Housing Affordability in Canada

[EMNofSeattle]

Home prices are driven primarily by what people are willing to pay for them. Right now, there’s a COVID bubble driving those prices up as the exodus from urban areas to the suburbs outpaces the availability of homes for sale and eventually that bubble will pop and home values will stabilize.

Affordability has been a problem long before the coronavirus.

I don’t think the elites will ever let the bubble “pop” again. They can always import more foreigners to take up housing demand if need be.

 

[jonny5]

No it’s not. You have no idea what you were talking about. You seem to be taking the old Chamber of Commerce republican party definition of socialism which is “anything I don’t like.”

You can redistribute wealth and still have a hierarchy

Yes it is. Literally the definition.

Definition of socialism​

1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods

 

[jonny5]

Except none of that is happening. The free hand of the market cannot solve everything.

It is happening, but not as efficiently, because it isnt free.

 

[Napoleon]

Affordability has been a problem long before the coronavirus.

I don’t think the elites will ever let the bubble “pop” again. They can always import more foreigners to take up housing demand if need be.

“Affordability” is a nebulous term and it never ceases to amaze me that people paying a fortune in rent are convinced they can’t afford to buy a house.

 

[Callen]

Home prices are driven primarily by what people are willing to pay for them. Right now, there’s a COVID bubble driving those prices up as the exodus from urban areas to the suburbs outpaces the availability of homes for sale and eventually that bubble will pop and home values will stabilize.

Normally, I would agree but urban and suburban prices are sky rocketing too. It's nuts and virtually unexplainable. What I don't get is how so many people can afford to pay a million, and way more, for a home but these homes are selling like hotcakes often with multiple offers and over asking.......this has got to implode.

 

[EMNofSeattle]

“Affordability” is a nebulous term and it never ceases to amaze me that people paying a fortune in rent are convinced they can’t afford to buy a house.

No, it’s not. Traditionally affordable meant your mortgage or rent did not exceed 1/3 of your take home pay.

 

[EMNofSeattle]

Normally, I would agree but urban and suburban prices are sky rocketing too. It's nuts and virtually unexplainable. What I don't get is how so many people can afford to pay a million, and way more, for a home but these homes are selling like hotcakes often with multiple offers and over asking.......this has got to implode.

Institutional investors and corruption. My girlfriend and I were walking in Manhattan Beach and there’s these rows of massive three story beach mansions, and the Southern California coast is like this for 30 miles from Newport to Malibu, these mansions cost between 10 and 60 million dollars. There’s no way there’s that many billionaires in America to own one per. So it’s clear the super wealthy are accumulating several of these at a time or foreign money is and if they’re buying up those then why not buy all the affordable homes too. Homes held by monied investors and businesses should be seized and resold with only individuals allowed to buy

 

[Callen]

Institutional investors and corruption.

That is not what is happening here, although I am sure it exists at the multi-million dollar level. These are not mansions on ocean front property...they are three and four bedroom homes in suburbia.

Just as an example.......scroll through some of these. Barrie is modest town an hour and a half north of Toronto. Commuting back and forth is awful......bumper to bumper.

https://www.zolo.ca/barrie-real-estate/houses?sc=aw-1078113036-55436116049&gclid=Cj0KCQjw9_mDBhCGARIsAN3PaFNwmzX_T6L4cj1MYe5zMyMSKI_5-yRDN-VEYpCuQhefhG03Uw64KpsaAmkcEALw_wcB

 

[EMNofSeattle]

That is not what is happening here, although I am sure it exists at the multi-million dollar level. These are not mansions on ocean front property...they are three and four bedroom homes in suburbia.

Just as an example.......scroll through some of these. Barrie is an hour and a half north of Toronto.

https://www.zolo.ca/barrie-real-estate/houses?sc=aw-1078113036-55436116049&gclid=Cj0KCQjw9_mDBhCGARIsAN3PaFNwmzX_T6L4cj1MYe5zMyMSKI_5-yRDN-VEYpCuQhefhG03Uw64KpsaAmkcEALw_wcB

There’s plenty of companies that buy homes just as store of value who have no intention of anyone living there.

Institutional investors should be in the back of the line.

 

[Napoleon]

Normally, I would agree but urban and suburban prices are sky rocketing too. It's nuts and virtually unexplainable. What I don't get is how so many people can afford to pay a million, and way more, for a home but these homes are selling like hotcakes often with multiple offers and over asking.......this has got to implode.

Part of the answer that explains it is in your reply. There are more buyers than sellers right now so it’s a highly competitive market with houses selling significantly higher than asking. And that, in turn, provides more fuel to the fire because it positively impacts the appraised value of the next home in the area that comes up for sale.

