servicing is in place / an agreement to build infrastructure through a series of negotiations with the municipality (suburbanite gave a good rundown of this a few pages back. Similarly a large infill structure in a low-density neighbourhood may run into service capacity issues even after land consolidation takes place. Not even taking into account that developers may not want to build if there aren't guaranteed sales above a certain price point.

Increased density in the inner-suburbs is a very good thing from an urbanist perspective IMO but it's not as simple as signing some legislation and then watching the housing (price) problem solve overnight.

[savevp]

Originally Posted by theman23

And yes - if the only way for our national economy to function is to import a never ending stream of warm bodies that have led to a housing crisis, then the feds are the most responsible. Not to mention the slew of other federal policies that have led to this demand imbalance.

This, the failure to settle the vast majority of immigrants outside of the GTA and Vancouver*, and dysfunctional municipal building departments who make housing construction slow or impossible. Coupled with NIMBY policy that keeps ~80% of cities artificially low density.

*There have been some efforts with Atlantic and Northern immigration pilots, but clearly more efforts should be made, however difficult. If we're going to pursue a potentially reckless path of ultra high immigration, this is the sort of thing tha should be sorted as a prerequisite.

[goodgrowth]

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.

You haven't answered the question....

Why are condo prices lower than detached homes?

[suburbanite]

Originally Posted by theman23

And yes - if the only way for our national economy to function is to import a never ending stream of warm bodies that have led to a housing crisis, then the feds are the most responsible. Not to mention the slew of other federal policies that have led to this demand imbalance.

If not importing 800,000/year means the economy fails (exactly this amount of course, the 500,000 previously brought in that don't actually end up in the critical sectors that we need is clearly not enough for, reasons...) then we are already heading for irreversible failure. The Feds are essentially just picking which demographic gets a golden parachute into their retirement and old age, and which gets screwed over as they look to begin their careers and start families.

If the federal government continues to ramp up immigration numbers, knowing full well that housing is majority out of their control, and that the province and municipalities are not acting in conjunction with their approach, then yes they share responsibility. If a doctor has an obese patient, is his approach to keep forcing 4,000 calories a day on him until the patient figures out he has to exercise, even though he's never walked more than 1 km at a time in his entire life? It's not the doctors fault! the patient is responsible for making sure he burns 2,000 calories a day. The doctor has a food quota that needs to be filled or the hospital will face economic collapse!

If the Feds want to ramp up immigration, then they need to take responsibility and a more active role. Get the infrastructure and the systems in place before you fucking juice the system to no end. Get the patient to lose 100 pounds with a reduced diet before you send him training for a marathon.

[goodgrowth]

"Liberalization of space has nothing to do with prices"

"You idiot it's obvious why tiny homes are less than mansions"

Yeah I'm not the idiot here.

[suburbanite]

Originally Posted by goodgrowth

"Liberalization of space has nothing to do with prices"

"You idiot it's obvious why tiny homes are less than mansions"

Yeah I'm not the idiot here.

Why are new condos in North Yonge selling for $1,300 PSF, while I can find a luxury home on an adjacent street with the same access to transit for $800 PSF? the latter comes with freehold land title. It's almost like the demand side is starting to overpower the supply side which is by its very nature stickier and harder to change.

[niwell]

Originally Posted by suburbanite

Why are new condos in North Yonge selling for $1,300 PSF, while I can find a luxury home on an adjacent street with the same access to transit for $800 PSF? the latter comes with freehold land title. It's almost like the demand side is starting to overpower the supply side which is by its very nature stickier and harder to change.

Another fun example that's further afield: a condo building under construction in the town I own a house in is selling sub-1,000 sq ft units for the same price as my 2,200 sq ft house on a quarter acre lot cost at the peak of the market. My house is less than a 500m walk away. The condo advertises itself as being a short drive from all PEC and targeted towards a certain type of investor.

[hipster duck]

Originally Posted by goodgrowth

You haven't answered the question....

Why are condo prices lower than detached homes?

We get it.

You have an obsession with sprawling into the greenbelt.

You also have an obsession with demolishing historic prewar neighbourhoods that already have a net residential density of 10,000 people/km2 and building towers.

Your vision of the GTA is one where Trinity Bellwoods looks like the student ghetto of Waterloo and the city sprawls out 100km in every direction and all of our groundwater aquifers are shot. Shenzhen surrounded by Phoenix. Whee!

The demand side of things - you know, the unprecedented immigration levels, the tax shelter of real estate as an asset class, the money laundering - never enters your mind.

The non-regulatory constraints to supply - like labor, materials and institutional resources - don't either.

I'll give you this: your vision of the GTA may result in lower house prices if only because you've destroyed something to save it.

