You aren’t looking at all the factors that has us in this situation. Plenty of them have nothing to do with Feds creating the status quo.
Cost of housing in Canada
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Brad Sallows
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Equally true of subways, bridges, tunnels, dams, sewer and water systems, etc.
Obviously these things have all become more difficult to build, taking longer and costing a lot (relatively) more. That raises the question of "why". To find the reasons is to find some points at which to effect change.
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What? All of a sudden we want to go back to the 50's? Where that myth existed that everyone had a one income house with3 kids and a picket fence? Society just didn't pay attention those those who had nothing, so if it wasn't on the radio news it didn't exist.....
Brad Sallows
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What the '50s had was more land. The house I used to live in (Burnaby) was originally built on a 100-foot lot, and stood on a 33-foot lot when I owned it. There are still a few larger (50-foot, mainly, perhaps a few at 66-foot) lots remaining to be further divided, but the limit of that expansion has pretty much been reached in the urban cores. At that point, the "wall" is the desire of people to live in a house with a yard and space to park three vehicles and one piece of recreational equipment - which is entirely incompatible with townhouses set back from the sidewalk by a couple of metres.
no intention of implying that they did it singlehandedly but their actions and decisions were certainly a major contributing factor. All levels of government are guilty. Money laundering by Chinese in VR was identified years ago as contributing to rising housing costs. Immigration policies have recently been tagged. Environmental requirements have dramatically increased the cost of construction. Fuel costs ditto. Local governments have multiplied the costs of doing business. The percentages of land in use are very telling. We occupy an extremely small portion of this land so why are we jamming houses 4 feet apart on 100 ft. deep lots? In part it gives the town more bang for their buck without huge infrastructure changes.
Another major factor is greed and the governments aren't truly responsible for this although they have encouraged people through their own spending habits to go beyond their means. The deficit will take care of itself only works for so long. Folks aren't satisfied with the 1200 sq. ft. bungalow that their parents bought nor are they happy with your basic IKEA kitchen. They have to have more and a bigger more at that.
Eaglelord17
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1) lack of will
2) increased standards, both safety and engineering wise
3) lack of tradespeople capable of doing the work
4) a unwillingness to take risk in terms of how qualified the workers we will allow to work (for example my grandfather when doing his linesman course in the 60s was told 1 of the 30 in his class will die in the field, that is unacceptable today). Not saying its a bad thing just that it limits production.
5) increased costs of doing business both on labour and materials
6) lack of long term planning required for those types of projects (they also aren’t ‘sexy’ to the public). All our large cities are run like they have a population of 100k not millions, we don’t have the strategic large population mindset in those cities either.
My favourite is the Liberals new housing minister talking about how they plan on making housing more affordable but not dropping housing prices. Why? Because it appeals to two seperate voter groups which are currently diametrically opposed.
The younger generations want more affordable housing because they want to have a home and live comfortably. The older generations who are much more likely to have a paid off home want the prices to go up as its better for their ‘investment’.
Unfortunately for the youth those older generations are much more likely to vote and most the politicians directly benefit from the increased prices as well.
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So…BoC keeps raising the prime rate to keep inflation down to help Canadians afford living in Canada.
www.ctvnews.ca
But other than mortgage costs, food and energy being notably higher than average inflation…good that the Bank is confident that average inflation will come back down to around 2% after the recession…
As inflation jumps to 3.3 per cent in July, economists say uptick is bad news for BoC
Canada's annual inflation rate rose to 3.3 per cent in July, as economists warn the latest consumer price index report spells bad news for the Bank of Canada. The uptick in price growth comes after inflation tumbled to 2.8 per cent in June, falling within the Bank of Canada's target range.
Well, I mean other than *food and energy costs outstripping ‘average’ inflation, pretty good news for the Bank…oh, wait…
Oh, that’s inconvenient. Tripling interest costs causing an overall one third increase to housing ownership…
But other than mortgage costs, food and energy being notably higher than average inflation…good that the Bank is confident that average inflation will come back down to around 2% after the recession…
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IKnowNothing
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And more concerning- the increase cost of ownership has not exerted anywhere near proportional downward pressure on housing prices themselves.
Though in a way housing prices being able to maintain current levels in the face of these interest rates could help stem the bleeding over the next few years- higher payments/ longer amortizations at renewal are one thing. Dealing with them, or having to sell, while being upside down are quite another
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This is going to be happening for many Canadians in the coming months/year. It won’t be pretty. Homeowners who got in at the extents of minimal down payment may have no choice, but to sell.
Your point that some price recovery may not be the worst thing had some validity to it, if it lets homeowners facing a sale condition recover some of their equity if any, vice declaring bankruptcy.
Edit to add:
Interestingly, just got this from my realtor…it’s for Ottawa region, but likely a trend elsewhere as well. The deflation of the housing market only lasted for so long, housing supply is still short and the demand is there. Housing prices are back up to, or in some cases above 2022 levels.
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Extended time on market may eventually trigger price reductions; if you're selling because you can't handle carrying costs, you'll start dropping your asking price.
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I'm curious why the realtor stats stopped including the houses on the market for the last 3 months. If they have one stat, they have the other.
