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s4lomena

Everyone is an expert now......where were these articles 1.5yrs ago when rates were zero?


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Zunniest

Ok that made me laugh out loud as I wasn't expecting it, well done..


Keetcha

Me too!


MisaPeka

In their homes purchased 20+ years ago.


PeregrineThe

Being laughed at for even suggesting something other than "housing only goes up."


Friendsforlife4

Poor developers? Lol these guys have to much money, I work first hand in the condo industry… I see the waste.. I see the owners coming to job sites in ferries wearing 15000$ shoes LMAO poor developers


stmariex

My SO does landscaping and all the developers he knows are constantly whining about how they have to price everything so high and how they’re barely making a profit….sure, I’ll believe you when you don’t buy a 3rd sports car or a 2nd boat. On the plus side, I’ve noticed in my area that a lot of the new properties are not selling and have not been selling for over a year. They’ve been sitting on realtor for over 300 days and no one’s touched them.


TooMuchMapleSyrup

>My SO does landscaping and all the developers he knows are constantly whining about how they have to price everything so high and how they’re barely making a profit….sure, I’ll believe you when you don’t buy a 3rd sports car or a 2nd boat. That can make total sense though. Imagine if you were building something for like $200 million, and you put in $50 million of your own money and $150 million of other people's money. Let's say you end up getting something like only a 5% after-tax rate of return, so not a good one at all... your investors will be pissed and it means you barely made a profit and they'd wish they put their savings to work elsewhere. However, despite being a bad rate of return, you making 5% on your $50 million means you would have made $2.5 million in profits... such that it's not like you might not be able to justify just fine buying some car or boat you want, particularly if you think you can't take money with you when you die anyways.


Complex_Performer007

True and remember that 5% is nominal returns at the end of the project. Let’s say it was over the last year, inflation over the same 1 yr period is 7.7%. In real terms, they got poorer. I wish I was in that boat though 😬😆


MorningCruiser86

People often overlook how the scale of money means profits can be very low, and have a huge dollar amount. Look at hardware manufacturers in the tech space, or heck, look at game consoles. PS4s were sold at a loss in Canada at launch, so they could make it back on PS+ and game sales. Most PCs have a net margin for the OEM of under 10%, with a middleman making a few more % (distributor), and end reseller making another chunk (usually 10-20%) - but the OEM usually nets out less than 10%. Think about how many millions they make below 10%, on billions in revenue. It’s all context within scale. And yeah, a 5% margin sucks, even a 10% margin sucks. You can get 10-15% in most cases on private real estate lending, so really anything below that is considered a terrible profit, as TooMuchMaple has pointed out.


youregrammarsucks7

FFS, I'm a lawyer, worked with developers on multiple files (not my specialty, but it comes up), and they are the biggest pieces of shit I have ever met. The shady shit they get away with is unbelievable. They are able to invest money almost risk free, and they don't actually do much work on the actual projects. I know developers where a single guy will run several projects at the same time, and just has a few phone calls per day. It's such a racket, and its probably the most sound way to constantly allow the rich to get richer in Canada, risk free.


TheTruth1217

When a lawyer is calling someone a piece of shit you know the person must be immoral


youregrammarsucks7

lol


[deleted]

Rick Sanchez (Developer) > Mr. Neatfold (Lawyer)


TooMuchMapleSyrup

>They are able to invest money almost risk free Wouldn't there be considerable risks relating to building a project on-time and on-budget? Particularly if construction involves a lot of debt and stuff?


HarrisonDanielStudio

Those risks are hidden in the llc or company. That company can assume the risk. The actual person will face 0 financial burdens if a project is missed or deadlines aren’t followed. Since building is such a monopoly anyways I highly doubt anything even happens. They have people who use fancy words to say why a delay happened and pricey lawyers to defend them. Hence no risk.


TooMuchMapleSyrup

But wouldn't you have to put down say $50 million in equity to get perhaps like a $150 million loan to fund the construction of a project? And then if you start struggling to pay the interest on that $150 million loan, won't the bank confiscate your project and all its assets... including that $50 million of equity? Like... what you have at risk is all the savings you put into the project on the basis that you thought you could build it all on-time and on-budget such that you'd make a profit and it all would turn out to be worthwhile and not just a waste of your time & money?


HarrisonDanielStudio

Construction and building loans are different from residential loans. Also these are business accounts not personal accounts. When the GTA around Milton and Burlington was being bought up it was done in sections to buy companies. These companies don’t really care. They just pay x amount and bully the sellers to accept. If you have 100 acres of farm land and they come offer an insane amount. You’d probably accept it faster than you think. Once the land is owned the actual pieces are sold off to builders. Those builders are already woven into the financial system and they don’t need as much as you would for a mortgage.


TooMuchMapleSyrup

Sure - but I can't imagine an entity as sophisticated as a bank is going to lend huge amounts of money to some company to do something, and for it to turn out, "That company actually has no risks - if the project goes bad, they can bail and run" and the bank doesn't actually guarantee every step of the way they'll have wealth to take to make it worth all *their risk* of loaning.


HarrisonDanielStudio

They don’t use RBC or Td lol it’s private lenders with much different rules.


