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

[YOWetal]

Originally Posted by P'tit Renard

Until Trudeau's Liberals roll the student employment rules back to Harper era limits, these fake students will continue to take advantage of these tractor sized employment loopholes.

The number is not what is important or at least not only. We can host a million students who are legitimate and want to spend money here and mostly return. It would be better if we forced the universities to build housing but otherwise there isn't an upper limit. Meanwhile Ontario's reaction to a reduction in numbers was to prioritize colleges. Mostly fake students not workers filling blue collar worker shortages.

[MonkeyRonin]

Originally Posted by Nite

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

Of course, wage growth outpacing inflation is also coming after a period of inflation rapidly outpacing wage growth - it should be expected that wages would rise in response:


https://www.axios.com/2024/02/05/wag...cing-inflation


Anyway, wages are rising, yes. Doesn't mean they wouldn't be rising even faster with more sustainable immigration levels (ie. less abundant supply of labour), eg. as is the case in the US, which saw a 6% annual increase as of March 2024 vs. Canada's 5% increase. Unfortunately still not enough to cover the increases to the cost of shelter (not included in CPI).

I know you'll disagree with me on this, but will you also disagree with Justin Trudeau or Marc Miller when they admit that their immigration scheme is suppressing wages?

[niwell]

It also matters where and how wage increases are happening. A 10% increase for someone making $20/hr isn't going to help much given the rise in living costs in a place like Toronto or Vancouver. But a tech or finance worker getting annual 5% increases on their $150k+ salary is a pretty decent chunk of change even after taxes. Anecdotally the people I know with the largest salaries have received the biggest increases in take home pay since the pandemic, including my wife and to a lesser extent myself (albeit mostly through promotions).

As has been discussed in the stats thread many times percentages don't always tell the whole story.

[lio45]

As stated multiple times already, I don’t disagree that wages are increasing relative to a cherry-picked basket of goods like iPhones and Teslas, but reality is, Canadian wages are going down relative to housing costs and probably food as well (was the case for sure recently, not 100% sure it still is).

Since most people pay for housing more often than they buy new Teslas, most Canadians are seeing their wages going down (i.e. their buying power being eroded).

(More specifically to prevent Nite’s nitpicking, Canadians are seeing their housing buying power being eroded, while their Tesla buying power is strengthening, the net result being, most Canadians have a harder time making ends meet with their lower relative wages.)

[Innsertnamehere]

Originally Posted by lio45

As stated multiple times already, I don’t disagree that wages are increasing relative to a cherry-picked basket of goods like iPhones and Teslas, but reality is, Canadian wages are going down relative to housing costs and probably food as well (was the case for sure recently, not 100% sure it still is).

Since most people pay for housing more often than they buy new Teslas, most Canadians are seeing their wages going down (i.e. their buying power being eroded).

(More specifically to prevent Nite’s nitpicking, Canadians are seeing their housing buying power being eroded, while their Tesla buying power is strengthening, the net result being, most Canadians have a harder time making ends meet with their lower relative wages.)

Wages are growing against CPI, which is a weighted average of what Canadians spend money on.

Teslas are a small amount of what canadians spend money on, so hold a small weight in CPI versus housing which is a large amount.

One critical difference is that the purchase price of housing is not included in CPI as it's not "consumed". Only rent and mortgage interest is counted.

Mortgage interest payments is one of the single largest drivers of CPI inflation right now as basically everything else in the economy (including rent!) is flat or declining right now.

You can check out the breakdowns here if you would like:

https://www150.statcan.gc.ca/n1/pub/...pi-ipc-eng.htm

The purchase of new vehicles is given 5.5% weight in CPI, compared to shelter which is given 28% weight.

