“This has become probably the most important both economic and political problem facing the country right now,” said Tyler Meredith, a former head of economic strategy and planning for Finance Minister Chrystia Freeland.
“And especially given the significant emphasis the government has put on immigration and the relationship between immigration and the housing market, there is a need to do more.”
Trudeau’s recent cabinet shuffle might be an early sign that the federal government plans to prioritize housing.
Ooh, a possible early sign, after eight years in government, that they might be thinking about maybe planning to perhaps prioritize housing slightly a bit, fairly soonish, all else being equal and weather permitting!
They don’t want to move too quickly…
In all fairness, before the pandemic the Bank of Canada started testing pushing up interest rates, and the liberals brought in the stress test.
If there wasn’t a pandemic and the BoC had increased its interest rates we would have seen a cooling in prices and increased security in the sector. However the pandemic derailed that and dropping interest rates near zero is what really ballooned prices.
They were expensive before not the rampant speculation was not nearly as bad. In fact in 2018 there was rental shortages in many cities. That should have indicated housing starts needed to increase, which is the liberals fault for not pushing harder on.
The liberals are in a tough spot. I’m a new home owner, I finally had enough money to buy during pandemic and I did because I needed a house to live in, and so I dumped my life savings into buying one.
Not to discount renters who are definitely hurting, but they do need to consider the new home owners in this too. Ideally they increase supply and set out precise immigration targets, but homeowners are in a shit spot here.
What would happen to your finances if your property value went down?
If my property value went down, not much. It is paid for and I don’t plan on going anywhere, so whatever paper value it has is inconsequential. If anything, it would improve my operating finances as my tax burden would decrease.
If everyone’s property values went down, things would look grim. A large segment of property owners are in debt up to their eyeballs and a decline in value can soon see them underwater, putting them on the verge of bankruptcy. Once they feel the trouble they are going to stop buying the goods and services I sell them.
It wouldn’t ruin me personally, but I wouldn’t be able to move for a new job or resize if we had a kid, or anything like that for probably a decade. It would also kill my goal to move into starting a small business in a few years.
I bought bottom of my budget anticipating some correction, but I’m still quite exposed to real estate prices. I’ve got an emergency fund but if I needed a major repair I wouldn’t have ge option of a HELOC for example.
So regarding your statement here:
Not to discount renters who are definitely hurting, but they do need to consider the new home owners in this too.
So if your property value decreased you’d still be better off than any renters would be.
If you want to talk about how hard it is, don’t even mention renters because the comparison makes your situation look rosy.
I’d love to have a concrete asset worth hundreds of thousands to back me up, but instead I have to spend 60% of my paycheck on somebody else’s mortgage payments and I don’t even get to own anything for all that money I’m spending.
Except my concrete asset is worth negative hundreds of thousands on paper, it’s mortgaged, and it took me near a decade to build up to save enough to buy a home.
And it’s tautologically true someone who could afford a down payment is in a better financial spot than someone who couldn’t. I don’t see the point of a comparison of who’s got it worse, the answer is always people without the ability to save.
My point is there are more than just renters who are getting squeezed right now, we need to properly manage the situation instead of renters blaming honest homeowners while the banks just looked away and let shitty slumlords overleverage themselves and the provincial governments gave them free reign to cover their losses by gouging renters infinitely.
Except my concrete asset is worth negative hundreds of thousands
Did your house burn down and you didn’t have insurance to rebuild or how the hell did you manage that? The market has softened a little, but not that much. Well, maybe if it was a $30,000,000 home?
I don’t see the point of a comparison of who’s got it worse, the answer is always people without the ability to save.
Saying the liberals are in a tough spot because they have to choose between helping renters who have no assets and owners who have hundreds of thousands is obviously going to raise a comparison.
It doesn’t seem like a tough choice from where I’m standing. People like you will recover over time. But people who don’t own homes have nothing to recover. So it’s pretty obvious who needs the help.
but I wouldn’t be able to move for a new job or resize if we had a kid, or anything like that for probably a decade
But that’s only true if your property value went down, but absolutely no one else’s did.
If property values went down across the board, your ability to do all those things would be basically unaffected.
For most people, nothing. The amount owing is always less than the value of the home in Canada. The economic bubble in the US was caused by people mortgaging 100+% of the value of a house. You’d get people with marginal income financing 100%, plus borrowing an extra $50k or $100k to “make improvements”. No wonder that went down in a ball of flames that almost toppled the US economy.
Just gotta get a few things together and see how some stuff plays out but totally thinking about taking a good look at that soonish!