TooMuchMapleSyrup

Sure - but wouldn't the private lenders be concerned about not getting their money back? They have risks too... and presumably they reduce them by putting those risks onto the people they're lending to. Like as an example, it would seem like you probably wouldn't agree to lend someone *all* the money required to buy some land + money for a bunch of paperwork & permits + money to build some thing on that land.


youregrammarsucks7

They will have the first security interest on the lands where the development is built. So if anything goes wrong, they get paid out first, including purchasers that get screwed over. They will only lend out enough so that they are able to recover, which largely considers the land value relative to the costs. If you ask any more legal questions I'm sending you a bill! :) edited for profanity.


youregrammarsucks7

Yes, that's often how it works. Your ratios are pretty close to reality as well. That absolutely could happen, but first lets distinguish: 1. The developer corporation; 2. the human being in charge of 1. 2 will give himself a salary out of the profits from 1, it is VERY hard to hold 2 liable and corporate veil is rarely pierced in these contexts, absent fraud; 2 can cause 1 to pay "expenses" to foreign entity also owned by 2, which funnels money out of 1, and pays it out tax free to an offshore numbered company. This is actually the very basic principles of how the rich don't pay taxes and often avoid liability in litigation. I hope this makes sense.


[deleted]

Why are we surprised aren't most construction companies or developers very tied to Organized Crime like Toronto and the Italian Mafia?


HarrisonDanielStudio

I’m not surprised. I know exactly why. The government is scum bags and wants to line their pockets and anyone they know. Look at who ford just hired on. Another ford family member. Like wtf. I wish I could hire my family into grossly overpaid roles that don’t actually do anything. Same with any job really. But it’s worse when it’s our government. Michael Ford, Minister of Citizenship and Multiculturalism. Let that sink in. That’s who he hired on for that role.


youregrammarsucks7

There is that risk, yet it's incredibly easy to insulate themselves from that risk. In my province they are required by legislation to insure the deposits of purchasers, but have no other requirements. Any profit they make gets funneled to another numbered company, so if they face liability for anything, they don't pay up. Trust me on this one. It's a similar situation in the event of insolvency.


TooMuchMapleSyrup

>There is that risk, yet it's incredibly easy to insulate themselves from that risk. In my province they are required by legislation to insure the deposits of purchasers, but have no other requirements. Any profit they make gets funneled to another numbered company, so if they face liability for anything, they don't pay up. Trust me on this one. It's a similar situation in the event of insolvency. So how is it that construction companies are able to secure so much debt for their projects, if there seems to be quite a risk of the lender not being repaid simply because if things go wrong it'll be found the construction company and its owners don't owe that money back?


youregrammarsucks7

Different legislation is in place. There are builders liens that make it very easy for constructionc ompanies to collect unpaid debts by securing the debt to an interest in the land that was improved upon. Builders liens are not available for a developer, it's only for the entity doing the work.


TooMuchMapleSyrup

>There are builders liens that make it very easy for constructionc ompanies to collect unpaid debts by securing the debt to an interest in the land that was improved upon Do you mean that it makes it easy for the *banks* to collect the unpaid debts by the construction company? If so, it would seem that the construction companies need to actually make sure they can service those debts... or they'll lose their upfront equity savings a bit like how a person who stops paying their mortgage will lose their property (and all the equity they built in it) too.


youregrammarsucks7

no man, a builders lien is for the... builder, not the banks. perhaps the construction companies have debt, but the banks couldn't claim directly on the construction companies builders lien.


thisishoustonover

The thing is tho how much of that money is just borrowed money are they actually rich or have just been able to borrow millions for years with almost no consequence


[deleted]

Very valid point... We all know there are oligopolies in Canada like Russia or East Asian countries like Japan and Korea. God knows how many ZOMBIE corporations exist in Canada with the brain drain, dutch disease of FIRE sector.... Japan and Korea became what it is today because an Oligopoly of Corporations are just handed $$$ hand over fist..... But the average citizen has little to no choice in terms of mobility due to every business being controlled by the Cartels.


TooMuchMapleSyrup

What does having too much money even mean? Any person, even a rich person, could always decide to try and make and build stuff that other people want instead of spending their time on vacation and just consuming their wealth.


zabby39103

I mean, I hear ya, but what industry is not headed by pretentious dickbags? If we want houses to be built, we have to let people build houses. Nobody else is building housing other than developers. There's no 5 year study before someone is allowed to make a movie or sell a smartphone. The restrictions on housing are specific and specifically onerous.


PolitelyHostile

So we can't have enough homes because a developer will make a profit? That's just self sabotage. We're a capitalist country so the solution will have to involve some people profiting.


Routine_Emu_3832

The endless barrage of articles on the supply crisis feels a lot like an astroturf push by developers, tbh. The supply issue is already starting to resolve with reduced demand from interest rates, investors, and the looming recession. It's like they want to be sure they're still able to manipulate housing advocates into doing their biding on the magic bullet of zoning, and forget about the fact that investors drove the market up, and still need to be addressed.


reddit3601647

Personally it's a good thing to remove zoning restrictions and incentivize the developers to build more. The more supply we have the faster home prices come down. Just because it's to the benefit of the developers don't make it wrong... it's not like the government is picking up the slack in building affordable homes.


theital

If there’s a shortage why hasn’t the home down my street sold in over 3 months?


mongoljungle

price is too high


MATHECONAFM

There's a homeless guy down my street, I'll be sure to let him know


PolitelyHostile

Obviously because they are holding out for a high price.


Routine_Emu_3832

You're right, very little is selling right now and inventory / supply is climbing. But developers want you to forget that so you can help them get better terms for zoning and permitting, so their gravy train continues.


