Housing Bubble II: The Quest To Build Enough Homes Where People Actually Need Them

[MonkeyRonin]

Originally Posted by WarrenC12

I'm in A.

Not to be too snarky, but that explains a lot. I'd imagine most of the other remaining LPC supporters are also in the same "A" camp: mostly those who are insulated from (or even beneficiaries of) the housing crisis.

If you're happy with your housing situation, then they haven't really been too bad of a government I guess. The problem is that everyone on the rungs below (ie. most Canadians) may disagree.

[lio45]

Originally Posted by MonkeyRonin

Not to be too snarky, but that explains a lot. I'd imagine most of the other remaining LPC supporters are also in the same "A" camp: mostly those who are insulated from (or even beneficiaries of) the housing crisis.

Most of my tenants are likely C2 right now, but I’m going to try to move them to D1 or E1 (i.e. raise my rents as much as possible; they’re way too low for the current context)

[niwell]

Originally Posted by MonkeyRonin

Not to be too snarky, but that explains a lot. I'd imagine most of the other remaining LPC supporters are also in the same "A" camp: mostly those who are insulated from (or even beneficiaries of) the housing crisis.

If you're happy with your housing situation, then they haven't really been too bad of a government I guess. The problem is that everyone on the rungs below (ie. most Canadians) may disagree.

Indeed. I do wonder how long that will last though. We aren't there yet (and may never be) but if things continue along their trajectory, those in a solid "A" position may start getting unduly affected by the consequences of what others are facing. Growing tent cities is one thing, but the larger the gap grows between the haves and have-nots the more precarious everyone's situation becomes.

[lio45]

Originally Posted by niwell

Indeed. I do wonder how long that will last though. We aren't there yet (and may never be) but if things continue along their trajectory, those in a solid "A" position may start getting unduly affected by the consequences of what others are facing. Growing tent cities is one thing, but the larger the gap grows between the haves and have-nots the more precarious everyone's situation becomes.

As several people have pointed out here, even if you’re a solid “A” yourself, you’re likely at the age where you’re seeing your kids become adults and get stuck at D/E levels …

Few people have enough real estate that they can have several kids and can still make sure every kid is an “A” on the housing ladder when they grow up.

[Acajack]

Originally Posted by MonkeyRonin

Not to be too snarky, but that explains a lot. I'd imagine most of the other remaining LPC supporters are also in the same "A" camp: mostly those who are insulated from (or even beneficiaries of) the housing crisis.

If you're happy with your housing situation, then they haven't really been too bad of a government I guess. The problem is that everyone on the rungs below (ie. most Canadians) may disagree.

I am an A and both insulated and benefiting, but I also have kids who will be trying to enter the housing market sooner than later, and I also care about the future of our society.

[lio45]

Originally Posted by Acajack

I am an A and both insulated and benefiting, but I also have kids who will be trying to enter the housing market sooner than later, and I also care about the future of our society.

“Double Liojack Post”

[shreddog]

Originally Posted by Acajack

I am an A and both insulated and benefiting, but I also have kids who will be trying to enter the housing market sooner than later, and I also care about the future of our society.

This! Many of those in the "A" category realize that our children have it so much different than we did. When I graduated Uni, Toronto/Vancouver were "expensive" but attainable. I had numerous friends buy homes (SFH) in those cities before their 30s. Nowadays ... not sure that's possible.

Just because I may be an "A"** doesn't mean I am happy.





** Technically I'm not an A anymore, but that's for another post.

[hipster duck]

Originally Posted by MonkeyRonin

I think this is pretty accurate, though worth noting that it reflects time as much as it does income. For example, I'm in the C2 group but "stuck" there because we moved in a couple years ago - and also just got pretty lucky (could in theory buy a place, but it would be a downgrade in terms of actual housing quality and/or cost a lot more). If I were looking for an apartment today though, I'd probably be in the D1/D2 group instead. Conversely, if I were a few years older, I could have been in the B1/B2 group by this point in my life.

