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

[whatnext]

A timely story courtesy of Daily Hive:

Landlord slammed for renting out room full of bunk beds for $2,000 per month
Kimia Afshar Mehrabi
May 27 2024

As the average price of a one-bedroom apartment in Toronto surpassed $2,450 in May, a handful of landlords throughout the city’s rental market continued to take advantage of tight-budget tenants by offering wallet-friendly accommodations that skimped out on privacy or cleanliness.

From makeshift “bedrooms” separated by rickety tarps, beds located in the middle of kitchens, and rooms packed to the brim with beds, prospective tenants in and around Toronto have seen it all at this point, and it doesn’t look like the influx of questionable listings will be slowing down anytime soon.

The latest “horror rental” to make rounds on social media is a basement apartment in Scarborough listed on Kijiji for a staggering $2,000 per month.

As the average price of a one-bedroom apartment in Toronto surpassed $2,450 in May, a handful of landlords throughout the city’s rental market continued to take advantage of tight-budget tenants by offering wallet-friendly accommodations that skimped out on privacy or cleanliness.

From makeshift “bedrooms” separated by rickety tarps, beds located in the middle of kitchens, and rooms packed to the brim with beds, prospective tenants in and around Toronto have seen it all at this point, and it doesn’t look like the influx of questionable listings will be slowing down anytime soon.

The latest “horror rental” to make rounds on social media is a basement apartment in Scarborough listed on Kijiji for a staggering $2,000 per month.

Despite already being a pricey accommodation, the landlord of the listing notes that they are looking for four tenants to occupy the two bunk beds in the room.

That’s right. The shared listing, which comes out to $500 per month for each tenant, includes two bunk beds, two shared washrooms, and one shared kitchen, with utilities and internet included.....

https://dailyhive.com/toronto/landlo...bunk-beds-2000

[blacktrojan3921]

Originally Posted by Hecate

Great article on what’s happening in Australia. The liberals knew what they were doing every step of the way when they increased immigration by over a million people a year. They didn’t give a fuck about the average or low income Canadian when choosing to manufacture the housing crisis.they thought about their own portfolios. https://www.news.com.au/finance/real...1b132ee727?amp

Because our (and let's be frank, most nations are in the same boat) economy relies on our population growing, in particular the young and working age?

We have to do immigration because our fertility rate is below the replacement level of 2.1, and it's forecasted to get even lower.

[MonkeyRonin]

Originally Posted by Changing City

because household growth, (which determines the demand for housing) and population growth are not the same. Household size has continued to fall since 1861, so even if the population stayed the same, you'd need more homes. (That's not factoring in the demand for recreational properties, or second homes - which are all part of the housing demand too).


[Business Council of Alberta showing Statistics Canada data]

The Australian article suggests immigration adds to the demand, but maybe not as much as the Australian demand for more housing.

The shrinking of household sizes is happening pretty slowly though. From that graph, we've gone from about 3.0 people/home in 1970 to 2.4/home today. That's an average annual decline in household size of 0.012 people/year.

Some back-of-the-napkin math here, but that means that in a hypothetical stagnant/no-growth scenario where the only demand for more housing came from new household formation & shrinking household sizes, you'd need to increase the housing supply by a very manageable 0.4% per year (working out to roughly 85,000 units in today's Canada).

In reality though, Canada is growing by 1.3 million+ per year through immigration, which means an additional 542,000 households (assuming an average of 2.4 people/household) are being added to the net ~85,000 new households being formed internally - all of whom also need a housing unit. In other words, we need approximately 627,000 new homes built every year just to meet base-level demand - that's a lot of competition for the ~240,000/year that we actually build.

Originally Posted by MolsonExport

I am under no such obligation. I was posting in good faith, with an element of sarcasm (well below that made by many others in this thread), because I have read, here and in many other threads, how the current federal government bears responsibility for most of the escalation in housing prices, despite ample indicators that similar things are happening in other countries.

So in other words, my point stands in response to that article, that:

A. Our federal government's policy choices have been a significant contributor to Canada's housing crisis.
B. Canada's housing crisis is more severe than that of any other peer nation, largely as a result of A.

