If Canada's biggest housing markets are bubbles, why aren't they popping? | The Big Story Podcast
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- Опубліковано 17 жов 2022
- Last week, a Swiss bank's annual ranking put Toronto No. 1 and Vancouver No. 6 on its list of the world's top housing bubbles. And although both cities have seen home prices decline this year, it's nowhere near close to matching their recent gains. So ... is this really a bubble, or will we not know until, oops, it pops?
What does a popped housing bubble actually look like in cities with limited supply? What would it do to homeowners who have their life savings in their property? And what would it mean to those who currently feel like they will never be able to own a home in these cities?
GUEST: Ari Altstedter, Reporter at Bloomberg News
For more information on this story and more, visit www.citynews.ca.
Keep in mind the bank economists work for the bank, and they want people to keep getting pricey mortgages. So take what the bank economist says with a grain of salt.
We bring in 400,000 immigrants per year. We build 226,000 homes. Supply and demand. We have 10 million sq/km of land, we use hardly any of it. We have more lumber than anyone other than Russia. We have everything we need to build homes cheaply, we just chose to not build them.
Our home prices are artificially inflated because we chose to bring in lots of people and build very little housing. Inflated housing prices assist the elderly who tend to own their homes, and punishes the young. In your 20s you make the least amount of money you are likely to make every year. You are just starting out. And the mortgage mountain looms. Average income for a 20 - 30 year old is $47k/yr, average home price is 640k. This gap pushes back family formation.
High home prices benefit the elderly and assist them in retirement. But high home prices reduce Canada's family size. Since families form later and have more debt, they do not feel economically stable and thus tend to have less children. Canada's birth rate has continued to trend lower as housing has increased. Today it is 1.47 children per family. 2.1 children per family is what it takes to keep Canada's population stable. Without immigration Canada would be shrinking fast, losing 25% of it's population every generation.
We’ve been talking about the bubble for 2 decades, and for 2 decades the gov’t have done everything they can to prop up prices. They’ve actually encouraged a completely unsustainable price appreciation this whole time and finally they are now stuck with broader inflation and they can’t step in and pump real estate anymore. Finally maybe home prices will start tracking wages again.
Technically we are headed for 4.75-5% BOC rate putting mortgages 1.5-2% higher than they are now. And inflation is sticky downward so expect rates to stay high for years.
For this to be a real correction we need to see prices drop under 2019 prices. And considering the interest cost are quite a bit higher than 2019, prices need to correct to 2015-17 levels to be considered a reasonable correction. That’s where the 50 yr trend line is.
@Mogul Rider LOL. Educate myself huh? I've been trading for 20 yrs. Bonds don't spike 4% in one day and yes the bond markets are very accurate in tracking where the central banks are going with their rates. I could get into an extended explanation about the relationship between the two but I'm sure that would be a waste of time.
That's OBVIOUS = an overinflated housing market is HIGHLY lucrative for provincial/federal governments & BANKS
100%
I've been hearing the Toronto housing bubble will pop every year since 2005 and every year it keeps rising.
Although with that said, I have seen price drops in Toronto by $200K for some houses, granted the house went from $1.8million to $1.6million, so still unaffordable for a lot of people.
Exactly
We're experiencing a housing crisis in Toronto but Torontonians will keep the current mayor for another turn.
I'm destined to live in a basement studio until I die, putting up with my upstairs neighbours and their three energetic children.
Sorry, we try, but these fvcking kids
Not in Calgary , still affordable for now
Any chance you can move to a more affordable city?
@@JJs_playground where would that be? Almost every city is 1m$ for a house. Small hick towns are 1m$ for a house
St. Johns,Newfoundland still very affordable
It's simple exclusionary zoning prevents the development of a variety of housing and the supply that's currently avaliable its luxury goods and pension funds at this point. Get rid of exclusionary zoning and red tape on construction materials and price will drop.
The market is irrational, people are acting irrational. The pop will come whether they want it or not
Highest immigration in the G7, yet somehow we have a massive labour shortage domestically (1M job openings). NIMBY municipal governments and red tape gatekeepers in big cities constrain supply. Oh and apparently the UN and the climate activists say we can't cut trees down in Canada anymore. How we're going to solve the housing crisis without labour, access to raw materials, or land (90% of which is owned by the government), is a mystery. Best thing we could do is change government to one with new priorities, which is why so many mayors changed in the BC municipal election recently.
The labor shortage is tied to immigration. During COVID there was a backlog. While Canada tries to bring in 400k immigrants per year, during COVID that number dropped almost in half. There's part of your labor shortage.
