Housing Bubble II: The Quest To Build Enough Homes Where People Actually Need Them

[thewave46]

Originally Posted by jonny24

And it 8 more years, it will seem much easier to have done something back in 2024....

I do not suspect 8 more years of the current contradictions is going to be possible at this juncture.

Either people are going to get very annoyed and toss governments who pursue the process of making an increasingly large segment of the population poorer. It's a risky long-term strategy to reward a declining but wealthy proportion of one's society to the exclusion of the larger, but increasingly poor segment.

Or,

The money men will get wise that Canada's low-yielding debt a bad investment because the country's economic future is contingent upon a scheme that has limited legs left in it. They will ask for their pound of flesh.

[lio45]

Originally Posted by Acajack

Nobody's buying that it's all the fault of the provinces and municipalities and that there is not much Ottawa could have done or could do.

Minister JF Roberge said it out loud in reaction to JT's smoke and mirrors yesterday: "If the Feds actually want to contribute to helping with the housing crisis, all they have to do is reduce the intake of newcomers."

The taboo around supply and demand seems to be breaking. Only hardcore LPC fanboys still denying the correlation these days...

[lio45]

Originally Posted by thewave46

Either people are going to get very annoyed and toss governments who pursue the process of making an increasingly large segment of the population poorer. It's a risky long-term strategy to reward a declining but wealthy proportion of one's society to the exclusion of the larger, but increasingly poor segment.

Though the correct analysis here is the one that looks at these two demographics' size weighted by probability of showing up to vote on e-day, not just sheer size.

If the Landed Gentry almost all vote, while the Renter-For-Life and Indentured Servant classes don't, the former will have all the political power to keep the Scheme going.

[thewave46]

Originally Posted by lio45

Though the correct analysis here is the one that looks at these two demographics' size weighted by probability of showing up to vote on e-day, not just sheer size.

If the Landed Gentry almost all vote, while the Renter-For-Life and Indentured Servant classes don't, the former will have all the political power to keep the Scheme going.

Current polling does not seem to vindicate the Landed Gentry Scheme's biggest proponents (i.e. The Liberal Party of Canada) at this juncture in time. The other Party is not exactly championing a line that seriously upset the Landed Gentry's apple cart, either. For reasons, obviously.

Obviously the only poll that matters is Election 2025 admittedly.

However, the risk remains in a democracy if the pie isn't getting bigger, but a narrower chunk of the population (i.e. homeowners and landlords) accrues benefits out or proportion to their political weighting (Number of voters*Wealth of demographic*Probability of showing up to vote).

In the long-term one has to keep the Indentured Servants/Renter-for-Life crowd out of the political process for this to work. The current scheme is good at keeping them poor, but probably will have trouble keeping them out of the political process, although the LPC forgetting about promised electoral reform was a good try.

[ssiguy]

Originally Posted by theman23

Apparently Trudeau now thinks young people have been kept out of the housing market because they haven't had a chance to build up their credit score:

https://www.msn.com/en-ca/news/canad...26da2385&ei=15

Oof. How could a guy who came to power on the backs of the young adult vote be this out of touch with the demographic? And for the record, you can already build your credit score with your rent payment history. It's just optional.

No kidding. Only a patrician like Trudeau who has never had to apply for credit in his lifetime wouldn't know that rental payment history can be used as a way to improve your credit score.

The fact that a wonderful credit score still mean that 50% of all people under 30, except those he choose the right parents, can't afford a $700k walk in closet doesn't even cross his mind.

This is yet another example of how completely detached Trudeau is from the average Canadian and especially younger ones.

[CanSpice]

Originally Posted by ssiguy

No kidding. Only a patrician like Trudeau who has never had to apply for credit in his lifetime wouldn't know that rental payment history can be used as a way to improve your credit score.

It looks like the current system is voluntary and only works with Equifax, and it's not available in Quebec? I'm guessing that "pledging to work with banks and credit bureaus to ensure regular on-time rent payments become part of a person’s credit history" means expanding the current system so it's more automatic.

[manny_santos]

Originally Posted by Truenorth00

I don't think he actually believes credit score is keeping young people from buying or renting homes. I thinks it's a sign of desperation that they are talking about credit score as an accomplishment. It means that don't have anything more substantial. They need some quick policies they can point to at the next election. This is one of them.

There are cases where this could help, but they're likely cases that aren't in Canada's large cities and they could well be edge cases.

Case in point, I know someone who bought a house in a small community in Eastern Ontario just over a year ago. She initially wanted to buy in a larger community but barely missed being able to buy where she wanted because of the interest rate she qualified for. Had her long history of paying rent on time been taken into account, it could have made the difference in which community she was able to buy in. We're talking about a difference of only a few thousand dollars in the price of house, but the difference was enough for the bank to turn down the mortgage for the first choice but approve the one for the second choice.

