The U.S. housing market vs. the Canadian housing market
awealthofcommonsense.com
awealthofcommonsense.com
Similar units in the same building now sell for $1.2m.
This means that my family's wealth has increased by $75,000 per year just from owning our home. That's more than the median income in Canada!
I don't say this to gloat. I say this as an example of how badly wrong things are. Nothing about this is sustainable. If it continues for another decade, we can presume no young person today will ever be able to afford a home.
I mean, the US isn’t as bad as Canada (as the article states), and this is already the case here. Most young people who manage to buy a house either get substantial help from parents, or buy in the middle of nowhere because they are able to capitalize on having a WFH job. Everyone else is stuck renting, at least until their parents die (if they have homeowner parents that is).
Let me know what happens to prices when everyone has to pay 8% soon.
Without legislation dissuading this behavior, home ownership will continue to be increasingly difficult for working people.
Could you be more specific, in what ways does one homeowner have more votes than one renter? Or if there are special elections where only homeowners can vote, could you give some citations to those?
AFAIK everyone gets one vote, regardless of home ownership status. Am I wrong?
Probably because non-homeowners are busy working 60+ hours a week to pay the rent seeking homeowners
In contrast the poorest working class people (renters) that are struggling just to survive, are more likely to be so busy working multiple jobs, commuting etc, that they literally do not have the time to vote in an election.
Additionally because of this, the two parties that have traditionally formed government, rarely even acknowledge the issues of the working poor, which means that the working poor are even more dissuaded from participating in the process, because regardless of who wins they can be assured that neither party is interested in policy change that would help them.
In reality the vast majority of homeowners are regular working professionals, working those 50-70 hour weeks to pay the mortgage.
I live in Toronto as well, and did penny pinch from the time I graduated (2016) to buy to buy my 1st condo here in 2020. I keep hearing statements like these, but if we're being honest unless this was an investment property, a 2nd home or you were moving away to a different city altogether, money is only made on paper. While the condo price has gone up, so has the prices of all the other houses. If you were to sell your condo to realize your gains, the next property you buy has gone up proportionally as well.
Second, that's my point, unless it's an investment property or if you're selling and leaving the city altogether, you haven't actually earned $75,000/year.
Yes, you have. You can take loans against your property value, for example. But even if you sell and put the money right back into another inflated asset, you still actually earned it.
The wealth is quite real - it just doesn’t feel that way since the experience of it doesn’t change
Yes, every other homeowner is sitting on the same gains, so relative to them, it feels like nothing has changed. But relative to the non-owners, you have been given a free handout of wealth. Which you are « consuming » by staying in the same house you were in before.
If the rent has gone up, then your house you live in is now producing 2600 dollars of value per month rather than 1700 (even though it feels like nothing has changed to you)
Take two people X and Y, both have $500k in the bank. X buys a house with it, Y sticks to renting. A few years later, they want to move to another place with the same costs. X's house now sells for $1M and he is able to buy a new place for the same money, thus his new house effectively only cost him the $500k he had spent years ago. Y, having not bought a house previously, now has to pay $1M, which he does not have.
Which is what makes complaints that it somehow doesn't benefit homeowners all the more outrageous: saying that "sure I'm on the other side of this wall, but I can only use my wealth to stay in this side of the wall" minimizes an absolutely huge unfair advantage you have over people unlucky enough to be born after you or not have wealthy parents.
Write your own story. Find a city with home prices similiar to Toronto 40 years buy and wait. Toronto 40 years ago was very different from the city you know. You had farm land, military bases, going to Yorkdale by bus was two bus tickets. Toronto has grown the people who bet on Toronto were rewarded. It could have went the other way if Quebec didn't almost leave Canada which moved invest from Montreal to Toronto. The Toronto stock exchange at the time was mainly mining financing.
Speculation on land value is non-productive, whereas capitalization of productive economic firms is precisely the definition of economic productivity.
Real estate gains, when they are not from development, are all rentierism, the enemy of economists of all sorts.
The idea that you could build out in a field ignores the true value and the true finiteness of land, the geography of agglomerations of skill and people.
British Columbia looks big on a map, turn on the topographic layer and oops it's all mountain. No wonder everyone lives in a handful of tiny valleys. And oops we flooded tons of the valleys for hydro power too, further driving down the actual available prime land one can live on.
If no one lives in a place there's usually a good reason.
The situation seems the opposite, the NYC/SF/LA/London/etc are entrenched.
https://www.businessinsider.com/dubai-in-1990-is-totally-unr...
Also, while Dubai is flashy, I wouldn’t really consider it a first tier city in terms of actual living. The urban planning is not human scale at all and they just defaulted to highways and skyscrapers.
But I think he means western examples. San Diego maybe?
Land is not fungible, you can't exchance an acre of downtown Vancouver for an acre in a rural area. Nobody would ever confuse the two when it comes to economics!
Land value is all about access, about who is near by, about what natural resources are near by. When real estate prices go up without construction, land value is increasing.
In the US, restrictive zoning limits workers from moving into productive areas and being able to use their labor for more productive ends. This has been a tremendous drag on our GDP, while simultaneously concentrating wealth into the unproductive hands of landowners.
The first paper to point this out made big errors, leading to an underestimate of this effect:
https://www.econlib.org/a-correction-on-housing-regulation/
This is the difference between gains from land use and gains from the stock market: one reduces overall wealth and concentrates wealth to those with the most; stock market investing does the opposite.
I am in no way saying that burdensome regulation hasn't artificially limited the growth of existing metro areas and caused a bubble driven by artificial scarcity but the idea that there's nowhere to invest in at the ground floor where it's cheap is absurd. This happens in cities on a smaller scale already. The nice areas are too expensive so young artsy people move where its cheap, make it better, and then it becomes a good area -- repeat.
If you invested in the development of say, Akron Ohio with the goal of tipping the scales and starting flywheel of metropolitan growth and your bet pays off not only will you be filthy filthy rich but you'll create brand new economic activity and real growth. Of course fighting over the same 100 sq miles is a zero sum game.
As an individual laborer your choices are obviously limited to where you can find work but as an investor the sky is the limit.
SF billionaires seem to be thinking along the same lines. If it worked for Las Vegas, perhaps they can make it work for a brand new SF-adjacent town.
[1] https://www.nytimes.com/2023/08/25/business/land-purchases-s...
This is where you go wrong.
Unlike posters defending real estate "investment," I'll criticize you from the opposite end: capital markets are a disguised form of the same old rentierism.
Watch out, lest you become a Clevinger.
You don't need to buy tech stocks to avoid becoming homeless. You do need to rent/own at least one home though.
And yeah, it was "easier" yesterday than today, given today's knowledge of the winners. Today is easier than tomorrow, if you know tomorrow's winners.
The internet / pop-culture narrative of "everything is against me, I'm too late, and there's nothing I can do about it" is actually great for people that want to go out and do something about it. The competition is sitting around bitching on Reddit.