Well, over the past eight years housing was a provincial matter. Trudeau reminded us of that on the regular. How could they do anything?
But the constitution was rewritten yesterday… or something like that. I don’t know. I’m not the Prime Minister.
Trudeau doesn’t give a flying shit about housing or the average Canadian. Atoms speak louder than words and time and time again the average Canadian is burned.
Trudeau, like every head of a party in Canada, is governed by the old guard who hide in the back rooms but control what happen.
That is the shit I’m more pissed about … that unelected rich white assholes tell the party leadership what they can do, and we pay for it.
That’s Neoliberalism for you. Which at this point is basically all the major parties. They all govern from the position that a free market is ideal, and regulation only happens when it “must”, which requires a lot of proof, Rather than a more sensible system that assumes a market needs regulation to function, and demands proof before deregulation.
But we function on a ratchet & brake system. The Cons ratchet things better for the rich, the Libs hold the line while making performative actions that don’t affect the fundamental power structure.
Shit sucks.
I’m really strongly against saying “both sides” or “all sides”. It’s not only factually incorrect but it breeds apathy. If you want things to change, you need to notice when the parties are trying to appeal to you.
In the last election, the NDP were the only ones to seriously bring up housing affordability. Singh said he thinks even current homeowners understand that people are suffering and are OK with lower prices, and the debate moderator grilled him for it. She “called him out” for supposedly hurting people who are relying on their home value as their retirement. I was shocked.
Meanwhile, the Liberals and Conservatives explicitly supported high home prices and “free market” solutions (except don’t mention zoning!). That makes sense given that they (especially the conservatives) get their voteshare from older homeowners.
Atoms speak louder than words
Yes, but never trust an atom; they make up everything.
LOL exquisitely executed 👌
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Anyone who votes for liberals hoping they’ll fix housing issues is an idiot. They haven’t done anything about it other than give handouts. Housing prices have still gone up and its only gonna me painful to correct the housing issues in Canada.
They keep trying to push that’s it’s a supply issue but I see it more of a price issue. Housing is over priced. You can build all you want but at market prices it’s too expensive for people to buy.
I think it’s not just the Liberals, but the Conservatives that are at fault. Neither parties have done much of anything when they were in power to help this and other significant stagnation issues over the least two or three decades.
At least for Toronto, the federal and provincial governments had to be punched in the sides to make public transit investments after being forgotten for most of a half century, and even then the new constructions are still quite inadequate and will require at least two more decades of consistent work before things reach a decent level, presuming that other areas don’t get worse in the meantime.
It’s unfair to just blame the Liberals. All our leading parties suck because they see themselves as invulnerable. They’ve gotten used to being an oligarchy, and the NPD is no longer scaring them, but instead have become a part of the oligarchy. Layton was great, Mulcair was okay, but Singh is just a puppy following Trudeau. Without someone new (it can be the Rhinoceros Party for all I care) getting a decent number of seats to become a legitimate threat to the oligarchy and make them actually move their asses for real and positive change, I think we’re stuck with nothing but corrupt personal interests.
It is a fundamental issue with the way we have been building and running the urban and economic fabric of our cities. Car centric design and infinite growth housing goals have pushed our cities into debt building sprawling suburbia. The economy also shifted away from manufacturing and production towards more service industries that support suburbia and add less value to the overall economy. Canadians have been spending more on necessities while making less in wages and part of this is influenced by the financially unstable ways we build our cities, the reliance on automobiles, and a less productive per capita economy.
While I disagree about service industries bringing less value to the economy (remember, the technical term service industry doesn’t refer to the hospitality industries like hotels and restaurants, but instead things like programming, design, and making movies).
On the other hand, yes, suburbia is the death of economies and livability. I hate how people are more willing to spend two hours driving 100km every day to work than to live without a lawn but be in walking distance of everything you need every week. And that doesn’t take into consideration that suburbia actually costs tax dollars to maintain rather than high density mixed uses urban areas that actually generate taxes instead. People forget that the downtown areas of most cities are actually subsidizing the suburbs, rather than their land taxes paying for themselves.
The subsidizing of suburban development is the biggest issue of it all in my opinion. It is poor economic and land use policy that almost exclussively promotes car centric infrastructure.
There’s the inconvenient fact that housing is way more provincial and municipal than federal. The feds can’t (and shouldn’t) be able to tell a town/city what they can or can’t do as per the rules of our democracy.
That being said, the Feds should be building their own public/rent geared to income housing.
One of the biggest hurdles is NIMBY voters who alway turn up and vote against density and constantly jam the system regardless of need - and those who need affordable housing generally don’t show up to vote.
