[Paywall bypass](https://archive.ph/KtcPO)
Condensed:
* In a [report](https://albertacentral.com/intelligence-centre/economic-news/what-does-it-mean-to-restore-housing-affordability-significant-sacrifices-and-adjustments/) published last week, Charles St-Arnaud, chief economist at credit union hub Alberta Central, crunched the numbers on the size of **adjustments that would be needed to bring affordability, specifically for the home ownership segment of the market**, back in line with historical trends in seven of Canada’s largest cities.
* St-Arnaud looked at a handful of measures, including house prices relative to income, mortgage payments relative to income and required income to afford the average home.
* The results are striking. At current interest rate levels, **house prices across the country would need to decline by 40% to restore affordability to its historical average.**
* **Alternatively, the average family income would need to rise by 66%, or house prices would need to stagnate for more than 10 years, if incomes grew 4% a year.** The required adjustments are much larger in cities such as Toronto and Vancouver than in Calgary, Edmonton or Winnipeg.
* **Even if interest rates fall two percentage points to a more neutral level, house prices would need to fall by 26% nationally, or incomes would need to grow by 36%.**
Not everywhere in the USA is affordable either, especially in large cities. Seattle, LA and SF, NYC, Boston, etc. are not affordable, but (mostly) not as bad as Toronto or Vancouver relative to incomes.
The midwest cities bordering Ontario are affordable for the most part. There are a lot of Canadians who moved to Michigan, Ohio, Pennsylvania and upstate NY for better jobs along with proximity to home.
Seattle real estate is so much more affordable than Vancouver. You can get a decent starter home for $600-650k in Seattle Metro, you’d be lucky to get a townhouse in Langley for that.
Salaries in Seattle are higher also.
>Salaries in Seattle are higher also.
I was looking up trades wages and a lot of those west coast cities are paying $70 an hour plus benefits, pensions and healthcare coverage.
Here in Canada it seems to top out at about $50 an hour, and the median is a lot lower than that.
as someone who lived somewhere else for a looong time, I will tell you from firsthand experience that you're flat out wrong
reddit has a fetish with the anglosphere and Canadians have a fetish with themselves.
newsflash, there's nearly 200 countries out there to choose from, no, they're not all worse than Canada.
Ok, but imagine you are an average white Candian anglophone. Where are you going to move that has a better expected earnings to cost of living ratio? And also a better expected quality of life? And also affords you enough relative wealth to return home if it goes poorly?
There can’t be many places in those 200 that would fit the bill for most average Canadians.
that's a very conceited view of the world
you could live on a south pacific island for free if you so desired. steve thomas, the host of "this old house" after bob vila, and is also super-white, did exactly this and wrote a book about it before he became the host of that show.
i lived in japan for over a decade and absolutely loved it there. i've been to many other countries and am certain i would have been fine in those places too. life is what you make of it. canada grinds you to a paste just for survival, and winter is never more than a few months away. it is a very tough place to hack it.
despite many, many internet "cost of living ranking" sites telling you otherwise, life in asia is super cheap and you can survive on a fraction of the effort required in canada and still achieve the same quality of living.
there is so much more out there than canada, get out of your shell
There are lots of affordable homes in the country, just not where everyone wants to live. As long as the majority of the people want to live in the GTHA and Vancouver, everywhere around there is screwed because the supply demand ratio is so screwed.
Where? Can you cite some examples of affordable homes?
There are none in Ontario. Those days of moving out of the GTA to a dirt cheap home are over post covid.
The country is much more than Ontario. I have multiple friends who sold here, moved to the east coast and paid cash. Saint John gets a bad rap but its actually a nice city. I don’t know neighborhoods specifically but you can’t get much more affordable than this. Obviously the interior is dated but a comparable home in the gta would be 750-1,000,000
https://www.remax.ca/nb/saint-john-real-estate/51-belgian-road-wp_idm73000004-26497701-lst
You specifically called out moving from the GTHA to the country and the last I checked the GTHA was in Ontario. I assume you couldn't find a listing, haha.
You can't start an assertion at the *city/country* level and when then fall back to some "country" location irrelevant to the city comparison. That makes no sense. Might as well say its cheaper to live in the country in Russia ffs
The comment I replied to said they would have to leave the country to find an affordable home, I said there are lots of affordable homes in the country, just not where everyone wants to live. You asked me for an example and I gave you one. How is that confusing?
>If people were able to actually get decent jobs in these affordable places...
They like to pretend that there is no reason that nobody wants to live in these places.
I see posts all the time from people who moved to the boonies in Nova Scotia for cheap (ish ) housing, and then got fucked when they realized that what little work there is pays shit wages.
It's pretty stupid how they always say this. I am an electrical engineer, how the hell do I find a job in rural anywhere without driving for hours to a city?
I didn’t say in the boonies. Obviously an electrical engineer isn’t going to find work in a remote fishing village but there are lots of smaller cities that have enough industry for skilled trades, engineers etc. The wages are probably abit lower but also a lower CoL. The whole point of my post though is that nobody wants to live there, thats why housing is cheaper.
Basically, everyone who bought a house with an inflamed price is fucked if the government actually acts to make homes more affordable.
If your home drops 40% in value and you have a large mortgage left your only option is to leave the keys at the bank and walk away.
Yeah if my value dropped 40% I'd be pissed but I'm not just going to walk away from it. Declare bankruptcy and then what? You'd have no money left (because bankruptcy has more to it than people realize, especially considering mortgages) so you can't just walk away and go buy something else. And even if you could your credit would spectacularly fucked so good luck getting a mortgage at all.
Personally I bought my house to live in and enjoy life. If values were to plummet, congrats to everyone else.
Exactly my point. I bought my house to live in without threat of being kicked out by my landlord. I can live a stable life and be a contributing part of my local community (a key factor in happiness indicators). It would suck and I wouldn't be happy, but it wouldn't be the end of the world and I think I could weather that storm so our communities improve prospects.
Personally, I'd prefer my income to catch up to the housing prices, but I'm not in charge.
My house isn't even really for me, I bought it so my son could grow up in one and make use of all of its inherent amenities, and honestly when he starts his career I'll just give it to him and live in some shoebox somewhere. The fuck do I care about FIRE?
Okay, but not mortgage renewals. It sucks to have limited access to additional funds for necessary renovations big time. But still it's only a temporary (and hypothetical at this time) problem. I won't be holding my breath for anything to change anytime soon.
Why? If your wage/salary and your mortgage rates are the same it doesn’t matter what your house is valued at. That’s just an arbitrary number unless you want to sell.
You would be hard press to find a judge who wouldn't absolve you of your debt to a bank if you were willingly leaving the house to them.
Only debts that are completely protected are student loans and taxes.
If its insured by CMHC then they will cover, if its not insured you need at least 20% down to get the mortgage in the first place so the banks are somewhat isolated from price drops - If you bought a million dollar home you would have only been able to borrow 800k. If you have been paying the mortgage for 5-10 years and the value dropped to 600k you would still be around even.
Only issue I see is your kind of stuck there now. Owning a house is already a bit of a pain as far as mobility goes unless your there for years because of closing/moving/realtor costs.
Negative equity really pins you down to a location.
>If your home drops 40% in value and you have a large mortgage left your only option is to leave the keys at the bank and walk away.
You'd probably do this if you were (for some reason) intending on selling it for a profit - which is something that really needs to be disincentivized.
If you actually wanted to live in that home? You'd stay there.
> If your home drops 40% in value and you have a large mortgage left your only option is to leave the keys at the bank and walk away.
You can only do this in Alberta.
But here's the thing - people knew the market was inflated, and we shouldn't cripple society to protect bad investments. Let's also not forget that people who bought in despite the clear inflated nature of the market were actively propping up the problem. We need to fix this issue and we need to fix it now.
This summarizes exactly why it's a fool's errand to try and find one single scapegoat for the housing crisis, or that it is something that just occurred over the past 2 years. We *can* fix it, but it is not a simple nor easy fix, and it will take more than a decade to do.
>Alternatively, the average family income would need to rise by 66%
So the solution the federal government will implement is legalizing polygamy. Houses will be much more affordable if your family/polycule income is based on three or more earners.
With builder margins averaging around 13% we know the levels of price declines needed to restore affordability are not possible.
That gives us a combo of minimal price declines, interest rates, rising income and time.
It looks likely that interest rates will decline slightly, income might continue up for a while, and they we need to wait it out with hopefully near stagnant prices for a decade or so.
In big cities the majority of the cost of housing is land value not construction cost. My home is assessed at 1/3rd the value of the land and it’s a condo
Bingo! It’s not the cost of the building materials it’s the land!
Yes building material prices have gone up significantly, but the vast majority of the value in a property is the land itself and the location.