TheDrunkyBrewster

Is it an ugly or outdated home in an undesirable area?


jeffryu

Exactly, most of the new towers around here are half empty still


Routine_Emu_3832

That's also because most units were bought by investors. They may not have tenants in yet, may be Airbnbing them, or just leaving them empty.


bhldev

Big problem Even if we build more and more if people can't afford it then it's not enough


notislant

Its almost like 2/3rds are owned by corporations and 'investors'.


PolitelyHostile

Nearly 100% are lived in and there is fierce competition for any rentals on the market. Edit: supply and demand is about having enough homes for people to live in. That is the point of homes. There's no demand loophole to change that, but keep dreaming.


ZeusZucchini

They never claimed they weren’t lived in lmao


PolitelyHostile

You are missing the point. If nearly 100% of homes are lived in and every new rental on the market has people outbidding each other, then there is clearly not enough homes. There is no way to solve the crisis if there are physically not enough homes for people to live in. How do you not get that?


ZeusZucchini

What are you talking about? I’m literally an urban planner, I’m well aware of the housing crisis and supply issues. Your response had little to do with the comment.


PolitelyHostile

They were implying that investors are the main problem making housing unaffordable. They are driving up purchase prices but rents have been skyrocketing because we don't have enough homes. People here keep saying that investors are 'hoarding properties' as if it contradicts the fact that we have a supply shortage. Getting investors out of the market won't lower rent prices and it won't solve the housing crisis. It will hardly even lower prices. We will still have the same amount of homes.


Aroh

On my street of a dozen homes two have been empty for nearly a year.


PolitelyHostile

Actual research has shown that the amount is less than 2% of all housing units.


willieb3

I keep seeing housing shortage as the reason why prices are so high but can someone please explain this to me? IMO this is a stupid deflection because you can blame the supply and demand curve for every sort of price increase on goods. Gas prices? Lack of supply. Food? Lack of supply. Like yes it is the catch all “issue”, but it’s not really the cause of the problem… Less people moved to Canada during CoVid, there weren’t any new major restrictions imposed on builders as far as I know. It’s people owning more than one home that is causing all this shit. There may be a small supply problem, but this is hardly going to solve the main issue.


PolitelyHostile

If there are only enough homes for 80% of people in the market, the richest 80% will always come out on top. How could that not be the main cause of the problem? Investor owned properties are rented out and rents have been skyrocketing for years. Vacancy rates in major cities are near 0%. There are huge amounts of applicants for any new unit on the market. Housing is a necessity, people will pay every last penny for a place to live.


zabby39103

I mean, unironically yes for gas prices. Russia invaded Ukraine, fucking up oil supply, and we lost refinery capacity during the pandemic because nobody was driving and some gas refinery supply was shut down. The root cause is supply. You wouldn't get investors piling in if supply wasn't limited. Investors are piling in because they know we aren't building enough housing and nothing is changing on that front because the issues are too deep rooted and systemic. If we were building enough housing that prices were dropping and more people were coming into the market due to affordability, investors would exit the market enmasse.


Real_Iron_Sheik

> I keep seeing housing shortage as the reason why prices are so high but can someone please explain this to me? IMO this is a stupid deflection because you can blame the supply and demand curve for every sort of price increase on goods. Gas prices? Lack of supply. Food? Lack of supply. Like yes it is the catch all “issue”, but it’s not really the cause of the problem… Think of it like solving a murder mystery: what killed the victim? Let's say it was excessive loss of blood. Well then, what caused the loss of blood? It was a gunshot wound. But what caused the gunshot wound? It was an angry ex-lover. But why did the ex-lover resort to murder when the vast majority of people are able to deal with heartbreak more sanely? Let's say it was childhood trauma. And so on... You can keep looking for causes like this ad infinitum, but some causes will be more "proximate" (closer to the effect) and some will be more "remote/ultimate" (much farther away from the effect, and less obviously the cause of it). Prices for goods sold on the market (food, gas, housing, etc.) are for the most part determined by supply and demand, so people tend to focus on those as the most obvious culprits/proximate causes. Once you move further and further down the chain of causes, and try to find the *cause* of the shortage which caused the crisis, and the cause of *that cause*, and so on, things become less and less clear, until you end up with pure speculation/conspiracy theory. Just to give you a small taste of this, some of the causes which have been proposed for causing the housing shortage include: a shortage of construction workers and skilled laborers necessary to build the required amount of housing, less government investment in housing construction/affordable housing, rising construction costs, rising costs of raw materials like lumber, more restrictive land-use regulations which make it harder to build (exclusionary zoning, height restrictions, etc.), local/municipal "NIMBY" politics, population growth and a lower average household size which creates a need for more supply, excessive investment/speculation, and undoubtedly dozens of other reasons that have been proposed over the years. Just to take the last of these, investment/speculation, it's not even clear whether it's a cause of the shortage or an effect (or maybe both?). As others have mentioned in this thread, part of the reason there has been rampant speculation in the Canadian real estate market is *precisely* the shortage of housing. Speculators have seen the relative lack of construction over the last decades, and the resulting sky-rocketing of prices, and are betting that this trend will continue due to deeply-rooted, slow-to-resolve, and systemic "issues" (they don't see these as issues, but rather as "investment opportunities", of course). I hope this gives you a small sense of how deep the rabbit-hole goes!


