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

[Changing City]

Originally Posted by theman23

It’s the same old story on this forum. We’re doing worse than our peers? Let’s compare ourselves with a group of struggling countries that no one would ever have benchmarked against to make ourselves look better. We’re literally the worst in the world? Let’s obfuscate by ignoring the details of the data and cherry pick anecdotes from the rest of the world that make it seem like others are in the same boat.

I don't view a lower fertility rate as 'good' or 'bad' - although clearly it has policy implications. So I don't think we're doing 'worse'. There are other reasons that countries might have low fertility as well as the price of housing (as Truenorth00 identifies). Canada's fertility rate has been below the 2.1 replacement rate since 1972, (and that's true for the US and UK as well), and the global rate is now 2.4. Which is probably a good thing, as fewer people in the world would, in my view, be better than more.

[Changing City]

Originally Posted by Truenorth00

Yep. Never thought I'd see a serious (non-sarcastic) response that compared Canada to the PIGS and an ex-Communist country.

I guess we should hold out for, "At least we're not < insert name of basket case developing country >."

At least we're not South Korea?

[Truenorth00]

Originally Posted by Changing City

At least we're not South Korea?

You're right. At least we're not South Korea. But we're on our way there. And remarkably they are actually trying harder than us to fix their problem.

At the center of the government response is a pledge to increase the stipend given to parents with a child under the age of 1 from 300,000 won per month (about $230) to 1 million won ($765) by 2024.

The country's child care policies are also among the best in the world, according to UNICEF, and continue to expand. The government announced plans in January to increase the paid parental leave period from one year to a year-and-a-half. The U.S., by comparison, has no national paid leave plan, and only about 35% of workers are employed at companies that offer any paid parental leave.

So why does the fertility rate continue to drop?

One problem is that the government's approach is a "Band-Aid solution," said Andrew Yeo, a senior fellow at the Brookings Institution's Center for East Asia Policy Studies.

"The child care subsidies, the leaves — these are all things you can visibly see and argue 'Yes, we are making these attempts,'" he said. "But dealing with the structural problems that aren't directly related to fertility, that's a big ship to turn around."

Among the thorniest issues is the lack of affordable housing — particularly in major cities like Seoul that have been drawing growing numbers of young people from the countryside with prospects of better educational and job opportunities.

People in their 20s and 30s often say, "I'll have kids once I have my own place," according to Jessica Ryu, a 27-year-old Korean citizen who is pursuing a postdoctoral degree in communications in the U.S.

But with so much competition for an apartment in Seoul — where 18% of South Korea's population is concentrated — young people are finding it difficult to afford a place of their own, and subsequently, start a family.
....

https://www.npr.org/2023/03/19/11633...fertility-rate

[someone123]

I wonder how the social contract will work when there are fewer intergenerational bonds in Canada. Is it stable to have a system that funnels resources to seniors but relies heavily on TFW and immigrant labour whose elderly relatives are mostly abroad or don't qualify for the same assistance?

I'm skeptical of the idea that low fertility is neutral in the sense of simply reflecting preferences and not economic constraints. I wonder if we're in a bit of a downward spiral where heavy migration to Canada is seen as a solution to low birthrates but also tends to lower birthrates.

If we zoom out to the 50,000 foot view I think our society and government are fairly rudderless and don't understand or focus on what is needed to allow the people living here to do well. I don't think the shoebox condo and TFW model makes people happy.

[MonkeyRonin]

Originally Posted by Changing City

Obviously the decision to have kids is partly related to housing, and the economy. But your list doesn't really explain all the countries with an even lower fertility rates than Canada's 1.43 (using the same data set you referenced), that also have lower housing costs.

Greece 1.39
Portugal 1.38
Poland 1.33
Italy 1.25
Spain 1.19

Should've prefaced that as I just knew someone would bring those countries up - but there's a reason I compared us to other wealthy, diverse, and Anglo/Francosphere countries and not the culturally distinct, economically troubled Southern European countries.