I was generally taught to buy only what one needs and can maintain, and work for wealth. Maybe naive, but the rent seeking and praise of extractive wealth is noxious the more I learn to recognize it.
“As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce.”
Sort of how the Weimar hyperinflation in the 1920s (which exacerbated the feeling that things are unfair) set the stage for the rise of Hitler in the 30s.
If taken to the extreme, it leads to the collapse of law&order.
It’s also why feudal systems were inherently unstable and suffered many uprisings.
Same as stock market investing - you can say that the profits are due to smart investing, but you can't ignore all of the centralized decision makers that put their thumb on the scale (i.e. 2008 bailouts?), which preference specific outcomes. In fact, this intervention makes the resulting disparate outcomes worse than random in the eyes of many people (i.e. people are more willing to accept the winner of a random lottery than a lottery that they believe was rigged).
Seems like the biggest affordability gains has come from people moving entire provinces. There's been a huge exodus out of Ontario and into the relatively more affordable Alberta and Nova Scotia.
In general prices of homes in the few medium and small towns in desireable provinces like Ontario and BC have also exploded upwards, so while sure in absolute terms there are "more affordable" homes in other smaller towns, the gap isn't quite so big as one would think. The very low supply of homes in smaller towns have also kept their prices lofty.
IMO Canada in comparison to the USA seems to not have nearly as many medium and smaller cities one could downshift to.
In many parts of Canada it very quickly becomes remote and rural. Outside of the Vancouver there are a handful of small towner but quickly you'll find "towns" so small that the only store in "town" is the combination gas station/liquorstore.
The problem here is 1) low supply of homes 2) few if any services.
This is a pattern we also see in Europe. Homeowners, largely older, get richer and richer by just standing still, while at the same time controlling politics so that fiscal policy supports this and new construction is made expensive by regulations.
It surprises me that Canada, with a relatively younger population, has similar issues.
Taxes on unearned income (i.e. income from simply owning something) have eased over time relative to taxes on earned income (i.e. income from actual productive activity).
Those that argue against wealth taxes on the basis that they discourage hard work and productive activity are often hypocrites in my opinion. They are usually more interested in maintaining a system that has a tendency towards concentration of wealth instead of promoting a system that encourages positive contribution to overall wealth (i.e. societal progress).
Property markets are a glaring example of this.
Over what time period? Canada didn't even have capital gains taxes pre 1972.
How do you afford something that high? Were you coming into this with a trust fund or are you one of those 300k+ per year engineers? I make 130k and feel my 220k mortgage (7.5% interest sadly) is scary.
Every time I watch one of those House Hunter type shows in Canada or just look at the home prices in my old home in Charleston I’m boggled by purchases.
But we're a double STEM couple with no kids (at the time). We're also the most boring people you'll ever meet, so our expenses are low.
We saved up a 20% down payment after a few years together. And interest rates were 2.5% at the time, so the payments were manageable.
The long and short is "make lots of money and live like you don't".
(That said, a year ago I was a 300+ developer, which is part of how we paid off the rest of the mortgage in 7 years.)
There's the typical Amazon, Google, Uber who pay decently (though Google is only in Waterloo and no remote). Shopify was paying well because they wanted to grow quickly and outbid on top talent elsewhere, but that blew up in their face (I was in the 20% laid off in May).
2 years ago Instacart offered me a ridiculous total comp for remote Canada, but it was mostly paper money- pre-IPO stock that will be worth something, someday, maybe.
Your family wealth didn't increase by 72,000 CAD/year it increased by 135,000 CAD/year
but I see, you paid it off. you didn't have to, the option was to just make the minimum payments and sell, could have used your big income for other things but now I'm just reminded why its not interesting to listen to boring (your words) mortgage holders.
Another simple answer is to have renters. It's not glamorous, it means people are in your space, but when it's necessary, it's necessary.
Family wealth going up is somewhat written in fake money. Especially if you’re paying a mortgage with a rate that might renew at double.
Toronto is still super desirable but I think there’s real risk, versus it being a guaranteed good investment the way the boomer generation has been hammering into us about real estate. Can you imagine buying a home at $900k, only for it to fall 33% in value and your mortgage interest payments double?
We're considering moving to London (ON) to be near family and friends, since we're both remote workers anyway. Interesting to hear the prices down there are falling.
If you aren’t raising a family you’ll find Woodstock to be devoid of stuff to do for adults unless you hate people.
A lot of good programs, especially at the library. There’s a great robotics program at the highschool level. Lots of sports leagues… it’s kinda wild how many quality ball parks there are here (with fences and clay infields and lighting). Good hockey arena. Good curling program for adults and kids.
Both my partner and I volunteer at schools and they’re generally great. Filled with teachers who care quite a lot.
It feels like what Waterloo was when I grew up there in the 90s. I love seeing roving bands of kids on bikes without parents in tow.
Of course a lot of it is subjective. Everyone has to make their own decisions.
And therein lies the rub. The 401 and 403 (heck, even the QEW and most other major highways) were (and still are!) so congested that it was a deciding factor to moving away from Toronto.
The only other place that reminded me of my days in sitting endlessly in stop-and-go traffic on major highways in Toronto was LA, which is a different major North American city famous for its gridlock.
Sort of, but in practice not really (particularly when interest rates are higher, like now). The only meaningful way to realize that extra wealth is to sell. But then you’ve got to live somewhere, but everywhere else has (on average) gotten proportionally more expensive too. The only way to really capture that wealth is to downgrade or to go to an area that has underperformed, neither of which are typically appealing options, nor are they generally aligned with our notions of “increased personal wealth”.
What’s really happened is that non-homeowners have effectively gotten effectively poorer since their only options are to pay increasingly-large rents or buy at inflated prices.
Which is one of many reasons we're considering leaving Toronto
There are people doing that. I know of multiple people who have sold their $1m++ houses in the city and moved out to retire on farms. Their property taxes and total cost of living went way down and all of that real estate wealth turned into cash.
Indeed, homes are some of the most liquid form of wealth, easily leveraged with loans to buy even more property. And home values are one thing that governments are most likely to protect through drastic policy changes. Sure, you can take out a loan backed by your diamonds, but it won't be on terms as good as that of your home.
Home wealth really is one of the strongest forms of wealth there is, and people trying to pretend it is not have no concept of how lucky they are, or even what wealth really means.
People without this wealth are forced to pay their rent to others, who accept both the rent and then the real estate gains.
I note this in that not owning results in being beholden to increasing rents and at a cost disadvantage in buying a future home.
But the property value gains are hard to realize in a meaningful way. Yes, you can potentially leverage your equity into acquiring more homes. But real estate gains have traditionally lagged the stock market. So as you continue this cycle, you increase your leverage dramatically while investing in highly-correlated and slightly underperforming assets.
