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

[Acajack]

Originally Posted by lio45

As I said earlier, the more kids you have the less well this works. Maybe we could go back to a somewhat feudal system in which one lucky kid (firstborn typically) inherits the property while the other kids get nothing…

You don’t need to move out to give downpayment help to your kids, you can simply refinance your mostly-paid-off SFH. Again though, the more kids one has, the less real-estate-equity-per-capita for the next generation. With more than two-three kids it’s likely not even viable.

All true.

Also, some of us may have other sources of cash not property-related that we can use to help our kids out.

[lio45]

A plan that kinda works for two kids and Gen X parents with a paid-off SFH: refinance the SFH to the max, buy a small condo with the cash for the Gen X parents to move in, keep a chunk of $ for retirement, give the rest of the cash to one kid for a downpayment and give the mortgaged SFH to the other kid.

[thewave46]

This is such a depressing timeline that we have to scheme for one's children to afford property in 2024 Canada.

But yeah, some sort of rent-to-own style scheme (parents own asset, let kid live in and pay for it) to the kids with parents' paid-for SFH as collateral probably is the way.

To think: 10-15 years ago - Vancouver excepted for its own special reasons - ordinary young people could afford the next step up in most of Canada.

We really should divorce the idea of shelter as an appreciating asset beyond the overall GDP growth line. If I break even after all the costs (mortgage, interest, property taxes, maintenance), I'll consider myself extremely lucky. If I don't, oh well. Wasn't banking on the house to fund my retirement.

Admittedly, the scheme does pad the wobbly retirement financials of older Canadians. As long as the country makes it to the check-out point for them, that's what matters.

Canada 2050: The Landed Gentry got theirs.

[Innsertnamehere]

Originally Posted by lio45

A plan that kinda works for two kids and Gen X parents with a paid-off SFH: refinance the SFH to the max, buy a small condo with the cash for the Gen X parents to move in, keep a chunk of $ for retirement, give the rest of the cash to one kid for a downpayment and give the mortgaged SFH to the other kid.

This assumes 1. that the parents are fine with a small condo, and 2. that one of the two kids can afford the mortgage on the house.

The reality is that most parents will remortgage their home or downsize to provide downpayment assistance to their children.

[Build.It]

This conversation is also a good reminder of why it's so important to teach our youth how to build wealth outside of just owning a principal residence.

Being a renter does not have to = being poor. There are plenty of otherwise to build wealth.

[goodgrowth]

All these feudalist ideas of how to fix housing are ignoring population growth. You can't take some sort recycling mentality to housing with high growth.

In a sane world low density areas in major urban areas filled with older people would already be upzoned and primed for redevelopment. That way they can cash out and there are more downsizing options on the market, more housing in general etc.

I believe this is from Australia but this is actually what a sane senior sounds like:

[Coldrsx]

Government takes further action to build more homes, faster
From: Department of Finance Canada

News release
Unlocking funding for student housing

January 29, 2024 - Ottawa, Ontario - Department of Finance Canada

Today, as part of Canada's economic plan, the government announced further action to build more homes, faster, by supporting the construction of student housing.

Canada is home to some of the world’s best higher learning institutions. Not only do they help provide skills for the future, they create jobs, and foster a young and dynamic community. But when students are unable to find a place to live on or near campus, they look to the nearby community, which can drive up rent and reduce the number of homes for everyone.

To help fix this, the Government of Canada will be offering low-cost loans to build more student housing on- and off-campus. By reforming the Apartment Construction Loan Program, we will help more students find housing they can afford close to where they study, and help ensure that there are more homes available for families who live in those same communities year-round.

These important steps to support the construction of student housing are just one piece of the government’s economic plan that addresses housing challenges and boosts affordability. This measure is one of many reforms committed to in the 2023 Fall Economic Statement to unlock new home construction financing.

https://www.canada.ca/en/department-...es-faster.html

[lio45]

I really should start looking into these various programs, I’m sure I can benefit from govt largesse while doing things that you wouldn’t need to twist my arm too much for me to do (23-unit SRO building that I’d turn into college student housing instead of surface parking, for a real life example).

The Feds hopefully have a simple “access point” to inquire? I’ll report on whether this part was done well or not, after trying to interact. (It’s obvious developers will need to contact bureaucrats about these programs, it’s unavoidable… hopefully someone thought of that!)

[Acajack]

Originally Posted by lio45

I really should start looking into these various programs, I’m sure I can benefit from govt largesse while doing things that you wouldn’t need to twist my arm too much for me to do (23-unit SRO building that I’d turn into college student housing instead of surface parking, for a real life example).

The Feds hopefully have a simple “access point” to inquire? I’ll report on whether this part was done well or not, after trying to interact. (It’s obvious developers will need to contact bureaucrats about these programs, it’s unavoidable… hopefully someone thought of that!)

So I guess you weren't affected by the big fire in downtown Sherbrooke too much?

[whatnext]

Originally Posted by lio45

A plan that kinda works for two kids and Gen X parents with a paid-off SFH: refinance the SFH to the max, buy a small condo with the cash for the Gen X parents to move in, keep a chunk of $ for retirement, give the rest of the cash to one kid for a downpayment and give the mortgaged SFH to the other kid.