In any event this was a longtime renter who was able to buy. And she's not the only longtime renter I know who has bought a home in the past three years. One couple even bought a condo in downtown Vancouver, and I know a couple that is planning to buy in North Vancouver soon. There are people my age and younger who are buying, or are very close to buying, but sometimes I think these people are overlooked by commentators who think all renters are in dire financial straits. Some Canadian renters make very good money and have been building savings.

Myself, I'm a renter and I don't plan to buy anytime soon; but that's more a product of being single and also having no interest in living in a smaller community. I'd rather rent in Metro Vancouver and be happy living here than moving anywhere else that's more affordable where I know no one and be unhappy.

[whatnext]

Originally Posted by MonkeyRonin

The "foreign investor" trope was no doubt played up as a bit of a singular boogeyman in some circles - after all, the vast majority of investment has always come from domestic sources - but there have still been enough of them (particularly in Vancouver and Toronto) to throw the market out of whack. The exact stats are inconsistent & unreliable, but it doesn't take a huge number to distort the relationship between the local economy & market values. And in Vancouver's case, apparently as many as a third of all purchases in some years have been made by foreign investors, which certainly is significant.

Rather than trying to pin it all on one thing though (or on the other hand, exonerate another), it's important to remember that our current housing mess is the cumulative result of many layers of bad policy from all levels of government that have been made over many years.

Someone here (I think it was hipster duck) once said that Canada has basically made every wrong decision on the housing file, and that's absolutely correct: it's been everything from restrictive zoning policy that's limited supply; to strict building codes driving up costs; to favourable tax policy that rewards speculation; to lax money laundering controls that make it easy to wash money through real estate; to easy foreign investment; to a lack of investment in social housing; to unsustainable immigration policy; to demand-inducing incentives like the FHSA; to high development fees and long permitting processes; among many others that have all conspired to create both a shortage of housing and an asset bubble. And it'll take addressing all of them now to get us out of this.

(bold mine)

Well said.

One thing I would note though, strict building codes and zoning restrictions had been in place for decades with little impact on affordability. It was only after gov'ts lost the plot on properly controlling incoming new residents and their money that prices took off like a rocket.

[theman23]

Originally Posted by Truenorth00

I don't think he actually believes credit score is keeping young people from buying or renting homes. I thinks it's a sign of desperation that they are talking about credit score as an accomplishment. It means that don't have anything more substantial. They need some quick policies they can point to at the next election. This is one of them.

Sadly, this is probably the most generous interpretation of these announcements. They will do nothing. Despite JT's social media manager attempting to muster up some enthusiasm (you need to check this out!), I doubt a single renter who clicked on that tweet was left with any hope about their situation improving. In the end we'll probably end up spending millions to implement these useless policies that no one ever asked for.

Originally Posted by CanSpice

It looks like the current system is voluntary and only works with Equifax, and it's not available in Quebec? I'm guessing that "pledging to work with banks and credit bureaus to ensure regular on-time rent payments become part of a person’s credit history" means expanding the current system so it's more automatic.

As I already pointed out, tenants have had this option for years. Emphasis on the word option.

Most renters have access to plenty of credit products and are not desperate enough to have their credit score beholden to their amateur landlord. There's a reason these products are primarily marketed towards landlords and not tenants: they're a way to encourage on-time payments and make it easier to evict tenants and collect debts. The tenant has some marginal benefit by building their credit score, but they take on the risk of badly damaging their credit score if they run into a spat with their landlord. This policy announcement just takes away the option and makes it mandatory. It offers nothing but downside for renters.

Originally Posted by manny_santos

Case in point, I know someone who bought a house in a small community in Eastern Ontario just over a year ago. She initially wanted to buy in a larger community but barely missed being able to buy where she wanted because of the interest rate she qualified for. Had her long history of paying rent on time been taken into account, it could have made the difference in which community she was able to buy in. We're talking about a difference of only a few thousand dollars in the price of house, but the difference was enough for the bank to turn down the mortgage for the first choice but approve the one for the second choice.

Its very unlikely she had no credit history whatsoever, and your credit score plays a small role in determining how much you qualify for. If she was approved for a slightly smaller loan, the issue was her loan to income ratio and not her credit score.

[Truenorth00]

Credit score is also a double edged sword. Just imagine empowering a million landlords with the ability to crush credit for years over a rent cheque being a few days late. Imagine having to deal with a small time landlord to fix misreported credit. I think there's downsides to this policy too.

[MonkeyRonin]

Originally Posted by whatnext

(bold mine)

Well said.