Originally Posted by someone123

I wonder how the social contract will work when there are fewer intergenerational bonds in Canada. Is it stable to have a system that funnels resources to seniors but relies heavily on TFW and immigrant labour whose elderly relatives are mostly abroad or don't qualify for the same assistance?

Canada is becoming more like the Arab Gulf states but with seniors acting as the ruling class. Their system of immigrant exploitation to funnel wealth to a favoured demographic seems to work well enough for them though.

[hipster duck]

Originally Posted by Truenorth00

The pensions and home values are nice. But our system was supposed to set up to do aging in place. And we really haven't done that. In about a decade that hole is going to become a lot more obvious. Also, a big part of aging in place, is having your kids and grandkids nearby. We've mostly failed at that.

We have? Or the very same demographic of seniors whose children cannot afford to live near them have?

As far as I can see, we don't have an aging in place problem - we have a seniors willing to vacate their homes to allow aging in place problem.

My uncle provides a counterexample. He sold his west side Vancouver home and bought a 2BR condo, netting about $800k after buying the condo and various closing costs. He gave both of his children $400k to buy their first homes, and they both bought townhouses with their families. A few years later both of them had grandchildren that they could afford to raise in homes with sufficient space. I guess his other option is that he could have shuffled around the rest of his days in a home with 4 empty bedrooms while asking his renter children at family dinners when they were to give him grandchildren.

It's not like Vancouver lacks for downsizing options for people who have the means. Even for seniors who are unwilling to downsize [read: selfish], they can borrow against their home to build a laneway suite and stuff their children and their growing families in those while they lord over the 2,000 ft2 main house.

[Truenorth00]

Originally Posted by MonkeyRonin

Canada is becoming more like the Arab Gulf states but with seniors acting as the ruling class. Their system of immigrant exploitation to funnel wealth to a favoured demographic seems to work well enough for them though.

The Gulf states don't give full Permanent Residency and eventual citizenship to their indentured servants. Ours will get voting rights at some point.

[someone123]

Originally Posted by hipster duck

My uncle provides a counterexample. He sold his west side Vancouver home and bought a 2BR condo, netting about $800k after buying the condo and various closing costs. He gave both of his children $400k to buy their first homes, and they both bought townhouses with their families. A few years later both of them had grandchildren that they could afford to raise in homes with sufficient space. I guess his other option is that he could have shuffled around the rest of his days in a home with 4 empty bedrooms while asking his renter children at family dinners when they were to give him grandchildren.

This is individually rational and nice for those who get it but so much worse than a world where education and work provide this payoff.

From what I've seen some of this practice of sharing with kids is cultural and some families tend to be more close-knit while others are nonfunctional to nonexistent or have a "pull yourself up by your bootstraps" mentality. I have basically given up on explaining the basic economics facing younger people to some older people I know. They imagine Canada's full of the same opportunities for young people that they had and if the young people aren't doing well it's because they're inflexible or lazy. You see it on SSP sometimes with people talking about how Millennials should stop complaining because if they were 2 surgeon couples they could still afford a nice place in Wawa.

On a related note, I don't like how Canada seems to be descending into mindset where people look more and more at what others have and judge how private resources like real estate should be allocated. Lately it seems the people in charge don't know how to keep things running well; they implement reactionary policies after decline sets in. What we really need is various forms of economic productivity, not gross mismanagement followed by a series of half-baked redistribution measures.

[niwell]

I actually know quite a few people who sold West End Toronto homes they got for a song 40 years ago and are able to live quite comfortably on the proceeds. My friend was able to buy a house in Hamilton (detached but with 2 rental units) on "early inheritance" proceeds from it.

I do think a lot of older people are counting on the proceeds of their home to fund eventual longer-term care which isn't exactly cheap though.

[someone123]

Originally Posted by niwell

I do think a lot of older people are counting on the proceeds of their home to fund eventual longer-term care which isn't exactly cheap though.