Other countries have problems too - in some cases for similar reasons, and some for completely different ones - but ours has been caused by our governments, and the particular severity of it nation-wide has largely been exacerbated by deliberate policy choices made by the feds.

[thewave46]

Originally Posted by MonkeyRonin

So in other words, my point stands in response to that article, that:

A. Our federal government's policy choices have been a significant contributor to Canada's housing crisis.
B. Canada's housing crisis is more severe than that of any other peer nation, largely as a result of A.

Other countries have problems too - in some cases for similar reasons, and some for completely different ones - but ours has been caused by our governments, and the particular severity of it nation-wide has largely been exacerbated by deliberate policy choices made by the feds.

Indeed, the graph showing an average home price of 'merely' ~$400,000 in 2015 when the former government was getting eviscerated for inaction on the housing file does seem rather quaint. Especially in light of the ~3% 5-year fixed mortgage rates available then.

If there's a rather galling graph to look at for the last decade, this is certainly one of them.

Had we cut off people's ability to get ever deeper in debt with government not guaranteeing the lender's liability past that threshold and instituted a pro-development policy with the election of the new governments since 2015, one might imagine we'd be in a better place in 2024.

Double down on easy street. We live with our choices.

[lio45]

Originally Posted by MonkeyRonin

The shrinking of household sizes is happening pretty slowly though. From that graph, we've gone from about 3.0 people/home in 1970 to 2.4/home today. That's an average annual decline in household size of 0.012 people/year.

Exactly. Plot both of these (rents/monthly housing costs, and household sizes) over the last 10, 20, 50 years, and it's obvious that the latter doesn't explain the former.

Plot population growth though, and it starts to correlate pretty well.

In fact the ideal graph for correlation is our housing deficit (number of units needed for the population increase in that year minus the ~200k units we can physically build each year) vs housing prices. The more of a housing deficit we have, the more of a demand-supply imbalance we have, and the higher the housing prices, because people greatly prefer not to be homeless.

[Hecate]

Originally Posted by blacktrojan3921

Because our (and let's be frank, most nations are in the same boat) economy relies on our population growing, in particular the young and working age?

We have to do immigration because our fertility rate is below the replacement level of 2.1, and it's forecasted to get even lower.

Yeah it’s going lower because NOBODY HERE CAN AFFORD TO FUCKING HAVE KIDS BECAUSE OF WHAT THIS SHIT GOVERNMENT HAS DONE.
https://globalnews.ca/news/10320688/...psos-poll/amp/

[Hecate]

Originally Posted by lio45

?

What’s the difference between “there are more Australians (i.e. immigration) and they all want housing” and “more Australians equals more demand for more housing in Australia”…?

The biggest driver of rising rents is more demand for housing (a.k.a. immigration) and the second biggest driver of rising rents is more demand for housing (a.k.a. immigration). Wow, thanks Einstein

I remember reading an article about New Zealand, It wasn’t all the immigrants they were bringing in, driving the housing crisis… it was the native New Zealander kids returning from going to school abroad. Imagine blaming your children for driving the housing crisis. LOL.

[Nite]

Originally Posted by MonkeyRonin

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.





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).

2.5 years ago, Canada unemployment rate was 6% and we also resumed immigration into the country.
in that span 2.5 million people came to the country. and unemployment is still 6%

If immigrant workers don't create at least an equal amount of job as they take up, why after Canada has the unemployment rate basically stated around the same and why has wage growth also been so very strong.

if they were taking more jobs than creating wouldn't both the unemployment rate and wage growth been going in the opposite direction, especially with 5% interest rates.
long term (10 years) as in the study i linked before immigration creates 1.2 job for every job taken up

[lio45]

The Covid Pandemic era should be a mandatory blank in all “trends” graphs (unless the point of the graph is to specifically analyze something pandemic-related). Too easy for intellectually dishonest people to abuse it.

[Nite]

Originally Posted by lio45

The Covid Pandemic era should be a mandatory blank in all “trends” graphs (unless the point of the graph is to specifically analyze something pandemic-related). Too easy for intellectually dishonest people to abuse it.

