The increased capital applied to home purchase is largely being borrowed.. accelerating leverage.... The vast majority of bank of mom and dads, are not just pulling $200-$300 grand from a checking account. It is coming from a HELOC!!! So the presence of increased capital is not a thought out explanation.. it is NOT capital, if it is being borrowed... its DEBT! This is what needs to change.. source of capital for DP needs to be vetted. Borrowing down payments increases systemic risk - it doesn't matter WHO is doing the borrowing.
They should make the second property or investment property very expensive. In addotion, mortgage frauds should be punished severly. Through away people who do frauds we need good people in Canada. People who feel proud to be law obiedient Citizens. People have 3, 5, 10 homes and government is sleeping.
There are lots of mortgage brokers who can fake t4s, income statements etc and show a higher income. All the bank care is if you have the down payment and a good credit score. That is how people making $50k are buying 800k houses.
Doubt this is that big of a problem. Its the top 1% investors scooping up as much supply as they can and immigration laundering where a millionaire in China sends a family member over to get residency and then gives them money to buy homes in cash so you have a kid earning 30k living in a multi-million dollar residence.
We Are in Unchartered Financial Waters! every day we encounter challenges that have become the new standard. Although we previously perceived it as a crisis, we now acknowledge it as the new normal and must adapt accordingly. Given the current economic difficulties that the country is experiencing in 2023, how can we enhance our earnings during this period of adjustment? I cannot let my $80,000 savings vanish after putting in so much effort to accumulate them.
I stopped listening and taking financial advise from these UA-camrs, because at the end of the day, I end up with a bunch of confusing stocks without knowing when to take profit, In reality, all I needed was professional advice
@RobertCooper03 I started out with an FA named “Colleen Janie Towe” . Her honest approach gives me complete ownership and control over my position, and her rates are incredibly affordable given my ROI.
Realtors and agents play a big role to influence house inaffordability for the common canadian. Their lies had promoted bidding that in turn push regular prices to next higher level day by day deal by deal until it becomes the new norm price range. Why do you guys fail to observe this??
I know someone who got greedy due to really low HELOC rates, and pulled out a huge HELOC. Now he is struggling to pay his expenses due to a 500 basis point increase in rates. We need to see such greedy bastards default big time
You’re just jealous and angry that you didn’t benefit from pulling out money from your assets - it’s always negative people like you who get no where in life. Stop name calling - greedy bastards… that negativity won’t get you anywhere
U kidding me John? Mortgage was so easy to get in 2020-2021. Not 4x ur income but instead 6-7x was easily given and don’t forget the CREATIVE FINANCING methods. Fake letters fake t4 fake t1s
Trust me, I work in a bank, some of the loans would make the hair on the back of your neck stand up. Absolutely, lending has contributed to this, especially the fraud involved.
Of course, there is mortgage fraud. Always has been and always will be. But for mortgage fraud to be the main driver of home prices, it would need to make up a very high share of all transactions, and I don't think that's the case. Mortgage fraud makes up a relatively small share of transactions
You basically need to be in the top 1% income bracket or get 100-200k gifted from parents. The birth rate will just continue to plummet leading to more immigration leading to more demand. If you are middle class prepare to work the rest of your life with nothing to show for it.
@@weaselsoup3105yes unfortunately you need the huge down payment. 105000 is plenty if you have 25-30% down. You won’t be able to afford a 900000 house on 105000 a year. If a person has a 900000 dollar mortgage even at 2% it is not doable
The upper end of the largest demographic cohort .. aka .. boomers, have been investing in housing for 20 yrs because the banks paid them zero for saving in cash. Same with large pension investment entities. The frog has been slowly heating up. It's a crisis now as the waters are starting to boil. I serve on our local Municipal Planning Committee. We are aggressively approving applications, but developers are not starting projects. Three applications came last month to convert an apartment to short-term rental, landlords got burned. The Ontario Municipal Planning Act does not give us the authority to deny these applications. Our Council approved a motion to support our local public senior residence building in applying for an addition. CMHC made it so difficult the project has been scrapped. I live in a 1000sq ft 1960's bungalow and would gladly move into our local, small senior government rental but the waiting list is 10yrs long. Im not moving into a private rental where i can be evicted. And I'm definitely not renting out my basement. So here I sit, a single person in a house that is designed for a family. Fyi, 80 percent on my street is in the situation.
The power to give municipalities more control over development and to provide other revenue generating steams is the province. Voters need to inform themselves of local policies - municipalities and provinces have the most impact on your day to day lives vs the federal govt. voters need to inform themselves - the media needs to spend more time informing the public.
Interest, period, is a problem. If lowering interest rates lead to a destabilising cheap credit problem, then in the process of eliminating credit, replace the missing interest rate amount with a fixed, non-compounding, fee. Then, you can eventually get rid of credit.
Well growing up in Canada, I always got a raise on my job, including bonus. Then... late 80s early 90s, in the influx of more immigration started. No problem if their building businesses and creating jobs... Not sponging off the government for more money, which I'd mine money... This is the problem... no jobs no raises, no bonus just cheap labor. Thanks to my wonderful greedy government. Welcome to Canada.
its not because of immigrants, its because we've exhausted the limits to growth due to a corrupt credit based economic system. We import immigrants to mitigate this.
@Canadian_Eh_I Immigration is over populated here in Canada. They are not creating jobs or bringing in businesses. But they have money and a place to live plus free education. All from my government, which is tax payers money. The begging here has increased. We dot allow begging here. It's way too much. There are zero jobs in this country. Zero.