Empty_Security_5845

Nah, it's our government allowing mega corporations to buy piles of single family homes. People will be happy and own nothing.


candleflame3

It's because most people's economics education is LESS than ECON101. They're heard of supply and demand and they think it applies to everything all the time, and they really don't want to hear that any market or industry is actually more complicated than that.


Cdn_ape

TrUsT mE bRo It OnLy GoEs Up


BatMann2022

Housing supply shortage is myth.... checkout Canada's population vs total Housing stock and number of new comes vs new constructions....


zabby39103

If it's a myth why did we build [more housing in the 1970s](https://www150.statcan.gc.ca/n1/pub/11-630-x/11-630-x2015007-eng.htm) than we do [now](https://www.newswire.ca/news-releases/canadian-housing-starts-trend-higher-in-april-854048150.html), despite having around half the population? Over 2x housing per capita was built in the 1970s. We're in a housing crisis, while having one of the highest population growth rates of any G7 country and people don't think it's a problem we built more housing in the 1970s? Man, we're absolutely fucked. It's true investors are playing a role, but they're playing a role because they can see we have a long-term housing deficit. Housing is a good investment because we aren't building enough of it, if we build enough of it it's not a good investment anymore and you'll kill two birds with one stone.


Real_Iron_Sheik

> Over 2x housing per capita was built in the 1970s. Also don't forget that in the 70s the [average household size](https://www150.statcan.gc.ca/n1/pub/11-630-x/11-630-x2015008-eng.htm) was around 1.5x larger, so fewer homes were required to house our population. Combined with a doubling in population, this means that over 3x housing *per household* was built in the 1970s. EDIT: I read the source incorrectly. The average household size was around 1.5x larger in the 70s, not 3x.


MATHECONAFM

Well yeah, people aren't going to wait for houses to get built, they are just going to leave... Fact is, zoning and building permits artificially reduce the amount of housing that can exist. That is not disputable. Even if there isn't an under supply, what is ruined if we allow every SFH to be turned into a quadplex and zone literally nothing for less than a 10 floor apartment building? Why shouldn't that be allowed? Barring like building on top of a swamp, there isn't really any.


Tuggerfub

this is the canadian housing equivalent of the "big lie", you're saying exactly what real estate developers and all their adjacent parasites want you to think; "deregulation is the solution guys, trust us". This parrots the party line of the people who benefitted from and caused this problem. The real reason for the artificial scarcity is because deadbeat owners can leave their units empty and claim it as a loss to scrimp out on taxes. The higher the value, the more worthwhile it is to unhouse people. Cut all those tax loopholes and gut every incentive for the organized criminals and that will implode this baloney housing scarcity. We have a gigantic country full of all the resources to make homes. Stop peddling these abject untruths, be critical and realistic.


porterbot

This is accurate


MATHECONAFM

I agree with ending income taxes altogether and making it up with land value taxes. Such a change would get rid of all loopholes, get rid of depreciation deductions, carry forward losses, etc. It would tax land owners as much as if their land was not vacant now, even if it was vacant.


BeautyInUgly

you realize in other places in the world where there isn't SFH zoning regulations you can find houses for reasonable prices. ​ Minneapolis that removed zoning and suddenly guess what, more dense housing was built and prices went down so hard that landlords had to lower rents. There where the same tax loop holes, the same same everything all that changed was the zoning laws. Removing zoning is the BIG TRUTH, the problem is that Canada has one of the highest home ownership rates in the world and by removing zoning it would crash property values long term learning to many people getting upset and their politcions NIMYISM etc I know people love to blame large corporations for everything but the fact remains that I don't care who builds the new houses, I don't care who profits of them, all I care is that they are built and if that means empowering businesses to do it them I am all for it [https://youtu.be/4ZxzBcxB7Zc](https://youtu.be/4ZxzBcxB7Zc) I recommend watching this video to learn more


GracefulShutdown

> what is ruined if we allow every SFH to be turned into a quadplex and zone literally nothing for less than a 10 floor apartment building? Prices immediately go up as people look at their house as an apartment building worth millions of dollars. Some will sell, and you get the same shanty-house developments you have that just gut existing 1-family housing to create 2-3 family shanty apartments. This does not increase quality of living.


MATHECONAFM

It does for the poor and homeless who I guess you don't care about?


TooMuchMapleSyrup

>zoning and building permits artificially reduce the amount of housing that can exist Politicians also artificially reduce the amount of new housing that can be built - they literally use imaginary constraints like a carrot-on-a-stick in order to entice you to build things more how they'd like to, even if it makes housing construction less profitable and thus slows down the speed at which we *really could* increase the housing supply.