[goodgrowth]

Originally Posted by suburbanite

Why are new condos in North Yonge selling for $1,300 PSF, while I can find a luxury home on an adjacent street with the same access to transit for $800 PSF? the latter comes with freehold land title. It's almost like the demand side is starting to overpower the supply side which is by its very nature stickier and harder to change.

Let me know when the average selling price of a detached home is less than the average selling price of a condo unit in city.

[suburbanite]

Originally Posted by goodgrowth

Let me know when the average selling price of detached home is less than the average selling price of a condo unit in city.

Sure, you can wait for the day when people build 500 SF detached homes. The rest of us will continue the discussion in reality and use prices PSF, since people are paying for an actual amount of space to live in.

[goodgrowth]

Originally Posted by hipster duck

We get it.

You have an obsession with sprawling into the greenbelt.

You also have an obsession with demolishing historic prewar neighbourhoods that already have a net residential density of 10,000 people/km2 and building towers.

Your vision of the GTA is one where Trinity Bellwoods looks like the student ghetto of Waterloo and the city sprawls out 100km in every direction and all of our groundwater aquifers are shot. Shenzhen surrounded by Phoenix. Whee!

The demand side of things - you know, the unprecedented immigration levels, the tax shelter of real estate as an asset class, the money laundering - never enters your mind.

I'll give you this: your vision of the GTA may result in lower house prices if only because you've destroyed something to save it.

nah I just want land use to be more market oriented and less feudalist.

If you want less immigration fair enough at least there is some intellectual honesty there.

[lio45]

Originally Posted by goodgrowth

nah I just want land use to be more market oriented and less feudalist.

If you want less immigration fair enough at least there is some intellectual honesty there.

“We” are not even saying we want less immigration; we are merely limiting ourselves to pointing out the inescapable fact that proportionately ultra-high immigration way beyond the definitely-not-infinite ability to always build more and more physical housing on physical land, when combined with the observation that most people, including newcomers too, prefer to live in housing rather than on the streets, results in rising housing prices.

Which part of the above aren’t you getting?

[LightingGuy]

Originally Posted by goodgrowth

You haven't answered the question....

Why are condo prices lower than detached homes?

It really is incredible. I guess we take it for granted that these concepts seem basic to us, yet others can't grasp them.

[lio45]

Originally Posted by goodgrowth

You haven't answered the question....

Why are condo prices lower than detached homes?

Man, AI is a real time-saver nowadays


—————————————


The prices of condos are generally lower than detached homes due to several factors:

1. Land cost: Detached homes typically come with a larger land area compared to condos. Land is a valuable and limited resource, especially in urban areas where space is at a premium. The cost of land is a significant factor in determining the overall price of a property. Since condos occupy a smaller land footprint, their prices are relatively lower.

2. Construction and maintenance costs: Detached homes often require more materials and labor during construction compared to condos, which are built as multi-unit structures. Additionally, condos generally share certain facilities and amenities, such as elevators, parking areas, and recreational spaces, among multiple residents. The shared costs of construction and maintenance help to keep condo prices relatively lower.

3. Location: Condos are often found in more urban or densely populated areas, while detached homes are more commonly located in suburban or rural settings. The demand for housing in urban areas tends to be higher, which can drive up the prices of detached homes. Condos, on the other hand, cater to a wider range of potential buyers, including those seeking more affordable housing options in city centers.

4. Homeowner's Association (HOA) fees: Condo owners typically pay monthly HOA fees to cover shared expenses, such as building maintenance, insurance, and amenities. These fees are in addition to mortgage payments and property taxes. While HOA fees contribute to the overall cost of owning a condo, they can help offset some expenses that would otherwise be borne solely by detached homeowners. The presence of HOA fees can influence the relative affordability of condos compared to detached homes.

5. Market demand and perception: The real estate market is influenced by supply and demand dynamics. Detached homes, with their larger living spaces and potential for more privacy, often attract buyers looking for a traditional single-family home experience. This demand can push up prices. Condos, on the other hand, cater to a different segment of the market, including individuals or families seeking more affordable or low-maintenance housing options. The perceived value and desirability of detached homes versus condos can impact their respective prices.

It's important to note that these factors can vary depending on the location, market conditions, and other local factors. Real estate markets can be complex and influenced by a range of variables, so it's always advisable to consult with local real estate professionals for specific insights into pricing trends in a particular area.

[Wigs]

Originally Posted by niwell

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

This. DoFo administration in Ontario allowed his landlord buddies to charge whatever the hell they want for housing stock occupied for the first time after Nov 15, 2018. Your rent could increase by 100% and there's nothing the renter can do

New buildings, additions to existing buildings and most new basement apartments that are occupied for the first time for residential purposes after November 15, 2018 are exempt from rent control.