Meanwhile, little of these gains are able to be used for actual lifestyle improvements until you start unloading these properties.
None of these homeowners would even consider the option of selling their home and renting it from the purchaser, because it is so obviously a bad idea in every way. But their blindness to the alternative is also indicative of just how amazing a form of wealth is.
Super wealthy people are always convincing themselves that they are not wealthy, because they always see others with a higher level of lifestyle. I knew an older man who had built an empire of hotels, but because he wasn't Hilton, he always felt like a failure despite never flying commercial, owning mansions across the world, and being surrounded by servants at his beck and call.
When people have raised their wealth without their lifestyle "changing," yet they can now move nearly anywhere else and have a massive lifestyle improvement in consumption, without the location they were in, they somehow trick themselves into thinking this is not wealth.
The above statement assumes that a home is nothing but a cold investment decision.
A home is a place to live and a neighborhood to grow older in. It is not an "allocation of resources".
People hold on to their home because they like it there, they like the neighbors, their kids like their friends in the area and so on. It is not a financial decision. It's a home. This is often lost in these discussions.
The problem is that enforcing any sort of restrictions would be warped to disproportionately affect the 99% while the 1% would use loopholes to continue doing as they please. So it would probably be more pragmatic to eat the rich and their lackeys before anything else.
This is an assumption, but on average this is true.
If that’s the case, the extra wealth you have for purchasing the new home was simply having a convenient way to store your down payment while saving additional money each month in the form of your principal.
Some people do actually realize a good part of their gains by retiring to the countryside and keeping the lion’s share of their RE gains. But this is something you get to do more or less once, and it’s something generally done in one’s twilight years. Nothing to sneeze at of course, but it again doesn’t really dovetail with the notion of a means to become practically wealthy.
Also, renting out rooms. Also ‘granny flats’, etc.
You pull money out of the HELOC, which does give you access to the equity. You then pay it down similar to a mortgage, at very low rates.
You just cashed out some of the ‘inaccessible’ equity by using it as loan collateral.
You’d still get to live there, and any gains in equity will be 100% yours. But you have cash now, with low payments and low interest to pay it back. If you do sell, proceeds could go right into paying it off.
There are similar ways to setup second mortgages, etc.
Does that take into account the relative ease and long term leveraging in real estate vs. the stock market?
Such rates of returns are simply impossible in the general stock market without getting very lucky.
Vs. the grim reality:
https://fortune.com/2023/09/03/diamond-demand-falling-lab-gr...
Which is one of the reasons it rubs me so wrong when people think their homes are not a form of wealth.
The one way to generally extract this gain in wealth is to downgrade (e.g., retire to a quiet place in the boonies), and that’s generally a one-time option and not something everyone wants to do.
This is a remarkable feature of real estate as wealth.
While there are other forms of wealth with more liquidity, housing wealth and real estate really are up near the top of the ones that give a person access to cash.
So multiple that 16x by the typical 4x-5x leveraging, and homes turn out to be really great. And since the transaction fees and the non-existence of index funds in the 1970s made it harder to invest in the stock market at a small scale, and homes were a much better investment.
Add on to that that everybody needs a place to live, and your home acting as an investment vehicle with equivalent performance to the US stock market, and people from the 1970s have had had an amazing deal that younger people have not had access to.
The idea that it’s easy or natural to make money via leveraged housing had ruined many people.
*/5s or even */3s offer an interesting option, depending on terms.
And if you are your own landlord (ie a homeowner) you can pretend your rent is whatever you want, but the market rent is what one should impute as the value of that rent.
1) Historically they have.
2) Most people in the US that haven't purchased very recently are locked in at very low rates. Only 9% of mortgages are over 6%. 61% of outstanding mortages are <4% [0].
3) There are a lot of incentives (and the ability) for governments to ensure home prices continue to increase, although at a rate lower than they are now.
4) We spent over a year with inflation that is double most people's mortgage rates.
5) You have to live somewhere regardless; the alternative is renting. For most of the country, at least until very recently, that was a worse option.
[0] https://apolloacademy.com/the-distribution-of-mortgage-inter...
"Liquid" means fast to sell without giving a deep discount. Homes are far less liquid than listed securities.
100%. Home owners are one of the most selfish voting blocs out there, and will punish politicians for not perpetuating unsustainable policies at the expense of the greater social good. That makes it a very good investment, at least until society completes its transition away from capitalism to a new kind of feudalism.
They absolutely aren't.
Transaction costs are very high (6%), the time required to sell can be months.
Borrowing against a house is not the definition of a "liquid asset". By that same logic a complex equity with no market could still be "liquid" because you could borrow against it.
Real estate is not a liquid asset by the definition of that term. Example:
https://www.investopedia.com/ask/answers/032715/what-items-a...
(Jewelry (as in your diamonds) are not liquid assets either.)
A primary residence is even less liquid for the reasons PP stated. Sure, you can sell it but then what? You still have to live somewhere so you can't use that money for something else, you'd have to buy another home at which point the money is locked up in real estate again. The only time you can extract that wealth into cash is if you can downsize to a much smaller home, or move to a much cheaper area.
So yes, a primary home is real wealth, but it is as far from liquid as any form of wealth can be.
This is true only on first approximation. On second approximation rent prices are positively correlated with property prices. This means that rent_amount / mortgage >>> 1 and if you rent the place out you can essentially get passive income. You are correct that you still need to live somewhere and that is going to come at a cost which will eat up the passive income, but effective rent will still be lower.
Another option is to realize that lower mortgage compared to equivalent rent means that extra cash is freed up towards other things. This can either be extra investments every month, experiences such as traveling the world, or even a lower paying job with a lot less stress.
Also, multiple homes mean multiple maintenance bills, and also the potential for bad tenants wrecking the place. I had a rental property in the past and had to spend multiple thousand dollars staging it for sale because, renters generally DGAF about maintenance, and property managers get lazy and do the bare minimum to get it rented.
Plus “moving to a less desirable area” doesn’t really dovetail with most people’s assumption of “increased personal wealth”. It is sometimes a good option for retiring somewhere cheap, which absolutely reflects a real increase in net worth. But it’s far from liquid worth and requires steep compromises not everyone is a fan of.
If I can be approved for a mortgage or have cash on hand, and have someone agree to sell me a house, and I sign a contract with them to purchase said house on such-and-such a date, and I fulfill my end of the deal and don't default on the contract, then yes, I am entitled to ownership of a single house. Because I bought it fair and square, and it's now legally mine. Just like if I were to stop making payments on said house, the bank would then seize it, and then I wouldn't be entitled to own that house any more, because I defaulted. This is not rocket science.
In a $100k home where you owe $80k the HELOC would be like only $10k - and the rate would be less good.
In the same home where you owe $20k (have $80k equity) you could borrow $50k at a better rate.