Maybe in TO but in Vancouver it started in 1986! Seniors could not afford hose taxes, it was bad. We had to move in 1996 and moved to the okanagan. This is nothing new in vancouver. Nowhere in BC is affordable 😢this is most unfair to seniors, renters and young families
John you nailed it on the head. Housing is no longer for living in, but is an asset. The current agenda bars people from owning their own homes and will continue to do so until you have a government willing to change this direction. The Ontario green party has proposed a dramatic tax on additional single unit homes you own. This tax increases by each home you own. I'm sure that it doesn't apply for purpose built properties (rental apartments). We need to get investors out of the single family homes. hmmm maybe houses should be for people to live in and not an investment.
Ummm I've watched home prices in Toronto run away from wages for almost 2 decades. I bought in 2003 and I could see pricing starting to run. By the time 2008/9 came around Toronto was already out of reach for most. The biggest mistake was allowing 5% down 40 yr mortgages. And the unfortunate thing is, many of the politicians used this situation to leverage and buy a lot of investment properties themselves, so they obviously don't want to see home prices drop. This easy money started well before 2009. The huge spike in the last 3 yrs was a result of flood of money supply to the tune of 28% increase. Capital could easily be coming from people who have been flipping homes for well over a decade. Their wages aren't following the price appreciation, the money is coming from an activity that has contributed to this out of control real estate inflation.
Tax won’t solve Canada’s housing issue. Tax is already stifling drive and innovation. Canada needs to get to building. Create incentives to grow the construction industry and that includes education, training and certification. Reduce taxes for investing in companies on the tsx. Have a flat rate tax on dividends. You want to shift where money is being parked from RE to elsewhere in the economy. You want to move decrease the demand while increasing the supply for housing. Government at the federal and provincial level needs to have programs to increase low-income housing and drive policies that increasing supply. I am still puzzled why CMHC exists to protect banks from the risk of lending money. Also move the demand from Toronto, create incentives to move new jobs to a new hub. You need other cities to be as developed as Toronto.
The question that the host and guest have not answered is where does the $ come from in driving up the cost of housing if it is not cheap and easy credit. Only cheap and easy credit can create $. Whatever the bank of mom and dad provides is already $ in the system assuming mom and dad did not get a loan to fund their kid's home buying. Where else all the new $ can come from?
@@gk6199 yes true, lots of fraud - but that’s always been a problem- the point is as fraudulent as it comes people pay their mortgages though… right? Or else there would be a vast amount of power of sales or foreclosures- explain that then? I always find it’s people who have small minds always put the blame on something instead of just facing the truth or reality… that’s not directed at you 1 I’m talking about in general. Don’t blame the fraud… it’s a smaller amount than you think. Fraud happens all the time. Politicians do fraud too - don’t you think? Hahaha. Give their friends contracts… etc.
Smaller mom-and-pop landlords aren't the only ones getting in on building short-term rental empires. Large corporations and real estate investment firms are building their own mega-portfolios, pouring in billions of dollars to create holding companies for their assets, only further contributing to the housing shortage. The government has to create policies to counter these.
My thoughts are the primary driver is interest rates. The 0.25% interest rate (and low rates from before this) caused people not wanting to lose their money (inflation, devaluing the currency) that they ran out and got homes. Yes, some/many had savings, so they could put down larger capital, however it is again due to inflation expectations that made them purchase homes up. It is scandalous that the world central banks did this on such an epic scale and caused hard working people to have their savings devalued to 50% of what it was worth before. History has shown people are willing to accept 2% inflation, but we had like 20% inflation!! So, everyone voted with their money and purchased homes up. People are trying to protect themselves from the central banks actions. The poor/lower income cannot find an inflation hedge like housing, so they lose the most :(
It basically pulled demand forward. It forced those who were just saving to buy and buy now or risk never owning. We can look at data and numbers but we also need to look at psychology.
Also, the central banks losing all credibility had something to do with it. Inflation was out of control and they called it transitory. HA. We all know the game plan is to have interest rate back to 0% long term EVEN IF inflation creeps up to crazy numbers. People have been burned for 20 years. They finally said enough! As a saver, I cannot save safely. Even now, interest rates are a little better, but I am still looking at buying a home since I know the long term master plan. He is right that the social contract is broken. Canada is broken. New policies seem to make thing worse for some, better for others. I agree in stopping the REITs and wealthy people from buying up SDH. I like what she said too about Singapore implementation. The old Housing minister was awful. The new one, well, wasn't he previously the immigration minister who let in over 1 M people into Canada? Where are these people going to go? Is this not also contributing to strong demand?
People felt forced to buy "assets" with those low rates. We all new all the money printing would cause massive inflation. It was a no Brainer to buy multiple homes.
Toronto, Vancouver and to an extent Montreal are the only cities in Canada worth living in as those are where the jobs, amenities and social support are at.
@@shauncameron8390 I strongly disagree but I am fascinated at the thought of people actually feeling the way you do. Have you tried living outside of a huge, crowded and expensive city? I don't mean living in the desolate urban sprawl of a big city. I mean a different city center where plenty of jobs, amenities and social supports exist and don't require navigating a traffic jam to access them. What jobs, amenities and supports do you think they don't have?
@@firstlast4229 You may strongly disagree all you want, but the vast majority of immigrants flock to those cities and barely anywhere else for a reason.
Let the truth be told. More people coming to the table with more capital? Simple answer: HELOC from inflated home prices, meaning people were simply taking on more debt, over-leveraging themselves using cheap borrowing cost. We know for a fact that the money is not coming from productivity output as GDP per capita has been stagnant for a long time now in this country. This is why, in the first place, that we are in this shitty situation that we are in right now. It will not be surprising that we will see widespread bankruptcies as a bunch of those overleveraged loans will be flushed out by the high interest rate.
I think people underestimate how much money people make in the stock market. It’s not just lines of credit. A lot of people and a lot of young people make a lot of money in the stock market and the internet.
Another issue is the huge land transfers taxes and agent fees. That's potentially 10% hit, so why would anybody want to sell? If somebody rents a house or condo they are not living in, it should be charged a commercial tax rate. They need to get rid of that wealth grab known as the land transfer tax.