It’s not that people can afford it. Very few people can walk into a property with cash and buy the home outright. What people can afford is the monthly mortgage payment for the loan spread out over, usually, 30 years. So it might be helpful for you to start thinking of it that way keeping in mind that your current rent is the bare minimum of what you could afford as a monthly mortgage payment.

 

[Callen]

So it might be helpful for you to start thinking of it that way keeping in mind that your current rent is the bare minimum of what you could afford as a monthly mortgage payment.

Think you have the wrong poster. I own two homes in Ontario neither of which is a rental property and a home in Florida. what is happening in Ontario is nonsense and it can't last. I think a whole bunch of people are going to end up underwater on their homes as they panic and try to "get in".

 

[jonny5]

No, it’s not. Traditionally affordable meant your mortgage or rent did not exceed 1/3 of your take home pay.

That just proves its nebulous. 1/3 is arbitrary. People spend more and do just fine. Affordable is relative to the individual.

 

[EMNofSeattle]

That just proves its nebulous. 1/3 is arbitrary. People spend more and do just fine. Affordable is relative to the individual.

Well no you don’t do “just fine” because money you’re spending on a mortgage and paying interest on is money you can’t set aside for retirement. It also means you may not be able to save enough to buy a car in cash or have an appropriate emergency savings fund meaning more use of credit cards meaning more payments with interest
Then there’s also the fact that house prices require for many people two incomes to pay for, and having the wife work is bad for the development of children.


Telling people to eat cake is not a recipe for social success.

 

[RetiredUSN]

That just proves its nebulous. 1/3 is arbitrary. People spend more and do just fine. Affordable is relative to the individual.

Spend more ...................................and have to keep borrowing money to replace a hot water heater.

25-30% of your wages is about right.

People never seem to self escrow their money for home repairs and go further into debt when shit happens.

 

[EMNofSeattle]

Part of the answer that explains it is in your reply. There are more buyers than sellers right now so it’s a highly competitive market with houses selling significantly higher than asking. And that, in turn, provides more fuel to the fire because it positively impacts the appraised value of the next home in the area that comes up for sale.

It’s not that people can afford it. Very few people can walk into a property with cash and buy the home outright. What people can afford is the monthly mortgage payment for the loan spread out over, usually, 30 years. So it might be helpful for you to start thinking of it that way keeping in mind that your current rent is the bare minimum of what you could afford as a monthly mortgage payment.

Buyers does not mean residents though.

Buyers could be people trying to buy as an investment, or foreign buyers, or speculators. Etc

I’m saying the government should make every effort to prevent non resident buyers

 

[Napoleon]

Buyers does not mean residents though.

Buyers could be people trying to buy as an investment, or foreign buyers, or speculators. Etc

I’m saying the government should make every effort to prevent non resident buyers

Who lives there, if anyone, has no impact on price.

 

[joko104]

How is anyone my age (early-mid 20s) suppose to ever be able to save up and buy a house or soon I imagine even a condo? When home prices keep increasing at 20% or more each year how is anyone who is not already in the property market supposed to enter? I have been reading a lot of articles how most millenials who are purchasing homes are doing it with the help of their parents money, what about those of us who don't have that? Now because of the pandemic nowhere is safe, even small towns are rapidly increasing in price. I have no idea how people are expected to buy a house, have kids, and somehow have enough money leftover to retire.

Something has to give and the government needs to intervene, the market needs to crash and it should be now before it gets worse. Ban foreign ownership, heavily tax and in some areas ban non-primary residences, heavily tax vacant residences, charge capital gains on home sales, half measures won't do anything.

The solution is for Canada to ask the USA to ship the 100,000 plus uneducated illegal migrants coming into the USA each month to Canada as their refuge - and a few million of those already here.

Ask the Democratic Party. They will assure you that nothing is better for the availability and affordability of housing, the economy, job available, community quality and low crime rates than an endless flow of more hundreds of thousands and always million more low skills, low education non-white immigrants that don't speak the national language.

The solution to your problem is South of our border. Nothing that 10 or 40 million immigrants wouldn't solve for Canada. The lower skilled, lower educated and more illiterate to your language the better it would be for Canadians. Canada simply does not have enough people. The more people, the more available housing. I don't understand how that works, but ask any Democrat on this forum. They'll explain it to you.

 

[Carjosse]

Who lives there, if anyone, has no impact on price.

It does actually, a speculator is not going care about condition of the property or community as long as the value goes up. And a home bought by a foreigner is a home that a Canadian resident could be living in instead. They are competing for supply, they only drive prices up unnecessarily. Simple supply and demand.