Nobody forces you to buy, or sell, a house. And if you feel strongly about the politics of the issues, try to get elected.
So that 200-something-thousand-dollar increase is on a downpayment that may have originally just been 200K or less.
Short-term "stepping up" through a series of properties can be much more wealth-building than, say, renting + investing in stocks. The longer you stay in one place the less advantageous the returns are over just putting the down payment in the market, but then having a concrete asset has its own benefits even then.
Also for reference, everone should know 592k CAD is 433k USD and 1.2M CAD is 880 USD.
By all means it’s expensive and has changed relatively fast. But Toronto isnt even top 25 for most expensive cities. Most rankings ive seen dont even have it in the top 50. I think people are surprised by this because its changed fast and feels expensive but in reality its cheaper than the major metros in the US, mich of Western Europe, China, Japan, SK.
> If it continues for another decade, we can presume no young person today will ever be able to afford a home.
In Toronto. Welcome to having a large, growing city. Generally speaking young people dont buy homes in NYC, Tokyo, London, Hong Kong, SF, and about 50 other places. Probably 2/3rds of the world population are living in metros like this.
The major issue isn’t that the absolute cost of living is high, it’s that the difference between cost of living and wages is increasing too fast. A median wage earner literally can’t save a down payment for a house because the amount they need is too growing too fast.
But you’re right that other major world cities even worse... in Taipei where I’m living now, home ownership is simply out of the question for most people unless they have family support to get a mortgage.
It’s a global problem.
But this collective delusion that the house prices of homeowners has gone up is a huge part of the problem, in part because if house prices halved, it would be a huge problem but probably not as large as people think, mainly because people can largely just walk away from underwater mortgages (in Canada AFAIK).
The only people who benefit are those hoarding real estate, not individual homeowners. This is the core problem with neoliberal private property.
Toronto (or the GTA more specifically) was the cheaper version of Vancouver. Now the average house price is north of C$1m in a country where average wages are a fraction of that.
People live in cities often because that's where the owrk is. A lot of people like it too. Some jobs can be remote. Many can't. You can't be a nurse or a mechanic or an EMT or a firefighter remotely. Toronto needs all those so-called "essential workers" too. Where are they supposed to live?
The general pattern has been in Canada (and the US and other places) is that you have starter homes like condos and then you buy a house when you want or need more space (eg you have children). The commenter I replied to buy a condo for just shy of C$600k. At that time maybe a house they might move up to was $900k. $300k is a lot but probably doable. Now their condo is $1.2m that house is probably $1.5-2m. It's actually more relatively unaffordable than at the time they bought their condo.
You see what I mean when rising prices for a basic necessity you cannot live without actually don't increase wealth?
Wealth is defined as the purchasing power across all possible consumption baskets - not just the one that you want though. So if you measure the value of your house in bananas, or oranges, or bars of chocolate, it’s value has definitely gone up.
I think it's a global phenomenon. I own an apartment in an European country and I also saw my neighbors selling theirs for 2 or 3 times what I paid for mine. The same trend can be observed in basically all European capitals. I don't think this is a Canadian problem.
I think it's dangerous to jump straight to witch hunts. First the scapegoat was golden visas, then it was Airbnb's, then "the rich" whatever that means, and now the Canadian government too? Which one is it?
Because the way I play this out... imagine you list your apartment for 1.2 but nobody can afford it so it stays unsold. Your neighbor lists for 1.1 and it doesn't sell either because nobody can afford that. Eventually you go oh shit it's never going to sell, lower it to 1.0. You play that game until it's low enough for somebody to afford it.
It's kinda crazy to think about it but the reason homes are so unaffordable is precisely because enough people CAN afford them at this price. So yeah I am curious, who are your new neighbors?
You want to lay blame? 30% of all homes in the last year have been bought by speculators and rental investors.
That’s right… one in three homes were bought by someone who will never live in it, but who has hoarded it in order to ransom it back to the community for more than it’s worth, thereby denying another working-class family the ability to exit the rental market and contributing directly to our housing problem.
No wonder shit is so out of whack here.
Truthfully I don't think this is an issue the federal government is in a position to solve any time soon. The long and short is that our population has grown faster than our supply of housing, COVID being an unfortunately timed disruption which further strained that supply. Nothing was built for almost a year, but the population continued to grow.
If I had a singular policy suggestion, after having talked to some friends in the industry, it would be to pump federal money into expediting site plan approvals and environmental assessments done at a county or municipal level. Some of these offices have tiny rosters who end up being the bottlenecks for enormous projects which otherwise would be breaking ground. Environmental assessments are notoriously time-consuming and particular in Canada, something we're largely very proud of. That said, I believe if there were ever a time for Canadians to be okay with cutting corners if it meant getting more of us into homes, I think it would be now. From my understanding, there are many housing projects in Ontario for which construction could begin next week, if not for the Sisyphean approval processes.
Here's an example of a site plan approval process for a town in Ontario[2] - just imagine all the points in which that chain of communication can get gummed up and projects can sit idle. We're used to steps like this taking a couple weeks in tech, but in the land development industry things move s l o w.
Canadians often take pride in our ability to do things the way they're meant to be done and to follow the rules as presented, even when they might not make sense in the moment. I think occasionally our love of process can be our downfall.
[1] https://archive.ph/CZE3y [2] https://www.middlesexcentre.on.ca/sites/default/files/2021-0...
I agree in general. There is some stuff the federal government can do, which is to return to funding social housing. The Federal government for a long time provided subsidized housing in the post war period up to the 1970s-80s.
> If I had a singular policy suggestion, after having talked to some friends in the industry, it would be to pump federal money into expediting site plan approvals and environmental assessments done at a county or municipal level.
I've seen similar. One of the biggest issues that is almost never talked about is development (land improvement?) taxes occur late in the process. So when it comes to multi-dwelling development, there is substantial risk the developers have to take on and manage, because they could get slapped with losing all their profits in surprise taxes near the end of the project (besides all the risks for building costs in general). I think the stats is in the ballpark of 2/10 building are successes, 6/10 are break even, and 2/10 are are losses. At $100-$400 million a piece for a medium sized tower, imagine taking on that risk profile... I can't. So cities need to understand the risks they're transferring to development, and fund their infrastructure upgrades through good and solid planning upfront.
Another related idea I saw from a youtube video on Vancouver I think it was, was the return to the Vancouver standard house plan. It was one of the post war house plans, and while there were a couple variations and you could make superficial changes, it was extremely cheap to get approvals for because the city was basically approving the same structure every time, and were so used to it the reviews were cheap and easy.
So you're right, just finding the opportunities to optimize that process for both the City and Developer is essential. And also allowing basement apartments and other medium density development. The giant towers are hella expensive if that's the only density getting built.
The issue is at the municipal level (mainly), and the provincial level (less so).
