Canada's 'housing bubble' deemed close to bursting

[Truenorth00]

Originally Posted by svlt

Like it or not it's time to put that dream of owning a SFH with a garage to bed for millennials or younger unless they have a generational handout. There realistically shouldn't be this expectation anymore unless we revolt France style.

I don't think most even think of owning an SFH with a garage. For some even owning a condo in major cities is difficult. For plenty, owning anything more than a townhouse is impossible.

The politics of this will be interesting in the years to come.

[Innsertnamehere]

Originally Posted by niwell

I'm not trying to claim the Growth Plan / PPS etc has zero effect, but the claims that it's *the* primary driver of housing costs are unfounded, at best. Restrictions on land were always overstated. Even SFH prices really only started rising unsustainably well after all of the various amendments were signed off on - for a long time it was a linear growth rate. A lot of these land-use patterns were also shifting before policies were in place.

Also worth keeping in mind that despite the rhetoric today, developers weren't exactly opposed to Places to Grow or even the Greenbelt. They had specific issues about certain lands, but were very much part of the process the whole way through. Lots of links between major developers and both Ontario's Liberal and PC governments.

Clergy Principle involved for approvals (policy regime in force when you first file your application is what applies), and the general timelines associated with getting greenfield areas approved, then developed, meant that the Growth Plan wasn't an overnight shift. SFH completions started to trail off basically immediately though, dropping from 15,797 units in the Toronto CMA in 2005 to just 6,329 in 2022.

Pent up demand takes even longer to accumulate as ultimately new supply is a small percentage of the overall market, too.

It's the kind of thing that takes time to see impacts as until the last few years the effective shortage of units over overall market demand was pretty marginal. In 2015 we may have been short maybe 20,000 SFHs over "free market" conditions, but that's in a market with over 800,000 SFHs in total. It's not a major shortage and price impacts would have been minimal.

Now, after a decade of significant completion shortfalls, we are probably looking at a shortage approaching 100,000 SFHs over free market conditions - and that's when it starts to really become a problem.

There are other inputs going on including things increased development charges, higher land costs (partly the growht plans fault), etc., and yea, the growth plan itself is definitely not the "primary driver", but it's not fault free either.

[Wigs]

Originally Posted by Truenorth00

I don't think most even think of owning an SFH with a garage. For some even owning a condo in major cities is difficult. For plenty, owning anything more than a townhouse is impossible.

The politics of this will be interesting in the years to come.

The SFH dream has been replaced with ownership of anything. The majority of Canadians live in unaffordable housing markets that are many times the multiple of the median income in their area. Talking to my cousins between 20-31 years old, they feel screwed out of the housing market before they've even had a chance to graduate from college/university or get established in a good paying career.

Meanwhile, we have a cousin around 30yrs old in Western Pennsylvania that her and her husband bought their decent sized house like 5-6 years ago and could afford to buy a huge acreage of woods and a stream for hunting/fishing and build a small cabin on that property for weekends and holidays.
totally different realities.

[urbandreamer]

^I'm currently looking at Western PA real estate. Planning a bunch of camping trips this year through the Allegheny National Forest etc. Very tempting to buy a house, apply for my US passport and live there half the year.

[Wigs]

Originally Posted by urbandreamer

^I'm currently looking at Western PA real estate. Planning a bunch of camping trips this year through the Allegheny National Forest etc. Very tempting to buy a house, apply for my US passport and live there half the year.

You don't have to travel far to be in the hilly forest.

Pittsburgh is one of my favourite American cities. Does it have problems? Is transit seriously lacking compared to the streetcar era? oh yeah.
But it's historic built environment and hilly typography are amazing.

[LightingGuy]

Originally Posted by niwell

NO IT DIDN'T.

Multiple people on this site (including myself) have shown endless stats and figures proving that this isn't the primary driver. At this point I honestly don't know if you're being intentionally obtuse or your reading comprehension is that bad. Because you keep spouting the same nonsense over and over again regardless of the evidence presented contrary.

My intention wasn't to provoke, but this isn't exactly rocket science either. When you restrict the supply of something while demand keeps increasing, the price can only go up. This is literally the most basic economic principle.

Property price = Land price + Structure price

Greenbelt reduced the supply of developable land, and every time another piece of land was developed the remaining supply got a little bit smaller, over and over again. There might still be enough left for 50 years, but what do you think happens to the price of each remaining parcel of land every time a new subdivision is built?