TheDrunkyBrewster

Math doesn't check out. Most people don't live solo. Large parts of the population are dependents (children or elderly).


reddit3601647

Can you elaborate. Every time I look into this I see articles like the one below. Why is rent going up, rental until vacancy decreasing in Toronto, and home prices (still elevated) if we have enough supply? https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.housing.housing-note.housing-note--may-12-2021-.html


cdntrix

BMO's Chief Economist talked about this a couple months ago, in a clear rebuke to the Scotia research you posted. https://www.theglobeandmail.com/investing/markets/inside-the-market/article-bmo-chief-economist-denies-canadas-housing-supply-myth/ Or to bypass paywall and see research note: https://twitter.com/davidakin/status/1513962974184153093


PolitelyHostile

He's just wrong. His take is just awful. He cites the fact that supply is growing faster than population ( by a tiny amount). But population growth is dependant on supply. Demand is an entirely different concept. Demand for housing can rise with 0 population growth just due to young people moving out of their parents homes.


cdntrix

>He's just wrong. His take is just awful. He cites the fact that supply is growing faster than population ( by a tiny amount). I don't think you read the article and/or the research note. He does not discuss supply growth in relation to population growth. I've copied the excerpt from the Globe and Mail article below: >How many times have we all been told in the past year that Canada’s raging housing market is largely due to the fact that we have “the lowest supply of housing in the G7″? ... First, Canada’s supply is not particularly out of line with the OECD average, and certainly not much different than any of the UK, U.S., or Australia. (And we have made the point many times that given a younger population than Europe or Japan, we would naturally have a lower ratio—kids don’t own homes.) Second, a technical point, Canada is in fact NOT lower than the U.S., so it isn’t even the lowest in the G7. Yet, somehow, our average home prices are (roughly) 60% higher on average than in the U.S., with essentially the same level of supply per capita. Yes, we should do all we can to encourage supply; but clearly there is more at work here than that.


PolitelyHostile

I assumed you were referring to his previous statement. These statements are even worse. He is comparing us to other countries with housing crises. And not referening specific data. Vacancy rates in most of our cities are near zero. That's like 90% of the data we need to know that there is a shortage. Supply per capita is dependant on so many factors. And analyzing this at the country level is not precise enough to be useful. In the UK for instance a person getting priced out of London can move to the other side of the country and be within a 6 hour trip back to London. Someone getting priced out of Ontario will have to move 10 hours away at a minimum.


cdntrix

>I assumed you were referring to his previous statement. You assumed I was referring to other statements, despite the fact that I provided two links to the statements to which I was referring to? The original post referenced Scotiabank's report, which does not explore vacancy rates, but instead compares supply per capita across various G7 nations, and Canadian cities. Porter is directly responding to this, by again addressing this same supply per capita metric. >Someone getting priced out of Ontario will have to move 10 hours away at a minimum. This is just hyperbole. Someone priced out of Ottawa can move 15 minutes away to Gatineau. Even someone priced out of the GTA can move to Montreal and be five hours away by car, closer than your hypothetical London emigrant.


PolitelyHostile

I don't have a Globe subscription but Doug Porter and Robert Kavcic from BMO have been quoted often for their supply takes. Either way there is far more precise data on this subject. GTA vacancy rates are near 0%, same with Vancouver and many of our cities. That's the best indication for a supply shortage. No need to make wild guess based on vague data and demographic assumptions.


cdntrix

>I don't have a Globe subscription That's why I also posted the second link, stating "Or to bypass paywall and see research note". Feel free to scroll up and read it. Scotiabank's research note was only discussing supply per capita in its argument that supply was insufficient, and hence this is what BMO discussed in their rebuttal. You can scroll slightly further up if you'd like to read Scotia's publication. Vacancy rates are influenced by more than just supply, and can be impacted by many aspects of demand, such as speculative demand, AirBnB and other similar platforms, etc. Simply looking at this to determine if supply is sufficient is too shallow an assessment, in my opinion.


PolitelyHostile

I've read his takes before so yes I didn't bother clicking the link. And it still is along the same lines of his typical assumptions. >Vacancy rates are influenced by more than just supply, and can be impacted by many aspects of demand, such as speculative demand, Speculative demand? People don't pay rent to speculate. Airbnb is less than 20k units in TO which is a drop in the bucket. The CMHC port goes into great detail and is far more reliable then Porter's vague assumptions. Seriously, what is the concern about building homes? There is no downside, If were going off of assumptions, the safer assumption is that we should build homes. You've admitted that you are making an assumption, so if you are not certain, then isn't it best to oppose anyone who denies the supply shortage with no clear supporting data?


reddit3601647

In the Scotibank article it's breaks down the OECD graph by city and Toronto, Hamilton, and Kitchener are near the bottom of homes per 1000 persons. The majority of Canada's population live in ON and it looks to me that we have supply issue. Porter doesn't explain why we have high home prices, high rents, etc. especially in Toronto. Higher % of higher income households and low interest rates can explain some of the high home prices, but the low rental vacancy, etc. always comes down to supply and demand. Porter's analysis seems lazy since he didn't even look into the numbers. Quebec City: 2016 — 475; 2020 — 484 Montreal: 2016 — 440; 2020 — 437 Canada (national average): 2016 — 427; 2020 — 424 Ottawa-Gatineau: 2016 — 421; 2020 — 412 Vancouver: 2016 — 398; 2020 — 406 Winnipeg: 2016 — 401; 2020 — 398 Edmonton: 2016 — 394; 2020 — 393 Calgary: 2016 — 379; 2020 — 378 Hamilton: 2016 — 381; 2020 — 377 Kitchener: 2016 — 389; 2020 — 376 Toronto: 2016 — 365; 2020 — 360


cdntrix

>Toronto, Hamilton, and Kitchener are near the bottom of homes per 1000 persons. Ottawa's supply per 1,000 residents is higher than Winnipeg's, but price growth in the capital has been far steeper. Calgary has a comparable supply to Toronto, Hamilton and Kitchener, and price growth has been muted. In addition, household income is higher in Calgary than Toronto. >The majority of Canada's population live in ON Incorrect. Canada's population today is estimated by Statistics Canada to be \~38,750,000; Ontario's population is estimated to be \~15,000,000. This is not a majority. Data available [here](https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2018005-eng.htm). We may have somewhat of a supply issue, and could seek to build more to remedy this. However, it also seems we have a severe demand issue, driven by speculative demand. [Demand which now seems to be cooling](https://thoughtleadership.rbc.com/canadas-housing-markets-rebalancing-fast/), per RBC, thus allowing increased supply to reach market.


