Canada Housing/Debt: Trust me, I'm a landlord.

The Something Awful Forums > Discussion > Debate & Discussion > Canada Housing/Debt: Trust me, I'm a landlord.

Kraftwerk: Aug 13, 2011; i do not have 10,000 bircoins, please stop asking

Femtosecond posted:

Housing scarcity is real.

Vacancy is stubbornly low, and if yimbys are to be believed even the sky high amount of condo construction taking place still isn't enough to move that number. Meanwhile immigration is only going to increase.

There was a while there where there was a reasonable question that speculation related empty homes and pied a terre growth was causing some % of new homes to be left off the market, but since the foreign/spec tax brought foreign buying to zero, injected several thousand empty homes onto the market overnight, and vaporized the pied a terre condo market, this is really not something we can point to any more. The demand siders that are still talking about money laundering and empty homes on twitter are pretty much a handful of tin foil hat wearing racists that can be ignored.

In real concrete numbers there's less than 50,000 single family homes in City of Vancouver proper and only a handful of that number are available for sale at any given time.

That number of single family homes will only continue to shrink as the CoV runs out of politically safe brownfield land to redevelop, more and more areas of SFH are intensified, and more SFHs disappear and are replaced by townhouses or denser.

Demographically millennials are now approaching their fourties and those amongst them that are lucky enough to have asset wealth either from parents or an appreciated condo or both are better positioned than they'll ever be to grab that brass ring of that oh so desired SFH.

All this put together and it is quite conceivable of why SFH prices are spiking so dramatically. The global pandemic which made everyone realize how valuable physical space was was the catalyst and of course the decrease in interest rates from the pandemic provided the lubrication to make these housing deals happen.

Even if there's some legit demographic reasons for this housing excitement, it doesn't mean that there's not gonna be a hangover.

What we're seeing is a bunch of expected purchasing being crushed into a tiny time of this year. This will mean reduced sales in following years.

I'm just gonna come right out and ask... Is there any shame in renting until you inherit a fully paid off house from your parents?

# ? Mar 17, 2021 23:43

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# ? Jun 3, 2024 01:15

Sassafras: Dec 24, 2004; by Athanatos

Today's first time buyers are well-enough qualified, mortgage rates can go to 5% and they'd *still* only be spending around 35% of their incomes on housing --- and that's if they maxed out their budgets.

The real effect of the stress test is that everybody who buys a house today can also turn right around and spend 100-200k on renos without feeling a pinch.

(Just try talking to any trades about their backlogs. Takes months even for one-day install jobs unless they sneak you in when someone's ahead of schedule/blocked - I've heard that if you want a swimming pool you're already scheduling into 2022 because they have that many committed jobs already).

Sassafras fucked around with this message at 00:11 on Mar 18, 2021

# ? Mar 18, 2021 00:00

Cold on a Cob: Feb 6, 2006; i've seen so much, i'm going blind
and i'm brain dead virtually; College Slice

Kraftwerk posted:

I'm just gonna come right out and ask... Is there any shame in renting until you inherit a fully paid off house from your parents?

Yes. If your parents loved you they'd max out their HELOC to help you buy several condos to landlord over.

# ? Mar 18, 2021 01:06

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

My ex-wife and I each bought houses with my tech industry ~~lottery winnings~~blood money, and my daughter seems to think she�s inheriting both of them. She is very excited about this prospect, and at 11 was making somewhat morbid plans for having one be a party house while she lived with friends in the other. Little does she know...

# ? Mar 18, 2021 01:15

DominoKitten: Aug 7, 2012

The Housing Boom That Never Ends Already Wiped Out All the Short-Sellers: Real estate dominates Canada�s economy to an alarming degree (Bloomberg)

quote:

In December, Aaron Moore bought an unremarkable three-bedroom house in the Toronto suburb of Brampton and, after throwing on a fresh coat of paint and laying down new hardwood floors, put it right back on the market.

In March, he found a buyer. The price tag: C$810,000 (about $649,000), a stunning 28% more than he had just paid.

Normally this kind of quick-buck speculation would be interpreted by economists, policy makers and finance types as the indisputable sign of a housing bubble. But Moore has been a professional house flipper in the Toronto area for more than a decade now, during which a seemingly endless line of illustrious doomsayers have taken the other side of his bet on real estate in word and deed, only to be proven wrong.

One of the earliest was Mark Carney, then Canada�s central bank governor but soon to take over the Bank of England, who called the country�s reliance on housing wealth � unsustainable� back in 2012. Then came the wave of American financiers, one after the other, whose collective bet on a Canadian housing crash got its own nickname, �The Great White Short.� Many of them, like Steve Eisman of The Big Short fame, applied the lessons they had learned in the bursting of the U.S. housing bubble years earlier.