Its just impossible. The goal posts keep being moved. 10 years ago 26 $ an hour was a good wage and enough to buy a house. Now 30$ per hour is not enough. You need to make 40. In another 10 years you will need to make 50 and so on.
Why can’t they put a cap on maximum number of properties a individual can own ? Rather skewing housing market and allowing only rich to keep investing thereby increasing prices ?
Impossible to implement. People can control corporations that own houses. Want to also cap the ownership of corporations as well? Say bye bye to the stock market then.
. Whether house prices go up or not, rents will keep going up ! Just check out the "'temporary injunctions '' against evictions at the Superior Court of Ontario. It will take several years to get rid of a bad tenant. Who will want to become landlords? Landlords are being driven into bankruptcy by the courts.
HELOC is a cheap credit indeed as I was told every home owner who bought 10, 20 yrs. ago can easily get a home equity loan / HELOC on assumptions of housing improvement.
Everything in Canada is overpriced. Why? Greed, policies for the rich eg. the quota system, milk, poultry, eggs; the wealthy control prices. The government is totally to blame for home prices, you nor I can regulate fees/taxes etc on homes. Eliminate all fees and taxes on non-investment homes ( no gst/hst, development fees etc) it may help. Canada is a closed monopolistic society, high prices.
How about better saving vehicles. We are being taxed to a maximum which doesn’t allow space for savings and wage growth is delayed apart to everything else. Taxes and now interest rates are deteriorating middle class. We need allowance of up to 200k tax free used for down payments. That will give on average 20% deposits for Canadians to save for homes.
It has absolutely nothing to do with mortgage credit..........and everything to do with cost to build. If builders could produce 100000 homes in a short time frame, prices wouldn't go up. (Just look at Alberta where prices have been flat for the last 10 years while Tor/Van double in price)............aka interest rate/credit have nothing to do with expensive homes.............it is the lack of alternative of extra houses to buy where people actually want to live. Protip: in this interest rate environment making building costs spike as panelling/lights/drywall/everything that goes into a house is produced in a factory which took out large $$ debt to produce such goods, a high rate = much higher supply cost.................meaning that even as prices skyrocket it is still a negative profit margin position for builders...........SO THEY DON'T BUILD.
It’s funny how people think housing is too expensive without ever built a house before or even looked at the costs and risks involved in building a house.
Thank you Urmi for asking great questions that get to the heart of the problem. I have one pressing question that I am curious about. The Liberals have allocated 96Billion for new housing starts in a bid for re election the main stream Media says they are doing it providing a Carrot, while the Conservatives main stream media are handling housing with a Stick going to penalize cities that don't cut the red tape and build ASAP! Which strategy do you think will work? It would be a great discussion for next session including Steves opinion! I hope you can ask this question for me it would be greatly appreciated!
One thing for sure we know the msm is totally unbiased and aren’t influenced at all by the money Trudeaus government is shoveling their way. The Liberals using a carrot!? You mean they’re using taxpayer money to buy votes! Don’t forget who put us in this position. But I’m sure you will find a reason to be a apologist. The current corrupt regime needs to disappear for a long time for Canadians to heal.
I wonder is this guy compleately clueless (which he doesent look like to me) or he's sand bagging. So he's telling me that when these people are earning less money since wages are not keeping up with inflation, and have less spending power, they somhow all these people get the 32% for deposit with these astronomical mortages that she mentions with (10X or more LTVs) and 1.3-1.5mill prices, i doubt that. My parents didn't have the money to drop me 200-300K, and even if they're equity was there, they wouldn't be able to pay back HELOCs as theyre retired, and theyre money pool is shrinking every day with the inflation. And with rents skyrocketing everywhere, i wouldnt have been able to save diddly-squat as a kid right out of college, and with prices more than doubling in last 10 years, there was no chance in hell that i could save for a downpayment with an avg job. Something funny is going on there in Canada-land, either a lot of people are doing cash jobs on the side (doubtful by the unemployment numbers), or are there many other sources of "these 32% of money" that misteriously show up. I doubt a large portion of people are selling drugs, or laundering money, perhaps it could be huge amount of fraud, possible i guess, if people get desperate they will do just about anything. Perhaps big companies, and lots of well healed "investors" are snapping up the market, since the government is plowing new people into the country at a recor rate, 1.2million new imigrants in one year, WOW! My friends in canada are having hard time, so i can't imagine how people with low paying jobs are coping, it's a tragedy and a crime that the govs are doing this to their own citizens. The arrogant stupid smerks on these peoples faces, as they're talking about it explains everything.
because people save in dollars they will not admit that their currency if flawed and losing purchasing power....it's like any other asset...drop it for an appreciating asset. cash is trash.
The pertetual motion machine that has inflated housing prices in Canada, also works in reverse. This is not a new phenomenon or a new paradigm. A correction is coming. The only question is when.
This is when immigrants won't choose to Canada no matter how wide they open the doors and that will be death of Canadian economy and it as a decent country.
For that, you need the least desirable areas like Saskatchewan to become unaffordable, then people will bail. The Toronto and Vancouver cancers will continue to spread. When everywhere is a mini toronto or vancouver and the middle class is hollowed out, then we will be a sinking ship. Canada should still be able to attract immigrants until the other provinces go to shit, however they might have to pick somewhere other than Toronto to live.
Recall in 2020/2021 Canada undertook Quantitative Easing, prior the 2008 recession …QE was first introduced in the US and Uk to inject liquidity and capital into the Market - this fuelled cheap credit and ease of borrowing by banks. The chickens have come home to roost, coupled with a complete abdication of purpose built housing/rentals by both levels of govt. in Canada. Both conservatives and liberals are responsible for this the mess and primary in the housing from you can plane your provincial govt giving back to 2007 for creating that perfect storm.