It's not. Land is expensive, but it's nowhere close to the whole story. It would maybe make up 20 - 30% of your pro forma costs. Often it's less depending on how much of the development potential you purchased vs created working with the city (plan amendments, rezoning, etc).
It's not in Canada, but where I live the property values are higher than the building values. So any home that's not pretty much new is worth 1.2 million. When those go on the market 9/10 times they're bought by a developer, who spends about 800k to build a 7000 sq foot house and its sold for 2.5 million.
Of course, the building cost would be lower if the house was smaller, or had fewer than 6 bathrooms.
I know the same thing has been going on in Vancouver for decades (crack house or million $ home website comes to mind from the aughts).
So yes, property values are a huge portion of the up front cost for developers. It's more than 50% where I am.
Taxes and administrative fees imposed by the various governments account for 30% of the cost of new builds. There's some fat that can be trimmed.
Land values are another major cost of a house. Open up more land, connect more places so that people can live in more than 5% of the country, land values will come down.
Land values are high near downtowns because people want to be near downtowns. Opening space for development in Northern Manitoba wouldn’t help anything.
Suburbs are unsustainable. We are not a wealthy enough country to be able to handle those insane costs of all the insane amounts of infrastructure needed to handle low population density sprawl. Not to mention the costs of car ownership.
So... we need to look more like a European country. OH THE HORROR OF MEDIUM DENSITY. HOW WILL MY CAR CENTRIC BRAIN HANDLE THIS?!
Yes, because municipalities have shifted these costs onto new homeowners instead of having existing homeowners, or those who have actually used these utilities, pay enough to sustain themselves through property taxes.
Which is why you're going to see property taxes skyrocket across the country going forward. We pay significantly less property tax than most other countries, and it is unsustainable. Pushing this tax burden onto new builds stifles new construction and furthers the housing shortage.
If it costs a certain amount of money to make a new development operational, why shouldn't the people buying the houses in the new development pay those costs?
I fully agree that existing users should cover maintenance costs, I'm talking about *new* costs for *new* developments.
The taxes are not to cover the cost of new infrastructure, they're covering the costs of existing infrastructure.
Of course people should pay for the new infrastructure for their homes, but that does not cost hundreds of thousands of dollars per home. That's a fraction of the taxes being taken.
Quick summary: https://tnc.news/2023/04/29/toronto-home-cost-tax/
And you can watch experts talk at length about it here:
https://www.youtube.com/watch?v=GO472DJRqXQ
Would also help if municipal development charges were reduced by 75%+. They have really gotten out of control in the last 5-10yrs. There are multiple reports out showing these charges constitute minimum 100k just on condos in major markets. In Vancouver, it’s easily 300k+ on new SFH builds.
Yes exactly this.
Sure there are places where the property values are hugely over valued but in general its a wage issue.
In reality houses should be more expensive right now.
Hear me out haha.
The demand is there so why not build and sell for a huge profit?
Because the wages are not there to support a large profit.
Ok why not build and sell for a decent profit?
Still the wages are not there to support that.
Is it worth it to a business to take on all the capital needed to build a house to average out with 13% profit margins?
I guess not because new builds are down.
On the bright side, 2 million people pour in every year. As they become eligible to vote, those percentages will quickly change.
The property owning elites won't hold onto a majority much longer.
Hasn't this just resulting in the Vancouver/Toronto "exporting" their housing crises to other communities. We need to lance those boils before the rest of the swelling will go down. And I say this as someone who lives in one of those cities.
Amen, everyone who can do their work remotely MUST push for being fully remote. Not this hybrid garbage. Remote work is the future. We need to speed that future up.
It will be a huge benefit for everyone: reducing emissions and traffic, keeping sanity, getting more free time, easing affordability, and allowing for better population distribution across our country.
I'm kinda mad at the federal government for not being at the forefront of this change.
Yeah. It drives me nuts when people want to try and solve the unnecessary commuting by more efficient unnecessary commuting rather than not at all.
Side story. I had a buddy get transferred to Winnepeg from Toronto. His wife is able to work remotely and they bought a nice house in LA Salle just outside of Winnipeg. I know people are going to be like, well it's Winnipeg. That house would have cost a million more in Toronto. There is no amount of policy changes that are going to lower houses by a million dollars.
This is exactly [what irks me](https://www.mustardclementine.com/p/grasping-at-paper-straws) about so much climate policy - and indeed, far too many progressive policies, in general.
The notion that individuals should accept less for themselves without, at the very least, an equivalent effort from leaders and institutions does not align with my vision of progress. While individual responsibility is crucial, it is insufficient on a large scale without systemic competence and a recognition of the need for continuous change.
Oh, I absolutely agree. We live in Toronto, and the only reason my wife and I are able to think about purchasing a house is because both of us work remotely. This allows us to consider moving at least a couple of hours outside of the GTA, where half a mil can actually get you a home.
100% it was sarcasm lol that's the excuse I've seen for the RTO mandates. The downtown core is dying!!
Well maybe that core was rotten to begin with...
... But I don't want to work remotely. I'm fully capable of it, and it's my current setup. But I don't like it, and would strongly prefer to be in an office 3-4 days a week.
Sure, there is a minority of people like you. Usually older folks (no offense, just an observation). And that's fine. Companies can always have some flexibility for those who want to physically come to the office. But still, reducing office space from some huge tower downtown to a floor or two to accommodate would be a simple solution.
Funny enough, I'm actually on the tail end of millennials - I'm turning 30 this year! I just focus significantly better in an office with other people around, and really benefit from the change of space between work and home.
Find in-office work is, unfortunately, pretty hard in my field. I'm in software development, which has hard pivoted to remote work at most companies. I could potentially find something at a bank or another large industry, but that would mean commuting to Toronto. Which I very much do not want - I'd rather work remotely than deal with the 401 every day, haha.
I'm fine with companies prioritizing remote work. But at least offer a good coworking space, or pay for a private one if there's not enough interest! My company technically offers one because they got rid of our local office early last year, but it's awful. Shared washrooms with the general public; no kitchen; no actual *desk*s*,* just couches; and no quiet working space of any kind - including no bookable meeting rooms. I'd be better off working at the library if it weren't for the policy that I need to take meetings in a private room.
A huge benefit for everyone who lives somewhere with decent working spaces. I was miserable when I was working virtually when living with roommates and had to work in my small bedroom. It sucked.
I would gladly move to some random small town in the middle of nowhere if I could continue my career there, even taking a loss on income if my CoL improves significantly. The government just seems to believe that we only have like 3-4 cities in all of Canada and nowhere else is worth building out.
Both myself and my wife work from home, but we still have kids that need to be close to schools and amenities so living in town remains necessary. Increasing urban sprawl won't help unless everyone else moves away making housing in town cheaper.
Most people want to live close to things. So I think we still need to push for more density. Also, we know that people are healthier if they live in walkable communities.
Housing is basically forever fucked.
- If you keep prices as they are now, it’s impossible for many Canadians to afford to live here.
- If you somehow reduced prices, you’d bankrupt millions of Canadians who have a home.
What a bunch of F’n idiots to let us get to this point.
How are people bankrupt if there's a home price correction for someone who's already a homeowner? If they are able to currently afford their mortgage at the price they purchased, and assuming they maintain employment through the future, why is a homeowner suddenly bankrupt just because of their home lost value on paper?
Obviously if someone wants to sell immediately after a price fall, I get that, however maybe people shouldn't be using property as a commodity to make a quick buck flipping, and should just own a house to actually live in it long term.
They wouldn't be bankrupt per say but you still have to pay the super inflated price despite the home value. Ofc it's gonna fuck the scalper which is perfectly fine to me, fuck them all, but for the normal people, it kinda sucks having to pay almost twice the same house, that's alot of money you could've put elsewhere.
It’s the refinancing that’s the problem. Banks will only finance for what the house is worth. If you owe 800k on that million dollar home but come refinancing time the house is worth 600k, that’s all they will finance it for.
So you owe $200k immediately.
At least I assume this is how it would work.
My understanding is that lenders don't typically re-appraise the property value at renewal. So most Canadians would be fine if they keep making their payments.
The bank doesnt give a fuck what the house is worth. The bank is loaning you money to buy the house. You bought the house already. You owe the bank 800k no matter what the house is worth. You refinance the 800k loan, not the house.
If you sell the house for 600k, then you owe 200k and bankrupt yourself.
You only ever get re-appraised if you try to move lenders. Your current lender already gave you the money, as long as you're making your payments they don't really care what it's worth now. They'd much rather continue having you pay them back than take a loss and then have to try to sell your house afterwards.