@@john_doe_not_found maybe we should have been prioritizing skilled workers instead of parents and grandchildren ?
@@booishoois309 I agree. Parents and children should be a separate stream. There are economic immigrants that Canada needs. The family re-unification stuff is costly. Bringing over wife and children is a net benefit to the country, bringing over elderly parents is a net loss. Cold but true.
@@john_doe_not_found sorry autocorrect. Grandparents and parents
lolz bro
Congratulations 🎉 on the housing project in Canada 🇨🇦 woot woot yay that’s exciting yay 😁
If the interest rates continue to go up there will be a crash of epic proportions
That’s what I’ve been hearing for 10+ yrs, still waiting for “the crash”
That's what we need. Keep interest rates going up, its great for the Canadian dollar and people who aren't over-extended.
Its time to pop the housing bubble. MPs must stand together to end high home prices and give a chance for the next generation to buy a house.
It is not that expensive actually, I don’t know why you people are whining at the prices, unless you want a super luxury house, you can simply buy a condo apartment for 800k or even lower tho, and if 2 people making 160k together, then you can easily qualify for mortgage with 20% down payment……that is 80k annually salary for each person, which nowadays economy can easily provide as long as you have university degree, which is kinda a normal thing for majority of family……I don’t know what you people are crying about seriously, what do you want actually is not affordability, it is actually exclusive cheap investment opportunity, you people seriously don’t care about anybody else but yourselves. So stop pretending you care.
The bubbles are beginning to burst.
Chief economist of Canada said 100 basis point rate hike would pop the bubble which he referred to the housing bubble as "the biggest bubble in the Universe"! I wonder what he would say about the 525Basis point hike plus stress test now 8% egads!
Increase wages...totally not in synch with house prices.
Can someone explain to me who benefits from interest rates going up? Who gets that extra money? Who benefits? There is all this talk about curbing inflation but then why apply that to someone who bought a house 10 years ago and isn't currently borrowing?
Housing used to be around $135,000 to $198,000 with interest of 7 to 8 % for 20 years.
Look, those who bought at $350,000 to $800,000. At ridiculous low interest rates. So you take the loss or homes foreclosure. Then yes you lose what you paid for 4 or 5 years. But now the cost is $135,000 @ 7 %, and you buy this second home that you can afford. So basically your total time of your mortgage will be 25 years when you pay it off..
Seriously, these people who have to accept a loss, but in the long run, they will recover by retirement or even early retirement at 60 instead of 65 years.
People are being run by fear...
Because they're directly correlated to interest rates. Wait for trigger rates and refinancing.
Because of hopes and dreams
Uh, they are popping.
Prices will only drop when you can build cheaper than what you can buy it for. You can't. You can always depend on government to add more regulation and drive the cost of new housing up
The reason why the bubble is busting in Canada my friend found that out the hard way moved back to America it's called taxes remember when we kicked the bricks out of America taxation without representation bricks means British.
People are living on the streets. They've got nowhere else to go, thanks to the governments immigration policy
Real estate has become a reflection to ivesting. Just like any investor intends to see the stock grow above regular clip, so the homeovners. Banks in rapacious stance let the credit mach the hype. End result is shortage of liquidity to spin the carousel of excess.
We are all doomed!
It just doesn’t “POP”. In Canada you have to see the trends of the 5 Year Fixed Rate Mortgage. It’s a gradual decline until it hits a crescendo..
Then that would be called a decrescendo
@@JohnSmith-gc7dp Depends on the viewpoint.
@@Johnny_Doe A lot of people in recent years (i believe it's 45%) have variable mortgages.
A lot of variable mortgages out there and the entire buying market didn't just pop into existence when COVID hit. Tons of 5 years are being renewed everyday
Why nobody tries to keep prices under control, when IT companies move from one dollar a share to 1000 dollars in a matter of weeks, days, hours Or months, while real estate investment, is targeted by control, and restrictions of all kinds including taxes, interest rate, Rental Board control and so on. Many say that residential real estate, does not contribute to innovation, or to the GDP or whatever, however, those who said this need to spend one winter freezing night in the street or a shelter, to appreciate their home. How about Casinos, or liquor stores, the lottery business. They do drain a lot of maney in the GDP, but if one is to define GDP by including in it only beneficial, and not harmful products or services, then, how those industries fit in the GDP, while they are actually a waist of resources, and producers of sickness, poverty, death and misery? Are they better than real estate investment for the GDP?
Because no matter what you say, if the home prices are too low, then that destroys economy as well, believe or not, and the home price is a reflection of local economy as well. Detroit has low home price, but why nobody wants to move there? So you should look at the bigger picture.
they have started to pop. as the population reduces💉the low demand will drive prices way down
People will move here.