Definitely. I'd argue that time is more important than income. I mentioned my brother-in-law, who has basically reached the top 1% of earners who work for somebody else (not self-made entrepreneurs) and how living in Vancouver and being just a bit over 40, he still has to make 'sacrifices' and land in B1 whereas not even half a generation ago he'd be firmly in A. And that cascades down the chain. A 25 year-old born in 1998 is much more likely to be E1 than a 25 year-old born in 1988 in 2013, and so on, all the way down to the example niwell posted about people on the verge of homelessness, which is people in the Es sinking into the Fs.

Not only are people of the same means and life stages shifting down 1 rung over where they would have been 10 years ago, but the space between the rungs is widening, too. C2 -> C1 used to be more of a lateral move that was just a question of priorities. Now it's very difficult to save for a downpayment and pass the stress test, all while paying market rents. Further down the scale, E2 is not pretty but at least you have a fixed address; people in F1 have an increasingly difficult time even finding a landlord to rent to them, and are stuck in a life of deprivation.

[WarrenC12]

Originally Posted by MonkeyRonin

Not to be too snarky, but that explains a lot. I'd imagine most of the other remaining LPC supporters are also in the same "A" camp: mostly those who are insulated from (or even beneficiaries of) the housing crisis.

If you're happy with your housing situation, then they haven't really been too bad of a government I guess. The problem is that everyone on the rungs below (ie. most Canadians) may disagree.

LOL proving you know jack shit about me. I have a mortgage and I'll never afford a SFH. There are many people who are far above me on that scale but insist they are the victims.

A CPC government would be better for my wallet but I can't stomach PP. Doesn't make me a big Liberal supporter.

[MonkeyRonin]

Originally Posted by Acajack

I am an A and both insulated and benefiting, but I also have kids who will be trying to enter the housing market sooner than later, and I also care about the future of our society.

Oh for sure, you can be an "A" and still recognise that the state of housing is detrimental to the greater good (and/or support any party for any other of a multitude of reasons). Just pointing out that most Liberal supporters in 2024 likely share the key characteristic of being generally secure and happy in their housing (and also thereby skew older & wealthier than the median voter).

Originally Posted by WarrenC12

LOL proving you know jack shit about me. I have a mortgage and I'll never afford a SFH. There are many people who are far above me on that scale but insist they are the victims.

A CPC government would be better for my wallet but I can't stomach PP. Doesn't make me a big Liberal supporter.

Perhaps I was being unfair, as you're correct that I don't know the details of your personal situation. Still, my point above remains; and I'd maintain that if you were less secure or satisfied with your housing that you'd be more likely to be less satisfied with this government.

Everyone is different, but if we were to create a chart mapping "housing satisfaction" with "likelihood of voting Liberal in 2025" I'd guess that it'd track pretty positively.

[theman23]

So former immigration minister (and now housing minster) Sean Fraser thinks Pierre Poilievre's plan of linking immigration to housing is a good one, but says the Liberals can't do anything about it because...uhh...apparently the Federal Government has no control over the issuance of visas to international students? That's weird, because a few months ago the new Minister for Immigration defended student visas because they offered industry a source for cheap unskilled labour. Did Fraser ever show up to work while and IRC, or did he just forget to do a handover when Miller came in? At the very least these people need to get on the same page with their messaging.

The real kicker is that he goes after the Conservatives for being "ignorant" about non permanent resident growth, a monster the Liberals created and hoped we would ignore. They even so far as recently attempting a slight of hand by announcing a decision to "stabilize" population growth with announcements only focusing on permanent residents. PP has pointed out a few times recently that newcomers to this country far exceed the number of permanent residents coming in, so I'm fairly certain he's aware of the problem. How could any serious political observer not be?

[GlassCity]

Tying immigration to housing starts/completions is intuitively appealing but doesn't really make sense when you think about it. It's reasonable to set aside natural growth given how low it is in Canada, but even then it ignores unmet demand where a huge amount of any new housing developed will be just as ravenously claimed by people leaving their parents or roommates as by new immigrants. Obviously others have brought up the non-permanent resident issue as well.

