Canada's 'housing bubble' deemed close to bursting

[Hali87]

I've been seeing that one of the NDP's conditions for working with the Liberals is that the definition of affordable housing is shifted to being "80% of local market rents" rather than "30% of income". I'm curious about the reasoning behind this.

Pegging affordability to local market rates seems like it would be less effective (from an affordability perspective) since the affordable housing wouldn't be included in the average market rate - so if the market rents spike, the affordable rents just spike with them. If rent is pegged to income, this isn't really an issue. A possible compromise (which AFAIK is not on the table) would be to peg affordability to average local rents (including both market and affordable).

[jamincan]

Originally Posted by Hali87

I've been seeing that one of the NDP's conditions for working with the Liberals is that the definition of affordable housing is shifted to being "80% of local market rents" rather than "30% of income". I'm curious about the reasoning behind this.

Pegging affordability to local market rates seems like it would be less effective (from an affordability perspective) since the affordable housing wouldn't be included in the average market rate - so if the market rents spike, the affordable rents just spike with them. If rent is pegged to income, this isn't really an issue. A possible compromise (which AFAIK is not on the table) would be to peg affordability to average local rents (including both market and affordable).

Yeah, that seems really odd.

[Innsertnamehere]

30% of income means the units don’t necessarily have to be below market - just small enough to have low enough rents to meet that threshold. 80% of AMR means that it has to be subsidized housing, and that rate is quite significant as well as new construction housing is usually rented well above AMR.

[SignalHillHiker]

There is another surprisingly cheap one near me on Livingstone. It’s cheaply done but finished. Nothing wrong with it other than it’s on a block where used needles are left everywhere. Boncloddy just below is one of my fave street names in the city, up with Merrymeeting, The Dardanelles, The Boulevard, and Hill o’Chips.



Seems to be a little over $200K average in this area, which is definitely higher than it was even when I moved in October. This $59K one was burned. Apparently everything that was inside is still melted to the walls and floors and it has to be torn down and removed at the buyer’s expense.





That Freshwater one looks like it’s out in the woods to me. It is amazing how much my sense of urbanity is tied to houses being attached and on the sidewalk.

EDIT: Checked out that Livingstone one on my walk home. If I was still looking, I’d take it. I still like mine more tho haha.

[someone123]

Originally Posted by Hali87

It'll be interesting to see what comes of this. The numbers seem bizarrely unambitious at first glance (Penhorn Mall, which is a major transit terminal, seems like it could handle way more than 950 units if Park West Plaza is projected for 3000 and Mumford is projected for 5000+)

The trendy term for the housing market is that the high prices are "overdetermined", i.e. there are many different factors making things expensive. A huge factor is the overall financial state of the economy (low interest rates, high savings with not much other than real estate to invest in), and then another big one is construction capacity. Even if you approve 1 million new units somebody needs to actually build them and Canada is short on trades. Another underappreciated fact is that the fees paid to municipalities in Canada have gone way up.

However, I think the planning delays themselves are a problem. They add to the costs of every project that eventually gets through and they probably hurt the market fit from the delays. So maybe the NS provincial initiative will help a bit with that. And at the end of the day it would be good to break the norm around development approval taking years and routine infill or greenfield projects being treated like complicated court cases with bespoke planning activity and rounds of changes.

[Wigs]

Originally Posted by Coldrsx

Edmonton's most recent avg. price is $411,000... so a significant jump over that chart from Jan.

Glad to hear

Now what's Canmore?

[Hali87]

Originally Posted by Innsertnamehere

30% of income means the units don’t necessarily have to be below market - just small enough to have low enough rents to meet that threshold. 80% of AMR means that it has to be subsidized housing, and that rate is quite significant as well as new construction housing is usually rented well above AMR.

That makes sense. In practice I'm worried it will make conditions here worse though. I'm not sure how much of an outlier Halifax is when it comes to the exact housing issues in 2022, although it sounds like Fredericton and Saint John are running into similar issues.

A major problem here is that market rates are rising very rapidly, regardless of whether the buildings are new or not. So if affordability is pegged at 80% of AMR, and a bunch of people move into 80%-of-AMR units because that's what they can afford... in a couple years, when the AMR is 1.5-2x what it is now, they will no longer be able to afford those units (unless their income increases dramatically). This is happening in the cheapest parts of the metro - once people get displaced from places like Spryfield, Dutch Village, North Dartmouth, there isn't really "somewhere cheaper" for them to move to, especially if they don't have a vehicle.

[lio45]

Count me among those who agree it makes no sense.

When "market" rents have become totally out of scale with many people's incomes (for various reasons), 80% of them is still astronomical and nonviable.

"Affordable" has to be pegged to income, by definition. That's how the concept is defined.