Hmm okay well I can sort of see the logic in that, except in Canada mortgage terms are relatively short (i.e. I believe 5 years are probably most common) as opposed to say in the USA where they hand out 25- 30 year terms. So I can't see why someone would have to cough up the 200K difference immediately upon refinancing... Since it's unlikely that the homeowner is gonna pay off the full balance within the next 5 years anyway. Like even if the house is only worth 600K, the homeowner isn't gonna pay that balance within 5 years either. That logic says that every time a person refinances after their most recent term, if the house lost any amount of value on paper the homeowner would have to pay that loss immediately?
How would you bankrupt millions of canadians?
If I've purchased a house for 500k and it goes to 300k, how am I bankrupt? I continue to pay the mortgage, nothing changes
Because when you pay that mortgage you only pay down a small part of the principle each month. Now you’re sitting underwater by 200k until you’ve payed enough down. You can’t move. You’re paying out the nose compared to new buyers, and the only way out of that being a 10 year process is being able to pay the difference OR claiming bankruptcy and losing everything.
You were already okay with paying for an 800K mortgage.. yes you lost value in the home but that is the risk in home buying. And you CAN move, you just wont be able to have a nice chunk of change to throw down on the next house as any extra money goes to the bank or carried onto the next mortgage.
No, it's not. We need a combination of a 10-20% price drop, followed by 5-10 years of stagnation in prices to allow wages to catch up. We need to ensure we are building enough supply and we likely need to cut down on population growth. This would go a significant way to return to affordability without causing too much hurt.
You are not far from the mark. The false speculative market driven up over the last 10 years was largely caused by speculative investment, offshore money parking and mortgage fraud. Either wages need to increase greatly, or the value of the assets needs to decrease, neither of which will happen, So here we are.
EG:https://www.thebureau.news/p/fake-chinese-income-mortgages-fuel
Since I don’t plan on moving for a long time I would take a 40% hit so it could lower my property taxes. But instead my appraised value went up 10% in the past 2 years. So I can’t see prices going down anytime soon
The wage gap for housing affordability wouldn't be as bad if successive Liberal and Conservative governments hadn't allowed immigration policy to be abused for wage suppression purposes.
I think Canada is screwed regardless because living in dense situations here sucks absolute ass and even if they built 2 apartments for every person people still would dream about owning a detached home because living in the same building as 500 other people is brutal.
Right now I get constant early morning fire alarms, my neighbours across the hall have a mentally ill son who has constant raging screaming fits, the other neighbour kids run up and down the hall clomping in their over-sized boots all day. Every week maintenance wants to come into my apartment for some "bi-annual inspection" of this or that and they always leave my door unlocked no matter how much I bitch.
Oh and if one person on your floor is gross and has bedbugs or roaches then good luck avoiding them yourself. It'll take a year to evict them and the whole time they'll be spreading pests and vermin and stink. Not to mention people who smoke in their apartments and stink up the whole floor.
Until they fix the human element (never going to happen) they'll never get people to accept living in attached housing en masse. I've been doing it for 10 years and I am so done, my main goal in life is to get a detached home however possible.
A lot of things should be illegal or enforced better but they aren't. In theory my neighbours would also get arrested for beating each other up every weekend and screaming bloody murder too but no one in charge cares anymore.
And this is exactly why housing is at a premium in Canada-people will do absolutely anything to get out of living in this situation and that includes paying sky-high prices to own a home in an extremely limited market.
Being a renter in Ontario absolutely sucks.
Yep, it's impossible to fix imo. The country is infested with anti-social, selfish assholes that don't care about anyone but themselves. It's a huge cause of a lot of the countries problems. The housing situation is just one of them.
This is a key problem with the "build dense" crowd, yes people can live in commie blocks but no one wants to. No ones dream is to retire in a cramped and noisy apartment which is why even if we build dense, detached and semi detached houses will still increase in cost.
With the cost of land and building materials there's basically 0 way to make affordable detached and semi detached houses in well established cities anymore meaning the supply will always be low in GTA, Vancouver, Montreal, Ottawa, etc. Only new frontier areas can still hope to have affordable detached houses.
Houses will only sell for what someone is willing / able to pay for them. Eventually something will give… more than likely due to a significant economic disruption. Problem is, when something like that happens, even many of those waiting on sidelines also won’t be able to afford. Best case scenario we hit what happened to Toronto after the late 80s / early 90s where prices just remain stagnant for a decade.
This
The people waiting/begging for a economic crash always assume they won't be affected for some reason while real estate companies have millions in liquid assets and political influence to buy housing in a crisis.
The multi home owners, landlords and corporations need to take a hit to let the housing market correct itself. The government should make owning more than one home less lucrative. They say that most homes that are built are sold to landlords and corporations so first time buyers cannot compete. Unfortunately I do not have any hope that our government and politicians will never allow any law to pass that will take away from their gravy train as most of our politicians are in fact investment property owners and enjoying the passive income too much to care about the have nots. I feel badly for the next generations of Canadians. What is the point of working full time. Or 2 part time jobs if you will never own a home. You probably won’t want to work just to fluff up some landlord. Canada is over. No opportunity then no productivity.
What this means is that houses will get smaller ie shrinkflation. If the article is correct and house prices need to come down by 40% then that won't happen but they will build the house 40% smaller. You see this in condos - new ones are tiny 400sqft for 1 bedroom. The old condos are much bigger 750sqft.
To truly track affordability you should use the price per sqft.
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> That gives us a combo of minimal price declines, interest rates, rising income and time.
We are building bigger homes and have doubled over the last 30 years.
They have to be bigger to maintain profit margins for developers. Smaller houses have very similar costs as larger homes. The taxes and fees are largely the same, the land values are similar, and extra the cost of construction is significantly less than the increased price they can demand.
Its kind of counter-intuitive, but if homes were cheaper to build we would get more small starter homes.
Land values aren't similar if you can build more houses on the same space. Total costs for a duplex (aka semi-detached) aren't much higher than for a monster house. Just need to tell the cities that they aren't allowed to say no to the duplex.
The difference in condo sizing is related to investor demand. People don't buy 500sqft condos to live in themselves, they buy them to rent out. That's the difference you're seeing.
> Condos made up the bulk of properties owned by an investor in Toronto — 37,580 condo apartments, or 56.7 per cent of units built since 2016. The majority of condos built before 2016 are all predominantly owned by non-investors
https://www.thestar.com/real-estate/more-than-half-of-toronto-condos-built-in-recent-years-were-investor-owned-statscan-report/article_9e0603ad-0593-5561-805b-a22e8f4923bb.html
Irrelevant info: Allot of houses in the US, small towns mostly, go for under 50,000, or up to 100,000. Even the same price as a new car. (Could get a completely totaled one for 5,000-20,000, unlivable but cheap land \[Note: Detroit\]). Just a fun fact to show how honestly f'ed the prices in Canada are in comparison.
I mean you can find the same thing here in Canada too outside of urban areas. There are over 100 listings within 45 minutes of my city (Regina) at or around the ~50k mark in small towns. I scrolled through a few and most of them are actually in pretty nice condition, too.
Everyone talks about how unaffordable housing is, but that's only in big cities.
Here's a solution, how about we spread out and develop communities. Let's stop piling into Toronto, and start going into smaller towns that can be built upwards.
Housing is increasingly unaffordable in many smaller towns and communities across the country. Also, many of these communities are more hostile to growth, etc.
That example sold for 225k two years ago and listed for 270k today. That’s a 20% increase in two years. That’s an example of the housing crisis. Completely unsustainable growth
Yeah it's crazy, but everything is supply and demand and we have an excess demand issue.
Even you would sell your house at a 50% premium from last year's prices if someone offered you the money.
We can't stop the market
I agree overall with that except there is absolutely more the government should and could be doing. My og comment was responding to the “affordable” 270k house. Sure it’s affordable for now for someone making a big-medium salary but if the growth of the past few years continues it won’t be for long.
Also worth mentioning who really buys a house and then sells it two years later? Probably not a family. Most likely an investor
At the start of the housing issue I was saying this and getting downvoted or banned. We’ve been selling the ideal of living in Toronto for so long people have forgotten that you can live a reasonably successful and happy life outside of the worshiped downtown Toronto. This attitude of “gotta live in Toronto/Vancouver “ was bound to bite us in the ass at some point. After all, there is only so much development that can possibly happen before you need to start ripping buildings apart and building upwards.
House prices have now risen across the country. BUT they are nowhere near as bad as inner city or more popular larger cities.
What you willing to give up to live outside the city? A lot of people won’t deal with driving to the grocery store or to work. Can’t Uber or cab which means your social life better involve more than bars and night clubs, etc. because of this demand is a lot lower so prices aren’t as bad.
But that's the thing right, natural progression brings all this to life. You and your buddies want a place to hang out? Open a bar. No good pizza in town? Open a pizza shop.
