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Comment by bonadrag | Hacker News Reader

I don't know how this does not exacerbate the housing problem in Canada. It's terrible here. I own a rowhouse in a decent neighborhood of a middle-sized city in Canada. Prices have doubled since 2017. People moving to the same unit as mine have Teslas, Mercedes, BMWs. These people are making upwards 200k in combined income. The situation is dire here.

My household income sits comfortably in the top 5% earning bracket and there is no way we can afford a bigger home even with a substantial equity in our current house. We've been looking into places 40, 50 minutes outside of the SUBURB we live (not downtown) and the prices are slightly lower but not enough to justify the move. Tell me how this will happen the situation of Canadian families here?

The strategy of pumping immigrants into the system is not sustainable. At some point, you need to have a sustainable strategy with a TFR > 2.1. We need babies, not immigrants.

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Very much agree. I'm a Canadian that moved to the US for better career / pay. Working in finance / VC, I thought I'd be able to buy a house in Ottawa after a few years. Even making upwards of USD $150K + bonus, I can't justify buying a home there to move back. My parents purchased a home in Ottawa for ~$250K around 2011 and their neighbor recently sold their house for $1.2M. Also, Canadian salaries are, for the most part, garbage compared to the US. My friend is programmer in the US makes almost as much as I do. Meanwhile, his brother is also a programmer for the same company but in the Canadian branch, doing similar work but his salary is closer to CAD $90K. The whole immigration thing in Canada honestly feels like an attempt at wage supression. The local Walmart in Ottawa is now like 60% Temporary Foreign Workers working the bottom jobs for minimum wage, though I guess their visa is tied to employment so they're willing to accept some abuse. I wonder what effect this no-job, no-worries visa will have.

> My parents purchased a home in Ottawa for ~$250K around 2011 and their neighbor recently sold their house for $1.2M.

Holy crap, I'm speechless. That's some bubble.

That type of home appreciation happens in larger US real estate markets as well, assuming you're willing to put a few hundred thousand into renovations. Everything has shot up tremendously post-COVID.

Nothing in the U.S. compares to the Canadian housing bubble

I guess because Canada only has like... 6 large cities? (1 million+ people)[0]

edit: also... not only a matter of size. But a lot of areas in Canada are just way too cold, so ppl just don't want to be there?

I'm in Vancouver, lived in Toronto for a year, but I don't see anywhere else besides Vancouver that I would like as much as here - for the green areas, mountains, ocean, and milder winter and summer. Toronto weather is bad, either too cold, or too hot.

[0]: https://en.wikipedia.org/wiki/List_of_the_largest_population...

It's not a function of density, there are plenty of incredibly dense cities in Europe and Asia that don't have anything like the price inflation of Canada. Canada has a) not been building nearly enough housing (same story as the US, UK, Australia, NZ, etc) to keep up with demand and b) their version of fannie mae/freddie mac is fully part of the government instead of a private/public thing. In 2008 the Canadian government just allowed people to borrow more to keep home prices intact instead of the US where there was a big drop as the bottom of the market fell out.

And the Canadian government since has continued letting people leverage themselves harder and harder so the market doesn't dip. That is how modest homes are selling for over a million CAD. The US is in the same trajectory but with higher salaries and the dip in 2008 we are just 5-10 years behind Canada on this.

See also the UK now allowing for mortgages to be passed on to the children of the home buyer, so that the term length can exceed a human lifetime, so as to not explode the monthly payment.

I'm not saying that's all the reason. But the thing - and another commenter mentioned - is that you kinda HAVE to live in one of those few cities if you want to work in a top company, or don't hate your live because of the winter.

Whereas in the US you have way more options.

We are building in Canada, but because of local regulations and just the fact that everybody wants to live in those few 3 or 4 major cities, it's way more difficult. Prices in other cities are WAY more reasonable.

Japan has 3x the population of Canada (125 million vs 38 million). The corridor from Toronto to Quebec is about (eyeballing this) 50% of Japan's land area, with the greater metro areas of Vancouver, Winnipeg, and Calgary probably adding up to another 15-25% of Japan's land area. If you had Japanese style land use you could fit 2-3x more people in the existing large metro areas of Canada

> If you had Japanese style land use you could fit 2-3x more people in the existing large metro areas of Canada

If you built high-rise dorms or tiny apartments, you could probably fit even more.

https://www.designboom.com/design/brownstone-shared-housing-...

https://www.nytimes.com/2022/10/03/business/tiny-apartments-...

> See also the UK now allowing for mortgages to be passed on to the children of the home buyer

Are you sure that's true? I googled it it and it looks like the Johnson Government floated the idea but I can't see anything saying it's now a thing. And we've got two Prime Ministers since then.