If the feds build their own housing, or blast provincial/local governments who are preventing the proliferation of Federally funded housing the narrative should hopefully flip.
Currently its the spider-man meme of feds, premiers, and municipal governments pointing at each other as the source of housing inequality - and all of them are correct. But it’s lack of public understanding that allows the inaction to continue.
This isn’t something that needs to be profitable, it’s fulfilling the basic role of government working for the people and giving them value.
This would also put pressure on developers collectively refusing to build due to costs. If you’re not developing, the land moves to the feds to be developed instead.
Some things need to exist outside of profit seeking.
The media aiming ire at the Federal Liberals isn’t just unhelpful, it’s actually extremely counter-productive.
Like, let’s say you work at $BIGCORP and you’re embezzling, and you’re not hiding it well. And the CFO says “$BIGCORP has an embezzling problem! We need to fix this urgently! As a result, I’m raising pressure on SomeOtherGuy to stop this problem!”
You’re not SomeOtherGuy, you’re you. What do you do? Do you stop embezzling? Do you shut up and keep doing it? Do you quietly encourage the CFO to keep the pressure on SomeOtherGuy to fix the problem?
Because as long as the press is aiming the ire at the feds, they’re keeping the heat off of the people most able to fix the problem.
Fundamentally, I think the press (and therefore the people consuming the press) is too dumb for federalism. We are not mentally capable of making informed political decisions about accountability in a 3-tier system.
Generally agreed, but also remember that the federal government sets immigration targets, which affects demand
They don’t want to bring the prices down because they’ve made their own wealth and that of other wealthy property owners, and a good chunk of Canada’s economy, dependent on the prices staying high. So they have to pay lip service and make statements about how they want to make housing affordable without actually, you know, bringing the prices down.
They also don’t want to bring it town because the dumb homeowners will just blame the current government when the prices correct themselves. It’s suicide for any party to willingly tank the housing prices. It’s only gonna get worse the longer we wait to do it. And it’s gonna be global because we aren’t the only country effected by it.
Or rent.
I had to move from my apartment to a rooming house. Next is the street. :(
Supply and demand are key factors in pricing. If no one wanted to buy houses, prices would go down. Of course, people foolishly want to live in dwellings rather than under bridges, so there will always be some amount of demand. Therefore, increasing the number of dwellings will have an impact on both rental prices and house prices. People can still charge whatever they want for their house, but if there is something more desirable for a lower price, it isn’t going to sell. Likewise for rental properties, landlords want to make as much as possible, but vacant units bring in less money than units with reduced prices. Again, that only matters when there is a sufficient supply of residences for the population.
Supply and demand are key factors in pricing. If no one wanted to buy houses, prices would go down
I agree that both increasing supply and decreasing demand would move prices down. At the same time, while the different measures that we can take to increase supply would require months if not years to have an effect, there are several things we can do to reduce demand overnight. Here are some examples:
- Increase taxes on empty homes and homes owned by non-resident landlords. For example, by increasing property taxes while at the same time providing a refundable tax credit for your primary home when you file your income taxes
- Reduce yearly immigration targets and reduce the number of other visas, such as student visas
- Do not automatically grant citizenship to babies born in Canada unless their mother is legally residing here
So…reduce the demand for homes purchased for income purposes and increase the supply of houses available on the general market.
But yes, those are all excellent ideas and I hope someone implements them soon. But since about a third of MPs have at least 2 homes, it could be a tough sell.
The problem is that our government’s neoliberal policies will never develop social housing on its own.
The government doesn’t think that’s the right thing to do because it’s the job of the corporations, but that’s a mistake.
Housing is a provincial responsibility.
The federal government can tax the fuck out of corporations and private individuals to take the profit motive out of speculating on real estate.
An immediate 1% tax on the total value of any non-primary-residence property that goes up at 2x the rate of inflation every year would see a steady stream of corporations and private landlords liquidating their inventory of homes as each individual property crossed into non-profitability – without causing a dramatic shock to the market. Housing cost increases have been going up for 20 years, fixing it in 5 to 10 should be seen as a huge win.
The majority of the electorate — 65%+ — own homes, and 75%+ of Canadians’ wealth is tied up in real estate.
There is absolutely no way this can get fixed politically in our democratic system. Any party that tries to deflate house prices in any meaningful way is committing its own suicide.
The only hope is that prices level off (or … you know… at least stop doubling every 3 - 4 years?) and the rest of the economy somehow catches up to make houses affordable again.