I am surprised he talks about the government having an agreement with the people to manage the country such that regular people could afford a home, whereas he was always talking about supply and demand, and that the market should be king in the past. It's OK, we shouldn't be too angry with our government, Australia seems to have the same problems as us, perhaps NZ and Britain too. The free economy won. Ultimately we will end up with nothing, and all the wealth being concentrated with a tiny minority. We can choose between the 2 major parties as much as we want, the result will be the same.
Reits and equity firms pooling money buying everything in sight is main cause, mass immigration is second problem and insane inflation by liberals is main problem. The problem has never been regular people buying a couple rental properties.
Every citizen should be able to have a roof over head, expectations and over the top spending and development for the rich foolish enough to venture into rental properties,, kharma will catch many of you and the tumble will be more of a shock than those already suffering deal with. Too much money is running the market. Over the top immigration will solve nothing beyond keeping this reckless boat adrift. Social responsibility begins at home. I call for a Parliamentary investigation and prompt action, or we all sink.
Not sure what is beef is who Ahmed Hussain. He's doing what ever other small and large large investors are doing. Seems this guy had an axe to grind...or is he simply a racist.
Homes are not overpriced if people are paying for it. If someone told you a loaf of bread is $100 would you buy it ? No, we are giving half of our income into taxes so it doesn’t give us any saving vehicles. Why people in Dubai can all afford a home which are about of average Canadian price. First no tax, second there is enough supply. So interest rates need to decrease to neutral level so people can be able to afford again, there needs to be tax incentives or cuts in taxes.
@@Mehmed317or the banks can stop extending amortizations, let some default. That would help bring down inflation instead of keeping prices propped up and skirting around the BoC tigbtening. Lowering the rates only increases demand, and if banks aren't letting people default it creates a tight supply. Someone gets hurt here, it's either those that are overleveraged, or future generations pay. Wouldn't be fair for future generations to pay for the mistakes of the overleveraged. Extending amortizations and adding aggregate demand via immigration only keeps rates higher for longer, now everyone pays via higher inflation for longer.. Like I said, if they just sacrificed the overleveraged, then inflation and rates would have been able to come down a lot quicker. So again, how on earth does lowering rates in a tight housing market make housing more affordable? That's crazy, I mean did you not learn anything about low rates and tight supply during the pandemic? You just want future canadians to have to pay more so that your debt serving costs come down. Anyways... BoC will tighten until something breaks. Then rates should come off a little. A new cycle is starting. Rates will go up and down but trend up from now. After ww2 rates were almost 0. From the 40s to 80s you had rates go up. From the 80s until now you had another 40 year cycle except rates went from around 18% to almost 0%.. Can you see a trend? Now prepare for a cycle where the rates trend up and debt is harder to pay back.
@@Casey-qm1nd how would defaulting make inflation come down? Mortgage interest inflation is applied to anyone with mortgage, not just the ones that are defaulting. Lowering interest rates will help people qualify for mortgages. Now the people without substantial down payments can’t even qualify for 300k mortgage and we know what $300k will get you in Canada. So if they don’t qualify for mortgages how will builders build homes for them? We are already down a year on a building new homes. Plus those defaulting will end up putting pressure on the rental market. I am saying rates need to come to neutral level for making mortgage somewhat affordable but to prevent houses from increasing further.
@@Mehmed317 what is the neutral rate to you? Because the cpi data is not an accurate representation of inflation, it is notorious for understating the inflation levels. The neutral rates are much higher because real inflation is much higher. That is a big part of why the inflation is being so stubborn, rates are not restrictive enough and that is why the BoC keeps chasing instead of being proactive. They need to allow the high rates to drop the asset prices, then things will be more affordable when we see deflation. Defaults make inflation come down by taking bad loans and liquidity out of the market. Also adds more supply and keeps competition down. A third of the CPI is shelter related.. So housing has a big effect.
@@priuss6109 because the answers been cheap money, it's always been cheap money and anyone ignoring that is pushing RE based on a false premise to people who would be better off not living under the crushing burden of debt
The increased capital applied to home purchase is largely being borrowed.. accelerating leverage.... The vast majority of bank of mom and dads, are not just pulling $200-$300 grand from a checking account. It is coming from a HELOC!!! So the presence of increased capital is not a thought out explanation.. it is NOT capital, if it is being borrowed... its DEBT! This is what needs to change.. source of capital for DP needs to be vetted. Borrowing down payments increases systemic risk - it doesn't matter WHO is doing the borrowing.
They should make the second property or investment property very expensive. In addotion, mortgage frauds should be punished severly. Through away people who do frauds we need good people in Canada. People who feel proud to be law obiedient Citizens. People have 3, 5, 10 homes and government is sleeping.
There are lots of mortgage brokers who can fake t4s, income statements etc and show a higher income. All the bank care is if you have the down payment and a good credit score. That is how people making $50k are buying 800k houses.
Doubt this is that big of a problem. Its the top 1% investors scooping up as much supply as they can and immigration laundering where a millionaire in China sends a family member over to get residency and then gives them money to buy homes in cash so you have a kid earning 30k living in a multi-million dollar residence.
Well, those mortgage broker suck because I make $25k and have bought 3million dollar homes
We Are in Unchartered Financial Waters! every day we encounter challenges that have become the new standard. Although we previously perceived it as a crisis, we now acknowledge it as the new normal and must adapt accordingly. Given the current economic difficulties that the country is experiencing in 2023, how can we enhance our earnings during this period of adjustment? I cannot let my $80,000 savings vanish after putting in so much effort to accumulate them.
Just try to diversify your portfolio to other market sectors, that way your investment is balanced and you don't get to make so much losses
I stopped listening and taking financial advise from these UA-camrs, because at the end of the day, I end up with a bunch of confusing stocks without knowing when to take profit, In reality, all I needed was professional advice
@RobertCooper03 I started out with an FA named “Colleen Janie Towe” . Her honest approach gives me complete ownership and control over my position, and her rates are incredibly affordable given my ROI.