For example, an "affordable" car is a car that most low-income people can hope to get; a Lamborghini offered at 80% of its previous pricetag would not qualify.

[lio45]

Originally Posted by SignalHillHiker

This $59K one was burned. Apparently everything that was inside is still melted to the walls and floors and it has to be torn down and removed at the buyer’s expense.

That one could be a decent project for a young person wanting to get into real estate in the Canada of 2022.

For the record, it's how I started: use your cash savings to acquire something, fix it, then the following year, refinance it with the result being that you now have more cash than you started with the previous year, and you can now buy a bigger building as your second one, and so on.

It was much easier back then, but I'm sure it's still doable.

[jamincan]

Average rent for 1-br in Kitchener right now is ~$1500.

At the 80% plan, that would set affordable rent here at $1200/mo. In order for that to be considered affordable rent under the 30% income rule, you would need to earn $48k/yr. To put that in perspective, the lowest tax bracket in Ontario is $46k/yr and below or so. Minimum wage in Ontario is $31k/yr.

[Wigs]

Price for rentals is hard to comprehend, particularly for Southern Ontario



Halifax can probably blame southern Ontarians for moving there and ruining their RE market as well

[goodgrowth]

Japan really seems to blow a hole in the theory about interest rates being a main factor in housing prices...

[giallo]

I'm looking to rent a place in Metro Vancouver right now, and it's absolutely brutal - and I don't means the rent prices (they're insane, make no mistake), it's the competition. Every single place I've looked at, there's a line up of people viewing it. As someone that's lived outside of the country for an extended period, all of my references are outside of the province/country which is an immediate turn off to prospective landlords.

I had no idea it was going to be this tough.

[theman23]

Originally Posted by giallo

I'm looking to rent a place in Metro Vancouver right now, and it's absolutely brutal - and I don't means the rent prices (they're insane, make no mistake), it's the competition. Every single place I've looked at, there's a line up of people viewing it. As someone that's lived outside of the country for an extended period, all of my references are outside of the province/country which is an immediate turn off to prospective landlords.

I had no idea it was going to be this tough.

We hear a lot about Canadians needing to get to the new normal of not owning and just renting for the rest of their life, but it doesn’t seem like the rental market offers a much better option. All levels of government have failed quite miserably on the housing front.

[someone123]

Originally Posted by theman23

We hear a lot about Canadians needing to get to the new normal of not owning and just renting for the rest of their life, but it doesn’t seem like the rental market offers a much better option. All levels of government have failed quite miserably on the housing front.

It's been interesting to me to watch NS since according to conventional wisdom BC is so expensive because it's amazing and has limited land availability. According to conventional wisdom NS is a craphole and it has tons of empty land (literally undeveloped forest) similar to the already developed suburbs. It's following more or less the same unaffordability trajectory as other places these days.

The price of course does not solely depend on the land or how amazing a place is. It's possible in theory to build more supply to drop prices no matter how amazing and it's possible to add multi unit when land is scarce (even multi unit in mediocre parts of Vancouver is extremely unaffordable based on incomes).

[SignalHillHiker]

Sorry to hear that giallo. The rental market seems a little fucked currently, even here. I understand rents will usually be more than a mortgage because the owner needs to cover at least that, but it just seems so out of whack. Even renting a single room in a home in my neighbourhood is more than my mortgage.

[urbandreamer]

Fifteen years ago I had a large 850 sqft 2 bedroom apartment in Waterloo for $760/month, parking and hydro included. It had the best layout of any apt I've seen: huge closets along the hallways, in the bedrooms and a large one by the foyer. I was making $55k then.

I can't afford to move: I'm paying $1100 for a 2 bedroom. On the streets of Toronto this past month, I've heard many people talking "I'm broke", "can't afford next month's rent", "can't afford meat", etc. On the highways, I've noticed people driving SLOW. 427/401 and people are doing 90kph in the slow lane, maybe 115kph in the fast lane.

[Dwils01]

Originally Posted by giallo

I'm looking to rent a place in Metro Vancouver right now, and it's absolutely brutal - and I don't means the rent prices (they're insane, make no mistake), it's the competition. Every single place I've looked at, there's a line up of people viewing it. As someone that's lived outside of the country for an extended period, all of my references are outside of the province/country which is an immediate turn off to prospective landlords.

I had no idea it was going to be this tough.

Same here. I took me 3 months to get a new place. Every place I visited had a bunch of people viewing them as well.

[ssiguy]

Talked to someone just today at the dog park. She and her partner are getting renovicted and have absolutely no idea where they are going to go. She said they are thinking of just giving up on Vancouver and moving to Calgary where they could actually buy and both would make more money.

[WarrenC12]

A recession will solve these problems. It's coming.