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

[Arrdeeharharharbour]

Originally Posted by lio45

It’s pretty simple: how high people can bid up rents and monthly mortgage payments is directly linked to both 1) people’s ability to pay and 2) supply vs demand. (And then, monthly mortgage payments being “fixed” by supply and demand, house prices are directly linked to interest rates.)

The behavior is fairly simple because housing is a pretty damn essential “purchase”. It’s like selling a bottle of water to someone stranded in the desert and about to die of thirst: no need for deep historical water market trends analysis to declare that what that person will be willing to pay is “all his $$$, whatever that is”. Very simple situation.

So you agree with Nite. A supply of free/cheap money affects the price of housing regardless of immigration levels.

[MolsonExport]

Priced out of home ownership - 'It makes me want to throw up'

When Nathan Wilkins moved back in with his mother and sister in 2019, he hoped it would help him save money to buy a home. But in the years since, the US housing market has been transformed by rising rents, surging home prices, and a massive jump in mortgage rates, making homeownership seem ever more impossible. He and his sister are making more money than ever, the 32-year-old insurance adjuster from Utah says. But shelling out $2,500 (£1,960) a month in rent doesn't leave much left over. “It’s like I’m playing a game that you can’t win,” he says. “The fact that we’re being priced out just makes me want to throw up.”

Such frustrations are spreading, fuelling dissatisfaction and contributing to the widespread pessimism about the US economy that is looming over the country's upcoming election.
The median home sale price in the US has jumped by nearly 30% since the end of 2019, hitting $420,000 this spring. At a time of rising property values globally, the leap has been one of the most dramatic in the world, according to the International Monetary Fund.

And that's not factoring in the added costs from higher interest rates, which now stand at roughly 7% for the 30-year, fixed-rate mortgage that is typical in the US, up from about 3% in 2020. Homebuyers today need an annual income of more than $100,000 - well above the country's household median of about $75,000 - to comfortably afford a home in most places in the US, research firms such as Zillow and Bankrate say, and face monthly payments that have roughly doubled in just four years.

personally, I blame Trudeau.

[theman23]

Yes, interest rates affect the price of housing regardless of immigration levels. That’s a meaningless statement on its own since the question is a matter of degree and what’s driving housing costs now. It doesn’t mean that immigration has no effect or even that immigration is not the dominant driver of costs right now, which is the exact opposite of what Nite has argued repeatedly despite all evidence to the contrary. As already mentioned, housing prices may have plateaued but housing costs have gone through the roof. Without a massive population boom, house prices would have dropped further and costs would be more reasonable.

[Arrdeeharharharbour]

Originally Posted by MolsonExport

Priced out of home ownership - 'It makes me want to throw up'




personally, I blame Trudeau.

Clearly it's his fault! Our PM is oh so powerful and with international influence that is so strong that he has caused a housing crisis throughout the western world. There can't possibly be another reason for a housing crisis to exist in other countries....can there?

[YOWetal]

Originally Posted by Arrdeeharharharbour

Clearly it's his fault! Our PM is oh so powerful and with international influence that is so strong that he has caused a housing crisis throughout the western world. There can't possibly be another reason for a housing crisis to exist in other countries....can there?

Yeah blaming the federal government for 2020-2022 boom seems ridiculous. The 2023 immigration boom certainly kept prices high and especially kept rents high. It's arguable if that was a mistake as we certainly could have tipped into a crash and panic selling which is probably worse for almost everyone.

[niwell]

I think the point is there are multiple factors affecting housing costs in Canada, some of which are tied to broader economic practice. However we're in a bit of a "perfect storm" where these are being actively exacerbated by current government policy. This isn't all the fault of JT and it's accurate to say his policies are largely in-line with what could have been expected. But there's also been very little will to address things.

[theman23]

Originally Posted by niwell

I think the point is there are multiple factors affecting housing costs in Canada, some of which are tied to broader economic practice. However we're in a bit of a "perfect storm" where these are being actively exacerbated by current government policy. This isn't all the fault of JT and it's accurate to say his policies are largely in-line with what could have been expected. But there's also been very little will to address things.

These drive-by shit posts that just dump a story of a housing crisis in some other part of the world to absolve all blame from the current government completely miss the point. As you mentioned, there are broader economic practices in the western world that have contributed to the issue. But Canada has seen the worst of it, and the reasons for that aren’t magic or luck.

[goodgrowth]

These sort of attitudes are why there are problems and people have turned on the Liberals. "What does it matter if population growth was cranked?" "At least prices didn't drop" "There are problems in other countries!"