Realtors and agents play a big role to influence house inaffordability for the common canadian. Their lies had promoted bidding that in turn push regular prices to next higher level day by day deal by deal until it becomes the new norm price range. Why do you guys fail to observe this??
No they don't. Government interference does. It's the reason why long-term rentals are no longer viable.
I know someone who got greedy due to really low HELOC rates, and pulled out a huge HELOC. Now he is struggling to pay his expenses due to a 500 basis point increase in rates. We need to see such greedy bastards default big time
You’re just jealous and angry that you didn’t benefit from pulling out money from your assets - it’s always negative people like you who get no where in life. Stop name calling - greedy bastards… that negativity won’t get you anywhere
U kidding me John? Mortgage was so easy to get in 2020-2021. Not 4x ur income but instead 6-7x was easily given and don’t forget the CREATIVE FINANCING methods. Fake letters fake t4 fake t1s
Trust me, I work in a bank, some of the loans would make the hair on the back of your neck stand up. Absolutely, lending has contributed to this, especially the fraud involved.
Of course, there is mortgage fraud. Always has been and always will be.
But for mortgage fraud to be the main driver of home prices, it would need to make up a very high share of all transactions, and I don't think that's the case.
Mortgage fraud makes up a relatively small share of transactions
@@thevintagekittyreminds me of NINJA loans that caused the 2008 Lehman crash
You basically need to be in the top 1% income bracket or get 100-200k gifted from parents. The birth rate will just continue to plummet leading to more immigration leading to more demand. If you are middle class prepare to work the rest of your life with nothing to show for it.
Painful truth right here.
Bullseye. Damn “investors” REITs and hedge funds have effed the whole thing up.
@oz6123 my girlfriend and I earn 105 k household. We are shut out of the market entirely
I am telling you places like Germany never solved affordability issues. Market is almost 60% renters and we are going that route.
@@weaselsoup3105yes unfortunately you need the huge down payment. 105000 is plenty if you have 25-30% down. You won’t be able to afford a 900000 house on 105000 a year. If a person has a 900000 dollar mortgage even at 2% it is not doable
The upper end of the largest demographic cohort .. aka .. boomers, have been investing in housing for 20 yrs because the banks paid them zero for saving in cash. Same with large pension investment entities. The frog has been slowly heating up. It's a crisis now as the waters are starting to boil. I serve on our local Municipal Planning Committee. We are aggressively approving applications, but developers are not starting projects. Three applications came last month to convert an apartment to short-term rental, landlords got burned. The Ontario Municipal Planning Act does not give us the authority to deny these applications. Our Council approved a motion to support our local public senior residence building in applying for an addition. CMHC made it so difficult the project has been scrapped. I live in a 1000sq ft 1960's bungalow and would gladly move into our local, small senior government rental but the waiting list is 10yrs long. Im not moving into a private rental where i can be evicted. And I'm definitely not renting out my basement. So here I sit, a single person in a house that is designed for a family. Fyi, 80 percent on my street is in the situation.
The power to give municipalities more control over development and to provide other revenue generating steams is the province. Voters need to inform themselves of local policies - municipalities and provinces have the most impact on your day to day lives vs the federal govt. voters need to inform themselves - the media needs to spend more time informing the public.
Interest, period, is a problem. If lowering interest rates lead to a destabilising cheap credit problem, then in the process of eliminating credit, replace the missing interest rate amount with a fixed, non-compounding, fee. Then, you can eventually get rid of credit.
Doesn't immigration play a role in rising rent/home prices?
Well growing up in Canada, I always got a raise on my job, including bonus.
Then... late 80s early 90s, in the influx of more immigration started.
No problem if their building businesses and creating jobs...
Not sponging off the government for more money, which I'd mine money...
This is the problem... no jobs no raises, no bonus just cheap labor.
Thanks to my wonderful greedy government. Welcome to Canada.
its not because of immigrants, its because we've exhausted the limits to growth due to a corrupt credit based economic system. We import immigrants to mitigate this.
@Canadian_Eh_I Immigration is over populated here in Canada. They are not creating jobs or bringing in businesses.
But they have money and a place to live plus free education. All from my government, which is tax payers money. The begging here has increased. We dot allow begging here. It's way too much.
There are zero jobs in this country. Zero.
Maybe in TO but in Vancouver it started in 1986! Seniors could not afford hose taxes, it was bad. We had to move in 1996 and moved to the okanagan. This is nothing new in vancouver. Nowhere in BC is affordable 😢this is most unfair to seniors, renters and young families
I totally agree. This had alot to do with the repatriation of Hong Kong.
John you nailed it on the head. Housing is no longer for living in, but is an asset. The current agenda bars people from owning their own homes and will continue to do so until you have a government willing to change this direction. The Ontario green party has proposed a dramatic tax on additional single unit homes you own. This tax increases by each home you own. I'm sure that it doesn't apply for purpose built properties (rental apartments). We need to get investors out of the single family homes. hmmm maybe houses should be for people to live in and not an investment.
Ummm I've watched home prices in Toronto run away from wages for almost 2 decades. I bought in 2003 and I could see pricing starting to run. By the time 2008/9 came around Toronto was already out of reach for most.
The biggest mistake was allowing 5% down 40 yr mortgages. And the unfortunate thing is, many of the politicians used this situation to leverage and buy a lot of investment properties themselves, so they obviously don't want to see home prices drop. This easy money started well before 2009.
The huge spike in the last 3 yrs was a result of flood of money supply to the tune of 28% increase.
Capital could easily be coming from people who have been flipping homes for well over a decade. Their wages aren't following the price appreciation, the money is coming from an activity that has contributed to this out of control real estate inflation.