When Covid-19 hit, even Canada�s own national housing agency seemed sure this was finally the end, predicting a dive in home values ranging from bad to catastrophic. But instead the market went on to another record year, even surpassing the gains in the red-hot U.S. market, and the housing agency�s leader had to take to Twitter to say they�d gotten it wrong, shortly before being replaced.

Through it all, Aaron Moore just kept on buying and flipping.

Standing in the Brampton house days before he listed it, Moore seemed puzzled as he thought about all the doom-and-gloom forecasts he�s heard over the years. They struck him as odd. �It would take something crazy, like a communist government, for me to lose my faith in the Toronto market.�

Today, the buying, selling and building of homes in Canada takes up a larger share of the economy than it does in any other developed country, according to the Bank of International Settlements. It also soaks up a larger share of investment capital than in any of Canada�s peers.

Canadians� mortgages have helped create one of the largest consumer debt piles in the world, and its financial system�s exposure to those loans is twice that of the U.S. With prices already at record levels, Canada�s housing market kicked off 2021 by going into overdrive, posting annual gains of 30% in many communities across the country.

And yet the bears who had so boldly predicted the end of the party have largely fallen silent -- having become afraid, it would seem, to attract further attention to their money-burning calls. As they fade away, a new and in some ways even more troubling question is starting to be raised in policy circles in Toronto and Ottawa: What if the bubble doesn�t pop? What if prices just keep going up and up?

Their concern is that this would only further cleave apart the haves and have-nots in Canada. In the past two decades, the country�s major cities have posted the worst deterioration in housing affordability among the world�s major metropolises, according to urban planning consultant Demographia. That�s putting what�s traditionally been Canadians� surest path to middle-class stability -- home ownership -- out of reach for many people not already in the market and exacerbating the inequality gap.

As an ever greater chunk of the economy is devoted to housing, concerns are mounting that there�ll be less room for more productive uses of capital.

�The housing market is on fire, and there doesn�t seem to be anything to put out the fire,� said Sal Guatieri, a senior economist with the Bank of Montreal. �We�re spending a lot more keeping a roof over our heads than we are on machines and factories and AI. A much greater share of our economy is now devoted to residential construction as opposed to non-residential structures, or just straight spending on machinery and equipment. That fundamentally is not healthy.�

For both housing bulls and the reformed shorts whose bearish bets have failed, Canada�s unusual capacity to absorb immigrants often tops the list for why the housing market hasn�t, and won�t, collapse.

Before the pandemic, the country was welcoming more than 300,000 newcomers a year, almost singlehandedly driving the fastest population growth among Group of Seven industrialized nations. These aggressive immigration targets enjoy popular support, but all these newcomers need a place to live, and in the major cities where they arrive they�re met by the other pillar of Canada�s residential real estate boom: a shortage of housing supply.

Toronto and Vancouver have long contended with some of the lowest rental vacancy rates in North America as slow re-zoning processes meant the addition of new apartment stock perennially lagged demand. And when it comes to ground-level homes, the constraints get even tighter. The cities are hemmed in by large bodies of water on one side, and regulations limit urban sprawl.

In Canada�s metropolises, Tony Soprano�s advice to buy land �cause God ain�t making any more of it� may be even truer than in northern New Jersey, thanks to local regulators. It�s this dearth of housing supply combined with the plunging interest rates caused by the pandemic -- the average rate on a common fixed-rate mortgage in Canada was 1.97% at the end of 2020 -- that has propelled home prices to new heights, even with immigration falling. Data released Monday showed the frenzy only gaining momentum, with February posting the largest ever monthly increase in national benchmark home prices.

�In Canada, you have zoning rules that limit development around the major metropolitan areas and that will keep a lid on supply,� said Rod Bolger, chief financial officer of Royal Bank of Canada, the country�s largest mortgage lender, whose internal base case assumes another 25% rise in prices over the next five years. �Then on the demand side, once immigration resumes, those two factors in combination should continue to lead to traditional economics putting upward inflation over the long term on housing in Canada.�

That has concern starting to shift from the market crashing to it rising too fast. Things are starting to get a bit loony: in Toronto a detached garage -- sans the home -- was recently listed for sale for C$729,000. In Woodstock, Ontario, a city of about 40,000 southwest of Toronto, the average increase in home values last year was greater than most residents� annual income.

Speculation may also be on the rise: In January 6% of all houses listed for sale in Toronto�s suburbs had been bought in the previous 12 months, up from 4% a year earlier, according to brokerage Realosophy.

All this has caused people�s ability to afford a place to live to deteriorate rapidly. This year, Demographia named Vancouver the second-least affordable city in the world, trailing only Hong Kong. Back in 2006, the city ranked 15th on the list. Toronto�s ranking went from 37th to fifth.