At a minimum problems should certainly not be exacerbated by ignorance or naivety and furthermore other countries having problems should not be some free pass on accountability or how Canada measures itself.

Anglo countries are not the example of how you want to do housing. It's as much about preservation and not ruffling the feathers of an asset class as it is about abundant shelter supply. Personally I wouldn't care if we had high population growth if our culture, mindset and process was completely different around urban planning and housing...but that isn't the case.

[theman23]

Originally Posted by goodgrowth

These sort of attitudes are why there are problems and people have turned on the Liberals. "What does it matter if population growth was cranked?" "At least prices didn't drop" "There are problems in other countries!"

At a minimum problems should certainly not be exacerbated by ignorance or naivety and furthermore other countries having problems should not be some free pass on accountability or how Canada measures itself.

Anglo countries are not the example of how you want to do housing. It's as much about preservation and not ruffling the feathers of an asset class as it is about abundant shelter supply. Personally I wouldn't care if we had high population growth if our culture, mindset and process was completely different around urban planning and housing...but that isn't the case.

The worst is “the government can’t really do anything about this issue”. For that to be true, you’d have to demonstrate both that government policy hasn’t led to the housing crisis in other countries and that things aren’t worse in our country. Neither of these are true, but even if they were this is still how a democracy works. If the elected government doesn’t want to wear the mess that’s unfolded during there tenure, they need to make some sort of effort to turn things around or consider a career change. Given how long it took the Liberals to even acknowledge this issue existed, the latter would be preferable.

[MolsonExport]

Originally Posted by theman23

These drive-by shit posts that just dump a story of a housing crisis in some other part of the world to absolve all blame from the current government completely miss the point. As you mentioned, there are broader economic practices in the western world that have contributed to the issue. But Canada has seen the worst of it, and the reasons for that aren’t magic or luck.

They are not shit posts, and they are relevant to the subject matter at hand. Shit posts are those that simply place all the blame at the feet of Trudeau and immigration levels, ad nauseam.

The article is from the BBC. Hardly a garbage source.

[YOWetal]

Originally Posted by MolsonExport

They are not shit posts, and they are relevant to the subject matter at hand. Shit posts are those that simply place all the blame at the feet of Trudeau and immigration levels, ad nauseam.

Agree it is very much debatable. I tend to think a 2021 tweaks such as an increase in down payment for investment properties were warranted. I doubt very much anyone else would have done things differently other than turning the taps off a bit earlier on the money. Going forward it is clear the Liberals are all talk no action and don't have the stomach for righting the ship but I think they get overly blamed for the general malaise. UK election is an exact mirror image with a long in the tooth far right government getting blamed for the exact same issues. Though they have the self goal of Brexit as well.

[goodgrowth]

The shit posts may not explicit but there has been a bunch of conspiratorial, pseudoscientific and economically illiterate claims about the cause of the housing problem that still continue to this day.

There are many people who benefit by keeping the problem vague, confusing and elusive in the political sphere.

[theman23]

Originally Posted by YOWetal

Agree it is very much debatable. I tend to think a 2021 tweaks such as an increase in down payment for investment properties were warranted. I doubt very much anyone else would have done things differently other than turning the taps off a bit earlier on the money. Going forward it is clear the Liberals are all talk no action and don't have the stomach for righting the ship but I think they get overly blamed for the general malaise. UK election is an exact mirror image with a long in the tooth far right government getting blamed for the exact same issues. Though they have the self goal of Brexit as well.

It’s impossible to say whether anyone would have done things differently because there was only one party in power for the last 9 years. When given the opportunity they doubled down the same (lack of) economic policy that has led us into this mess in the first place. If they don’t like the responsibilities of governing, they can call an election and go home to give someone else a shot.

[whatnext]

Originally Posted by casper

That does make sense. The students (aka part-time uberEats drivers) are not going to be in a position to have a down payment for a home. They don't factor into the supply-demand equation. It will be several years before they build up the experience in Canada to be able to get a better paying job where they have a chance of starting to look at home ownership.

They are going to impact the rental market, not the home buyer market.

I'm sorry but that's total hogwash.

Do you think the international students are going to be living in rental housing specifically constructed for them? Rare, though the public shaming of institutions like Conestoga is helping to force them to build student housing. No, they're living in rentals that would otherwise have been occupied by Canadians. And many of those rental accommodations were built as ownership units and bought by investors.