Tax won’t solve Canada’s housing issue. Tax is already stifling drive and innovation. Canada needs to get to building. Create incentives to grow the construction industry and that includes education, training and certification. Reduce taxes for investing in companies on the tsx. Have a flat rate tax on dividends. You want to shift where money is being parked from RE to elsewhere in the economy. You want to move decrease the demand while increasing the supply for housing. Government at the federal and provincial level needs to have programs to increase low-income housing and drive policies that increasing supply. I am still puzzled why CMHC exists to protect banks from the risk of lending money. Also move the demand from Toronto, create incentives to move new jobs to a new hub. You need other cities to be as developed as Toronto.
The question that the host and guest have not answered is where does the $ come from in driving up the cost of housing if it is not cheap and easy credit. Only cheap and easy credit can create $. Whatever the bank of mom and dad provides is already $ in the system assuming mom and dad did not get a loan to fund their kid's home buying. Where else all the new $ can come from?
Immigrants come with lots of money!! Most of them are educated and they have capital
Tons of east Indian fraudulent loans. Keep it honest
@@gk6199 yes true, lots of fraud - but that’s always been a problem- the point is as fraudulent as it comes people pay their mortgages though… right? Or else there would be a vast amount of power of sales or foreclosures- explain that then? I always find it’s people who have small minds always put the blame on something instead of just facing the truth or reality… that’s not directed at you 1 I’m talking about in general. Don’t blame the fraud… it’s a smaller amount than you think. Fraud happens all the time. Politicians do fraud too - don’t you think? Hahaha. Give their friends contracts… etc.
Smaller mom-and-pop landlords aren't the only ones getting in on building short-term rental empires. Large corporations and real estate investment firms are building their own mega-portfolios, pouring in billions of dollars to create holding companies for their assets, only further contributing to the housing shortage. The government has to create policies to counter these.
No. The government has done enough damage. Its anti-landlord policies made short-term rentals a thing.
My thoughts are the primary driver is interest rates. The 0.25% interest rate (and low rates from before this) caused people not wanting to lose their money (inflation, devaluing the currency) that they ran out and got homes. Yes, some/many had savings, so they could put down larger capital, however it is again due to inflation expectations that made them purchase homes up.
It is scandalous that the world central banks did this on such an epic scale and caused hard working people to have their savings devalued to 50% of what it was worth before. History has shown people are willing to accept 2% inflation, but we had like 20% inflation!! So, everyone voted with their money and purchased homes up. People are trying to protect themselves from the central banks actions. The poor/lower income cannot find an inflation hedge like housing, so they lose the most :(
It basically pulled demand forward. It forced those who were just saving to buy and buy now or risk never owning. We can look at data and numbers but we also need to look at psychology.
Also, the central banks losing all credibility had something to do with it. Inflation was out of control and they called it transitory. HA. We all know the game plan is to have interest rate back to 0% long term EVEN IF inflation creeps up to crazy numbers. People have been burned for 20 years. They finally said enough! As a saver, I cannot save safely. Even now, interest rates are a little better, but I am still looking at buying a home since I know the long term master plan.
He is right that the social contract is broken. Canada is broken. New policies seem to make thing worse for some, better for others. I agree in stopping the REITs and wealthy people from buying up SDH. I like what she said too about Singapore implementation.
The old Housing minister was awful. The new one, well, wasn't he previously the immigration minister who let in over 1 M people into Canada? Where are these people going to go? Is this not also contributing to strong demand?
People felt forced to buy "assets" with those low rates. We all new all the money printing would cause massive inflation. It was a no Brainer to buy multiple homes.
Why do people insist on contributing to the excess demand in the most crowded and expensive cities in Canada?
Toronto, Vancouver and to an extent Montreal are the only cities in Canada worth living in as those are where the jobs, amenities and social support are at.
@@shauncameron8390 I strongly disagree but I am fascinated at the thought of people actually feeling the way you do. Have you tried living outside of a huge, crowded and expensive city? I don't mean living in the desolate urban sprawl of a big city. I mean a different city center where plenty of jobs, amenities and social supports exist and don't require navigating a traffic jam to access them. What jobs, amenities and supports do you think they don't have?
@@firstlast4229
You may strongly disagree all you want, but the vast majority of immigrants flock to those cities and barely anywhere else for a reason.
@@shauncameron8390, the reason being: they don't know any better? What's your excuse?
Screw buying overpriced homes! Make 💰 and Van life...find a wife and ride bikes 4 life baby...simple life baby 🤟🤟🤙🤙🚴🚴♀️🏞️🏞️😁😁
Let the truth be told. More people coming to the table with more capital? Simple answer: HELOC from inflated home prices, meaning people were simply taking on more debt, over-leveraging themselves using cheap borrowing cost. We know for a fact that the money is not coming from productivity output as GDP per capita has been stagnant for a long time now in this country. This is why, in the first place, that we are in this shitty situation that we are in right now. It will not be surprising that we will see widespread bankruptcies as a bunch of those overleveraged loans will be flushed out by the high interest rate.
I think people underestimate how much money people make in the stock market. It’s not just lines of credit. A lot of people and a lot of young people make a lot of money in the stock market and the internet.
Another issue is the huge land transfers taxes and agent fees. That's potentially 10% hit, so why would anybody want to sell? If somebody rents a house or condo they are not living in, it should be charged a commercial tax rate. They need to get rid of that wealth grab known as the land transfer tax.
Look how many condos in Toronto sit empty. 60 per cent of ech building have owners who don’t even live in their lives.
Its just impossible. The goal posts keep being moved. 10 years ago 26 $ an hour was a good wage and enough to buy a house. Now 30$ per hour is not enough. You need to make 40. In another 10 years you will need to make 50 and so on.
Why can’t they put a cap on maximum number of properties a individual can own ? Rather skewing housing market and allowing only rich to keep investing thereby increasing prices ?