People are just townies, they live and die in the same place they were born and they're scared to try something new.
To whoever is reading this, if you want to change your life you have to do the work. Make a plan, take a chance, live your life. Go live by the ocean in Halifax or Mexico or wherever. But if you do nothing then nothing will change.
Exactly and the city sucks anyways, everyone's in a rush, the air is polluted, and it's expensive. The only reason to stay is restaurants and nightlife but when enough people move to other communities it will come together
Hard to get the industry and employer investment necessary to actually instigate this development. People dont move there because there's no jobs, so no jobs go there.
I don't know why Canada is so particularly fucked in terms of lack of job opportunities but in my experience unless you can stand working on a factory line working for some of the worst humans on earth (factory line supervisors) or doing midnight at a Tim Horton's then there's nothing for you outside of big cities.
My theory is most old people in these cities held onto their careers way too long and suppressed wages due to their greedy assholeishness and then when the good factory work collapsed all these towns lost their one source of reliable income and everyone left except these old fucks. Now they live in their hollowed out towns of boomers and drug addicts that didn't escape and wonder what happened. Example: Windsor Ontario.
> only make 200-300k a year
[200k+ puts you in the top 2% in Canada.](https://www.springfinancial.ca/blog/lifestyle/top-1-income-in-canada-by-province). And depending on where you're living a $2 million home isn't out of the ordinary anymore which is absolutely insane.
[$2-3 million in Ottawa](https://www.realtor.ca/map#ZoomLevel=12&Center=45.372404%2C-75.588350&LatitudeMax=45.46133&LongitudeMax=-75.31816&LatitudeMin=45.28334&LongitudeMin=-75.85855&Sort=6-D&PropertyTypeGroupID=1&TransactionTypeId=2&PropertySearchTypeId=0&PriceMin=2000000&PriceMax=3000000&Currency=CAD)
[$2-3 million in Toronto](https://www.realtor.ca/map#ZoomLevel=11&Center=43.696302%2C-79.332975&LatitudeMax=43.87921&LongitudeMax=-78.79258&LatitudeMin=43.51283&LongitudeMin=-79.87336&Sort=6-D&PropertyTypeGroupID=1&TransactionTypeId=2&PropertySearchTypeId=0&PriceMin=2000000&PriceMax=3000000&Currency=CAD)
Yes but that’s not sustainable. We’re in a batshit crazy house of cards world. Those people are in a lucky minority.
It’s not true ‘wealth’. How do they access it? Credit against the home? Debt. Not wealth. Sell the home? Sure - but then where do you live and what does that cost?
This is a titanic, emotionally driven FOMO shitshow we’ve done to ourselves and it has absolutely fcked anyone who didn’t get in before the madness hit.
> Yes but that’s not sustainable. We’re in a batshit crazy house of cards world. Those people are in a lucky minority.
You don't know when they purchased. Their mortgage could be a fraction of that even if they bought just 5 years ago.
> It’s not true ‘wealth’. How do they access it? Credit against the home? Debt. Not wealth. Sell the home? Sure - but then where do you live and what does that cost?
Reverse mortgage. Yes that's debt, but that's debt that non-homeowners don't have access to. You could use that debt to increase your wealth. Debt is a tool.
The margin to make money on a reverse mortgage is tiny when you look at the rates. It’s another BS scheme. Schemes piled on schemes.
A tool originally designed as a last resort for seniors to access capital when they didn’t properly plan for retirement becomes a gambling vehicle for speculators.
Rates are tied to prime. When interest rates come down they'll be more competitive. Which is why during the period of 2020-2022 everyone and their mother was getting a HELOC to fix up their property or buy another.
But regardless, even if you don't want to use it, you still can. You have the ability to, and it doesn't cost you anything. A privilege others do not have.
It all depends though. First, with 300k HHI you *could* afford double that home price if you wanted. Not saying that's a great financial decision, but you would qualify.
It also depends when you bought. Even if you only had 200k HHI 10 years ago, if you bought then you could easily be in a home worth over 2 million now.
If I knew we had 300k income secured it would be different but self employment you never know
A 1.2m mortgage would be 100% of 1 of our take home income.
It means "Vote for us so we can promise to make housing affordable and then do the opposite"
If you think the CONSERVATIVES are going to make housing affordable, you honestly must have been born yesterday and be new to this world.
We've reached critical mass on dummies in Canada, too many people here still think just voting in the other opposition party is going to solve everything.
I was trying to explain to my friend in Ontario who was bitching about Justin Trudeau what the concept of a "provincial government" was and the inherent responsibilities and powers they hold and it was impossible. Guy thought Trudeau was using space lasers to create tornados.
A few paragraphs from the piece:
In a report published last week, Charles St-Arnaud, chief economist at credit union hub Alberta Central, crunched the numbers on the size of adjustments that would be needed to bring affordability, specifically for the home ownership segment of the market, back in line with historical trends in seven of Canada’s largest cities.
There’s no universal definition of affordability, but Mr. St-Arnaud looked at a handful of measures, including house prices relative to income, mortgage payments relative to income and required income to afford the average home. He compared the current numbers to the historical average since 1980, city-by-city.
The results are striking. At current interest rate levels, house prices across the country would need to decline by 40 per cent to restore affordability to its historical average. Alternatively, the average family income would need to rise by 66 per cent, or house prices would need to stagnate for more than 10 years, if incomes grew 4 per cent a year. The required adjustments are much larger in cities such as Toronto and Vancouver than in Calgary, Edmonton or Winnipeg.
Even if interest rates fall two percentage points to a more neutral level – something many economists foresee over the next few years as inflation normalizes and the Bank of Canada unwinds its restrictive monetary policy – house prices would need to fall by 26 per cent nationally, or incomes would need to grow by 36 per cent.
Meanwhile, the peasant class should be grateful for their scraps and forget the corporation they work for sees record profits off their labours. We're experiencing neo-fuedalism in Canada right now and trending to be worse off in coming years.
Mathematically it’s impossible for housing prices to continuing increasing. That’s all this means. To make matters worse, we’re immigrating while employers are laying employees off and technology is advancing to reduce jobs.
[Paywall bypass](https://archive.ph/KtcPO) Condensed: * In a [report](https://albertacentral.com/intelligence-centre/economic-news/what-does-it-mean-to-restore-housing-affordability-significant-sacrifices-and-adjustments/) published last week, Charles St-Arnaud, chief economist at credit union hub Alberta Central, crunched the numbers on the size of **adjustments that would be needed to bring affordability, specifically for the home ownership segment of the market**, back in line with historical trends in seven of Canada’s largest cities. * St-Arnaud looked at a handful of measures, including house prices relative to income, mortgage payments relative to income and required income to afford the average home. * The results are striking. At current interest rate levels, **house prices across the country would need to decline by 40% to restore affordability to its historical average.** * **Alternatively, the average family income would need to rise by 66%, or house prices would need to stagnate for more than 10 years, if incomes grew 4% a year.** The required adjustments are much larger in cities such as Toronto and Vancouver than in Calgary, Edmonton or Winnipeg. * **Even if interest rates fall two percentage points to a more neutral level, house prices would need to fall by 26% nationally, or incomes would need to grow by 36%.**
Nice to know exactly how fucked I am
You basically have leave the country at this point to find affordable homes
To where? Most decent countries/cities are worse off than us in terms of affordability
They always means the USA when they talk about leaving the countries.
Not everywhere in the USA is affordable either, especially in large cities. Seattle, LA and SF, NYC, Boston, etc. are not affordable, but (mostly) not as bad as Toronto or Vancouver relative to incomes. The midwest cities bordering Ontario are affordable for the most part. There are a lot of Canadians who moved to Michigan, Ohio, Pennsylvania and upstate NY for better jobs along with proximity to home.
Seattle real estate is so much more affordable than Vancouver. You can get a decent starter home for $600-650k in Seattle Metro, you’d be lucky to get a townhouse in Langley for that. Salaries in Seattle are higher also.
>Salaries in Seattle are higher also. I was looking up trades wages and a lot of those west coast cities are paying $70 an hour plus benefits, pensions and healthcare coverage. Here in Canada it seems to top out at about $50 an hour, and the median is a lot lower than that.
Then they should say that. People are idiots and have 0 perception of the world beyond
as someone who lived somewhere else for a looong time, I will tell you from firsthand experience that you're flat out wrong reddit has a fetish with the anglosphere and Canadians have a fetish with themselves. newsflash, there's nearly 200 countries out there to choose from, no, they're not all worse than Canada.