Look at what California has been doing in the last 2 years. You force constraints on zoning regulations down on the lower level entities. You force permitting time limits and acceptance rates. You force a minimum level of multifamily lots per population.
It's really really really not as hard as it's presented. It's just in political gridlock.
The municipalities are creations of the province so personally I would assign them just as much blame. The provinces have the most power to address the issue but seem to be happy to hide behind the Feds and Cities.
[1] https://www.theglobeandmail.com/canada/british-columbia/arti...
Same reason why we have things like the notwithstanding clause that allows provinces to overrule the constitution
So in other words, them not making babies has nothing to do with economics?
There is much we don't know about the long-term impact of some of these types of chemicals people ingest nowadays as part of their diet.
The solution (in my opinion) is simple. Increase taxes on unearned income and balance that with decreased taxes on earned income (i.e. productive activity). Unfortunately this looks like political suicide in a climate where a large portion of the population has gone all in on a strategy of investing in unearned income.
We've embraced the exploitative aspects of capitalism at the expense of the creative aspects and it has made our societies sick and fragile.
It's too bad that's such important discussions happen in private. Between this and the shenanigans with the Ontario Premier and developers, I think it is obvious that most politicians don't actually want to solve the problem.
I'm hoping we get something like a single issue party with a mandate to implement a land value tax.
Federally they can do an immigration moratorium. Immigration-driven population increase is clearly making quality of life worse for Canadians.
As we've seen, the accumulated potential energy in the housing market has now grown to such an extent that we don't know what to do with it. Eventually, the "sandpile effect" is likely to come into play, since the laws of nature always wins.
Have they identified the root causes?
It was completely asinine for Trudeau to refer to potentially restricting the number of foreign students[1] because, while this is a contributing factor, he sidestepped the primary driver which is that the largest reason for Canada's population growth[2] is our (permanent) immigration targets, where said policy is set primarily by the federal government (although some provinces have overlapping programs for immigrants such as Quebec).
[1] https://www.theglobeandmail.com/politics/article-trudeau-hou...
[2] https://www.cbc.ca/news/canada/canada-record-population-grow...
Given the amount of time and prep that is put into government communications and policy, if they actually had some concrete policy to announce after the retreat it would have meant that the whole retreat was actually a sham and they had something planned all along.
The government has switched out the housing minister from a dud to a rising star, and had a retreat where they listened to a bunch of experts. These are promising things to notice, but if they are only now changing tack on this issue, it will likely take months from now until we see a coherent policy response.
It means Canadians who are already in the system can afford a lot more house in their subsequent purchases, especially at the high end.
I would think dropping capital gains taxes on your primary residence, and have a property tax that scales with the market value of your home, would make the housing market more efficient.
It keeps prices suppressed in the USA for exactly the reason you say -- old people won't sell their high end homes, which keeps the median price lower.
https://www.investopedia.com/financial-edge/0110/10-things-t...
Actually, you pay full cap gains on a 1031 exchange because it can't be your primary residence. You pay gains on the difference in value during the exchange, and if you sell it down the line you pay gains on the full difference (minus your improvements).
I think the 2 bigger taxes difference are: 1. Property tax in Canada is often 80% less than much of the US. (0.28% in Vancouver vs 1.3% in Bay Area, CA vs 2.2% in Austin, TX) 2. Interest on $750k is tax deducible in the US, however with low interest rates, many people just take the standard deduction anyway.
It seems to me that the incentive-difference is that in the US, the tax code is telling you to flip often, or not flip at all.
Another big difference in tax policy, if I recall correctly, is that Americans don't pay tax on mortgage interest. Seems to me, that incentivizes Americans to over-leverage on paying mortgage interest. Don't worry though, in Canada these days, we too over-leverage on mortgages, because otherwise we're homeless, as per the article. I sure wish I could tax-deduct my mortgage interest, because that's the main thing I spend money on.
1031 is probably closer to flip model, but not sure the implications of the rules.
I feel like if my entire income stream was buying, renovating to improve value, and selling, and my spouse and I had a family income of $300k per year, and we could only get the income tax waived on $250k of that (me one year, my spouse the next), and thus were only paying income tax on one sixth of our income, I'd feel like I wasn't paying very much income tax.
Though. I mean. Currently I teach post-secondary for a living, so the idea of a $300k two-earner family income sounds like a dream, no matter what the taxes, so maybe my intuitions about the incentives of house-flippers are off the mark.
Take a look at housing density and zoning, and fix the problems there. Get a more vibrant economy in the process: a society that aspires to be stuck in a ‘golden era’ is one that is chasing an illusion.
Very occasionally I see ‘real sounding’ and human sounding comments from every day people (instead of a professionally sharpened message). Those are now growing very slowly over time, which could just be a success of the propaganda.
It's not hatred and fear "of the Other". Leftist and their leftist policies invite as many immigrants as they possibly can to an area with limited housing. Then it's shockedpikachu.jpg when the reality of supply and demand occurs and they clutch their pearls and ask "what could we have done to stop this?!" When in reality land, conservatives are telling them "we told you so". So instead of taking ownership of their mistakes thus proving conservatives were right, they gaslight everyone into thinking anything even remotely pointing towards the influx of immigrants is an issue is racist, effectively shielding themselves from blame.
This tactic of blaming any opposition as "racist" has been insanely effective in the West for the past four or so decades. Reality is catching up, and people left and right are seeing through the BS.
No one hates the immigrants, who wouldn't leave a third world country for Canada? The blame is firmly on the leftist politicians in Canada that are speed running the housing crisis.
People critical of immigration aren't necessarily critical of the immigrants themselves but they are critical about the level of immigration during a housing shortage.
I believe governments don't want to address this because of the ugly truth it would expose.
At the heart of the issue is sky high deficits and an ageing population putting pressure on federal budgets and the easiest way to grow the budget is to continually increase the tax base.
The local population doesn't wan't to or can't afford to have children and it's more beneficial for the government to import full grown adults who will contribute towards GDP immediately. All costs from doing this (i.e not just financial costs) are passed onto the citizens. Those with assets actually pay the least in this system since they financially benefit from increased increased rents, suppressed wages and larger target markets.
This is not a phenomenon unique to Canada. It is common problem in developed nations.
Leftist and their leftist policies invite as many immigrants as they possibly can to an area with limited housing. Then it's shockedpikachu.jpg when the reality of supply and demand occurs and they clutch their pearls and ask "what could we have done to stop this?!" When in reality land, conservatives are telling them "we told you so". So instead of taking ownership of their mistakes thus proving conservatives were right, they gaslight everyone into thinking anything even remotely pointing towards the influx of immigrants is an issue is racist, effectively shielding themselves from blame.
This tactic of blaming any opposition as "racist" has been insanely effective in the West for the past four or so decades. Reality is catching up, and people left and right are seeing through the BS.
No one hates the immigrants, who wouldn't leave a third world country for Canada? The blame is firmly on the leftist politicians in Canada that are speed running the housing crisis.