And what happens when we get to the point where parents can no longer afford a SFH to tap into? We’re getting close to that point in Vancouver.

[harls]

r/SlumlordsCanada is really taking off on Reddit.

[theman23]

Originally Posted by harls

r/SlumlordsCanada is really taking off on Reddit.

You can pay $300 a month to work as someone’s live in cook:
https://www.reddit.com/r/SlumlordsCa...g_and_the_boy/

I’m fairly certain the living situation of intentional students in Canada is worse than that of foreign labourers in the mid or far east. And all we get to show for it is a bunch of shitty private colleges.

[Build.It]

Originally Posted by theman23

You can pay $300 a month to work as someone’s live in cook:
https://www.reddit.com/r/SlumlordsCa...g_and_the_boy/

In South Africa the landlord will pay you for that.

[logan5]

Originally Posted by Build.It

This conversation is also a good reminder of why it's so important to teach our youth how to build wealth outside of just owning a principal residence.

Being a renter does not have to = being poor. There are plenty of otherwise to build wealth.

Yeah when you add up the property tax, maintenance fees, and extra cost of a mortgage, it comes to over 1000 per month or more than renting. Put that towards a diversified stock fund and you can get a 10% return (average). Builds up fast.

[Berklon]

Prepare for luxury living:

Latest Toronto nightmare rental is $500 ‘jail cell’ in Scarborough

[Build.It]

Originally Posted by logan5

Yeah when you add up the property tax, maintenance fees, and extra cost of a mortgage, it comes to over 1000 per month or more than renting. Put that towards a diversified stock fund and you can get a 10% return (average). Builds up fast.

That's basically how I see it - in most places across Ontario it is much cheaper to rent than to own, and has been for a while, even pre-COVID (unless you a very high down-payment).

Personal finance should be a compulsory course (separate from math) that every high school kid needs to take.

[lio45]

Originally Posted by Acajack

So I guess you weren't affected by the big fire in downtown Sherbrooke too much?

Only the immediate neighbors on each side were impacted (and only one building was lost). I do have buildings a stone’s throw from there, but nope, didn’t affect me at all. Sucks to have lost an old building but it wasn’t that old or that nice, not the end of the world. I’m really puzzled about how this could happen though as the buildings I have in that size category are all forced by law to have high-tech very sensitive alarm systems and the fire trucks will automatically show up about two minutes after the first molecule of smoke is created. I’m guessing the system in that one building wasn’t functional at the time…?

[Acajack]

Originally Posted by lio45

Only the immediate neighbors on each side were impacted (and only one building was lost). I do have buildings a stone’s throw from there, but nope, didn’t affect me at all. Sucks to have lost an old building but it wasn’t that old or that nice, not the end of the world. I’m really puzzled about how this could happen though as the buildings I have in that size category are all forced by law to have high-tech very sensitive alarm systems and the fire trucks will automatically show up about two minutes after the first molecule of smoke is created. I’m guessing the system in that one building wasn’t functional at the time…?

Hmmm....

https://www.facebook.com/watch/?v=748752756459917

[ssiguy]

One good example in the rent to own system is where each unit has a predetermined price with a predetermined strata fee.

Let's say each unit is built at $250k per unit {yes Vancouver that is possible} and they set the rent at an affordable rate of say $1300 for a one bedroom which only goes up at the rate of inflation. One can live there till they die if they want but those that want to can buy them after a certain time period.

They rent for {for example 3 years} but after that time an amount ie $300/month is allocated for a potential down payment. That would mean that in a decade they would have 7 years of down payment accrual which is equates to $14,200 in the bank for their down payment towards the purchase price. The purchase price is still that $250k plus 50% of the rate of inflation which equates to about 20% down. The best thing is that they are not forced to buy if they don't want to or if interest rates are too high at the time they can continue to rent and accumulate more down payment until rates come down. The part put aside for a downpayment is exactly that, just for a down payment and not for anything else so if you choose to leave you get nothing.

They would sell the condo back to the gov't at the predetermined price plus half of the accumulated inflation rate and then begin to pay their predetermined strata fee plus rate of inflation. The gov't can then use that money from the sale and the rent they have collected towards new buildings where they again start off as rentals and then after 3 years they can purchase etc.............the system is essentially self-financing while the tenants get cheap rent and the ability to purchase so they aren't poor forever but are actually accumulating capital. If the person who bought the condo wants to leave then again they sell it only to the gov't at the predetermined original; price plus inflation.

It is a win-win situation and has the added benefit of having less deterioration in the apts themselves. People are far more likely to take care of their unit and the building itself if they have a vested interest in it. Also, due to the building not allowing rentals for non-occupants and most buying with less than 25% down means they must purchase thru CMHC financing which means the purchasers cannot be used for a second home resulting in no flippers, investors, and guarantees the hommes will be available only to Canadian citizens.

[Coldrsx]

https://assets.cmhc-schl.gc.ca/sites...jE3MDY3MTYzNTM.