For any pre Nov 15, 2018 occupied-for-the-first-time rentals

Rent increase guideline

The rent increase guideline for 2023 is 2.5%.

The guideline is the maximum a landlord can increase most tenants’ rent during a year without the approval of the Landlord and Tenant Board.

For most tenants, your rent can’t go up by more than the rent increase guideline for every year.

https://www.ontario.ca/page/residential-rent-increases

[LightingGuy]

To the lefties: You do understand that rent control is one of the primary causes of the rental undersupply in Ontario, right? (not the only one, but it is a massive contributor)

If people know that their rent can't go up, they're incentivized to stay put, which reduces supply on the market at any given time, and ironically pushes prices up further for everyone who is looking at that time, and themselves when they reach a point where they actually do have to move.

Furthermore, if landlords know that they can't increase rent to the market rate, they will be less incentivized to construct purpose-built rentals in the first place. Lio can chime in here, but if it was me and I know I'll be operating at a loss for the first few years, the last thing I want is a tenant who intends to stay for 10 years if I can't increase their rent to market rates every year. So I'd rather not build it in the first place.

People think they're doing tenants a favour with rent control, however it's hurting them. And it's not really benefitting landlords either, because if their costs go up, eg. during high inflation periods, they can't increase their prices. The only time they can do that is if a tenant moves out. Rent control benefits no one. In comparison, Alberta has no rent increase control and has incredibly stable YoY rent compared to Ontario, historically speaking. Rent in Edmonton for a 2 bedroom unit in 2014 was ~$1200. Today it's ~$1450. Can't say the same thing about any city in Ontario.

That said, Doug Ford's method of removing rent control from anything built after 2018 isn't how would've done it. You only get the benefits of no rent control if it is removed uniformly across the entire province at once. And because of the severe undersupply (caused by decades of rent control), it likely would've led to a massive rent increase for millions of people at once. I don't know what the most sustainable way would be. Maybe allow 5% increases for a few years and give massive tax breaks to anyone who builds purpose built rentals? Something like that.

[swimmer_spe]

Originally Posted by lio45

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.)

You can argue all you want about your hated leader, but you are part of the problem. Now multiply that by a factor of a thousand and that does more damage than any record immigration can. You know what happened when there was an explosive population growth? The built more homes. They didn't blame the leader of the country back then for letting so many adults have sex. What are you not doing now that you could do to help fix the problem? Build more housing.

Originally Posted by suburbanite

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.

Right here:

Originally Posted by LightingGuy

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.

100% implies the whole part of the blame goes to it.

Originally Posted by theman23

Its an amazing coincidence that all of the municipalities and provinces across this country implemented policies in 2016 that led to this housing crisis.

Sitting at the top of that chart doesn't tell us we're doing "as good" as everyone else. Those are the worst countries in the world. The initial response was to casper, who often tries to handwave away the housing affordability issues in this country with cheap anecdotes. The 90% increase seen in Canada is a wee bit larger than the 20% increase seen in the UK.

And yes - if the only way for our national economy to function is to import a never ending stream of warm bodies that have led to a housing crisis, then the feds are the most responsible. Not to mention the slew of other federal policies that have led to this demand imbalance.

What happens when the largest part of your population no longer works, but you still need that same number of workers? What happens when the provinces and municipalities do not want to see this? You get a government enacting policy that is good for the country's economic engine, but is incompatible with the local politics. We should have had a housing boom to cushion us going into the biggest group of retirement that we have know of since the 1960s. Baby Boomers, the largest generation is 1946-1964.
1946+65= 2011
1964+65= 2029

Hey wait, 2016, that is after the start of when a whole bunch of people who were of retirement age stopped working. Those jobs were still needed to be filled, so the federal government, who are in charge of immigration saw that and raise the amount of people immigrating to fill those positions.

Now, if the provinces and municipalities saw the same thing, since 2011 there should be record development and that record development should not have slowed down... oh, wait, what happened in 2020-2022? Supply chain issues, lack of enough workers, and of course the multiple shut downs of work multiple times all made those 2-3 years a lost time for housing construction. And then add on the fact that many people decided they wanted out of large cities.

Originally Posted by goodgrowth

"Liberalization of space has nothing to do with prices"

"You idiot it's obvious why tiny homes are less than mansions"

Yeah I'm not the idiot here.

Don't worry, you are not alone.

[suburbanite]

Originally Posted by swimmer_spe

Right here:


100% implies the whole part of the blame goes to it.

I love the part where he said federal.