So, this is conflating two completely different issues, in a rather counterproductive way.
There is "complaining about immigrants", which is racist stuff like "I don't like the fact that the composition of my neighborhood is changing, I don't like the fact that the people from other places are different than me, I don't like that my school has to hire a Mandarin interpreter for parent council meetings".
Then there's a completely different thing, complaining about unsustainable immigration levels. Which has nothing to do with disliking the immigrants themselves, and might even involve a great deal of concern about their welfare. This is what you get when the situation is so bad that even Ukrainian refugees want to go back to Ukraine because they didn't realize how hard it would be to fend for themselves in Canada.
As one person aptly put it, this is the kind of complaint that happens when a host invites a hundred guests to a party and only orders three pizzas. You aren't complaining because you don't like the other guests, you're complaining because the host's all-are-welcome attitude is completely irresponsible when they have no intentions of making accommodations available.
Most of the housing crisis is a result of politicians and homeowners refusing to cede even one plot of land for any building denser than a detached single family house. The other week on Twitter, a city councilmember from Toronto/some major Canadian city was complaining about an apartment tower being "out of scale with the neighbothood" as though 90th percentile incomes were still sufficient to get a loan for a house.
Even if the authorization was permitted to construct an entire new city capable of housing 3 million people, no reviews or permits, and assigned the highest priority and a blank-cheque budget to rush construction, it would take at least ten years to build. Vancouver's massive Oakridge redevelopment alone broke ground in 2019 and is expected to take until 2027 to complete. (The rezoning was approved in 2014.)
And that is what we should do! Yes! The country should be building brand new cities and linking them up with high-speed rail. But, even if that plan were shovel-ready today -- which it definitely, definitely isn't! -- it would still take years before it contributed to the solution, and all the while, the demand is continuing to grow!
The seeds of the supply solution to today's housing crisis needed to be planted at least ten years ago. But it wasn't, so we can plant those seeds now, but they'll take time to come to fruition. In the meantime, the only fast-acting measures are demand-side measures. And having to deploy demand-side measures is a very tragic consequence of not having taken timely action on the supply side. And that's even assuming we can plant those seeds today: if the city council squabbling about setbacks and floor-space-ratios continues today, then those seeds still aren't being planted, the demand-side measures will unfortunately need to last even longer, and the vitality of the country will suffer for it.
do you mean make housing available? (I ask because "accomodations" could mean other things)
If so-- Who would pay for that housing?
Are you opening your door and renting out rooms for free? Do you expect other people to do so?
Asking my tax dollars to go towards the housing of an illegal entrant... when there are legal entrants waiting years to enter the country... Nah, doesn't make sense. Sounds more like theft.
Crossing the border illegally is the same as barging through my locked door into my house. And it's especially egregious when there is a system created specifically for LEGAL immigration.
It's a slap in the face to those who follow the lawful process, in our orderly society...
...by a person coming from a disorderly society (where 90%+ of crimes go unpunished-- as is the case in Mexico)
...who thinks they have the right to break the law in a country they aren't even legally allowed to enter.
[1] https://www.cbc.ca/amp/1.6938242
[2] https://thoughtleadership.rbc.com/proof-point-soaring-constr....
Whether that's protecting farmland/parks/forests/etc., increasing immigration, increasing building standards, etc...
In fact, I don't think it's viable for any party to drop support for even two of those. e.g. I doubt there's much of a voting base for someone who's both hard on immigration and relaxed on environment issues to allow for huge housing developments on protected lands.
Almost all of Canada cannot qualify for a home at current housing prices. Either to buy or to rent. The rental market is currently at the level of parody where the requirements filter out almost everyone. The bottom 50% of Canada, income wise, is in the precarious situation where if anything happens to their current housing, they will be homeless. Slowly social assistance and related programs are going to have to start resetting and the costs are going to be enormous.
This is a problem created by multiple governments over various parties, and at this point I don't see an exit that isn't enormously painful.
The scale of the problem is dramatically different. In the US, like much of the world, there are the expensive areas and then the less expensive areas, and people migrate accordingly. Gentrification happens and people have to move further afield, etc. I see listings for extraordinary homes in various towns in the US for prices that are absolutely dreamy (not like ghettos, but nice little towns). In a remote world, the US has astonishingly attainable options throughout the union.
In Canada, far-flung garbage towns have million dollar bungalows and $3000 rents. There are no inexpensive options anywhere, no matter how far out you're willing to move just to have a place to live. The country literally has politicians telling people to loan a bedroom. Yet in the face of actually falling home building and recurring disasters, the governing party has doubled down on an immigration rate that exceeds every other developed country (and I'm not talking about per capita, I'm talking about in absolute numbers!). It's unbelievable.
I'm not convinced the "affordable housing" people imagine is available if you go far enough out in the US is as available as is popularly presumed.
Obviously this doesn't mean everyone in all situations can find a home, but the scale of the problem is just dramatically different.
No, I'm not looking at teardowns. Many of these are absolutely gorgeous, extremely well-appointed homes. This is more than just touristy noise at this point: I am seriously considering relocating to the US because of what is happening in Canada, and have looked in depth at available homes across the nation.
I wish you luck in finding your bliss, but this seems like an unconstructive discussion.
PS: What's on the internet is not necessarily a comprehensive and accurate picture of reality on the ground.
The western US is a lot more expensive than the rest of the US.
https://cdn.nar.realtor//sites/default/files/documents/ehs-0...
Thank you for coming to my TED talk on location-based compensation is wage theft.
Call it volatility, and it is not easily calculable as a number. I can get a job move to cheap Topeka, KS, but how much does the volatility cost me if I lose that job or I get laid off, etc.
How? How can rural people afford it? Are you talking about rural places that are tourist locations? Do you have any data on this? It seems wrong to me.
How are you quantifying this? If this is true, how is it not reflected in some manner in prices? In other words, who are are the buyers propping up prices?
I'm not trolling, because if what you're saying is true it suggests that there is something fundamentally fraudulent about the Canadian housing market.
[0] - https://www.reca.ca/consumers/financial-considerations/money...
https://news.westernu.ca/2023/01/expert-insight-canadas-ban-....
Data that tracks foreign buyers and owners in Canada are scarce and patchy. The Canadian Housing Statistics Program shows that non-residents only own about two to six per cent of Canadian residential properties in 2020.
Edit: Those numbers are in line with the US. Why is the US real estate market not that crazy then?
Of course, China shows that you don't need outsider investing to create a ridiculous property affordability situation.
Real estate is, at worst, used for sanction evasion and money laundering, and at best, as a loophole for citizens of restrictive countries to extract more of their money from those countries.
All of these create an incentive to overbid on real estate.
Where I live, this is a known issue. In fact, the top real estate companies specifically try to attract foreign investors, and have stated so publicly.