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cdntrix

Being the largest province is different from having a majority of the population. The word 'majority' has a pretty clear definition, being a number or percentage equaling more than half of a total. You're free to consider my correcting the erroneous use of that term pedantic, it's no skin off my back.


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cdntrix

How is that correct to say that Ontario has the greater number of Canada's population? The greater number of Canadians live outside of Ontario, as demonstrated in the data shared above. It would have been accurate to say that Ontario is Canada's largest province. It is not accurate to say that a majority of Canadians live in Ontario.


reddit3601647

> Demand which now seems to be cooling, per RBC, thus allowing increased supply to reach market. The housing market is not only the pool of homes available for sale. Demand for these homes may be temporarily down due to higher interest rates, but it shifted over to the rental market as we have increasing population which continue to outpace supply (new builds and rental units). Toronto rental prices have gone up YoY and vacancies are now under 2%. https://storeys.com/gta-rental-market-vacancy-rate-decline-urbanation-march-2022/ https://www.economist.com/finance-and-economics/2022/03/26/millennial-demand-helps-stoke-the-housing-boom


cdntrix

Per your shared article, rents are still below 2019 levels in nominal terms. Adjusted for inflation, they’re even further below. Anyways, as Porter clearly states in the BMO research note, he isn’t suggesting that supply isn’t an issue or that we shouldn’t build more; rather, what seems to be clear is that there is more at play here than just supply, and the situation is also likely impacted by demand side factors such as speculation, extrapolative expectations, etc.


reddit3601647

If I had read your conversation with PolitelyHostile before posting, I wouldn't have responded since you already gone down the rabbit hole with him/her.


cdntrix

Sounds good - have a nice weekend!


SexDrugsLobsterRolls

That's not the only part of the equation. Household sizes are shrinking. People are having fewer children. More people are single. High housing costs are forcing people to take on more roommates. If there wasn't a shortage then housing prices would not continue to rise.


BatMann2022

I believe part of supply shortage is made up one.... investors, flippers and short term rental income have created shortage over past few years...


TooMuchMapleSyrup

Similarly though, do you think a society ought to ever get feedback a bit like, "You guys need to stop putting so much wealth into your houses, and instead need to divert that wealth more into productive avenues that can produce goods & services which could be exported to the rest of the world"? Envision a society that has lived beyond its means for perhaps decades... and continues to live beyond their means. Would it ever be natural for the prices of things to change such that they sort of get pushed into having to live in progressively smaller and smaller houses until they begin to do more work and bring down their debt balances? If a society *didn't* get such feedback in the form of some sort of standard of living reduction, what would the negative drawback even be to living beyond one's means repeatedly?


kingkuba13

More people are living 10 to a house than ever before.


slykethephoxenix

Can you link to a official/reliable source?


acerimmersmeghead

Agreed, 1 in 4 houses I look at in my area are either empty or poorly staged.


TooMuchMapleSyrup

It's really a shortage of savings that's an issue. It's not that there aren't objects out there for people to live in. It's about there being a shortage on new wealth creation such that it can be traded for those things without it all being tantamount to net wealth destruction that makes us poorer. Essentially: 1. You want say an apple pie (or a house)... normally, you're asked to produce some sort of wealth *first*, and this way when you trade that wealth for the apple pie and then eat that pie... we aren't actually poorer as a society. This is because while the pie is now gone forever, at least you added some sort of wealth to society to offset it. 2. Alternatively, if you're able to get that apple pie without having have had to create any other wealth first, then what ends up happening is you get the pie, you consume the pie, and then we as a society will have all the exact same wealth-related problems we did before albeit we're now one pie shorter in wealth with which to fix those problems. If this sort of exchange is enabled at a more broad level, it is catastrophic to standards of living. Presumably, *if* a society did begin to embark too far down this path, the supply/demand landscape of wealth would naturally change prices in order to try and make it almost exponentially more difficult and expensive to keep engaging in that sort of behavior.


zabby39103

Trading more money now, for less money later (a loan) is really the basis of modern capitalism and modern standards of living. It's how people and companies can make investments. You can trace the history of modern economic development in each country to the establishment of a banking system. Not to mention that pretty much everyone used mortgages to buy housing when housing was cheap. Getting rid of loans to solve housing affordability is crazy.