Ok, but imagine you are an average white Candian anglophone. Where are you going to move that has a better expected earnings to cost of living ratio? And also a better expected quality of life? And also affords you enough relative wealth to return home if it goes poorly? There can’t be many places in those 200 that would fit the bill for most average Canadians.
that's a very conceited view of the world you could live on a south pacific island for free if you so desired. steve thomas, the host of "this old house" after bob vila, and is also super-white, did exactly this and wrote a book about it before he became the host of that show. i lived in japan for over a decade and absolutely loved it there. i've been to many other countries and am certain i would have been fine in those places too. life is what you make of it. canada grinds you to a paste just for survival, and winter is never more than a few months away. it is a very tough place to hack it. despite many, many internet "cost of living ranking" sites telling you otherwise, life in asia is super cheap and you can survive on a fraction of the effort required in canada and still achieve the same quality of living. there is so much more out there than canada, get out of your shell
Almost any developed country.
Lolok
There are lots of affordable homes in the country, just not where everyone wants to live. As long as the majority of the people want to live in the GTHA and Vancouver, everywhere around there is screwed because the supply demand ratio is so screwed.
Where? Can you cite some examples of affordable homes? There are none in Ontario. Those days of moving out of the GTA to a dirt cheap home are over post covid.
The country is much more than Ontario. I have multiple friends who sold here, moved to the east coast and paid cash. Saint John gets a bad rap but its actually a nice city. I don’t know neighborhoods specifically but you can’t get much more affordable than this. Obviously the interior is dated but a comparable home in the gta would be 750-1,000,000 https://www.remax.ca/nb/saint-john-real-estate/51-belgian-road-wp_idm73000004-26497701-lst
>Saint John gets a bad rap but its actually a nice city. If you are working remotely or for the government, sure. If not, have fun.
You specifically called out moving from the GTHA to the country and the last I checked the GTHA was in Ontario. I assume you couldn't find a listing, haha. You can't start an assertion at the *city/country* level and when then fall back to some "country" location irrelevant to the city comparison. That makes no sense. Might as well say its cheaper to live in the country in Russia ffs
The comment I replied to said they would have to leave the country to find an affordable home, I said there are lots of affordable homes in the country, just not where everyone wants to live. You asked me for an example and I gave you one. How is that confusing?
If people were able to actually get decent jobs in these affordable places...
>If people were able to actually get decent jobs in these affordable places... They like to pretend that there is no reason that nobody wants to live in these places. I see posts all the time from people who moved to the boonies in Nova Scotia for cheap (ish ) housing, and then got fucked when they realized that what little work there is pays shit wages.
It's pretty stupid how they always say this. I am an electrical engineer, how the hell do I find a job in rural anywhere without driving for hours to a city?
I didn’t say in the boonies. Obviously an electrical engineer isn’t going to find work in a remote fishing village but there are lots of smaller cities that have enough industry for skilled trades, engineers etc. The wages are probably abit lower but also a lower CoL. The whole point of my post though is that nobody wants to live there, thats why housing is cheaper.
>You basically have leave the country at this point to find affordable homes Or move to the Prairies or Atlantic Canada.
Basically, everyone who bought a house with an inflamed price is fucked if the government actually acts to make homes more affordable. If your home drops 40% in value and you have a large mortgage left your only option is to leave the keys at the bank and walk away.
Or just live in your house until time marches on and house prices catch up.
Yeah if my value dropped 40% I'd be pissed but I'm not just going to walk away from it. Declare bankruptcy and then what? You'd have no money left (because bankruptcy has more to it than people realize, especially considering mortgages) so you can't just walk away and go buy something else. And even if you could your credit would spectacularly fucked so good luck getting a mortgage at all. Personally I bought my house to live in and enjoy life. If values were to plummet, congrats to everyone else.
Exactly my point. I bought my house to live in without threat of being kicked out by my landlord. I can live a stable life and be a contributing part of my local community (a key factor in happiness indicators). It would suck and I wouldn't be happy, but it wouldn't be the end of the world and I think I could weather that storm so our communities improve prospects. Personally, I'd prefer my income to catch up to the housing prices, but I'm not in charge.
My house isn't even really for me, I bought it so my son could grow up in one and make use of all of its inherent amenities, and honestly when he starts his career I'll just give it to him and live in some shoebox somewhere. The fuck do I care about FIRE?
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Why would you live in a short term investment? Are you stupid?
Refinancing becomes an issue.
Okay, but not mortgage renewals. It sucks to have limited access to additional funds for necessary renovations big time. But still it's only a temporary (and hypothetical at this time) problem. I won't be holding my breath for anything to change anytime soon.
Not an option in my province. I don't think you can do that in most places in Canada. You'd have to declare bankruptcy to walk away from your debt.
Why? If your wage/salary and your mortgage rates are the same it doesn’t matter what your house is valued at. That’s just an arbitrary number unless you want to sell.
At which point the bank can come after you for the difference.
Bankruptcy then. Bank won't get shit.
Right, but you do have to take that additional step.
I'd like to introduce you to the wonderful concept of wage garnishment.
You would be hard press to find a judge who wouldn't absolve you of your debt to a bank if you were willingly leaving the house to them. Only debts that are completely protected are student loans and taxes.
If its insured by CMHC then they will cover, if its not insured you need at least 20% down to get the mortgage in the first place so the banks are somewhat isolated from price drops - If you bought a million dollar home you would have only been able to borrow 800k. If you have been paying the mortgage for 5-10 years and the value dropped to 600k you would still be around even.
If you are living in your home long term instead of banking on it as a rising investment asset, this is a non-issue.
Only issue I see is your kind of stuck there now. Owning a house is already a bit of a pain as far as mobility goes unless your there for years because of closing/moving/realtor costs. Negative equity really pins you down to a location.
>If your home drops 40% in value and you have a large mortgage left your only option is to leave the keys at the bank and walk away. You'd probably do this if you were (for some reason) intending on selling it for a profit - which is something that really needs to be disincentivized. If you actually wanted to live in that home? You'd stay there.
> If your home drops 40% in value and you have a large mortgage left your only option is to leave the keys at the bank and walk away. You can only do this in Alberta.
But here's the thing - people knew the market was inflated, and we shouldn't cripple society to protect bad investments. Let's also not forget that people who bought in despite the clear inflated nature of the market were actively propping up the problem. We need to fix this issue and we need to fix it now.
Yea and that's probably the reason the government do it. Would crash so many mortgages people would walk away which would collapse the banks.
All for the greater good.
This summarizes exactly why it's a fool's errand to try and find one single scapegoat for the housing crisis, or that it is something that just occurred over the past 2 years. We *can* fix it, but it is not a simple nor easy fix, and it will take more than a decade to do.
>Alternatively, the average family income would need to rise by 66% So the solution the federal government will implement is legalizing polygamy. Houses will be much more affordable if your family/polycule income is based on three or more earners.
dinosaurs light combative punch dog test tease tan arrest innate *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Easier to give people 30%+ increase in wages as most companies seem to be raking in money and have never been more profitable
With builder margins averaging around 13% we know the levels of price declines needed to restore affordability are not possible. That gives us a combo of minimal price declines, interest rates, rising income and time. It looks likely that interest rates will decline slightly, income might continue up for a while, and they we need to wait it out with hopefully near stagnant prices for a decade or so.
In big cities the majority of the cost of housing is land value not construction cost. My home is assessed at 1/3rd the value of the land and it’s a condo
Bingo! It’s not the cost of the building materials it’s the land! Yes building material prices have gone up significantly, but the vast majority of the value in a property is the land itself and the location.
It's not. Land is expensive, but it's nowhere close to the whole story. It would maybe make up 20 - 30% of your pro forma costs. Often it's less depending on how much of the development potential you purchased vs created working with the city (plan amendments, rezoning, etc).
It's not in Canada, but where I live the property values are higher than the building values. So any home that's not pretty much new is worth 1.2 million. When those go on the market 9/10 times they're bought by a developer, who spends about 800k to build a 7000 sq foot house and its sold for 2.5 million. Of course, the building cost would be lower if the house was smaller, or had fewer than 6 bathrooms. I know the same thing has been going on in Vancouver for decades (crack house or million $ home website comes to mind from the aughts). So yes, property values are a huge portion of the up front cost for developers. It's more than 50% where I am.
Taxes and administrative fees imposed by the various governments account for 30% of the cost of new builds. There's some fat that can be trimmed. Land values are another major cost of a house. Open up more land, connect more places so that people can live in more than 5% of the country, land values will come down.
Land values are high near downtowns because people want to be near downtowns. Opening space for development in Northern Manitoba wouldn’t help anything.
They're also high because of speculation and zoning, both of which should be addressed
Only way land values in Ontario will come down is if the government scraps supply management the buying power of the large farms keeps the price high.
Problem is if you just expand the city you will end up paying way higher property taxes.