 

[EMNofSeattle]

Who lives there, if anyone, has no impact on price.

Yes it does.

If you win the powerball lottery and have 300 million dollars and buy three hundred houses for a million each that will distort the market more then if they had to sell them for 300,000 to three hundred people applying for mortgages

I am not arguing for the idea that you should be in titled it to a $30 million mansion on the beach in Malibu if you make minimum-wage. I am arguing that the housing market should be such that most wage earners can’t afford a decent place to live on the average income paying no more than 1/3 their take-home. You can argue that I am arguing for a government intervention. I am. Because throughout history the truth has shown that when you have permanent under classes of people who have no obvious way upward Then you have a serious problem in your society. That goes double if it’s a diverse society not tied by religion or ethnicity

 

[jonny5]

Well no you don’t do “just fine” because money you’re spending on a mortgage and paying interest on is money you can’t set aside for retirement. It also means you may not be able to save enough to buy a car in cash or have an appropriate emergency savings fund meaning more use of credit cards meaning more payments with interest
Then there’s also the fact that house prices require for many people two incomes to pay for, and having the wife work is bad for the development of children.


Telling people to eat cake is not a recipe for social success.

Then dont tell them what to do. Let them figure it out. Its not my job to tell others whats affordable. I was asked, I gave advice. If Canadians want to force the issue, have at it.

 

[jonny5]

Spend more ...................................and have to keep borrowing money to replace a hot water heater.

25-30% of your wages is about right.

People never seem to self escrow their money for home repairs and go further into debt when shit happens.

Maybe, or maybe not. Thats up to the individual. I could easily spend half my income on housing, and have enough for savings, food etc. Thats because i dont spend very much. Other people who choose to have more expenses may vary.

 

[Middleground]

It's great of you're a retiring boomer and sell your house because the recent surge in pricing has added a lot to equity. I sold mine in December and there was a bidding war that drove the price up almost 50K. But for someone trying to get into the market these days, like the OP, it's tough.

I keep thinking back to the story of the bidding war on that crappy bungalow in Toronto that went over $700,000 over asking. Insane to me.

I waited until my mid-30s to buy. I took my time and found a nice house in an area that had a bad reputation but in an excellent location (very central). The area has gentrified beyond belief and I think my house could be sold $500,000 more than what I paid for in 2004.

 

[Carjosse]

I keep thinking back to the story of the bidding war on that crappy bungalow in Toronto that went over $700,000 over asking. Insane to me.

I waited until my mid-30s to buy. I took my time and found a nice house in an area that had a bad reputation but in an excellent location (very central). The area has gentrified beyond belief and I think my house could be sold $500,000 more than what I paid for in 2004.

The area where I live in Montreal has definitely gone downhill over the last few years, and it is sandwiched between two of the wealthiest and highest incomes areas in the city. Can't walk outside without seeing a police car or ambulance yet rents still keep increasing. I even found a pamphlet titles "Safer Crack Smoking" outside my building.

 

[Surrealistik]

As someone who works in real estate (though primarily commercial), yes, housing prices have gone completely insane for a multitude of reasons, but it ultimately comes down to supply vs demand, and in particular stimulus money/bailouts and low interest rates that rich people (both domestic and abroad) have ready access to which they then plow into investment assets like stocks, crypto and real estate. The inflation everyone and their mother fears due to massive government borrowing/printing/stimulus is already here, albeit expressed vis a vis investment assets because wealthy people have all of the money, lol.

Taxes leveled against such speculators would definitely be helpful in combatting this sort of thing (just look at the impact the foreign buyer tax had on the Toronto real estate market, despite our Real Estate Associations lying through their teeth about foreign investors not being a big segment of the market), though they would have to be handled carefully and deftly to preclude any collapse.

 

[jonny5]

As someone who works in real estate (though primarily commercial), yes, housing prices have gone completely insane for a multitude of reasons, but it ultimately comes down to supply vs demand, and in particular stimulus money/bailouts and low interest rates that rich people (both domestic and abroad) have ready access to which they then plow into investment assets like stocks, crypto and real estate. The inflation everyone and their mother fears due to massive government borrowing/printing/stimulus is already here, albeit expressed vis a vis investment assets because wealthy people have all of the money, lol.

Taxes leveled against such speculators would definitely be helpful in combatting this sort of thing (just look at the impact the foreign buyer tax had on the Toronto real estate market, despite our Real Estate Associations lying through their teeth about foreign investors not being a big segment of the market), though they would have to be handled carefully and deftly to preclude any collapse.

You dont think they would just pass those taxes on in even more inflation?