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Comment by epicureanideal | Hacker News Reader

> the real estate value bubble has expanded beyond all reasonable limits.

I'm very interested to find out how this ends...

It will end in either a correction of the price of housing, or a correction on the currency those houses are priced in to bring it back in line with the rest of the world, because from my understanding the economics when adjusted for wages in Canada is the number that is way out of whack. Place your bets!

> to bring it back in line with the rest of the world

Can you explain what you mean by this? The USA and Canada are both quite low when comparing median home price to median income[0]

0: https://www.numbeo.com/property-investment/rankings_by_count...

I see here showing Canada as #7 on the list (House-price-to-income ratio) https://www.statista.com/statistics/237529/price-to-income-r... I live in Canada and have a very high wage and I feel like it is not affordable, but maybe I'm just too cheap!

That seems to be rate of change since 2015?

I’m curious where exactly in the rest of the world you think these cheap homes are in major metropolitan areas? https://www.cnbc.com/2019/04/12/hong-kong-average-house-pric...

Canada doesn’t even make it to the top 3

Edit: I got a bit more curious so found a more up to date article and Van makes it to 3rd: https://www.bosshunting.com.au/lifestyle/real-estate/most-ex...

However, you can see that expensive housing is not something unique to Canadian cities.

From my reading online, Canada is in the top spots for the most expensive housing when adjusted for income. https://www.statista.com/statistics/237529/price-to-income-r...

Even that chart puts Canada just ahead of the US and Europe for that ratio... I think we maybe just missed the boat on cheap land...

I don't see a "correction" anytime soon.

There are no vacant units and Canada is rapidly filling in with immigrants.

Areas like Toronto are booming. Demand is good, supply lags. This could be the state of affairs for decades.

There already was a correction. People only care about the monthly cost, and rates going up 0.5% has just shaved a large chunk off the cost of the property which is not yet realized in the sales due to extremely low sales volume. Any failure to keep up with USA's rate hikes will result in CAD going down vs. USD in my opinion. If Canada's central bank does keep up with QT coming from USA, it will attack the cost of property via large monthly payments. I don't see any way around that. In comment to supply, the number of new housing units being finished in 2021/2022 is at record highs. Immigration has stopped due to covid, yet the price keeps going up. I don't buy the tight supply hypothesis. I think its just due to hoarding and speculation. Why sell when your asset goes up 20%/yr. Many people I know have 2+ properties here (don't forget cottages)

Or feudalism. No guarantee that the majority of the population will be able to afford houses at all; in many societies, you have a small landowning class (< 10% of the population) that owns literally all the land, and then a large number of serfs who must work for survival.

People can still vote in both the US and Canada, and if the supermajority couldn't afford homes the taxes on homeowners could go much higher.

Inflation is the only way it can end without another financial crisis.

A married couple both making 150k will be seen as middle class soon. It’s already true in a few cities.

I’m more curious how it started.

Mortgage rates of 1.x% probably didn't help.

Yearly 1% is very cheap, we have around 6% in Hungary :)

We are now up to ~4.5% for fixed interest mortgages and ~2.5% for variable rate mortgage. But in the depths of the pandemic, the rates went near 0.

And that's at your lower bound.

Here's why:

Edit putting this here as intended

Viktor Orban's Bank" Financial Times feature of this morning. https://archive.ph/tINOK

This won't help "Hungary Loses the trust of its European neighbours"https://archive.ph/rXucw. Also FT earlier .

I contrast these articles because Orban ended foreign currency and foreign banks mortgage loan supply and nationalized the risks, now linking domestic mortgages to the political situation which is for everyone now a reckoning but any reckoning Orban isn't the best prepared for.

Banking oligopoly is my guess. You see similar problems in Australia which has a similar banking setup. New Zealand I don't know how their banks work, but I do know they are up there in the clouds as well. Same deal?

I think it started with mostly foreigners buying up property, not to live in but as investment to keep the value of their money, like using housing as an alternate currency to dollars

I have been venturing to Vancover BC for the better part of the last 30 years. In that time, there were waves of hippies selling in Kits and moving to the Okanagan, etc. Prices went up. What has happened in the last 15+ years is a noticable vacancy when you look at housing as you walk around. An influx of foreing money has been buying up and keeping properties vacant. This is happening all up and down the west coast. Some of that money may not be foreign, but a lot is.

BC has attempted a lack of occupancy tax and it seems like it's not working.

But if we were able to build to keep up with demand, in theory the price would not increase so sharply...

AirBnB investors, flippers, and other speculative purchasers.

Societal breakdown and balkanization in Canada? Seems it is already approaching that point.

Rent was extremely low in Québec for a long time after the referendum.

Having lived my whole life in many different parts of Canada I think it's quite unlikely. It's seemingly easy to romanticize apocalyptic scenarios like that when consuming news/media but I have found very low tolerance for them when interacting with real people across many different communities here.

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