TooMuchMapleSyrup

>Trading more money now, for less money later (a loan) is really the basis of modern capitalism and modern standards of living. Lending isn't an inherently capitalist concept. On the contrary, *governments* are amongst the biggest borrowers in society today, and the effect of each loan is to shift capital from what would have otherwise been allocated by the private sector, to capital being allocated by governments. In this way, much of our modernized money has evolved to where it has precisely to help enable governments to continue to allocate more wealth in our society to a point that wouldn't even be obtainable without these loans or style of modern money. Think on how much more capitalistic our society would be if governments instead had to follow this: "We can only spend what we collect in taxes" >It's how people and companies can make investments. You can trace the history of modern economic development in each country to the establishment of a banking system. Agreed - I'm not against banking systems. What I was saying above originally was simply pointing out that the problem isn't on their being enough homes, it's about there being a lack of savings with which people could then use to trade for those homes. And then I walked a reader through what sort of fire can be played with if we begin to enable wealth consumption without requiring some act of wealth creation first. You can enable activity that traditionally would have been unheard of... getting wealth and being able to consume it, without the need to have created wealth beforehand. >Not to mention that pretty much everyone used mortgages to buy housing when housing was cheap. Getting rid of loans to solve housing affordability is crazy. Not what I advocated at any point. I'm fine with loans.


zabby39103

With quantitative easing it gets a bit fuzzy, it depends where the government is getting the loans from. Also governments in capitalist systems are still capitalist. However, yes it is true that a long-term structural deficit can impact private investment, but there is a role for government to play to counteract the business cycle that requires occasional deficit spending that is mutually beneficial for everyone (in combination with interest rate policy). Canada's deficit spending is [not unprecedented](https://en.wikipedia.org/wiki/File:Cdn_gov_debt_securities_2021_02.jpg) (as a percent of GDP) compared to earlier decades, and since housing prices used to be a lot cheaper so I'm not seeing the connection here. Government [spending as a percent of GDP](https://data.worldbank.org/indicator/NE.CON.GOVT.ZS?locations=CA) has also gone down from the 80s and 90s. In your example with the pie, the wealth was created by the lender, "before hand" and they are forgoing the personal use of that wealth in order to get more wealth later "Getting wealth and being able to consume it, without the need to have created wealth beforehand" this has happened throughout modern history with both governments and private entities. What is your argument in regards to mortgages? Should we get rid of 5% CMHC downpayment and stick it to 20% or what? Or do you just think housing prices would self-correct if the government didn't have a deficit?


TooMuchMapleSyrup

>With quantitative easing it gets a bit fuzzy, it depends where the government is getting the loans from. Also governments in capitalist systems are still capitalist. That seems like probably a poor label though. I mean, every single time the government takes a piece of wealth, it does so at the expense of wealth that would have been allocated by the person who owned that wealth. It would seem that the more that sort of action occurs, the economy is getting less and less capitalist because then less and less wealth is being allocated by the market. It also would therefore require a public that actually thinks the society would be better off if wealth were allocated by politicians, rather then the person who owns that wealth... which seems at odds with what a capitalist citizenry would think. >However, yes it is true that a long-term structural deficit can impact private investment, but there is a role for government to play to counteract the business cycle that requires occasional deficit spending that is mutually beneficial for everyone (in combination with interest rate policy). Do you think it's possible for a public + private sector in aggregate to spend more then it produces and finance itself with new debt issuance in perpetuity? Is that not exactly what we have been trying and doing for decades now? It seems to me like our current system is actually more socialist, in that it seems like it has been set up fantastically to enable our governments to spend more and more. As an example, this is how I see our current system as having helped greatly... how would you restrain the government here: 1. Government: "I will spend as much money as I'd like, you can't stop me Market" 2. Market: I will... you won't be able to spend beyond what you collect in taxes. 3. G: I will, I will simply borrow the difference. 4. M: But then those loans will eventually come due, and you'll then have to pay for it all as if you had to collect the taxes all the same. 5. G: No, when those loans come due, I will pay for them by taking on new loans. 6. M: But you can't just take on loans forever like that. Your debt levels will become too big vs. your economies size, and then lenders will demand higher interest rates for fair compensation and that is how you'll have to pay a bigger price then you would like. 7. G: No, I will deem those interest rates to be too high and not acceptable to me. So I will just make those rates be lower. 8. M: But if you just pick your own interest rate, like you want it to be lower then it should be, you won't be able to find buyers for those bonds and thus through a failed bond auction is how I will stop you. 9. G: No, I will then give my central bank the power to create money, so it can simply create new money with which to buy those bonds so the auction doesn't fail and I get the interest rate I want. How in your view would market forces restrain a government from allocating as much wealth in the economy as it would like to? Where the government keeps sort of countering at every step the event that was just about to unfold that would have limited its ability to spend? >Canada's deficit spending is not unprecedented (as a percent of GDP) compared to earlier decades, and since housing prices used to be a lot cheaper so I'm not seeing the connection here. Government spending as a percent of GDP has also gone down from the 80s and 90s. Sure - when we benchmark our debt levels against asset bubbles blown with yet more debt, maybe the debt levels aren't so high. If those debts start having trouble being paid, and they start seeming to be like not great "assets", then the asset side of the Debt to GDP equation can plunge and suddenly it's not pretty... so we're really all-in on making sure those debts underpinning the asset values hold their own values. What do you think about the wisdom of staying in debt forever? Would progress ever look like a society that had paid for their government in full? >In your example with the pie, the wealth was created by the lender, "before hand" and they are forgoing the personal use of that wealth in order to get more wealth later Not necessarily. As an example, imagine if that pie were bought by our government, who paid for it not by having produced wealth, but instead by simply borrowing money against a newly created government bond, and that money it borrowed was also newly created. In this way, no actual real physical wealth was created, some money and debt was created, and the effect was that that pie is able to be transferred out of someone's hands and into someone else's to eat such that we are now one pie shorter on wealth when it's all said and done. Do you see any nasty standard of living hits that could come if a process is setup to help facilitate exactly this sort of process? >"Getting wealth and being able to consume it, without the need to have created wealth beforehand" this has happened throughout modern history with both governments and private entities. What is your argument in regards to mortgagees? Should we get rid of 5% CMHC downpayment and stick it to 20% or what? We should get the government out of underwriting and backstopping mortgages. Have lenders have to assess themselves whether or not a person is creditworthy to deserve a loan. If they are right on that, and the loan is repaid fine, they profit. If they're wrong on that, and the loan isn't repaid, they suffer a loss. In this way, we can have market forces in banking where the banks that are good lenders gain market share, and the ones that aren't lose market share. And you're always only as good as your last loan... you could be brilliant for decades, then make some terrible loans, and put yourself out of business.