One thing I would note though, strict building codes and zoning restrictions had been in place for decades with little impact on affordability. It was only after gov'ts lost the plot on properly controlling incoming new residents and their money that prices took off like a rocket.

Some causes have a bigger effect than others, but they're all related at the same time. The population boom of the past couple years is of course a huge factor, but the market would have had more slack and at least somewhat more ability to adjust to it if housing were less heavily regulated. It's just the little things - that on their own, aren't make or break items - but when taken cumulatively have made building housing here more difficult and more expensive. Stuff like this:

• Video Link

Also worth remembering that things weren't exactly cheap 5-10 years ago either, and we were always eventually going to run into a wall as prices crept upwards, disinvestment in affordable housing mounted, and once certain cities "filled up". We were already slowly bleeding out by a thousand cuts - the current immigration boom was basically just the equivalent of a gun shot to finish the job.

Originally Posted by manny_santos

In any event this was a longtime renter who was able to buy. And she's not the only longtime renter I know who has bought a home in the past three years. One couple even bought a condo in downtown Vancouver, and I know a couple that is planning to buy in North Vancouver soon. There are people my age and younger who are buying, or are very close to buying, but sometimes I think these people are overlooked by commentators who think all renters are in dire financial straits. Some Canadian renters make very good money and have been building savings.

Sure, some people still are (and always will be) able to make that jump from renting to owning, but anecdotes & the existence of those people doesn't refute the larger problem that:

-It's an increasingly narrower pool of renters who are able to do this, representing a progressively smaller share of peak earners.
-Those who do buy are either taking on increasingly large amounts of debt, and/or requiring greater amounts of family or government assistance.
-Their options for buying are fewer and worse than what they would have been in the recent past.

In other words, one's options and the avenues through which to "move up" or to achieve home ownership are shrinking; with less likelihood of being able to find something that suits their need at a price that they can afford. This is true of everyone in the market right now, but doubly so for renters.

[SpongeG]

they were talking about this plan on the radio today and a guy called in and complained, he is losing $3500 a month on rentals, he owns 10 condos and due to BC's strict rental rules he cannot raise the rent to keep up with his much now higher mortgage rate, he said his rate jumped from 2.2% to 7.2% recently. The host was kind of nice but also didn't feel so bad for some guy who owns 10 condos.

[Truenorth00]

Originally Posted by SpongeG

they were talking about this plan on the radio today and a guy called in and complained, he is losing $3500 a month on rentals, he owns 10 condos and due to BC's strict rental rules he cannot raise the rent to keep up with his much now higher mortgage rate, he said his rate jumped from 2.2% to 7.2% recently. The host was kind of nice but also didn't feel so bad for some guy who owns 10 condos.

The fact that he hasn't sold and is just whining on a talk show is quite revealing. Clearly, we've not bottomed, when guys like that still believe $3.5k/mo negative carry is worthwhile. I wonder what it will take to get him to offload.

[Changing City]

Originally Posted by Truenorth00

The fact that he hasn't sold and is just whining on a talk show is quite revealing. Clearly, we've not bottomed, when guys like that still believe $3.5k/mo negative carry is worthwhile. I wonder what it will take to get him to offload.

Presumably for the time being he's able to make up the difference between the rent he makes, and the mortgage payments / taxes / strata fees he's paying out.

Condo prices crept back up in Greater Vancouver in the past year, compared to a year ago, although they're still less than in February 2022, (and 2021 if you include inflation).

Maybe he's naive enough to think mortgages will fall to 2.2% again. The taxes and strata fees will be going up, almost certainly more than the province allows for rent increases. The longer his tenants stay, preventing him from hiking the rents, the worse his financial situation will get.

[P'tit Renard]

Trudeau continues to be the greatest gift to the spectacular revival of the PQ:

https://x.com/ContrarianTribe/status/1773702167980888453?s=20

PSPP is smart to call out Justin's hypocrisy for triggering this housing crisis, and then creating these silly sideshows like the renter bill of rights to come off as saviours of the problem they created.

[lio45]

Originally Posted by Truenorth00

The fact that he hasn't sold and is just whining on a talk show is quite revealing. Clearly, we've not bottomed, when guys like that still believe $3.5k/mo negative carry is worthwhile. I wonder what it will take to get him to offload.

By choosing to acquire assets with such poor ROI that 7% cost of capital already puts you in negative cashflow territory, he made his bed.

It's like my bitcoin-mining friend: so far I'm sure he easily beat +10% annually over ten years, but should he borrow several million at 10% annual interest and invest all of in bitcoin, he doesn't get to whine if at some point in the future it stops being a money-making strategy.