@@FullCircleTravis they be dieing off too
right now im getting invitation to mortgages access 'formation' from at least one bank, while french CBC is trying to have folks swallow the indignity of more than one familly living in a unifamilial house.
my answer : GET FUDGED
@@steveswhirld
I figure 2-3 billion left. What's the price of anything when every economy is toast.
@@FullCircleTravis who wants to move into serfdom?
It’s crazy to me that people see rent, food & gas all going up, but think property value will come crashing down. Don’t believe the hype, hold on to your assets people. 💯
it's crazy when people think the markets will go straight up forever.... home prices are coming down now. the catch: you still wont be able to afford anything because you will be struggling just to feed yourself and stay warm.
So I guess you missed all the fraud happening in Canada eh?
"Dont believe the hype, hold on to your assets people"... do you understand the basics of how the economy works ? 🤡 hold on tight 🤣.
@@vmtl4659 I am well positioned for this downturn, telling people to sell their assets before money printer go burr would be a new money mistake. But you never had any to begin with, we call guys like you “no money” 😂
@@citiessportsbar6475 ohh i have no money yes thank you ! God bless you and your house 🙏
As long as it stays out of reach for freedumbers, it's all good. Nobody wants to have freedumbers as neighbours.
What is a freedumber?
Please stay in the city, don't leave even for a hike, or pick apples. Stay south of Mayfield.
It's out of reach for everyone. More will join them if the government continues to contribute to the problem.
@@RealPeteRyan i think he's referring to people that participated in the "freedom convoy".
Toronto's housing bubble is epic but that doesn't mean it will pop... markets can remain irrational longer than you can stay solvent
Agreed, I've been hearing that Toronto housing bubble will pop since 2005. And yet it keeps going up.
✡ Always follow the money ✡
There is just not enough inventory Immigration way to-high not enough houses
Municipalities can’t afford to build infrastructure for water and sewer
Immigration to high?
Please elaborate. Based on what outcome?
@@tonys2957 All inmigration is to high when new demand is not allowed to be supplied by construction.
Tony we are living the outcome right now 😂
7 months later, status quo lol
so far, vancouver and toronto are the 2 cities that have high housing price. cities like Calgary, Edmonton and other small cities are reasonably priced but people still have a hard time buying a house because of the high taxation and low wage (especially minimal wage). Government needs to face the issues and not hiding away from it.
one of the reasons why the house prices are so expensive in Van and TO is because rich immigrants (Indians and mainly Chinese and Japanese and Korean) raise up the demand there. Canadians are forced to move to cities like Edmonton and Calgary for more affordable housing and job opportunity and family raising purposes. ( don't get me wrong, edmonton and calgary are 2 very big cities) Yes, we need these rich Chinese because we need these investment. But I prefer Canadians to move to other cities for affordable housing so that it will be a balance.
I guess you didn't notice Shelburne, Dundalk, Markdale are all million dollar towns now?
the housing markets are high because of a few factors beyond our control really, and until the government of canada outright says no to any investors and investments and money coming out of china this nonsense wont change. while toronto and vancouver will always be big expensive to live locations, the chinese people have always put their moeny in housing, and now all the domestic housing market is falling to a meteoric crash, everyone who is able too is now in a mad rush to move their money OUT of china, and where will they put it? chinese will put it exactly where they used to put it, land and homes. if your family owns land keep it, if you own a home hoard it for as long as u are able and lobby to keep the asian money out of this country and extract the existing investors and their money, dont grandfather them in, and do your level best to deny canadian banks the capacity to circumvent this via third party investors.
only then, coupled with a healthy grow out of homes, and apartments especially at the lower end, starter homes, simpler apartments, less designer luxury suites, simpler condominiums pushed out in scale, that is when you will see a return to normalcy in the housing markets. we have A LOT of luxury homes for service sector workers and high skill labour workers, but that is not your bread and butter, the boomers are retiring soon en masse, theres going to be ALL SORTS of those homes, but the millenials, coming in to take their place, and soon the gen z's behind them will be fighting like prisoners with shanks over what does exist for apartments and starter homes. less luxury, more simplicity its the market section that is the most anemic. people arent having massive families and the per person net worth in canada will rapidly decline in less then 7 years. you are wasting building materials, and the labor of the skilled workforce we do have right now today, on anything else.
Only bubbles in farmers minds. Reasonable on global standards
That's why it's rated a #1 bubble by global standards.
It is one of the biggest bubbles by global standards.