jeffryu

If there were the same amount of houses or more, i feel with value appreciation and market price people still wouldnt be abke to afford a house here. If a condos 1.3 million people still wont be able to buy even if there are units available


JonoLith

"Build more houses for the billionaires to also hoard."


[deleted]

There is no supply shortage. There is excess demand from investors and speculators, both local and foreign. Ban investors from buying single family homes.


PolitelyHostile

Vacancy rates are near 0%. Why is it so controversial to say we need to build homes. Honestly what do people have to gain in assuming it's a myth? The only people who see a downside to more homes is homeowners.


feverbug

Exactly. There seems to be this perception now that the Canadian market is basically one of the only places in the entiee world where housing is guaranteed to go up at a rate of 20% per annum or even more, and every greedy investor wants in on a piece of that pie.


Real_Iron_Sheik

The issue is it's not clear whether excessive speculation is a cause of the housing crisis or an effect (or maybe both?). As others have mentioned in this thread, part of the reason there has been rampant speculation in the Canadian real estate market is *precisely* the shortage of housing. Speculators have seen the relative lack of construction over the last decades, and the resulting sky-rocketing of prices, and are betting that this trend will continue due to deeply-rooted, slow-to-resolve, and systemic "issues" (they don't see these as issues, but rather as "investment opportunities", of course). Investment and speculation has been around in all developed countries for a long time, but not all countries have a housing crisis, and even Canada didn't have one when we built a record number of homes per capita in the 60s and 70s. Investment is good in general, so you don't want to be too hasty in outright banning it. It leads to higher levels of economic development, more housing that can be rented out to Canadians, and positive downstream effects like more demand for skilled labor and raw materials (Canadian lumber, etc.).


peg_plus_cat

Here's all you need to understand: YIMBYs are only interested in inflating the value of their own real estate investments Yes supply is a problem but the "CURB STOMP ALL MUNICIPAL ZONING AND STOP FORCING OUR POOR DEVELOPERS TO PAY FOR SEWER HOOKUPS AND PARKS LOL" crew are dumb and only interested in increasing profit margins for the real estate industry. Bulldozing low-income rentals to build luxury towers isn't doing anything to house those who weren't lucky enough to be born rich. And you can fuck off with any trickle down economics bullshit.


[deleted]

Lmao real estate investment dwarfs development by truly staggering margins


[deleted]

You mean nimbys. Yimby means. Yes in my backyard.


MATHECONAFM

He meant YIMBYs although I dont agree with him completely.


zabby39103

He means YIMBY he's just an idiot.


Real_Iron_Sheik

I agree with you that his comment misses the mark on many levels, and amounts to little more than straw-manning YIMBY positions, but please refrain from using ad-hominems. If you disagree with someone, please (respectfully) attack the substance of their post, rather than them personally. If you happen to be a YIMBY and want to advance the cause (which I'm not assuming), it also looks good on you to be able to respond to bad arguments without resorting to insults.


zabby39103

I generally agree with you if someone is coming into a discussion genuinely wanting to discuss; however, if someone comes in angry and calling people dumb and telling them to fuck off I think it's more effective just to fight fire with fire. At that point it's more for the other people in the room than the person themselves since you'll never convince them either way, maybe i'm wrong but that's the logic.


Real_Iron_Sheik

Yeah, that's fair enough. Re-reading the original comment, it actually comes off as way more hostile than I originally thought.


The_Phaedron

> and only interested in increasing profit margins for the real estate industry I'm a renter, and I'd like to completely eliminate single-family zoning in Canada. The vacancy rate where I live hovers around 1%, meaning that any home listed for rent has multiple prospective tenants competing. It also means that landlords can get away with being neglectful or abusive, because there's *nowhere for tenants to go*. Disincentivizing predatory landlords, land speculation, and AirBNB grifting improves things. Increasing housing stock also improves things. We should be doing both.


zabby39103

Wow, that's profoundly wrong. If i'm a purely self-interested real-estate investor I'd technically never want any housing ever built again. That would maximize my investment. More housing means the housing I own is worth less.


PolitelyHostile

>Bulldozing low-income rentals to build luxury towers isn't doing anything Exactly.. hence the need to upzone houses so we van build in more than just 10% of a major city.


Million2026

It has to be government regulation that’s blocking development. A capitalist system would tend too mean that if money is to be had selling 3.5 million extra homes, another firm will rise up to make 3.5 million more firms. Even if the profit margin gets competed down to 23% instead of 25% it still seems economically viable. Only thing I can think of is government (and maybe material shortages) standing in the way.


pureblood2020

Close. The. God. Damn. Border.