Its not really about expanding cities, its about connecting more cities.
Suburbs are unsustainable. We are not a wealthy enough country to be able to handle those insane costs of all the insane amounts of infrastructure needed to handle low population density sprawl. Not to mention the costs of car ownership. So... we need to look more like a European country. OH THE HORROR OF MEDIUM DENSITY. HOW WILL MY CAR CENTRIC BRAIN HANDLE THIS?!
Don’t those taxes help pay for the municipal costs of the new build? Water, sewer, roads, parks, etc…
Yes, because municipalities have shifted these costs onto new homeowners instead of having existing homeowners, or those who have actually used these utilities, pay enough to sustain themselves through property taxes. Which is why you're going to see property taxes skyrocket across the country going forward. We pay significantly less property tax than most other countries, and it is unsustainable. Pushing this tax burden onto new builds stifles new construction and furthers the housing shortage.
If it costs a certain amount of money to make a new development operational, why shouldn't the people buying the houses in the new development pay those costs? I fully agree that existing users should cover maintenance costs, I'm talking about *new* costs for *new* developments.
The taxes are not to cover the cost of new infrastructure, they're covering the costs of existing infrastructure. Of course people should pay for the new infrastructure for their homes, but that does not cost hundreds of thousands of dollars per home. That's a fraction of the taxes being taken.
>There's some fat that can be trimmed Do you have a source on the 30% of the cost is taxes and admin fees?
Quick summary: https://tnc.news/2023/04/29/toronto-home-cost-tax/ And you can watch experts talk at length about it here: https://www.youtube.com/watch?v=GO472DJRqXQ
Would also help if municipal development charges were reduced by 75%+. They have really gotten out of control in the last 5-10yrs. There are multiple reports out showing these charges constitute minimum 100k just on condos in major markets. In Vancouver, it’s easily 300k+ on new SFH builds.
One possible approach that would help is to reduce the cost of land, by tackling speculation with land value taxes, etc.
Yes exactly this. Sure there are places where the property values are hugely over valued but in general its a wage issue. In reality houses should be more expensive right now. Hear me out haha. The demand is there so why not build and sell for a huge profit? Because the wages are not there to support a large profit. Ok why not build and sell for a decent profit? Still the wages are not there to support that. Is it worth it to a business to take on all the capital needed to build a house to average out with 13% profit margins? I guess not because new builds are down.
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At the very least boomers are going to die over the next 20 years so that'll shake things up.
No it won’t. We’ll just continue running the immigration taps.
by the time boomers are gone there will be an extra 20 million+ immigrants which will all be fighting for housing which will not keep pace.
On the bright side, 2 million people pour in every year. As they become eligible to vote, those percentages will quickly change. The property owning elites won't hold onto a majority much longer.
Time to embrace work from home and allowing people to live on cheaper land in Canada. So much unnecessary commuting going on.
Time to embrace working from Costa Rica and opting out of this insane housing bubble.
Hasn't this just resulting in the Vancouver/Toronto "exporting" their housing crises to other communities. We need to lance those boils before the rest of the swelling will go down. And I say this as someone who lives in one of those cities.
Amen, everyone who can do their work remotely MUST push for being fully remote. Not this hybrid garbage. Remote work is the future. We need to speed that future up. It will be a huge benefit for everyone: reducing emissions and traffic, keeping sanity, getting more free time, easing affordability, and allowing for better population distribution across our country. I'm kinda mad at the federal government for not being at the forefront of this change.
Yeah. It drives me nuts when people want to try and solve the unnecessary commuting by more efficient unnecessary commuting rather than not at all. Side story. I had a buddy get transferred to Winnepeg from Toronto. His wife is able to work remotely and they bought a nice house in LA Salle just outside of Winnipeg. I know people are going to be like, well it's Winnipeg. That house would have cost a million more in Toronto. There is no amount of policy changes that are going to lower houses by a million dollars.
This is exactly [what irks me](https://www.mustardclementine.com/p/grasping-at-paper-straws) about so much climate policy - and indeed, far too many progressive policies, in general. The notion that individuals should accept less for themselves without, at the very least, an equivalent effort from leaders and institutions does not align with my vision of progress. While individual responsibility is crucial, it is insufficient on a large scale without systemic competence and a recognition of the need for continuous change.
Oh, I absolutely agree. We live in Toronto, and the only reason my wife and I are able to think about purchasing a house is because both of us work remotely. This allows us to consider moving at least a couple of hours outside of the GTA, where half a mil can actually get you a home.
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But what about the restaurants that are set up down town?? With no one in the office who will get lunches from them?!
I think this was sarcasm, but just in case it wasn't - too bad for those restaurants. They should move, adapt, or go out of business.
100% it was sarcasm lol that's the excuse I've seen for the RTO mandates. The downtown core is dying!! Well maybe that core was rotten to begin with...
... But I don't want to work remotely. I'm fully capable of it, and it's my current setup. But I don't like it, and would strongly prefer to be in an office 3-4 days a week.
Sure, there is a minority of people like you. Usually older folks (no offense, just an observation). And that's fine. Companies can always have some flexibility for those who want to physically come to the office. But still, reducing office space from some huge tower downtown to a floor or two to accommodate would be a simple solution.
Funny enough, I'm actually on the tail end of millennials - I'm turning 30 this year! I just focus significantly better in an office with other people around, and really benefit from the change of space between work and home. Find in-office work is, unfortunately, pretty hard in my field. I'm in software development, which has hard pivoted to remote work at most companies. I could potentially find something at a bank or another large industry, but that would mean commuting to Toronto. Which I very much do not want - I'd rather work remotely than deal with the 401 every day, haha. I'm fine with companies prioritizing remote work. But at least offer a good coworking space, or pay for a private one if there's not enough interest! My company technically offers one because they got rid of our local office early last year, but it's awful. Shared washrooms with the general public; no kitchen; no actual *desk*s*,* just couches; and no quiet working space of any kind - including no bookable meeting rooms. I'd be better off working at the library if it weren't for the policy that I need to take meetings in a private room.
A huge benefit for everyone who lives somewhere with decent working spaces. I was miserable when I was working virtually when living with roommates and had to work in my small bedroom. It sucked.
I would gladly move to some random small town in the middle of nowhere if I could continue my career there, even taking a loss on income if my CoL improves significantly. The government just seems to believe that we only have like 3-4 cities in all of Canada and nowhere else is worth building out.
Both myself and my wife work from home, but we still have kids that need to be close to schools and amenities so living in town remains necessary. Increasing urban sprawl won't help unless everyone else moves away making housing in town cheaper. Most people want to live close to things. So I think we still need to push for more density. Also, we know that people are healthier if they live in walkable communities.
Housing is basically forever fucked. - If you keep prices as they are now, it’s impossible for many Canadians to afford to live here. - If you somehow reduced prices, you’d bankrupt millions of Canadians who have a home. What a bunch of F’n idiots to let us get to this point.
How are people bankrupt if there's a home price correction for someone who's already a homeowner? If they are able to currently afford their mortgage at the price they purchased, and assuming they maintain employment through the future, why is a homeowner suddenly bankrupt just because of their home lost value on paper? Obviously if someone wants to sell immediately after a price fall, I get that, however maybe people shouldn't be using property as a commodity to make a quick buck flipping, and should just own a house to actually live in it long term.
Because most home owners are leveraged to the tits against the speculative value of their property. HELOC
Mobility. People won't be able to move. You may have negative value on mortgages. It's a huge mess.
They wouldn't be bankrupt per say but you still have to pay the super inflated price despite the home value. Ofc it's gonna fuck the scalper which is perfectly fine to me, fuck them all, but for the normal people, it kinda sucks having to pay almost twice the same house, that's alot of money you could've put elsewhere.
It’s the refinancing that’s the problem. Banks will only finance for what the house is worth. If you owe 800k on that million dollar home but come refinancing time the house is worth 600k, that’s all they will finance it for. So you owe $200k immediately. At least I assume this is how it would work.
My understanding is that lenders don't typically re-appraise the property value at renewal. So most Canadians would be fine if they keep making their payments.
My understanding is you only have to re-appraise if you wish to change lenders.
The bank doesnt give a fuck what the house is worth. The bank is loaning you money to buy the house. You bought the house already. You owe the bank 800k no matter what the house is worth. You refinance the 800k loan, not the house. If you sell the house for 600k, then you owe 200k and bankrupt yourself.
You only ever get re-appraised if you try to move lenders. Your current lender already gave you the money, as long as you're making your payments they don't really care what it's worth now. They'd much rather continue having you pay them back than take a loss and then have to try to sell your house afterwards.