I know some wealthy seniors who are scared of the future prospect of having to pay for very extreme long-term care costs. I suspect they are probably hoarding lots of wealth and underspend even on themselves in their 80's. IMO, enjoying yourself in your 70's is much more important than worrying about being penniless when you are 102.

I know others who had a lot of money but have sort of lost their marbles and their kids seem to have taken advantage. The kids also didn't plan well and basically it was wasted. They buy new cars and new expensive furniture or whatever and then their finances are not great 5 years later.

[WhipperSnapper]

I have many neighbours that live off of inherited wealth (their children and children's children can also live comfortably off that wealth) from the sale of their parent's acreages on the fringes of the GTA. I did quite well inheriting $100,000 in 1995 and funneling it into real estate over the last 20 years. A monkey could have. I made a ridiculous number of poor choice passing over many lucrative situations. A 100k does even buy a kitchen with flimsy, overpriced cabinetry.

There are haves and have nots and the middle ground is a shadow of what it was 30 years ago. That's affecting our GDP and more people lately isn't boosting it anymore.

[niwell]

On the flipside my stepdad/mom financed a house in Canmore for his brother and then-wife in the mid-90s but ended up selling at a loss shortly after when they divorced. I shudder to think at how much better off I'd be now if they managed to hold on to that...

[someone123]

IMO it's generally negative for residential real estate to make up such a large percentage of everybody's wealth and for house sale decisions to be extremely important generational wealth building or destroying events.

[WhipperSnapper]

Most people that sold in 1995 took losses. They gained it back and then some when they purchased something else.

Over the last decade, it became increasingly harder to get into the game and if you did manage to get into the game with everything you had than it didn't take long to end up stuck with what you had or something lower.

[WhipperSnapper]

Originally Posted by someone123

IMO it's generally negative for residential real estate to make up such a large percentage of everybody's wealth and for house sale decisions to be extremely important generational wealth building or destroying events.

What's worse maybe people's coming to that realization too much wealth is tied up in a single cyclical asset and not being able to afford a lifestyle reflective of their income and then choosing to relocate to another market leading to dramatic inflationary price increases.

[niwell]

^Yep. We didn't relocate but purchased in a cheaper market to be able to get something. Realize it's part of the problem but didn't want to be stuck relying on ever-increasing rental costs if it comes to it. Thankfully our costs are still much lower than if we'd over-extended and tried to get something much smaller in Toronto.

It's hard to make a moral stance if you end up getting screwed over in the end.

[Truenorth00]

Originally Posted by WhipperSnapper

What's worse maybe people's coming to that realization too much wealth is tied up in a single cyclical asset and not being able to afford a lifestyle reflective of their income and then choosing to relocate to another market leading to dramatic inflationary price increases.

That concentration of wealth is also problematic. They may not get the exit they want if the generation who is supposed to buy is broke.

[lio45]

Originally Posted by MonkeyRonin

Canada is becoming more like the Arab Gulf states but with seniors acting as the ruling class. Their system of immigrant exploitation to funnel wealth to a favoured demographic seems to work well enough for them though.

As a general rule, exploitation works great when you’re among the exploiters and the exploited don’t have the resources/weapons/numbers to even think about rebelling.

And don’t blame me: I didn’t vote for these guys, YOU (greater you, not MonkeyRonin specifically) did.

(I love quoting George Carlin whenever appropriate!)

[Doady]

Originally Posted by theman23

Said absolutely no one ever. Even if we were to go back to 2015 levels we would be bringing in more immigrants than most countries.

No one said that Toronto could build a subway system on par with Tokyo's? Wow, thanks for educating me, TheMan23. I would not have known that if you hadn't told me.

[theman23]

Originally Posted by Doady

No one said that Toronto could build a subway system on par with Tokyo's? Wow, thanks for educating me, TheMan23. I would not have known that if you hadn't told me.

No one ever said we should stop immigration. Sarcasm is supposed to have a point. I’m not sure what yours was if that wasn’t it, and I’m probably not alone.