It seems pretty obvious that there's a housing/population growth mismatch right now and reducing immigration will objectively help with that but there's a ton of catching up to do on the housing side no matter what.

[theman23]

You can't begin to play catch up unless the number of newcomers dramatically decreases or the supply of housing significantly increases. Right now the plan seems to be do neither but to spend a lot of time on TV wringing hands.

Realistically, no one is talking about cutting off immigration completely. But I believe natural growth was on the order of 30,000 people last year. Average household size is 2.5. We're building 200,000 to 250,000 housing units a year, which should be enough to accommodate natural growth, chip away at the housing gap, and also accommodate a healthy amount of immigrants assuming we resume intake rates seen prior to the JT government. But not over 1 million a year.

The CMHC estimates we'll have a housing shortfall of 3.5 million by 2030, and that was with a growth model that estimated we would hit 38.5 million by 2023. We hit 40.5 million in Q3 2023. Their "high population growth" estimate was that we would have a shortfall of 4 million units, but that was modelled on a growth rate of 600,000 to 700,000 persons a year. We're growing at over twice that rate currently. The immigration minister's response is to make the rounds on the media to announce that he's "maybe possibly" going to "look at" doing something in "the first quarter or maybe first half of this year", but still seems to think that excess demand influencing housing prices is just a theory and that the only things influencing prices are "supply and affordability".

[Build.It]

We're a C2 - this housing market is way too unpredictable/irrational, no way I'm dumping all my cash into a house just to see it plummet in value whenever they decide to stop the ponzi. There are plenty of better ways to invest your money than to throw it into a house (which despite all the headlines is still just a commodity), and the place we're renting is pretty decent/secure. Why would I put $500K into a house when I can invest that money into a business that I understand way better?

I have family members with $5000 mortgages who have to work multiple jobs to afford that, and have seen the value gone down by 30% as well ... yeah no thanks. I'm very happy paying half that amount and banking the rest.

If I can afford to buy a house all cash in Ontario that we actually like, and still have half my money left, then I would consider doing it, but otherwise it just doesn't make sense in this market. I would much rather rent here (living as cheaply as I can) and use my money to buy a rental property in Florida/Texas/some other red state where the market is more stable, I can actually make a profit and I can actually evict a tenant. Or reinvest it into my business. Or buy an inflation hedge. Or use it as down payment to buy another business.

You don't need to buy a house to become rich - over 100s of years, the average is that a house for personal residence is a liability, not an asset. The only way a house becomes an asset is if it produces rental profit. Otherwise at best it's just a savings account. What we have is a speculation bubble, and it will crash eventually - either through a hard crash, or an inflationary crash. But it will crash nonetheless. I can't tell you when (although I like to guess), just that it will, and I don't want to get caught in the middle of it when it does. I am far better off investing my money in cash-producing assets and inflation hedges.

[Acajack]

Originally Posted by theman23

You can't begin to play catch up unless the number of newcomers dramatically decreases or the supply of housing significantly increases. Right now the plan seems to be do neither but to spend a lot of time on TV wringing hands.

Realistically, no one is talking about cutting off immigration completely. But I believe natural growth was on the order of 30,000 people last year. Average household size is 2.5. We're building 200,000 to 250,000 housing units a year, which should be enough to accommodate natural growth, chip away at the housing gap, and also accommodate a healthy amount of immigrants assuming we resume intake rates seen prior to the JT government. But not over 1 million a year.

The CMHC estimates we'll have a housing shortfall of 3.5 million by 2030, and that was with a growth model that estimated we would hit 38.5 million by 2023. We hit 40.5 million in Q3 2023. Their "high population growth" estimate was that we would have a shortfall of 4 million units, but that was modelled on a growth rate of 600,000 to 700,000 persons a year. We're growing at over twice that rate currently. The immigration minister's response is to make the rounds on the media to announce that he's "maybe possibly" going to "look at" doing something in "the first quarter or maybe first half of this year", but still seems to think that excess demand influencing housing prices is just a theory and that the only things influencing prices are "supply and affordability".