[P'tit Renard]

Originally Posted by YOWetal

Yeah blaming the federal government for 2020-2022 boom seems ridiculous. The 2023 immigration boom certainly kept prices high and especially kept rents high. It's arguable if that was a mistake as we certainly could have tipped into a crash and panic selling which is probably worse for almost everyone.

The issue is whether kicking the can down the road is actually going to make it worse for almost everyone in the end, even if it made homeowners feel good about themselves during COVID. Case in point is China where they've kicked the can so many times the bubble is now too catastrophic to reel back from, and the government has run out of tools to keep the bubble afloat.

[YOWetal]

Originally Posted by goodgrowth

The shit posts may not explicit but there has been a bunch of conspiratorial, pseudoscientific and economically illiterate claims about the cause of the housing problem that still continue to this day.

There are many people who benefit by keeping the problem vague, confusing and elusive in the political sphere.

Well there is no definitive answer. At least inn terms of why we see bigger increases than France or Germany who had most of the same policies. My take is it's general Anglo-American desire for housing and incoming immigration combined with massive drop in interest rates. The interest rate drop is especially dramatic in Canada as we have 5 year rates. So we went from 2% to 1% . US only went from 3.5% to 2.5%.
It is hard to see prices not falling dramtically if we don't get back to 2% again.

[P'tit Renard]

Originally Posted by casper

That would be the best possible outcome. Ensuring there is no market crash. Stability while at the same time making housing more affordable over time.

Perhaps that is sounds management of the economy by the current government. More likely explanation is it is just good luck.

Only in the delusions of Casper boomers and TruAnon loyalists could a protracted real estate super bubble be praised and trumpeted as sound economic management by the Trudeau Liberals.

[P'tit Renard]

Originally Posted by YOWetal

Well there is no definitive answer. At least inn terms of why we see bigger increases than France or Germany who had most of the same policies. My take is it's general Anglo-American desire for housing and incoming immigration combined with massive drop in interest rates. The interest rate drop is especially dramatic in Canada as we have 5 year rates. So we went from 2% to 1% . US only went from 3.5% to 2.5%.
It is hard to see prices not falling dramtically if we don't get back to 2% again.

The French and German governments do not subsidise mortgagees by guaranteeing MBS bonds, and there is no CHMC equivalent. It's much harder to secure credit in those countries (good luck trying to apply for multiple credit cards there..), so the situations are entirely different.

[YOWetal]

Originally Posted by P'tit Renard

The French and German governments do not subsidise mortgagees by guaranteeing MBS bonds, and there is no CHMC equivalent. It's much harder to secure credit in those countries (good luck trying to apply for multiple credit cards there..), so the situations are entirely different.

You're kind of proving my point are you not? Those are all long standing policies and we are told that helicopter money printing by Trudeau is the reason our housing prices exploded. Germany and France did the same or more of that but as you said our home ownership model has been propped up by the government since ww2 and is an inate part of our culture. Germans given checks by the government with nowhere to spend it bought a car went on a trip or spent it otherwise enjoying life. Canadians bought their second third or fourth home.

[MonkeyRonin]

Originally Posted by theman23

Yes, interest rates affect the price of housing regardless of immigration levels. That’s a meaningless statement on its own since the question is a matter of degree and what’s driving housing costs now. It doesn’t mean that immigration has no effect or even that immigration is not the dominant driver of costs right now, which is the exact opposite of what Nite has argued repeatedly despite all evidence to the contrary. As already mentioned, housing prices may have plateaued but housing costs have gone through the roof. Without a massive population boom, house prices would have dropped further and costs would be more reasonable.

The Nite view of immigration is essentially to treat it as a divine blessing, divorced from any other economic theory or basic laws of supply-and-demand: each new immigrant automatically creates 1.2 new jobs regardless of the quantity or type of immigration and unrelated to the overall state of the economy; and the quantity of immigration has absolutely no effect on the housing or rental market.

It's almost as if immigrants are just magical job-creating fairies, and not y'know, actual human beings who need employment, a place to live, or to be able to access services.

Originally Posted by MolsonExport

They are not shit posts, and they are relevant to the subject matter at hand. Shit posts are those that simply place all the blame at the feet of Trudeau and immigration levels, ad nauseam.

The article is from the BBC. Hardly a garbage source.

The legitimacy of the source is irrelevant when the purpose of posting it is to serve as a red herring and obfuscate the discussion. We're well aware that many other countries besides our own are also experiencing housing crises. That doesn't mean that:

A. Our government and their policy should be absolved of their role in Canada's housing crisis, or;
B. That our housing crisis isn't still more severe than any of theirs (thanks largely to item A).