[Nite]

Originally Posted by MonkeyRonin

Of course, wage growth outpacing inflation is also coming after a period of inflation rapidly outpacing wage growth - it should be expected that wages would rise in response:


https://www.axios.com/2024/02/05/wag...cing-inflation


Anyway, wages are rising, yes. Doesn't mean they wouldn't be rising even faster with more sustainable immigration levels (ie. less abundant supply of labour), eg. as is the case in the US, which saw a 6% annual increase as of March 2024 vs. Canada's 5% increase. Unfortunately still not enough to cover the increases to the cost of shelter (not included in CPI).

I know you'll disagree with me on this, but will you also disagree with Justin Trudeau or Marc Miller when they admit that their immigration scheme is suppressing wages?

So the highest wage growth in probably your lifetime is occurring now and you are saying the prime minister is suppressing wages???

Wage growth is currently at, and for most of 2024, 2% above inflation. look at your chart again, how often do you see wage growth 2% above inflation, the answer is not much.
Since Canada open the doors to large number of migrants in 2022, wage growth has never dropped below 4%
The fact that wage growth is so high while population growth is also high means immigrants are not suppressing wages, which is pretty much what ever study on the matter has shown.
Immigrants create as much or more jobs than they take up so that's why wage suppression doesn't occur.

Finally wage growth in Canada in percentage was higher than the US in 2023, and just below in absolute term at the current exchange rate

Canada hourly wage
Jan 2023: 33.72 CAD/ hr
Dec 2023: 35.33 CAD/ hr
wage growth 4.8%
Net: 1.61 CAD/hr or 1.17 USD/hr at current exchange rate

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

US hourly wage
Jan 2023: 28.31 USD/ hr
Dec 2023: 29.51 USD/ hr
wage growth 4.2%
Net: 1.20 USD/hr

https://tradingeconomics.com/united-states/wages

More proof that high immigration doesn't suppress wages.

[Nite]

Originally Posted by niwell

It also matters where and how wage increases are happening. A 10% increase for someone making $20/hr isn't going to help much given the rise in living costs in a place like Toronto or Vancouver. But a tech or finance worker getting annual 5% increases on their $150k+ salary is a pretty decent chunk of change even after taxes. Anecdotally the people I know with the largest salaries have received the biggest increases in take home pay since the pandemic, including my wife and to a lesser extent myself (albeit mostly through promotions).

As has been discussed in the stats thread many times percentages don't always tell the whole story.

Minimum wage workers saw among the largest wages increases in 2023 compared to the average worker which was 4.8%

here is the increase in minimum wages for each province in 2023

Alb 0%
BC 7.0%
Man 13.3%
NB 7.3%
NFLD 9.5%
NWT 5.6%
NS 10.3%
NT 0%
Ont 6.8%
PEI 9.5%
Que 7.0%
Sask 7.7%
YT 6.8%

https://minwage-salairemin.service.c...since1965.html

[Nashe]

I'd also like to see one of those wage growth charts without those "does not include contracted / frozen / unionized sectors" caveats. I suspect doing so would drag that wage growth down.

[Nite]

Originally Posted by lio45

As stated multiple times already, I don’t disagree that wages are increasing relative to a cherry-picked basket of goods like iPhones and Teslas, but reality is, Canadian wages are going down relative to housing costs and probably food as well (was the case for sure recently, not 100% sure it still is).

Since most people pay for housing more often than they buy new Teslas, most Canadians are seeing their wages going down (i.e. their buying power being eroded).

(More specifically to prevent Nite’s nitpicking, Canadians are seeing their housing buying power being eroded, while their Tesla buying power is strengthening, the net result being, most Canadians have a harder time making ends meet with their lower relative wages.)

Canadian House buying power going down is why house prices are falling. if Canadian house buying power was going up prices would also be going up
This is the mechanism by which increased interest rates cause house prices to fall by making debt more expensive and hence reduce buying power.
The power of interest rates to control house prices is far beyond population growth which is why prices are falling now while population growth is the fastest ever.
This has always been my point

[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.

Looks like PM Trudeau just blurted out loud the core wishes of the Casper Boomers. Canadian residential Real estate prices must stay high uber alles. No wonder Casper praises the Liberals for the sound management of the economy by supporting RE bubble price "stability" at all costs.