The fact that the math on this appears to have been relatively simple is what is fuelling a lot of the anger towards the Libs, and will likely continue to fuel anger against them for a while.

In light of these numbers, most people will only see two possible explanations.

Either decisions were driven by powerful and greedy corporate interests who don't care about the impacts on average Canadians and on society in general, and who have politicians in their back pocket.

Or, it's driven by ideological naïveté about the world being one country, Canada welcoming the world onto its clean slate, all 8 billion people on the planet being potential Canadians, beautiful rainbow grandchildren for all of us, awesome ethnic cuisine on every corner, etc.

[lio45]

Originally Posted by Build.It

I would much rather rent here (living as cheaply as I can) and use my money to buy a rental property in Florida/Texas/some other red state where the market is more stable, I can actually make a profit and I can actually evict a tenant.

Florida has gone up so much that snowbirds now go to the Caribbean instead (similar and much cheaper). The JdM had a series of articles on that a few days ago -- which I read with great interest. (No kidding, I'm actually looking seriously at Dominican Republic real estate now )

Cap rates in FL have been steadily going down to the point that I don't think I'll buy more there anytime soon (I might build, though.)

You are correct on the eviction side though, takes a few days only. It's just amazing (when used to Quebec). Aren't you in Alberta? I would have guessed eviction timelines are reasonable there...

[lio45]

Originally Posted by Build.It

You don't need to buy a house to become rich - over 100s of years, the average is that a house for personal residence is a liability, not an asset.

At first sight, I'd say that that data over many places and many centuries probably fails to capture the unique nature of residential real estate as a fully tax-free asset, in modern Canada.

It also probably fails to take into account that Canada is almost certainly positioned for the long run as a growing location in a warming world. Real estate performance is directly tied to population gain/loss, so you can't use an average (which includes places that lose population) if you're actually discussing a specific market that's going to be growing at a healthy rate, and with certainty, for the foreseeable future.

If you average real estate performance over decades in Detroit, Toronto, Buffalo, Dallas, you're going to conclude that it's unimpressive (even worse if you add countries like Japan to your average), but if you stick to markets where demand is high, a choice which an investor can easily make, then it's different.

[WarrenC12]

Originally Posted by MonkeyRonin

Perhaps I was being unfair, as you're correct that I don't know the details of your personal situation. Still, my point above remains; and I'd maintain that if you were less secure or satisfied with your housing that you'd be more likely to be less satisfied with this government.

Everyone is different, but if we were to create a chart mapping "housing satisfaction" with "likelihood of voting Liberal in 2025" I'd guess that it'd track pretty positively.

I rated myself an A and my wife a B2 because it's always a matter of perspective. You can be in a modest home and be happy with your situation. I'd much rather be paying a small mortgage on a basic home than stretching my credit for a "dream home".

If you are a single issue voter, yes you will likely not be pleased with this government on housing. The question you need to ask is: will the CPC be any better for your situation?

It can always get worse.

[Harrison]

I'm in B2 moving up to an A at the end of March - that's the Edmonton market for you.

[MonkeyRonin]

Originally Posted by Acajack

The fact that the math on this appears to have been relatively simple is what is fuelling a lot of the anger towards the Libs, and will likely continue to fuel anger against them for a while.

Yet even here we still see some posters denying that this basic math has had any effect whatsoever on housing affordability.

Originally Posted by WarrenC12

If you are a single issue voter, yes you will likely not be pleased with this government on housing. The question you need to ask is: will the CPC be any better for your situation?

It can always get worse.

That's kind of been the theme of the past 9 years that this government has been in power - each one has gotten successively worse. Why would anyone (who's unhappy with the status quo) keep voting for the same people and expect different results this time?

I don't have much faith in the Conservatives, but when you haven't got much to lose it's still better to go with the unknown quantity than the one that you know to be bad. Also, I think most people are going to be "single issue voters" on this file - housing is kind of a basic necessity. It takes coming from a place of huge privilege to be able to flippantly handwave away those facing housing insecurity as single issue voters.