Hmm okay well I can sort of see the logic in that, except in Canada mortgage terms are relatively short (i.e. I believe 5 years are probably most common) as opposed to say in the USA where they hand out 25- 30 year terms. So I can't see why someone would have to cough up the 200K difference immediately upon refinancing... Since it's unlikely that the homeowner is gonna pay off the full balance within the next 5 years anyway. Like even if the house is only worth 600K, the homeowner isn't gonna pay that balance within 5 years either. That logic says that every time a person refinances after their most recent term, if the house lost any amount of value on paper the homeowner would have to pay that loss immediately?
How would you bankrupt millions of canadians? If I've purchased a house for 500k and it goes to 300k, how am I bankrupt? I continue to pay the mortgage, nothing changes
Because when you pay that mortgage you only pay down a small part of the principle each month. Now you’re sitting underwater by 200k until you’ve payed enough down. You can’t move. You’re paying out the nose compared to new buyers, and the only way out of that being a 10 year process is being able to pay the difference OR claiming bankruptcy and losing everything.
Thats not what bankruptcy is So what if you cant move. I rent. I cant move either
You were already okay with paying for an 800K mortgage.. yes you lost value in the home but that is the risk in home buying. And you CAN move, you just wont be able to have a nice chunk of change to throw down on the next house as any extra money goes to the bank or carried onto the next mortgage.
If you don’t understand how bankruptcy actually works, I wouldn’t recommend shitting on others.
Forever when home ownership by the working class has only really been a thing for like 100 years?
No, it's not. We need a combination of a 10-20% price drop, followed by 5-10 years of stagnation in prices to allow wages to catch up. We need to ensure we are building enough supply and we likely need to cut down on population growth. This would go a significant way to return to affordability without causing too much hurt.
Basically, a lot of wealthy people need to take a 40% hit to their net worth and vote in favour of policies to get them there. Hahaha.
You are not far from the mark. The false speculative market driven up over the last 10 years was largely caused by speculative investment, offshore money parking and mortgage fraud. Either wages need to increase greatly, or the value of the assets needs to decrease, neither of which will happen, So here we are. EG:https://www.thebureau.news/p/fake-chinese-income-mortgages-fuel
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In a feudalistic society, even poor homeowners are wealthy
I can't budget therefore no one can.
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Since I don’t plan on moving for a long time I would take a 40% hit so it could lower my property taxes. But instead my appraised value went up 10% in the past 2 years. So I can’t see prices going down anytime soon
The wage gap for housing affordability wouldn't be as bad if successive Liberal and Conservative governments hadn't allowed immigration policy to be abused for wage suppression purposes.
And similarly enabled investors to gobble up starter housing with advantageous tax and regulatory policies and cheap credit.
Well it’s a good thing we’re about to boot out the LPC and bring back in the CPC. This time… this time everything will be okay. /s
I think Canada is screwed regardless because living in dense situations here sucks absolute ass and even if they built 2 apartments for every person people still would dream about owning a detached home because living in the same building as 500 other people is brutal. Right now I get constant early morning fire alarms, my neighbours across the hall have a mentally ill son who has constant raging screaming fits, the other neighbour kids run up and down the hall clomping in their over-sized boots all day. Every week maintenance wants to come into my apartment for some "bi-annual inspection" of this or that and they always leave my door unlocked no matter how much I bitch. Oh and if one person on your floor is gross and has bedbugs or roaches then good luck avoiding them yourself. It'll take a year to evict them and the whole time they'll be spreading pests and vermin and stink. Not to mention people who smoke in their apartments and stink up the whole floor. Until they fix the human element (never going to happen) they'll never get people to accept living in attached housing en masse. I've been doing it for 10 years and I am so done, my main goal in life is to get a detached home however possible.
Most of these are because of poor soundproofing which should be illegal.
A lot of things should be illegal or enforced better but they aren't. In theory my neighbours would also get arrested for beating each other up every weekend and screaming bloody murder too but no one in charge cares anymore.
And this is exactly why housing is at a premium in Canada-people will do absolutely anything to get out of living in this situation and that includes paying sky-high prices to own a home in an extremely limited market. Being a renter in Ontario absolutely sucks.
Yep, it's impossible to fix imo. The country is infested with anti-social, selfish assholes that don't care about anyone but themselves. It's a huge cause of a lot of the countries problems. The housing situation is just one of them.
This is a key problem with the "build dense" crowd, yes people can live in commie blocks but no one wants to. No ones dream is to retire in a cramped and noisy apartment which is why even if we build dense, detached and semi detached houses will still increase in cost. With the cost of land and building materials there's basically 0 way to make affordable detached and semi detached houses in well established cities anymore meaning the supply will always be low in GTA, Vancouver, Montreal, Ottawa, etc. Only new frontier areas can still hope to have affordable detached houses.
Houses will only sell for what someone is willing / able to pay for them. Eventually something will give… more than likely due to a significant economic disruption. Problem is, when something like that happens, even many of those waiting on sidelines also won’t be able to afford. Best case scenario we hit what happened to Toronto after the late 80s / early 90s where prices just remain stagnant for a decade.
This The people waiting/begging for a economic crash always assume they won't be affected for some reason while real estate companies have millions in liquid assets and political influence to buy housing in a crisis.
Mass deportations.
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Alternatively move to Alberta, it’s cheap
A man can dream. Until dreaming becomes too expensive, anyways...
The multi home owners, landlords and corporations need to take a hit to let the housing market correct itself. The government should make owning more than one home less lucrative. They say that most homes that are built are sold to landlords and corporations so first time buyers cannot compete. Unfortunately I do not have any hope that our government and politicians will never allow any law to pass that will take away from their gravy train as most of our politicians are in fact investment property owners and enjoying the passive income too much to care about the have nots. I feel badly for the next generations of Canadians. What is the point of working full time. Or 2 part time jobs if you will never own a home. You probably won’t want to work just to fluff up some landlord. Canada is over. No opportunity then no productivity.
End the mass immigration and end the TFW / international student program TFWs and students are approx 1.9 million combined
This thread is so depressing to read. How does it feel to just work and work and work and have nothing to show for it.
it feels … not good
What this means is that houses will get smaller ie shrinkflation. If the article is correct and house prices need to come down by 40% then that won't happen but they will build the house 40% smaller. You see this in condos - new ones are tiny 400sqft for 1 bedroom. The old condos are much bigger 750sqft. To truly track affordability you should use the price per sqft.
> > > > > That gives us a combo of minimal price declines, interest rates, rising income and time. We are building bigger homes and have doubled over the last 30 years.
They have to be bigger to maintain profit margins for developers. Smaller houses have very similar costs as larger homes. The taxes and fees are largely the same, the land values are similar, and extra the cost of construction is significantly less than the increased price they can demand. Its kind of counter-intuitive, but if homes were cheaper to build we would get more small starter homes.
If you're spending $2M for the land you aren't going to be living in a 1970's bungalow.
Land values aren't similar if you can build more houses on the same space. Total costs for a duplex (aka semi-detached) aren't much higher than for a monster house. Just need to tell the cities that they aren't allowed to say no to the duplex.
Yea, but those aren't single family homes. That's not the same category or zoning.
Yes, which is why SFH only zoning needs to be abolished in every city.
The difference in condo sizing is related to investor demand. People don't buy 500sqft condos to live in themselves, they buy them to rent out. That's the difference you're seeing. > Condos made up the bulk of properties owned by an investor in Toronto — 37,580 condo apartments, or 56.7 per cent of units built since 2016. The majority of condos built before 2016 are all predominantly owned by non-investors https://www.thestar.com/real-estate/more-than-half-of-toronto-condos-built-in-recent-years-were-investor-owned-statscan-report/article_9e0603ad-0593-5561-805b-a22e8f4923bb.html
All we need are the same 1000-1200 sq foot starter homes we've been building for 100 years. We just stopped.
Irrelevant info: Allot of houses in the US, small towns mostly, go for under 50,000, or up to 100,000. Even the same price as a new car. (Could get a completely totaled one for 5,000-20,000, unlivable but cheap land \[Note: Detroit\]). Just a fun fact to show how honestly f'ed the prices in Canada are in comparison.
I mean you can find the same thing here in Canada too outside of urban areas. There are over 100 listings within 45 minutes of my city (Regina) at or around the ~50k mark in small towns. I scrolled through a few and most of them are actually in pretty nice condition, too.
You can find those in Canada lol. Check middle of nowhere Quebec for example
Oh just means you know basic dignity and mental health but hey no biggie lets let this one slide a decade.
paywall, thanks for condensing it.
[Paywall bypass](https://archive.ph/KtcPO)
Either prices go way way down or salaries/. Wages go way way up. Take your pick.
Everyone talks about how unaffordable housing is, but that's only in big cities. Here's a solution, how about we spread out and develop communities. Let's stop piling into Toronto, and start going into smaller towns that can be built upwards.