Ah sorry, I remembered the news about this plan but the latest is from 2022 so maybe that never got implemented. And ha, I once heard someone refer to 2022 as the year of the three Prime Ministers

> See also the UK now allowing for mortgages to be passed on to the children of the home buyer, so that the term length can exceed a human lifetime, so as to not explode the monthly payment.

This is horrifying that anyone even considered this. That is 100% a straight up return to serfdom. If things get that bad I suggest we take a page out of the French revolutionaries and the IRA on the proper way to respond.

> This is horrifying that anyone even considered this.

The mortgage can be passed on to children, they aren't being forced on them.

My sister got lucky when my dad died that they let her assume the mortgage they took out together on their house. Not having that option would have been difficult for her, because she really wouldn't qualify for one by herself, and the payments on the home were less than it would be to rent something equivalent.

Actually, why not make this an option: children can assume the mortgages of properties they inherit from their parents? Because it isn't automatic right now, even if they are joint on the mortgage already.

This doesn't exist right now, and in the form it did, it's up to the child to take it. A parent can't force debt on you like that.

Honestly, why do you think they could?

>I guess because Canada only has like... 6 large cities? (1 million+ people)

More than that, if you want to get to the top of your industry, all major companies (and their jobs) are based on Toronto, Montreal, or Vancouver (plus Edmonton and Calgary for oil/gas). In the US, depending on the industry, it's entirely possible to get to the top of your field while living in (say) Denver, Dallas, Orlando, Charlotte, or Las Vegas.

Natural resource extraction, agriculture, and conservation/forestry aside (because of course those happen outside of the big cities), you have an excellent school in Waterloo for academics at the top of their industry, Ottawa and Victoria (and I'm sure some other cities) for politics, Alberta for a decent film/acting scene, and a few other cities (Gatineau?) for misc government jobs.

Canada never had a housing correction in 2008, despite a similar run up in prices like the US.

If you think the recent US bubble is bad, imagine adding it on top of the 2008 bubble (minus the crash) and you have Canada.

Before the most recent correction in Canada, the average sale price in Canada was double that of the US. Let that sink in. A country with lower wages, higher taxes, no 30 year fixed mortgages had an average sale price of double the US.

its not a bubble if they keep bringing in half a million people per year to keep the pressure on housing and healthcare high. As long as you have desperate people looking for housing there will be pressure to keep the costs up. The government doesn't care because the real estate numbers pump up the GDP numbers as they make life unlivable for middle class and lower, so the numbers look good even if the results are bad.

I made the same misassumption when I moved back to Ottawa.

Got laid off in 2020 during Corona. Jumped ship from private to government. Went from 185k US to 120K CAD.

Substantial drop in purchasing power and ability to buy a house. I love my country but it feels like it has become openly hostile to staying in middle class. Scary stuff. I can provide more details if anyone is interested.

I wonder why Canadians always look at housing from the demand perspective. What about supply? Canada is big. Unless everyone is trying to live in Vancouver and Toronto, there is more than enough space to build houses. Do you not have enough construction workers to build houses?

That is an excellent question.

As usual, there are many factors that contribute to the current housing situation. On the supply side, I feel a major issue is lack of qualified workers. And I am not sure immigration can solve this problem easily unless you are prepared to accept lower quality housing. It is not a coincidence that specialized trades like electrician, heavy machine operators, roofers are not immigrants. The standards are higher here. In the developing world, standards are much sloppier. So it isn't simply a "plug-and-play" situation. There are other issues though. I know that input prices have skyrocketed.

To me, the focus on the demand side is becuase it is easier to solve whereas the supply issues are more structural.

Are the standards for electricians, heavy machine operators, roofers somehow higher than software engineering, such that immigrants are more than capable of software engineering but apparently not trades?

Yes. In Canada, you don't do software engineering because that would require a license.

Software skirts the regulation where electricians cant

You don't understand.

There's layers of rot that have created an untenable situation. The past few years Canada has become all about taking shortcuts and juicing numbers as much as possible. Bad decisions and incompetence create a feedback loop where we dig even deeper. If we built more houses, it would devalue the rest of the housing market - just for a start, it would wipe out the retirement plans for millions. It's not going to happen. It's a depressing downwards spiral where there is no easy exit. Not to mention that Canada wouldn't be able to execute that kind of plan because different parts of the government are trying to do different things.

> Unless everyone is trying to live in Vancouver and Toronto

They are, pretty much.

> Do you not have enough construction workers to build houses?

I don't think most people understand what's going on with Canada. Relative to their population size, the number of immigrants they're bringing in is absolutely insane. 500K+ a year with no signs of slowing down. And those people all need housing TODAY. Canada needs to commit to an absolutely massive, never-ending nationwide construction project to keep up with demand.

As someone who recently moved back to Canada I echo this.

This is an existential issue.