Look at the chart in the article. Home prices plummeted in 2022, when the Canadian government enacted a 1% Underused Housing Tax (UHT) on Canadian residential property that is considered vacant or underused.
[0] https://sgp.fas.org/crs/misc/IF11967.pdf
[1] https://www.brookings.edu/articles/the-impact-of-treasurys-p...
[2] https://www.reuters.com/world/us/us-set-unveil-long-awaited-...
[3] https://gfintegrity.org/press-release/new-report-finds-u-s-r...
[4] https://www.faegredrinker.com/en/insights/publications/2023/...
[5] https://lewisbrisbois.com/newsroom/legal-alerts/foreign-inve...
Then why is the Canadian real estate market so much f'ed up than the US market?
Also any data on "the demand is focused more intensely"?
Even in the US, the population and desirable RE for investment is focused in a few cities on the coasts.
True cause is Canada is facing a supply gap but politicians find it easy to blame foreigners.
https://www.linkedin.com/pulse/canadas-housing-supply-gap-tr...
Because there was no data tracked before 2015, whether or not there was indeed a significant amount of foreign buying remains speculation and theory but there are some signs that support the notion that it was important.
For example major luxury condo builder Westbank has significantly reduced their operations in Vancouver, pivoting away from super luxury homes explicitly marketed as pied-a-terres and in the pages of Monocle magazine and are now building increasingly in the USA and even Japan. Some of their projects in Vancouver changed from being condos to rental. That this all happened post foreign buyer tax suggests that foreign buyers were a critical part of their business plan and they needed to remarkably change it after foreign buyers went away.
Essentially 92% of Canadians can't afford the average home based on the average income.
I think if you do "top" of the last month it'll be near the top.
Yes, I rent for $4250 a home that you can buy for $1.7M. The distortion here is beyond ridiculous. The equivalent mortgage would be something like $7K before property taxes and maintenance.
Because you can’t imagine government moving fast enough to change policy, the only way out is likely a sudden and shocking collapse in home values caused by the bond market failing to continue its belief that Canada is sound.
We haven’t even seen the full brunt of this—every time one of these properties changes hands at this point as the current owner cashes out, we’re going to see one more of these “affordable” rentals off the market in one way or another. (Either they hike the rent to the point of unaffordability, occupy it themselves, or leave it sit empty to just store or accumulate value.)
And just to put it in some perspective—to afford that shitty run down house I was renting, you’d need to be making somewhere around $720k/yr pre-tax to pay the mortgage and maintain the “1/3 toward housing” ratio. People in Canada do not make $720k/yr.
Isn't Canada's housing problem caused by a supply crunch? Other than the Canadian government going into the real estate business and start building medium and high-density appartment blocks, what role does the Canadian government have in this mess?
Also, please note that this issue is plaguing basically the whole European housing market as well.
During the pandemic period, low interest rates caused home owners with plenty of house equity to go on a virtual binge of home buying. I know of people who bought four extra houses in 2021 just because they could. The bank gave them free money. Why not?
Is it, though? I mean, that would drive up demand, but what happened to supply? If your hypothesis had any basis, wouldn't real estate developers rush to profit from that demand by building more homes? They wouldn't turn down all that free money, would they?
And more to the point, why is that a government problem?
Insufficient labour. Anyone who builds houses was booked up for years. It looks like this is finally starting to turn, but that doesn't help right now. You need to build houses in the past to be able to live in them now.
With the strongest labour market possibly ever seen in Canada, you didn't find anyone going to build houses because they had no other work. So you throw more money at workers to try to compel them away from the work they were doing and into housing work, but that just... drives up the cost of housing.
I'm not sure that explanation is plausible.
Canada's housing stats show a drop in total investments in building construction, and a drop in housing starts.
https://www150.statcan.gc.ca/n1/daily-quotidien/230818/dq230...
https://www.cmhc-schl.gc.ca/professionals/housing-markets-da...
If supply was catching up with demand to ride that gravy train, we would see in the very least an increase in investments. Why would anyone refuse to invest in a venture that's handing out free money?
Also, labour costs don't account for more than 30% of the build cost, which is far below the current real estate prices. Even if they doubled salaries of construction workers, selling apartments in today's market would still be very profitable.
Hence why the labour issues have started to turn...
> If supply was catching up with demand
Demand has backed away because an increasing number are not willing to take the risk on housing now. High interest rates and a lot of increased pressure for governments to do something means that a coming crash is highly likely and nobody wants to be the bag holder.
Same reason rents have skyrocketed. If you can rent, why on earth would you buy a house right now? Indeed, housing tends to be highly sticky, but it's almost certain they will cost a whole lot less in a year or two. The downward trend is already quite visible, with average price in most markets peaking in 2022.
It’s as if Canada is a country that pulls resources out of the ground, takes cash from foreigners, lends it out to boomers, and then buys houses. That’s all there is in the country now.
All that ended in 1993 with the Jean Chretien austerity budgets. Feds stopped participating in social housing, incentives ended, transfers to Provinces were scaled back, and Provinces responded by pulling back themselves.
Accordingly basically nil non-market housing was built for decades.
Market housing financing became harder and creation slowed and shifted toward a sort of condo product marketed toward the relatively wealthy. Creation of purpose built rental pretty much ended.
So at this point it's pretty clear that huge tax expenditure and investment from the Feds and Provinces in helping finance new housing creation both market and not market is required.
There's also policy work to be done here to try to stream line municipal rules to hopefully make it easier such that less government aid is required.
But yea just by looking at what we were doing in the 60s/70s and now there's a massive difference that suggests at what the solutions could be.
What would you all pay for such a thing? I'm ashamed of how little it actually costs, you can't even rent a car park in my old city for the same amount.
If this really is hacker news then you can either find somewhere good to live with a bit of searching or you aren't particularity good at hacking the basics of life.
All that matters is that I'm happy as a migrant from the west, I go home to visit family/friends regularly and who are always stressed with long commutes and up to their necks in debt in cities that are overflowing with population growth. I truly worry for my nephews and nieces there, we've created a rough world for the kids. There's plenty of good things from my home country that I appreciate but for the average person life isn't that great considering their net worth on global scale.
When suicide rates are on par with Japan it's somewhat comical to see the city I grew up in on the "top ten greatest places to live" stats that come out every year.
If you took the median house price from where I'm from and put it into a basic savings account you could have $60k USD annually. That goes a very long way across most of the planet, is the house actually worth that much or is it a mass delusion? Know plenty who have gotten out while the going is good.
Median income after taxes: $68,400 [1] Median rent (2 bedroom): $2,300 [2] Average tax rate (single worker): ~32% [3]
If we apply the 30% rule (it's ok to spend up to 30% of pre-tax earnings spend on rent), your assertion doesn't hold up - well over 50% of Canadians are making plenty of money to afford rent. Of course, in expensive cities where rents have far outpaced wages things are going to be bad but that's true pretty much everywhere in the West these days. If anyone has better numbers, please share.