The other inference I make is either there are more than 50% of homes are on the market just to see if they can make a killing, or, 50% of the homes on the market are being sold by individuals who can't afford to sell for less than asking.
The other inference I make is either there are more than 50% of homes are on the market just to see if they can make a killing, or, 50% of the homes on the market are being sold by individuals who can't afford to sell for less than asking.
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We are seeing the leading edge of distressed sales now, where there are still sufficient interested buyers. With most folks carrying five year mortgages, as renewals start hitting the people with variable rate fixed payments the volume will increase; the question is whether suppressed demand will be sufficient or if increasingly aggressive reductions to asking prices will be needed.
I have been lucky, and every time I bought I was able to go in well below asking and negotiate up, still landing under asking, and seen significant appreciation. But I also bought well below the maximum the bank would loan, and aggressively repaid above amortization rates.
I have been lucky, and every time I bought I was able to go in well below asking and negotiate up, still landing under asking, and seen significant appreciation. But I also bought well below the maximum the bank would loan, and aggressively repaid above amortization rates.
Brad Sallows
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The number of people unable to carry increased payments on variable rates or meet terms of a mortgage due for renewal is probably pretty small compared to the number of people pinched by other costs of living. One of the adjustments being made might be the one of getting back to a world in which 4-6% mortgage rates are customary.
Obviously increased energy costs affect the price of everything which requires energy to produce and transport it. But the main solution template for energy right now seems to be "conserve-and-reduce" rather than "build". So much for "the key to prosperity is abundant and inexpensive energy".
An article I read recently, lamenting the role of short-term rentals in depriving the market of long-term rentals surprised me by mentioning - in passing - immigration levels as an aggravating factor in shortages. It's the one policy lever firmly in control of the federal government that could have a huge effect on demand and is easy to turn up or down. I wonder if any of the bright minds in the highest strata of the federal government will suggest reaching for it.
Huh, timely- was just driving, and heard a real estate developer radio ad for a new subdivision here in Ottawa. They’re explicitly advertising houses of up to six bedrooms designed “for multigenerational living (or may have been ‘families’)”. First time I’ve heard this actually pitched from the builders here as part of advertising.
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I think the worst impact is cost of food. 9% inflation and yet the Government tells us the ‘average’ inflation is only 3.2%
Someone is either shitty at math or willfully misdirectional…
Who knew that printing money and jacking M2 to pay for bravadic virtue signaling wouldn’t equate to prosperity for the middle class?
A friend of mine doing the Brady Bunch thing just bought a six bedroom new build home. Both divorced and combining house holds.
Read a recent article as well on couples separating being left to have to still live together because they can’t afford to get something on their own.
The house we bought, we did so with the fact that we may have to take in a parent at some point.
I’m pretty sure we’ll see all sorts of ads and builds catering to generational realities.
Halifax Tar
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So are we going full circle ? Bigger houses with 2 to 3 generations of a family living in them ?
This isn't necessarily a bad thing, we should be trying to keep our elderly out of "assisted living" situations as much as possible me thinks.
This was pretty common in the rural areas I grew up in before my time. And the houses that are still there are huge.
This isn't necessarily a bad thing, we should be trying to keep our elderly out of "assisted living" situations as much as possible me thinks.
This was pretty common in the rural areas I grew up in before my time. And the houses that are still there are huge.
I tend to agree with keeping the elderly out of assisted living as much as possible but need a whole slew of things to help make that happen effectively. Having watched and watching my wife’s parents go through this there is a lack of various support mechanisms that need to be put in place.
Eaglelord17
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Its going to be a huge issue very soon. Many families only had one or two kids. Some of them only had one or none. Add in the fact most seem to be having kids much older there will be families with grandparents in their 70s/80s parents in their late 30s/40s and not much ability to look after those grandparents well struggling with young kids. Add in a aging demographic and lack of care staff and it isn’t going to be a good time for many.
IKnowNothing
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I ran some numbers here
I think that there's a good chance that societally, the bleeding is kept fairly contained. The vast, vast, majority of homeowners/mortgage holders have equity ranging from safe to impressive.
Rough numbers, 15 million homes in Canada, only 1.1 million of them were bought in 2021/2022. Of those 1.1 million, not all will have been bought with a mortgage, of those with a mortgage, the majority are uninsured. Of those that are uninsured, generally more than half have an initial loan to value less than 75%. Of all mortgages issued despite the raft of bad advice leading to the variable spike, still around one half of those issued in the danger period (2021-2022) were fixed, with the majority of those being 5 year.
Of course, there are extenuating circumstances- job loss, medical, unforeseen expenses, unwise releveraging/use of equity, but generally speaking while the structural "pain" (having budgets pinched and having to make tough spending choices) caused by inflation and interest rate hikes is going to be widespread, the pain (being pushed into a completely untenable situations leading to default and bankruptcy) should be fairly localized to the those that bought in 2021-2022 with high-ratio mortages that weren't fixed for 5 years. All things considered that's a fairly small group and shouldn't be enough to completely crash the market and lead to a chain of cascading defaults.
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