Ok, here is the last 20 years of data then



what i see is that unemployment is still among the lowest it's been over the last 20 years.
If you remove the covid years unemployment looks basically unchanged from when covid started ( it was 5.7% in Feb 2020 and 6.1% in April 2024), even in an environment with much higher interest rate while taking in 2.5 million people is a short time.

[jonny24]

Nite, could you show the same for labour participation rate? Since that's measured differently than unemployment.

Part time vs full time vs "gig" would be interesting too.

[Hecate]

Well Canadas unemployment rate has been on the rise. It also helps to note that the quality of jobs being created aren’t top tier, unless you consider fast food delivery drivers working two days a week good meaningful employment. We know there are tens of thousands here who aren’t supposed to be. They really don’t have a clue what the true unemployment number is.

[Nite]

Originally Posted by jonny24

Nite, could you show the same for labour participation rate? Since that's measured differently than unemployment.

Part time vs full time vs "gig" would be interesting too.

Canadian are getting older so participation rate is expected to fall, this is one of the justifications to increase immigration, but here is the last 5 years.



Participation rate: May 2019 was 66.1% and it is now 65.4% in April 2024
https://tradingeconomics.com/canada/...icipation-rate

[Nite]

Originally Posted by Hecate

Well Canadas unemployment rate has been on the rise. It also helps to note that the quality of jobs being created aren’t top tier, unless you consider fast food delivery drivers working two days a week good meaningful employment. We know there are tens of thousands here who aren’t supposed to be. They really don’t have a clue what the true unemployment number is.

https://tradingeconomics.com/canada/...ourly-earnings

Note the slope of the graph post pandemic.
Wage growth has been at the highest, post pandemic to now, than any other time in the last 27 years.



As for unemployment
Lets keep some perspective about the increase in unemployment in the last year.
It increased 1% (5% to 6%) from the lowest unemployment rate in almost 50 years under the highest interest rates in around 20 years.
with interest rates about to fall in Canada and around the world I would expect unemployment to not increase much going forward and likely fall.

[Hecate]

Originally Posted by Nite

Wage growth post pandemic has been the highest it's been in the last 27 years at least.


https://tradingeconomics.com/canada/...ourly-earnings

A 24 pack of Pepsi cans cost $7.99 full price at Walmart five years ago. It’s now selling for $13.99

Do you really believe that increase in inflation is reflected in your wage growth chart?

[Hecate]

Originally Posted by Nite

https://tradingeconomics.com/canada/...ourly-earnings

Note the slope of the graph post pandemic.
Wage growth has been at the highest, post pandemic to now, than any other time in the last 27 years.



As for unemployment
Lets keep some perspective about the increase in unemployment in the last year.
It increased 1% (5% to 6%) from the lowest unemployment rate in almost 50 years under the highest interest rates in around 20 years.
with interest rates about to fall in Canada and around the world I would expect unemployment to not increase much going forward and likely fall.

You have to look at where the growth in employment is. It’s all service industry. It’s predominantly part time jobs being created. This isn’t good for anyone but the corporate overlords running our country.

[Nite]

Originally Posted by Hecate

A 24 pack of Pepsi cans cost $7.99 full price at Walmart five years ago. It’s now selling for $13.99

Do you really believe that increase in inflation is reflected in your wage growth chart?

Post pandemic to now overall wage growth has been higher than inflation.

[Nite]

Originally Posted by Hecate

You have to look at where the growth in employment is. It’s all service industry. It’s predominantly part time jobs being created. This isn’t good for anyone but the corporate overlords running our country.

Medical, Education, Government Jobs, etc. are all service jobs so that doesn't mean service jobs are bad.

what is important is overall wage growth which like i have shown is growing stronger than ever.

[Hecate]

Our problem is made even worse because much of the full time job growth in the country since 2019 has all been in the public sector not private. So the federal government is creating positions to pad their employment stats making shit look better than it actually is.

[Hecate]

Originally Posted by Nite

Medical, Education, Government Jobs, etc. are all service jobs so that doesn't mean service jobs are bad.

what is important is overall wage growth which like i have shown is growing stronger than ever.

They are not service jobs. Service jobs are restaurants and stores. The service industry.