And thanks to the pandemic, the two cities are now exporting their housing problems to small towns across the country as urban-dwellers, now free to work remotely, move further afield in search of larger homes, bidding up prices beyond what locals can afford.

These problems are starting to cause an outcry. Canadian policy makers from Prime Minister Justin Trudeau to Toronto Mayor John Tory have signaled they�re considering implementing new taxes in an effort to make homes more affordable. And economists at the country�s major banks have begun warning that the market risks being overtaken by a speculative frenzy if the government doesn�t act.

But Canada�s long housing boom has seen policy tweaks before, from changes to down payment rules to taxes on foreign buying and ownership. In the end, these measures just proved to be speed bumps in the long ascent of Canadian home values. And with housing inventory across the country at the lowest level on record and the Trudeau government ratcheting up immigration targets to make up for last year�s lull, there�s every reason to think the trend will continue.

�Everybody has an interest in keeping this going, that�s the part that I didn�t realize,� said Jared Dillian, an investor, financial newsletter writer, and contributor to Bloomberg Opinion who had initiated his own bet against the housing market back in 2013. He pulled the plug on it last year. �There were a lot of people who said that Canada is different and there�s lots of immigration and all kinds of reasons why the Canadian housing market is different. They ended up being right.�

# ? Mar 18, 2021 02:38

I would blow Dane Cook: Dec 26, 2008

They said it couldn't be done, but Canadians have found a way to make themselves rich just by buying and selling houses to/from each other.

# ? Mar 18, 2021 02:52

tagesschau: Sep 1, 2006; Guten Abend, meine Damen und Herren.

Kraftwerk posted:

By my count, home prices are rising so fast that even living rent-free with your parents and saving money this way will not outpace the rate at which the house prices are rising each year.

The fact that you can say this (and in a lot of cases, it's true) is a giant flashing indicator that the underlying economy does not support these asset prices. If something cannot go on forever, it will stop.

# ? Mar 18, 2021 03:12

Franks Happy Place: Mar 15, 2011; It is by weed alone I set my mind in motion. It is by the dank of Sapho that thoughts acquire speed, the lips acquire stains, stains become a warning. It is by weed alone I set my mind in motion.

odiv posted:

Can I get a ruling just how much of an understatement "experts say such cryptocurrency investments come with risks" is?

"What's that, we need a new boiler? Well I'll just sell a few Bitcoins out of the reserve fund. It'll only cost us $47,000 in transaction fees and take three weeks to get the money, so until then it's cold showers for everyone."

# ? Mar 18, 2021 04:00

Sassafras: Dec 24, 2004; by Athanatos

Why do we even pay taxes? The government should just buy some Bitcoin!

# ? Mar 18, 2021 04:38

Subjunctive: Sep 12, 2006; ✨sparkle and shine✨

https://twitter.com/KidsWriteJokes/status/1371173159446188036

# ? Mar 18, 2021 05:06

I would blow Dane Cook: Dec 26, 2008

VancouverCoin

# ? Mar 18, 2021 05:21

Dorstein: Dec 8, 2000; GIP VSO

Vancoinver

edit: Coinquitlam

# ? Mar 18, 2021 08:11

Cold on a Cob: Feb 6, 2006; i've seen so much, i'm going blind
and i'm brain dead virtually; College Slice

https://twitter.com/JohnPasalis/status/1372248779366227975?s=20

https://twitter.com/JohnPasalis/status/1372535448329928705?s=20

# ? Mar 18, 2021 15:45

Sassafras: Dec 24, 2004; by Athanatos

Massive selection bias on the poll, it was taken within an article titled "Do you find the scale and persistence of housing gains alarming?"

Not exactly a hotbed of clicks from people who think not.

# ? Mar 18, 2021 15:55

Number19: May 14, 2003; HOCKEY OWNS
FUCK YEAH

From my experience talking to people, a lot of them who used to be �number always goes up� and who believed that the market is always right are now starting to grow very skeptical of the current situation. I�ve heard terms like �ponzi scheme� and �irresponsible greed� mentioned. At some point there won�t be enough money coming in at the bottom to fuel this. As it is a lot of people are putting themselves in very precarious situations and are one bad life event away from losing everything. I�ll gladly keep on renting and throwing money away into savings and investments while feeling pretty secure that I don�t have to stress about buying a vastly overpriced shithouse in a bidding war.

# ? Mar 18, 2021 16:16

Cold on a Cob: Feb 6, 2006; i've seen so much, i'm going blind
and i'm brain dead virtually; College Slice

Yeah, same. The ONLY reason we're still maybe considering buying is condos have increased maybe 1% YoY in our area (though admittedly 91% over 5 years, ugh), volume is starting to pick up again, rents on 2BR condos haven't dropped as much, and we can do it while still maintaining a healthy and safe level of savings. But it's looking more and more likely we'll be renting again.