And what do you think happened to neighbouring farm land on adjacent sides of the greenbelt boundary right after it was enacted?

And how motivated do you think the average developer is to develop their farmland now, when they know they can sell it for a lot more in 5 years, when there will be a little bit less land, and therefore a little less competition left?

Then you throw Places to Grow on top of that, which dictates how many greenfield housing units can get built based on how much infill had happened, and suddenly the cost of a house (aka structures) goes up as well. (Since it takes significantly longer for an infill development to get built)

So basically we had a triple whammy:

1. Greenbelt constraining the supply of developable land
2. Places to Grow constraining the amount of housing units that got built
3. Cheap money making it easier to borrow higher amounts.

All while 100,000 new people moved here every single year.

Even if zoning rules became more developer friendly immediately, we still would've seen land prices escalate

If I'm wrong about this, then why didn't Calgary and Edmonton experience similar property price escalations, when they have higher incomes and had a higher population growth rate?

I know it's an unpopular stance within Ontario, and I'm not making a moral judgement here. I'm just stating what obviously happened.

[1overcosc]

Originally Posted by LightingGuy

I know it's an unpopular stance within Ontario, and I'm not making a moral judgement here. I'm just stating what obviously happened.

There's a lot of folks in Ontario who are very attached to the whole narrative of "there's more than enough supply, it's just [speculators / developer greed / AirBNB / etc] that is why we have a housing crisis".

[Truenorth00]

Originally Posted by 1overcosc

There's a lot of folks in Ontario who are very attached to the whole narrative of "there's more than enough supply, it's just [speculators / developer greed / AirBNB / etc] that is why we have a housing crisis".

There's enough supply....for 2014 levels of population growth.

We don't have enough supply for our current levels of population growth. And the current supply is basically rationed on generational wealth. Nobody wants to be honest about it. But all these policies, like FHSA, are basically based around parents paying six figure downpayments for their kids.

https://www.thestar.com/business/2021/10...f-money-for-kids-down-payments-cibc.html

If you don't have rich and generous parents, you'll be renting forever. It's just that simple.

[swimmer_spe]

Originally Posted by Truenorth00

I don't think most even think of owning an SFH with a garage. For some even owning a condo in major cities is difficult. For plenty, owning anything more than a townhouse is impossible.

The politics of this will be interesting in the years to come.

For the GTA and GVA, SFH ownership will become near impossible for most young adults. Outside of there, SFH maybe expensive, but still attainable for a working professional.

Originally Posted by 1overcosc

There's a lot of folks in Ontario who are very attached to the whole narrative of "there's more than enough supply, it's just [speculators / developer greed / AirBNB / etc] that is why we have a housing crisis".

5 years ago, housing was still sort of affordable and not huge line ups for it. So, what happened? It isn't like our population boomed. So, there has to be other factors at play. The key is to address those factors.

[Truenorth00]

Originally Posted by swimmer_spe

It isn't like our population boomed.

Record-high population growth in the year 2022
Canada's population was estimated at 39,566,248 on January 1, 2023, after a record population growth of 1,050,110 people from January 1, 2022, to January 1, 2023.

https://www150.statcan.gc.ca/n1/daily-quotidien/230322/dq230322f-eng.htm

[LightingGuy]

Originally Posted by Truenorth00

https://www150.statcan.gc.ca/n1/daily-quotidien/230322/dq230322f-eng.htm

[swimmer_spe]

Originally Posted by Truenorth00

https://www150.statcan.gc.ca/n1/daily-quotidien/230322/dq230322f-eng.htm

Two percent

Do they even change the population signs for that?

How much of the housing market is short term rentals like AirBnB? Like we are seeing in Montreal, it is likely much higher than that 2%. The problem is, with how that works, we don;t actually know.

[Truenorth00]

Originally Posted by swimmer_spe

Two percent

Do they even change the population signs for that?

Stats Can calls it record growth. Partisan hack minimizes the news. Why bother....

Also, when was the last time housing stock in Canada grew by 2% in a single year? Run a decade or two of population growth ahead of housing stock growth and you'll have a housing crisis eventually.

[swimmer_spe]

Originally Posted by Truenorth00

Stats Can calls it record growth. Partisan hack minimizes the news. Why bother....