Impossible to implement. People can control corporations that own houses. Want to also cap the ownership of corporations as well? Say bye bye to the stock market then.
This sounds exactly like Australia. I wonder if either country will ever make progress on this?
Almost like same playbook,$$
It's a significant issue, one that may remove the western world's edge over the rest of the world to a certain extent.
. Whether house prices go up or not, rents will keep going up ! Just check out the "'temporary injunctions '' against evictions at the Superior Court of Ontario. It will take several years to get rid of a bad tenant. Who will want to become landlords? Landlords are being driven into bankruptcy by the courts.
HELOC is a cheap credit indeed as I was told every home owner who bought 10, 20 yrs. ago can easily get a home equity loan / HELOC on assumptions of housing improvement.
Everything in Canada is overpriced. Why? Greed, policies for the rich eg. the quota system, milk, poultry, eggs; the wealthy control prices. The government is totally to blame for home prices, you nor I can regulate fees/taxes etc on homes. Eliminate all fees and taxes on non-investment homes ( no gst/hst, development fees etc) it may help. Canada is a closed monopolistic society, high prices.
How about better saving vehicles. We are being taxed to a maximum which doesn’t allow space for savings and wage growth is delayed apart to everything else. Taxes and now interest rates are deteriorating middle class. We need allowance of up to 200k tax free used for down payments. That will give on average 20% deposits for Canadians to save for homes.
Oligarchies rule Canada. The peasants live their lives, blissfully unaware.
It doesn't get you a girlfriend either.
It has absolutely nothing to do with mortgage credit..........and everything to do with cost to build. If builders could produce 100000 homes in a short time frame, prices wouldn't go up. (Just look at Alberta where prices have been flat for the last 10 years while Tor/Van double in price)............aka interest rate/credit have nothing to do with expensive homes.............it is the lack of alternative of extra houses to buy where people actually want to live.
Protip: in this interest rate environment making building costs spike as panelling/lights/drywall/everything that goes into a house is produced in a factory which took out large $$ debt to produce such goods, a high rate = much higher supply cost.................meaning that even as prices skyrocket it is still a negative profit margin position for builders...........SO THEY DON'T BUILD.
It’s funny how people think housing is too expensive without ever built a house before or even looked at the costs and risks involved in building a house.
The interviewer says “Canada is considered a capitalist country”? HELLO. NOT EVEN CLOSE.
Thank you Urmi for asking great questions that get to the heart of the problem. I have one pressing question that I am curious about. The Liberals have allocated 96Billion for new housing starts in a bid for re election the main stream Media says they are doing it providing a Carrot, while the Conservatives main stream media are handling housing with a Stick going to penalize cities that don't cut the red tape and build ASAP! Which strategy do you think will work? It would be a great discussion for next session including Steves opinion! I hope you can ask this question for me it would be greatly appreciated!
Thanks for the watching and for the kind words, much appreciated! Great question - have noted it for our next episode! ~ Urmi
One thing for sure we know the msm is totally unbiased and aren’t influenced at all by the money Trudeaus government is shoveling their way. The Liberals using a carrot!? You mean they’re using taxpayer money to buy votes! Don’t forget who put us in this position. But I’m sure you will find a reason to be a apologist. The current corrupt regime needs to disappear for a long time for Canadians to heal.
RENT today is wild'n
I wonder is this guy compleately clueless (which he doesent look like to me) or he's sand bagging.
So he's telling me that when these people are earning less money since wages are not keeping up with inflation, and have less spending power, they somhow all these people get the 32% for deposit with these astronomical mortages that she mentions with (10X or more LTVs) and 1.3-1.5mill prices, i doubt that.
My parents didn't have the money to drop me 200-300K, and even if they're equity was there, they wouldn't be able to pay back HELOCs as theyre retired, and theyre money pool is shrinking every day with the inflation.
And with rents skyrocketing everywhere, i wouldnt have been able to save diddly-squat as a kid right out of college, and with prices more than doubling in last 10 years, there was no chance in hell that i could save for a downpayment with an avg job.
Something funny is going on there in Canada-land, either a lot of people are doing cash jobs on the side (doubtful by the unemployment numbers), or are there many other sources of "these 32% of money" that misteriously show up.
I doubt a large portion of people are selling drugs, or laundering money, perhaps it could be huge amount of fraud, possible i guess, if people get desperate they will do just about anything.
Perhaps big companies, and lots of well healed "investors" are snapping up the market, since the government is plowing new people into the country at a recor rate, 1.2million new imigrants in one year, WOW!
My friends in canada are having hard time, so i can't imagine how people with low paying jobs are coping, it's a tragedy and a crime that the govs are doing this to their own citizens.
The arrogant stupid smerks on these peoples faces, as they're talking about it explains everything.
JT single handedly shattered the middle class dream
That's why he got rid of the "middle class" minister position. Give it a year and we won't have "housing" minister position either.
YES = too easy. Do audit you will see big holes
If you can't pay the rent then pay 50% of rent amount, always reach your landlord explain your situation. Not paying your rent is not a crime 🤔🤔
because people save in dollars they will not admit that their currency if flawed and losing purchasing power....it's like any other asset...drop it for an appreciating asset. cash is trash.
The pertetual motion machine that has inflated housing prices in Canada, also works in reverse. This is not a new phenomenon or a new paradigm. A correction is coming. The only question is when.
This is when immigrants won't choose to Canada no matter how wide they open the doors and that will be death of Canadian economy and it as a decent country.
For that, you need the least desirable areas like Saskatchewan to become unaffordable, then people will bail. The Toronto and Vancouver cancers will continue to spread. When everywhere is a mini toronto or vancouver and the middle class is hollowed out, then we will be a sinking ship. Canada should still be able to attract immigrants until the other provinces go to shit, however they might have to pick somewhere other than Toronto to live.
Don’t need to worry, only good earners will survive other will be wipe out soon when housing bubbles burst.