Canadian Home Prices “Need” To Be High To Pay For Retirements: PM
https://betterdwelling.com/canadian-...etirements-pm/

[GenWhy?]

Originally Posted by P'tit Renard

Looks like PM Trudeau just blurted out loud the core wishes of the Casper Boomers. Canadian residential Real estate prices must stay high uber alles. No wonder Casper praises the Liberals for the sound management of the economy by supporting RE bubble price "stability" at all costs.

Canadian Home Prices “Need” To Be High To Pay For Retirements: PM
https://betterdwelling.com/canadian-...etirements-pm/

Isn't this the actual quote he said/

"“Housing needs to retain its value… It’s a huge part of people’s potential for retirement and future nest egg,” "

[P'tit Renard]

Originally Posted by GenWhy?

Isn't this the actual quote he said/

"“Housing needs to retain its value… It’s a huge part of people’s potential for retirement and future nest egg,” "

Current values are high relative to fundamentals, affordability, leverage, historicals and compared to peer G8 countries.. so what's contradictory?

Even in the originally referenced G&M article:

Cutting shelter costs while ensuring that homeowners’ property values remain high could be viewed as contradictory, but Mr. Trudeau was adamant that property owners would not lose out.

“Housing needs to retain its value,” Mr. Trudeau told The Globe and Mail’s City Space podcast. “It’s a huge part of people’s potential for retirement and future nest egg.”

Trudeau says housing needs to retain its value
https://www.theglobeandmail.com/busi...affordability/

[Innsertnamehere]

The one thing current values aren't close to is replacement cost - so the question is - why is replacement cost so high here?

[WarrenC12]

Originally Posted by Innsertnamehere

The one thing current values aren't close to is replacement cost - so the question is - why is replacement cost so high here?

Yeah, replacement cost effectively sets a floor right? No housing crash at this rate.

[whatnext]

Originally Posted by GenWhy?

Isn't this the actual quote he said/

"“Housing needs to retain its value… It’s a huge part of people’s potential for retirement and future nest egg,” "

Either way, it ain't capitalism and it is incredibly harmful to young Canadians.

[P'tit Renard]

Originally Posted by Innsertnamehere

The one thing current values aren't close to is replacement cost - so the question is - why is replacement cost so high here?

Forcing developers to mainly build skyscraper condos to meet the majority of Canada's housing demand likely plays a big role, along with arcane zoning (like minimum parking requirements) and overbearing building codes.

From a cost perspective, these high rises aren't economical especially after they hit a certain floor count. Cheaper midrise and multiplex buildings are much more common in the rest of the world.

[GenWhy?]

Originally Posted by P'tit Renard

Current values are high relative to fundamentals, affordability, leverage, historicals and compared to peer G8 countries.. so what's contradictory?

Even in the originally referenced G&M article:

Cutting shelter costs while ensuring that homeowners’ property values remain high could be viewed as contradictory, but Mr. Trudeau was adamant that property owners would not lose out.

“Housing needs to retain its value,” Mr. Trudeau told The Globe and Mail’s City Space podcast. “It’s a huge part of people’s potential for retirement and future nest egg.”

Trudeau says housing needs to retain its value
https://www.theglobeandmail.com/busi...affordability/

The PM didn't say we'd retain house prices at their peak, or even today's prices.

[theman23]

Originally Posted by GenWhy?

The PM didn't say we'd retain house prices at their peak, or even today's prices.

huh? He would have at least meant todays prices, but if you disagree maybe you should just tell us what you think he said?

[GenWhy?]

Originally Posted by theman23

huh? He would have at least meant todays prices, but if you disagree maybe you should just tell us what you think he said?

Well instead of interpreting or misquoting him I can just say what he said, which is "retain". It can mean almost anything, and isn't worth it to dissect.

[whatnext]

Originally Posted by GenWhy?

.. It can mean almost anything, and isn't worth it to dissect.

So true of almost everything Trudeau says...