But I can’t see how that’s going to happen. We’re going to have to have a nasty recession to sort this out, and that won’t be because of anything whoever is in power at the time did intentionally.
The problem about just hoping for the best is that there’s basically no way for it to happen naturally. Without an external force to make prices fall in some sort of controlled way, market and local forces will just keep the prices rising, until they crash. And while a part of me kinda hopes for it on a surface level, a housing crash is something we really don’t want.
If the housing prices crash, that means that the retirement funds of most people will simply disappear. Most people have almost all of their retirement funds locked up in their homes, with the hope that the value will continue to rise until they’re ready to withdraw from the market. But if the housing bubble bursts, then you’ve got millions of people who suddenly have to figure out how to go from expecting to smoothly sliding into retirement to not even being close to having enough money saved up to retire before 80.
The results of this is that everybody with a home will suddenly stop buying anything but the essentials, and doing everything they can to recoup as much liquid cash as they can with what they have left, while scraping every penny they can from their expenses. It’s basically millions of people suddenly just eject themselves from the economy, and we’re instantly into a major recession. Everybody’s working as hard as they can to save as much money as they can, but nobody’s buying anything, businesses lose profits, so everybody starts to shed jobs, making people try even harder to save money, and the cycle continues.
Without a controlled soft landing, it’s hard to see how we don’t get into a death spiral. And if you want the best case scenario of a place where this really happened, just look at Japan with its Lost Decades. And more of a worse case, look at what’s going on in China right now.
While I think what you say is accurate, I think the main issue here isn’t just the housing crisis being manifested, it’s the part you hinted at where our economy is so dependent on non-essential spending to keep it running. On one hand you have people overspending and going into debt to have new vehicles, RV’s, McMansions, and we have people complaining that this rampant consumerism is killing the environment because people keep spending on single-use items, or trashing otherwise serviceable items to keep up with the Jones’s. On the other hand, if that consumerism goes away, people pay off their debts and don’t buy all the new toys, then the economy and those of us in the working class section of that economy, struggle.
Honestly, it’s the fundamental problem with capitalism, and while I personally advocate for a better system, it’s not the sort of thing that can be put into place without major disruptions on all levels of society. Not to mention severe opposition from our allies at even the mention of such reform.
That said, the solution in the short term is to try to force people away from placing most of their money in nonperforming assets. Frankly speaking, getting the latest and greatest cars, smartphones, shoes, whatever isn’t actually that much of a deal. The issue is the waste that comes from doing that so often. If all of these things actually lasted us a good decade (or 3+ for cars), it wouldn’t be such a problem. Hell, we’d probably enjoy their use that much more if they were built to such a quality.
Imagine a smartphone that has a steel frame, engraved with a nice bezel pattern, and a colourfully etched backplate, strong enough that you don’t need a protective case, and all its parts can be replaced by hand, or at least easily at any local repair shop? Sure, you might pay a few thousand for it, but if it’s so beautiful, silky smooth to use, and easily lasts a good decade or longer, what’s wrong with that? Especially if you can pass it down to one of your kids because it’s still good and usable 15 years later.
I know there’s software issues with such degrees of long term usage, but the thought that things might last more than a year or two has all but disappeared from most people’s minds. It’s sad that we’re happy buying shoes that’ll only last us 6 months of wear, just because you can buy it for less than the price of a week’s Starbucks? I’d rather spend over $100 and get nice shoes that not only lasts me a few years, but feel good to wear and don’t make my feet hurt after standing and walking around for 10+ hours a day.
On the other side, there’s the issue that we don’t have good ways to dispose of things. Human sorting is terrible and expensive, yet there’s surprisingly little research into automating such processes because there’s a lack of money to be found doing so. It takes government will to get these sorts of things done, but need awareness before the governments even start looking at such things in the first place.
People still need homes to live in, and they still have mortgages to pay. If housing prices decrease modestly, nobody is going to riot. The only people who might get hurt is those who are already over-leveraged.
That’s going to happen. Houses will become affordable (in price). Thanks to the interest rates hikes that happened so fast their effect can hardly be seen yet, pretty soon, a lot of owners in debt won’t be able to sustain their mortgage anymore. “For sales” signs are going to pop-up faster than mushroom and the prices will collapse.
No one will be able to afford them still, because of the mortgage cost, but at that point, Liberals can claim they successfully reined in the housing cost, and now they’re off to tackle the mortgage cost. As the economy will be cratered, Bank of Canada will dump the interest rates back to floor level: another job well done!
Oh no, I hope the Liberals don’t try to do anything. All they would do is to give certain people handouts, which would increase home prices.