I own two houses, both mortgages paid, make 150k as a family and would need to save for decades to put a down payment on a detached home in a far away suburb of Ottawa.

People who didn't own a house a few years ago bought too much house for fear of being priced out of the market and now their mortgages are coming up for renewal...can't pay it so the banks are doing 50-90 year mortgages!!

Actually the quarterly numbers came out today.

Year over year, Canada grew by 1.2 million new residents. That's 20% higher than Trudeau's already absurdly high target of 1 million new residents.

This is an engineered crisis in the making.

It's a response to trump.

Canada needs a strong consumer market to respond when the US decides it doesn't like free trade

Canada’s economy runs on unrefined natural resources and housing. Without a domestic manufacturing sector all more consumers can do is keep the housing party going a while, that’s hardly a long term strategy. Might goose the numbers in advance of the next election though.

There's no people in those places in Canada because there's no jobs. And the climate is harsh. Canada is not as big as u think it is.

Yeah biggest misconception about Canada. It may be the second largest country by surface area but an enormous majority of all of that land is unsuitable for housing development due to either 1) literally being unbuildable ie. tundra or sheer mountain or bog 2) enormously more valuable for agriculture (ie. all the prairies).

There's places where sure yes it would be technically possible to build some new town but it's so cold and miserable that no one would want to and there's no local economic reason to put such a town in such a far flung place. Ultimately we probably will though if the population continues to increase at such a pace.

Lots of people look from a supply perspective. There's significant and growing political appetite for broad rezones and liberalization of housing rules.

However regardless of near term future policy that would enable more home development, interest rate hikes have soured the lending environment and caused housing development to plunge.

It may well be that we don't have enough construction workers too.

There is plenty of cheap(er) housing in Canada, but everyone wants to own a single family home in Vancouver or Toronto.

The truth of the matter is they're fighting very hard to not build anything. In Vancouver, they tried to suppress First Nations people's rights to build apartment blocks because they didn't want anyone to build homes. It's the same story as in California, and they have the same explanations: starting with the foreigners and techies, and then going down the list.

The fortunate thing is that the First Nations have rights over their land https://www.architecturaldigest.com/story/vancouver-real-est...

The unfortunate thing is that others don't.

People are moving from toronto and vancouver, selling their houses there for a million, and then going to other cities and overpaying for houses there. That brings up the cost across all of canada. On top of the excessive immigration that is putting a huge strain on housing and healthcare. It has provided a massive upwards pressure on housing prices across all of canada.

And no, canada does not have the capacity to build housing at the rate immigration is bringing people in. half a million per year is a small city each year, mostly going to areas where work is available.

I agree with you, but not sure on the conclusion.

The housing problem needs to be addressed if we have more immigrant or not. The renting prices doubled in Vancouver, I have no idea how people are living there right now, given the median income

Well then you know which party to vote for if that's one of the most important issues for you. Or at least, which one not to vote for.

Note that housing is a provincial jurisdiction, so your provincial and municipal votes are the ones that matter, not your federal votes.

Sort of, except that the Federal government controls all sorts of things that influence housing development, such as taxation and significantly contributes to infrastructure spending.

When we look at the last time an enormous amount of apartments were being built in this country, through the 60s and early 70s, the Federal government was deeply involved both in directly subsidizing coops and non-profit housing and also through tax expenditure which aided market housing. There were a great deal of federal tax incentives to build market housing, many of which no longer exist.

Basically Chretien got the Feds entirely out of housing during the austerity budgets of 1993, housing construction plunged for decades and decades and now we seem to somehow have an enormous shortage.

The Feds also are in control of Indigenous reserves, so a failure to build housing there is their fault.

> Well then you know which party to vote for if that's one of the most important issues for you. Or at least, which one not to vote for.

No major party that I know of have a coherent strategy to solve the housing crisis and the TFR issue. None. They all have contradicting ideas embedded in their policies. Usually it is a mix of more incentive to own property (e.g. incentives to first-buyers, incentive to construction companies, etc) while also increasing immigration to record levels, what changes is the flavour of immigrants they prioritize (different sectors of the economy, more refugees, etc).

There's no one to vote for. All the parties favour lots and lots of immigration.

Sad truth about "democracy" - people keep thinking that the other party will fix their problems but it's always more of the same. Rinse and repeat.

Increase density. More people per room > more profit > more bubble! Cut unprofitable people, around 4% of all deaths are from euthanasia.

I really do not understand why people still can have any illusions about Canadian government after last 3 years.

It's almost as if making it expensive (development charges) and largely illegal to build housing could result in an increase in prices. But yeah, let's blame the bad immigrants and get rid of them, they're not good immigrants like yourself.

> It's almost as if making it expensive (development charges) and largely illegal to build housing could result in an increase in prices.

I don't live in a major city, land is not a problem here, building permits is not an issue.

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