Also, when was the last time housing stock in Canada grew by 2% in a single year? Run a decade or two of population growth ahead of housing stock growth and you'll have a housing crisis eventually.

What I'd like to see is how much was taken out of the long term rental market.

And then there is this:
https://www.chba.ca/CHBA/News/Residentia...s_record_year_but_will_it_be_enough.aspx
Residential construction industry has record year, but will it be enough to meet housing demand?

Each side has records. Show us the numbers that show where housing starts stopped keeping up to demand. Then, lets see what else happened that took long term rentals out of the market.

[Truenorth00]

Originally Posted by swimmer_spe

how us the numbers that show where housing starts stopped keeping up to demand. Then, lets see what else happened that took long term rentals out of the market.

1) You can look up stats for once instead of your regular troll routine of "just asking questions".

2) Housing starts = / = housing stock growth.

[suburbanite]

No seriously guys, if we just put in one more government regulation on x or y then we can have our cake and eat it too.

This type of narrative is why this country is so fucked.

[casper]

Originally Posted by suburbanite

No seriously guys, if we just put in one more government regulation on x or y then we can have our cake and eat it too.

This type of narrative is why this country is so fucked.

I think the trend has been to increasing not restricting conditions on building houses.

Here in BC the local NDP is now proposing a province wide rezoning of single family lots that allows up to 4 units on a single lot.

https://www.timescolonist.com/local-news...wed-on-single-family-lots-in-bc-6801446?

[Truenorth00]

Originally Posted by casper

Here in BC the local NDP is now proposing a province wide rezoning of single family lots that allows up to 4 units on a single lot.

https://www.timescolonist.com/local-news...wed-on-single-family-lots-in-bc-6801446?

Too little. Too late. Especially given record demand. And a proposal is not policy. We'll see what survives the political process. But counting on existing housing stock to be redeveloped in an ad hoc manner is not really a strategy. It's just removing a legal impediment. But I doubt even 1% of homeowners are going out tomorrow to file to build a fourplex.

We use the word "crisis" a lot these days. But we definitely don't act like there's a crisis. In a crisis, governments make difficult choices and slaughter sacred cows. Instead, we have the federal environment minister arguing with Ontario about the greenbelt while letting in record numbers of immigrants with literally nowhere to live. And everybody (feds, provinces and municipalities) talks about "Affordable Housing", while never actually talking about prices, you know the part that determines what is affordable. Governments even allow all kinds of shady practices to bid up housing, such as trading pre-con like stocks. The fact that the banks have 30% of their mortgage books seeing their amortizations go up (effectively negative amortization), with mortgage rates from just 15 years ago, should tell you how well all the policies being implemented are working.

Our governments show us everyday that they really don't care and aren't taking this seriously. Broadly, as a strategy, it's pretty clear the unspoken rule here is, "Eat the young." It's a set of deliberate policy choices to prevent asset prices from depreciating while paying lip service to the issues of affordability or making marginal and token efforts. It's why Ontario and Toronto cheer at legalizing laneway homes. Something that might put in a scratch in the housing issue. It's why the Feds act like letting young people save $40k more in an FHSA is a big deal without talking about where young people will get the extra $40k (has to be their parents) or that bank and CMHC fees in high cost cities means that a large chunk of that won't end up in a downpayment. Nobody is actually serious here. I personally tell every young person with an inkling of ambition or talent to leave. They have zero chance here. And when I lay out the facts above, the choice becomes obvious.

[WarrenC12]

Canada as of Jan 1 2023 39,566,248 (StatCan)
USA as of Jan 1 2023 334,233,854 (US census bureau)

US is 8.44x as big.

In 2000 it was 9.19

In 1960 it was 10.0

[swimmer_spe]

Originally Posted by Truenorth00

1) You can look up stats for once instead of your regular troll routine of "just asking questions".

2) Housing starts = / = housing stock growth.

I do a lot more homework on what I post before posting it than you give me credit.

Blaming this just on one thing, like immigration or population rise does not look at all the other things that led us here.

So, let's say 2% per year population growth will become the norm, how do we ensure the housing matches the growth?That is the real question that needs to be answered. As a military person, I would expect you to not just point out the obvious problem, but get at the root causes and to offer real suggestions to fix those root causes.