# ? Mar 18, 2021 16:23

leftist heap: Feb 28, 2013; Fun Shoe

tagesschau posted:

The fact that you can say this (and in a lot of cases, it's true) is a giant flashing indicator that the underlying economy does not support these asset prices. If something cannot go on forever, it will stop.

Ah, but what if it CAN go on forever?

# ? Mar 18, 2021 16:28

Slotducks: Oct 16, 2008; Nobody puts Phil in a corner.

Problem is right now rents are skyrocketing up everywhere outside of Toronto as well

# ? Mar 18, 2021 16:48

Professor Shark: May 22, 2012

Our rural Maritime home sold for over asking and we have more than half a dozen people on a wait list if it doesn�t work out lol

# ? Mar 18, 2021 17:19

odiv: Jan 12, 2003

Where are you going, if you don't mind me asking and did you have trouble finding a new place if you were buying?

# ? Mar 18, 2021 17:29

Hubbert: Mar 25, 2007; At a time of universal deceit, telling the truth is a revolutionary act.

leftist heap posted:

Ah, but what if it CAN go on forever?

and it will

canada has nothing else going for it any more, except as a place for the wealthy looking to hedge their bets against climate change

# ? Mar 18, 2021 17:31

thechosenone: Mar 21, 2009

But will this not cause cascading effects as well? The livelihood of the poors directly effects how many rich people can be supported after all.

I know those who stay rich will be fine, but we might see a higher attrition rate of upper middle class people falling from grace, as it becomes easier to lose it all. Corporations devouring the ability to seek rent in service of their owners, and then merging the companies together will also concentrate the wealth further, and since the poor have no money left to steal comparitively, this will have to come from the weaker rich.

thechosenone fucked around with this message at 19:25 on Mar 18, 2021

# ? Mar 18, 2021 19:23

Slotducks: Oct 16, 2008; Nobody puts Phil in a corner.

Yes. Capitalism will continue to roll onward without a thought otherwise

Literally everything will be absorbed into Amazon

# ? Mar 18, 2021 19:48

Flater: Oct 20, 2006; Ask me about sucking Batman's dick

thechosenone posted:

But will this not cause cascading effects as well? The livelihood of the poors directly effects how many rich people can be supported after all.

I know those who stay rich will be fine, but we might see a higher attrition rate of upper middle class people falling from grace, as it becomes easier to lose it all. Corporations devouring the ability to seek rent in service of their owners, and then merging the companies together will also concentrate the wealth further, and since the poor have no money left to steal comparitively, this will have to come from the weaker rich.

From where I am standing it looks like the plan is to bring in a constant supply of foreign workers as a pool of poor people/renters to be used up and spit out to keep this thing afloat

# ? Mar 18, 2021 20:41

Sassafras: Dec 24, 2004; by Athanatos

When you get nearly a hundred houses in an area holding offers for the same night, a few of them end up being the bridemaids but never fear, all the people whose bids lost will probably circle back!

https://twitter.com/loveurhome/status/1372268405034717184

# ? Mar 18, 2021 23:39

RBC: Nov 23, 2007; IM STILL SPENDING MONEY FROM 1888

Is that supposed to mean something

# ? Mar 19, 2021 00:12

Sassafras: Dec 24, 2004; by Athanatos

RBC posted:

Is that supposed to mean something

Well, with the increase in supply, there's a chance of getting an offer with conditions accepted, in the Dumb and Dumber sense.

# ? Mar 19, 2021 00:25

Guest2553: Aug 3, 2012

Cold on a Cob posted:

Yeah that's basically what I'm seeing. If you plug in historical returns that precede the incredible 2010-2020 bull run it sure makes renting look a lot better.

The calculator posted in June doesn't really let you estimate potential interest rate increases. If I start at 3% I break even in 4 years, but if I push to 5% then I never break even.

Makes me feel better about loving around and finding out by renting since 2016 at least.

The holypotato had a good xls file for download, but the site doesn't exist anymore. You might be able to find an archived version of the site somewhere, or hit me up at username at gmail and I can send you the one I have.

# ? Mar 20, 2021 15:19

Cold on a Cob: Feb 6, 2006; i've seen so much, i'm going blind
and i'm brain dead virtually; College Slice

Guest2553 posted:

The holypotato had a good xls file for download, but the site doesn't exist anymore. You might be able to find an archived version of the site somewhere, or hit me up at username at gmail and I can send you the one I have.

Looks like the site is back actually: http://www.holypotato.net/?p=1909

Similar to the one I posted earlier, yet I get wildly different results. Beginning to see the appeal of the 5% rule.

# ? Mar 20, 2021 16:24

Femtosecond: Aug 2, 2003

If the globe is pushing this, well now I'm wondering, "hey is this a trick?"