[lio45]

Originally Posted by theman23

Most renters have access to plenty of credit products and are not desperate enough to have their credit score beholden to their amateur landlord. There's a reason these products are primarily marketed towards landlords and not tenants: they're a way to encourage on-time payments and make it easier to evict tenants and collect debts. The tenant has some marginal benefit by building their credit score, but they take on the risk of badly damaging their credit score if they run into a spat with their landlord. This policy announcement just takes away the option and makes it mandatory. It offers nothing but downside for renters.

Originally Posted by Truenorth00

Credit score is also a double edged sword. Just imagine empowering a million landlords with the ability to crush credit for years over a rent cheque being a few days late. Imagine having to deal with a small time landlord to fix misreported credit. I think there's downsides to this policy too.

Yeah, this has got to be a joke. The Liberals actually, somehow, think that giving landlords the power to destroy their tenants' credit single-handedly, ISN'T going to worsen the housing crisis?!?!?

I have probably at least 15-20 tenants right now, if not more than that, who are in a situation of less-than-impeccable rentpaying record; doesn't really matter to me, and of course this isn't enough to legally kick them out, but if I could use that new Trudeau-Granted Power against them, it would be easy to tell them "Okay, unless you accept to sign this relinquishing of your lease rights and leave in order to let me rent your unit to ~20 Fresh New Suckers packed like sardines, I'm about to totally destroy your credit, and if I do that it would take you years of fighting with Equifax to maybe partially restore it -- if you're lucky. We have a deal? Thanks!"

[lio45]

Originally Posted by P'tit Renard

Trudeau continues to be the greatest gift to the spectacular revival of the PQ:

https://x.com/ContrarianTribe/status/1773702167980888453?s=20

PSPP is smart to call out Justin's hypocrisy for triggering this housing crisis, and then creating these silly sideshows like the renter bill of rights to come off as saviours of the problem they created.

In fairness, Trudeau is the second-greatest gift to the PQ, or maybe even the third-greatest. The greatest one is the CAQ's mindboggling incompetence. Another great gift is the Quebec Liberals' insistence on not catering to Quebecois voters -- sure, it gives them a lock on some Montreal ridings but it disqualifies them from being The Alternative when the time is ripe for The Alternative to win in a landslide because people are totally fed up with The Government.

[rousseau]

Posting without comment, but this is interesting (Google translation from Spanish):

The Rental Law died: the supply of apartments in CABA has already doubled and prices have fallen

The end of the Rental Law generated an almost immediate impact on the real estate market. Since the repeal of Javier Milei's DNU came into effect , the supply of apartments in the City of Buenos Aires has already doubled, according to data from the Argentine Real Estate Chamber (CIA) , and prices have already dropped, so far, by 20 %, say the brokers in the sector.

https://www.cronista.com/negocios/mu...n-los-precios/

[ssiguy]

Originally Posted by manny_santos

There are cases where this could help, but they're likely cases that aren't in Canada's large cities and they could well be edge case

In any event this was a longtime renter who was able to buy. And she's not the only longtime renter I know who has bought a home in the past three years. One couple even bought a condo in downtown Vancouver, and I know a couple that is planning to buy in North Vancouver soon. There are people my age and younger who are buying, or are very close to buying, but sometimes I think these people are overlooked by commentators who think all renters are in dire financial straits. Some Canadian renters make very good money and have been building savings.

Myself, I'm a renter and I don't plan to buy anytime soon; but that's more a product of being single and also having no interest in living in a smaller community. I'd rather rent in Metro Vancouver and be happy living here than moving anywhere else that's more affordable where I know no one and be unhappy.

Obviously, there are young people that can buy, particularly in cheaper markets. However, the fact that you state a couple "even bought a condo in Vancouver" exemplifies how ridiculous the situation has become. It shouldn't take 2 high income people a combined income to afford a glorified walk in closet in the city. Do you have any idea how low a standard that is?

I would also be interested in knowing how many of these younger buyers are getting help from the Bank of Mom & Dad or at least getting them to co-sign. It is offensive how anyone with even a decent paying job cannot afford a home of their own, like they use to be able to and even if you can, the mortgage is now so high they will have very little disposable income left and be debt slaves for 30 years. Of course, if you don't have the BM&D to back you up, you are pretty much screwed and going to be at the mercy of your landlords for the rest of your life. Many people, like yourselves, will always prefer to rent and that's cool but it should be a CHOICE between renting and owning and not something you have little choice in.

Our housing crisis and plunging standard of living is a complete abomination. There is NO excuse for any Canadian living on the streets or going to Foodbanks. When I was kid, tents were for campers and a bank was a place you went to get money. It's truly horrifying to see how far and how fast this country has fallen. Perhaps even worse, people under 40 now consider it "normal" and just a fact of life because they think it's always been like this.