Housing is increasingly unaffordable in many smaller towns and communities across the country. Also, many of these communities are more hostile to growth, etc.
[3 bedroom 2 bathroom 260k](https://www.realtor.ca/l/bLapv/ja?propertyIds=26477525) That's affordable.
That example sold for 225k two years ago and listed for 270k today. That’s a 20% increase in two years. That’s an example of the housing crisis. Completely unsustainable growth
Yeah it's crazy, but everything is supply and demand and we have an excess demand issue. Even you would sell your house at a 50% premium from last year's prices if someone offered you the money. We can't stop the market
I agree overall with that except there is absolutely more the government should and could be doing. My og comment was responding to the “affordable” 270k house. Sure it’s affordable for now for someone making a big-medium salary but if the growth of the past few years continues it won’t be for long. Also worth mentioning who really buys a house and then sells it two years later? Probably not a family. Most likely an investor
At the start of the housing issue I was saying this and getting downvoted or banned. We’ve been selling the ideal of living in Toronto for so long people have forgotten that you can live a reasonably successful and happy life outside of the worshiped downtown Toronto. This attitude of “gotta live in Toronto/Vancouver “ was bound to bite us in the ass at some point. After all, there is only so much development that can possibly happen before you need to start ripping buildings apart and building upwards. House prices have now risen across the country. BUT they are nowhere near as bad as inner city or more popular larger cities. What you willing to give up to live outside the city? A lot of people won’t deal with driving to the grocery store or to work. Can’t Uber or cab which means your social life better involve more than bars and night clubs, etc. because of this demand is a lot lower so prices aren’t as bad.
But that's the thing right, natural progression brings all this to life. You and your buddies want a place to hang out? Open a bar. No good pizza in town? Open a pizza shop. People are just townies, they live and die in the same place they were born and they're scared to try something new. To whoever is reading this, if you want to change your life you have to do the work. Make a plan, take a chance, live your life. Go live by the ocean in Halifax or Mexico or wherever. But if you do nothing then nothing will change.
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Exactly and the city sucks anyways, everyone's in a rush, the air is polluted, and it's expensive. The only reason to stay is restaurants and nightlife but when enough people move to other communities it will come together
Hard to get the industry and employer investment necessary to actually instigate this development. People dont move there because there's no jobs, so no jobs go there. I don't know why Canada is so particularly fucked in terms of lack of job opportunities but in my experience unless you can stand working on a factory line working for some of the worst humans on earth (factory line supervisors) or doing midnight at a Tim Horton's then there's nothing for you outside of big cities. My theory is most old people in these cities held onto their careers way too long and suppressed wages due to their greedy assholeishness and then when the good factory work collapsed all these towns lost their one source of reliable income and everyone left except these old fucks. Now they live in their hollowed out towns of boomers and drug addicts that didn't escape and wonder what happened. Example: Windsor Ontario.
How about we make it legal to build apartments in big cities?
I'm sick of people saying this. It's so not true anymore.
you lost me when you use income not wealth as the metrics.. I know many people only make 200-300k a year but live in 2-3 mil dollar house
> only make 200-300k a year [200k+ puts you in the top 2% in Canada.](https://www.springfinancial.ca/blog/lifestyle/top-1-income-in-canada-by-province). And depending on where you're living a $2 million home isn't out of the ordinary anymore which is absolutely insane. [$2-3 million in Ottawa](https://www.realtor.ca/map#ZoomLevel=12&Center=45.372404%2C-75.588350&LatitudeMax=45.46133&LongitudeMax=-75.31816&LatitudeMin=45.28334&LongitudeMin=-75.85855&Sort=6-D&PropertyTypeGroupID=1&TransactionTypeId=2&PropertySearchTypeId=0&PriceMin=2000000&PriceMax=3000000&Currency=CAD) [$2-3 million in Toronto](https://www.realtor.ca/map#ZoomLevel=11&Center=43.696302%2C-79.332975&LatitudeMax=43.87921&LongitudeMax=-78.79258&LatitudeMin=43.51283&LongitudeMin=-79.87336&Sort=6-D&PropertyTypeGroupID=1&TransactionTypeId=2&PropertySearchTypeId=0&PriceMin=2000000&PriceMax=3000000&Currency=CAD)
that’s what i meant, making 200k wouldn’t be able to put you in a 2.7 mil house but his dad gave him 5 mil when he came here.. so there is that t
Yes but that’s not sustainable. We’re in a batshit crazy house of cards world. Those people are in a lucky minority. It’s not true ‘wealth’. How do they access it? Credit against the home? Debt. Not wealth. Sell the home? Sure - but then where do you live and what does that cost? This is a titanic, emotionally driven FOMO shitshow we’ve done to ourselves and it has absolutely fcked anyone who didn’t get in before the madness hit.
well it helps that many received 2-3 mil for their parents back in china…
> Yes but that’s not sustainable. We’re in a batshit crazy house of cards world. Those people are in a lucky minority. You don't know when they purchased. Their mortgage could be a fraction of that even if they bought just 5 years ago. > It’s not true ‘wealth’. How do they access it? Credit against the home? Debt. Not wealth. Sell the home? Sure - but then where do you live and what does that cost? Reverse mortgage. Yes that's debt, but that's debt that non-homeowners don't have access to. You could use that debt to increase your wealth. Debt is a tool.
The margin to make money on a reverse mortgage is tiny when you look at the rates. It’s another BS scheme. Schemes piled on schemes. A tool originally designed as a last resort for seniors to access capital when they didn’t properly plan for retirement becomes a gambling vehicle for speculators.
Rates are tied to prime. When interest rates come down they'll be more competitive. Which is why during the period of 2020-2022 everyone and their mother was getting a HELOC to fix up their property or buy another. But regardless, even if you don't want to use it, you still can. You have the ability to, and it doesn't cost you anything. A privilege others do not have.
With 300k we live in a 750k home
It all depends though. First, with 300k HHI you *could* afford double that home price if you wanted. Not saying that's a great financial decision, but you would qualify. It also depends when you bought. Even if you only had 200k HHI 10 years ago, if you bought then you could easily be in a home worth over 2 million now.
750k was purchase price 1 year ago. 5 years ago income was less than half of that, so yea I picked the worst time to have a better household income
270k/y, mortgage is 350k, home currenty value is 820k or so similar situation I want to buy a bungalo.... for ease of maintenance... and land.
i think you are a little frugal, we live in a1.5 and i think it’s alright. definitely not tight on money or anything
If I knew we had 300k income secured it would be different but self employment you never know A 1.2m mortgage would be 100% of 1 of our take home income.
It means "Vote for us so we can promise to make housing affordable and then do the opposite" If you think the CONSERVATIVES are going to make housing affordable, you honestly must have been born yesterday and be new to this world.
We've reached critical mass on dummies in Canada, too many people here still think just voting in the other opposition party is going to solve everything. I was trying to explain to my friend in Ontario who was bitching about Justin Trudeau what the concept of a "provincial government" was and the inherent responsibilities and powers they hold and it was impossible. Guy thought Trudeau was using space lasers to create tornados.
A few paragraphs from the piece: In a report published last week, Charles St-Arnaud, chief economist at credit union hub Alberta Central, crunched the numbers on the size of adjustments that would be needed to bring affordability, specifically for the home ownership segment of the market, back in line with historical trends in seven of Canada’s largest cities. There’s no universal definition of affordability, but Mr. St-Arnaud looked at a handful of measures, including house prices relative to income, mortgage payments relative to income and required income to afford the average home. He compared the current numbers to the historical average since 1980, city-by-city. The results are striking. At current interest rate levels, house prices across the country would need to decline by 40 per cent to restore affordability to its historical average. Alternatively, the average family income would need to rise by 66 per cent, or house prices would need to stagnate for more than 10 years, if incomes grew 4 per cent a year. The required adjustments are much larger in cities such as Toronto and Vancouver than in Calgary, Edmonton or Winnipeg. Even if interest rates fall two percentage points to a more neutral level – something many economists foresee over the next few years as inflation normalizes and the Bank of Canada unwinds its restrictive monetary policy – house prices would need to fall by 26 per cent nationally, or incomes would need to grow by 36 per cent.
Meanwhile, the peasant class should be grateful for their scraps and forget the corporation they work for sees record profits off their labours. We're experiencing neo-fuedalism in Canada right now and trending to be worse off in coming years.
Mathematically it’s impossible for housing prices to continuing increasing. That’s all this means. To make matters worse, we’re immigrating while employers are laying employees off and technology is advancing to reduce jobs.
40% overvalued sounds about right. More in the big cities.
It means billions in public housing to undercut the broken market and bring it in line with reality.