Recall in 2020/2021 Canada undertook Quantitative Easing, prior the 2008 recession …QE was first introduced in the US and Uk to inject liquidity and capital into the
Market - this fuelled cheap credit and ease of borrowing by banks. The chickens have come home to roost, coupled with a complete abdication of purpose built housing/rentals by both levels of govt. in Canada. Both conservatives and liberals are responsible for this the mess and primary in the housing from you can plane your provincial govt giving back to 2007 for creating that perfect storm.
Supply and demand !
John you are dead on. Purpose built housing is a must and responsibility of Federal and Provincial.
Money laundering
I am surprised he talks about the government having an agreement with the people to manage the country such that regular people could afford a home, whereas he was always talking about supply and demand, and that the market should be king in the past. It's OK, we shouldn't be too angry with our government, Australia seems to have the same problems as us, perhaps NZ and Britain too. The free economy won. Ultimately we will end up with nothing, and all the wealth being concentrated with a tiny minority. We can choose between the 2 major parties as much as we want, the result will be the same.
What free economy? Government meddling is the reason why housing is expensive and ordinary people can't afford to buy a home.
*you know times are tough in Canada when Trudeau's wife is having a hard time qualifying for a mortgage after her separation from Trudeau* 😅🤣😂
I wonder if all the countries start using there own currency to trade or brics currency comes to picture then inflation is here to stay .
The word Equity doesn’t belong in anything.
I dont know how renters do it. You all are either really rich or blow in all your monies on rent.
Second property much more expensive tax and yhe problem is solved.
Love your balanced discussion! 👍🙏🙏
who s got parents with this kind of money???????
Reits and equity firms pooling money buying everything in sight is main cause, mass immigration is second problem and insane inflation by liberals is main problem.
The problem has never been regular people buying a couple rental properties.
I agree. I only purchase my home because they are an investment. I wouldn’t buy if i thought they would go down. That’s with everyone buying.
Every citizen should be able to have a roof over head, expectations and over the top spending and development for the rich foolish enough to venture into rental properties,, kharma will catch many of you and the tumble will be more of a shock than those already suffering deal with. Too much money is running the market. Over the top immigration will solve nothing beyond keeping this reckless boat adrift. Social responsibility begins at home. I call for a Parliamentary investigation and prompt action, or we all sink.
Not sure what is beef is who Ahmed Hussain. He's doing what ever other small and large large investors are doing. Seems this guy had an axe to grind...or is he simply a racist.
Because homes are overpriced. The end.
Homes are not overpriced if people are paying for it. If someone told you a loaf of bread is $100 would you buy it ? No, we are giving half of our income into taxes so it doesn’t give us any saving vehicles. Why people in Dubai can all afford a home which are about of average Canadian price. First no tax, second there is enough supply. So interest rates need to decrease to neutral level so people can be able to afford again, there needs to be tax incentives or cuts in taxes.
Not really. If they were overpriced, few people would be buying.
@@Mehmed317or the banks can stop extending amortizations, let some default. That would help bring down inflation instead of keeping prices propped up and skirting around the BoC tigbtening. Lowering the rates only increases demand, and if banks aren't letting people default it creates a tight supply. Someone gets hurt here, it's either those that are overleveraged, or future generations pay. Wouldn't be fair for future generations to pay for the mistakes of the overleveraged.
Extending amortizations and adding aggregate demand via immigration only keeps rates higher for longer, now everyone pays via higher inflation for longer.. Like I said, if they just sacrificed the overleveraged, then inflation and rates would have been able to come down a lot quicker.
So again, how on earth does lowering rates in a tight housing market make housing more affordable? That's crazy, I mean did you not learn anything about low rates and tight supply during the pandemic? You just want future canadians to have to pay more so that your debt serving costs come down.
Anyways... BoC will tighten until something breaks. Then rates should come off a little. A new cycle is starting. Rates will go up and down but trend up from now. After ww2 rates were almost 0. From the 40s to 80s you had rates go up. From the 80s until now you had another 40 year cycle except rates went from around 18% to almost 0%.. Can you see a trend? Now prepare for a cycle where the rates trend up and debt is harder to pay back.
@@Casey-qm1nd how would defaulting make inflation come down? Mortgage interest inflation is applied to anyone with mortgage, not just the ones that are defaulting. Lowering interest rates will help people qualify for mortgages. Now the people without substantial down payments can’t even qualify for 300k mortgage and we know what $300k will get you in Canada. So if they don’t qualify for mortgages how will builders build homes for them? We are already down a year on a building new homes. Plus those defaulting will end up putting pressure on the rental market. I am saying rates need to come to neutral level for making mortgage somewhat affordable but to prevent houses from increasing further.
@@Mehmed317 what is the neutral rate to you? Because the cpi data is not an accurate representation of inflation, it is notorious for understating the inflation levels. The neutral rates are much higher because real inflation is much higher. That is a big part of why the inflation is being so stubborn, rates are not restrictive enough and that is why the BoC keeps chasing instead of being proactive. They need to allow the high rates to drop the asset prices, then things will be more affordable when we see deflation.
Defaults make inflation come down by taking bad loans and liquidity out of the market. Also adds more supply and keeps competition down. A third of the CPI is shelter related.. So housing has a big effect.
walking eggshells about facts no good
This guy is absolutely clueless and anyone using his advice should think twice
Why
@@priuss6109 because the answers been cheap money, it's always been cheap money and anyone ignoring that is pushing RE based on a false premise to people who would be better off not living under the crushing burden of debt
Well there no longer decent incomes I guess, because income correlates with housing
I THINK THAT GOVERNMENT NEEDS BRING CDBC SOON TO STOP THESE MONEY LAUNDERING. WHERE ARE THESE PEOPLE ARE GETTING MONEY FROM SO CALL GIFT?
Speak English before commenting please.
CDBC = population enslavement.