Baby, we got a bubble!?

[lenaitch]

Without knowing the circumstances, on the surface that sounds like madness. If you own your house outright you don’t sell it to rent elsewhere. Instead, you rent out your house and use that to pay your own rent.

I can understand it. Many people, I included, simply don't want the hassle of being a landlord.

 

[Undead]

It's immigration and monetary policy, not mortgage fraud.

Rent is artificially high due to overly relaxed/low down payment requirements (too much leverage being passed down to the renter) and mortgage fraud. Which in turn, creates a new "floor" for the rental market.

The countrys relaxed attitude towards substandard living arrangements (as opposed to banning the advertising of roomshare/room rental ) also created "floor" of rents which eat up 80% of take home pay. I noticed the room rental culture started getting really bad around 2011, horrendous basement room rentals, bunk bed rentals, "share room" rentals. This is not somthing that should be permitted to be advertised in a first world country.

"If rooms with no ensuite bathroom are going for $900 a month. Then I should be able to charge $2700 a month for a condo" Allowing the room slumlording was opening pandoras box. So was the mortgage fraud and the CRAs failure to create a system to check all documents.

And so we've ended up with more money going into unproductive real estate and less towards real economic growth/local business etc. And a city where everythings closing earlier.

 

[xy3]

Monetary policy drove prices up across all of Canada during the Covid Bubble and the effects of this absurd liquidity continue to stimulate major cities across Canada.

Foreign immigration/international students and mortgage fraud almost exclusively effect the GTA & Lower Mainland.

Edmonton has a much more balanced and reasonable market with almost no mortgage fraud. But you are correct this is due in part to lower more manageable immigration levels there .

 

[christiesplits]

‘The condo market right now is a ghost town’: Toronto has a record number of units for sale. Here’s why they aren’t selling despite a housing crisis​

‘The condo market right now is a ghost town’: Toronto has a record number of units for sale. Here’s why they aren’t selling despite a housing crisis

'Something is wrong with the market when we have housing nobody wants and homelessness at the same time,' says Coun. Gord Perks, Toronto's planning and housing chair.

www.thestar.com

 

[afransen]

It's pretty simple. Prices need to go down.

 

[evandyk]

I wonder what the price to rent ratio is for a unit like that? Just doing back of the napkin math, if you had $589,000 lying around and wanted to make an 8% return on it, you'd need to rent it out for almost $4,000 plus property taxes and condo fees. Realistically you're probably making more like 3% pre-tax. Who would buy that as an investor?

If you just wanted to live in a one bedroom unit at Jarvis and Dundas, it probably makes way more sense to rent than to buy right now.

 

[afransen]

I wonder what the price to rent ratio is for a unit like that? Just doing back of the napkin math, if you had $589,000 lying around and wanted to make an 8% return on it, you'd need to rent it out for almost $4,000 plus property taxes and condo fees. Realistically you're probably making more like 3% pre-tax. Who would buy that as an investor?

If you just wanted to live in a one bedroom unit at Jarvis and Dundas, it probably makes way more sense to rent than to buy right now.

On the assumption a greater fool will come along and pay even more for it.

 

[Admiral Beez]

https://archive.is/jzn71#selection-4525.0-4531.43

"If more people continue to off-load their units for significantly lower costs it can depreciate the value of the building, which isn’t what developers or existing homeowners want, he said."

Um. That's how we get to affordable housing, by increasing supply over demand.

 

[Admiral Beez]

 

[afransen]

https://archive.is/jzn71#selection-4525.0-4531.43

"If more people continue to off-load their units for significantly lower costs it can depreciate the value of the building, which isn’t what developers or existing homeowners want, he said."

Um. That's how we get to affordable housing, by increasing supply over demand.

It is very amusing seeing politicians and others tie themselves in knots saying that they want housing to be affordable and that they want house prices to remain high to protect household balance sheets.

 

[evandyk]

"There’s a listing for a detached home near Avenue Road and the 401, ... priced competitively, ... but there’s little activity in terms of offers from buyers..."

Ummmm... maybe if nobody is offering to buy it, it's not competitively priced?

 

[goreckm]

It is very amusing seeing politicians and others tie themselves in knots saying that they want housing to be affordable and that they want house prices to remain high to protect household balance sheets.

Yup, quite the pickle they've made for themselves. It would be fun to watch if we didn't also have to live here.

 

[DirectionNorth]

"There’s a listing for a detached home near Avenue Road and the 401, ... priced competitively, ... but there’s little activity in terms of offers from buyers..."

Ummmm... maybe if nobody is offering to buy it, it's not competitively priced?

Unfortunately, we've created a moral hazard-free environment where anyone who buys real estate does so with the assurance - no, the certainty that they will profit off higher prices. It's complete insanity.

Our cowardly political "leaders" are now catering to these "investors" with no sense of risk management. Retirement funds for the landed gentry, fuck the unwashed masses. Let them fail, I say - maybe we'll all learn a lesson on economic management from this shitshow.

Or maybe not, if the current governments' (at all levels) actions are anything to go by. /sigh

 

[Undead]

Retirement funds for the landed gentry, fuck the unwashed masses.

Let's not forget that about 2/3 of Canadians and half of Toronto are owners, including plenty of first time buyers (the second largest group of buyers) barely holding on. So it's inaccurate to frame the issue as one of a small group of owners screwing the "masses."

The problem with letting housing crash is that the entire economy has become dependent on it. Meaning we all lose our jobs if it does. Not a good alternative even given the current situation.

All of which makes the issue more complicated and even tougher to fix.

 

[DirectionNorth]

Let's not forget that about 2/3 of Canadians and half of Toronto are owners, including plenty of first time buyers (the second largest group of buyers) barely holding on. So it's inaccurate to frame the issue as one of a small group of owners screwing the "masses."

The problem with letting housing crash is that the entire economy has become dependent on it. Meaning we all lose our jobs if it does. Not a good alternative even given the current situation.

All of which makes the issue more complicated and even tougher to fix.

The right time to crash prices was five years ago, and the next best time is now. It's a Ponzi scheme, transferring costs from new buyers and renters to sellers (I'm not convinced that regular people actually benefit from the bubble, rather than having the perception of having benefits); you don't help more people by keeping the scheme going longer.

When immigration slows, or people emigrate, or we see economic stagnation from low interest rates (compared to the US; see the BoC's rate cuts) and poor productivity (from this shitshow), then the music will stop. Maybe we won't regret the crash when it happens, but I doubt it - we'll wish we did it while the economy was good (so late 2010s or 2021-2022), and the effects less painful.

Pick your poison.