[1] https://www.policyadvisor.com/magazine/what-is-the-average-i...
[2] https://www.zumper.com/blog/rental-price-data-canada/
[3] https://www.oecd.org/tax/tax-policy/taxing-wages-canada.pdf
-Very few Canadians can currently qualify for a mortgage for an average home in most markets. The housing market has lost all rational basis.
-Canada has approximately 2 million apartment units across all of Canada [1]. The vacancy rate is currently at less than 1% across Canada, and in many areas is hovering around zero. Just as some context, the vacancy rate in California pushes above 5%. NYC is an especially tight market at 3.1%. In both cases the apartments per capita is dramatically higher than Canada.
-Landlords of apartments that do come to market have become spectacularly picky, because they can be. Perfect credit. Perfect history. No debts. People have been in situations where they've offered tens of thousands in deposits and a seemingly perfect application, to be denied.
It is fascinating how often data is shown that betrays that Canada is in a particularly terrible situation -- like this very submission -- yet people still retort with "oh well it's bad everywhere". No, it is nothing like Canada.
Canada is a fully saturated market like nowhere else on the planet. And this government is squeezing a hundred thousand more a month into an already full container, with zero indication of a letup.
[1] - As some fun context relative to the 2 million apartments across the entire country, Canada currently has >900,000 international students in Canada, a number that is growing by leaps and bounds.
I really don't understand your point here since it truly seems more emotional than data-based. Why are you focused on mortgages / home ownership as opposed to being able to afford to live somewhere? What do vacancy rates have to do with affordability? Why don't you provide a single concrete example of a majority of Canadians being unable to afford rent or being "filtered out" as you originally claimed? All your points here are tangential and don't support the argument.
"Canada is completely messed up" is a common refrain online these days, but I just don't see it either in the data or in talking to friends who live outside the Vancouver/Toronto popular areas.
The median Canadian has a credit rating of 650. The median Canadian cannot remotely afford a home in any Canadian market. Apartments -- the absolute last resort -- have vacancies below 1% in most markets, 1.7% nationwide. Canada is seeing an immigrant intake of approximately 130,000 per month.
If this isn't data to you, you are clearly not arguing in good faith and are either a contrarian, agenda-driven, or a troll. Or a mix of the three. The retort of "I talked to a friend in Canada" is so absurd that it confirms the prior.
Why blame "government" and not capitalism? Canadian Gosplan didn't conspire to set housing prices at insane and rising levels. It was the market mechanism doing its own thing.
Despite how hard that is to believe, market equilibrium may not have been reached and prices may still rise.
In a properly functioning market we should see rising supply to meet demand.
Unfortunately regulation (zoning) prevents that. So until regulation improves to allow for more supply, everything else is a bandage.
That, or make it so somehow people stop wanting to live in large metros by eg creating economic opportunities in other cities.
I recently sold my downtown Toronto condo (principle residence) after 8 years and the returns are arguably higher than the wage I've made over the same period of time after taxes (I work at one of the big 4 consulting firms, so a fairly average salary for the city).
We are now with our backs to a wall where we cannot let house prices drop, which means we cannot increase supply to quickly or risk a good chunk of the population losing a significant portion of their future buying power....that is unless wages shift.
Plenty of people are already living that reality, it's called renting.
I've been renting for the last 10 years, the house I'm in now is estimated to be worth $300,000. My rent payment is 2500.
2500 x 10 x 12 = coincidentally, $300,000 exactly, that I'll never see again.
So someone who owns an equivalent home for the same amount of time, if it were to suddenly have the value plummet to $0, would still come out ahead of me because they'd only be losing the equity they've put into their home. And that's still not a fair comparison, because there's almost no way it'd become utterly worthless, so they'd still be left with something to show for it even if it loses a significant percentage of its value.
Housing is a basic human need for survival, to be 100% honest I don't feel that bad that the people that have been willfully participating in a system that only works by screwing other people over may lose some money when the people getting screwed over have had enough and try to change things.
Just by living in the US and participating in our modern society here I am myself in a similar situation, and I'm not exactly a political activist dedicating my life to changing the status quo, but if and when the people we're exploiting to fund our current lifestyle start fighting for a better life I'm not gonna be telling them that they need to stop and think about the effect their demands would have on our lives.
Maybe, but you are absolutely right, that “snark” is merely a thing out of frustration from people who can not buy houses, while home owners from previous generations have the audacity to lectures the new generation about their “attitude”, attitude will be the least thing to worry about in the near future from these angry young people who can not even afford rent.
Thing is, historically, Canada was incredibly innovative. It seems there was a culture shift somewhere in the 90s where "getting a good job" became the goal of Canadians.
We can see this echoed in education data. Canada has become the most educated nation, but is so because of an exceptionally high rate of vocational training. Canada lags well behind when it comes to research-focused education.
As seen in the link's charts, the US housing market crashed in 2006 because, after a period of innovation stagnation (Dotcom bust, 9/11), new innovation was taking hold. Investors left housing to ride that train, and thus the price declined. The people of Canada do not appear to have it in them to offer anything other than housing to investors.
And contrary Americans’ vague impressions of some snow-swept utopia…yeah, Canada is shockingly lacking in innovation.
It’s a place of US-designed and Chinese-made products, moribund government-backed private industry like Rogers and Bombardier, and a population that really did seem complacent and rather go-along get-along. People didn't seem to look past going to the cottage on the weekend, and whistling past a lot of increasingly decrepit infrastructure.
Wages will have a much harder time heading up unless the federal government implements a moratorium on immigration, both temporary visas (e.g. foreign students) and permanent residence permits. The only way to (equitably?) do this is by turning off the tap going forward and denying/capping new immigration applications.
Long-term though I don't see a way for the Anglosphere to thrive unless immigration increases, given low birth rates.
So yes, there are regional differences but they impact each other and can broadly be considered a single market.
Investors account for 30 per cent of home buying in Canada, data show - https://news.ycombinator.com/item?id=37445732 - Sept 2023 (129 comments)
You've got excess demand over supply, so prices go up. Just like with anything else, the solution is to add more supply. Build more houses and prices of houses will go down.
OK, that's the problem then. If enough houses were built there would be no speculation either, just as there's no speculation in cars.
Your entire example is predicated on this very fact: scalpers cannot compel middle age white women to all the sudden want to attend a concert, same way investors cannot induce genz kids to want to move to vancouver.
Make more houses or taylor swift tickets and the whole thing resolves itself.
It was relevant to me, I was reading the other thread that dang brought up and it reminded me that I had read this article yesterday and it seemed like something that would be interesting to other people also which is why I posted it.
The appearance of one thread on HN's frontpage often leads to follow-up submissions on related topics. We try to avoid giving such article clusters more than one slot, because frontpage space is the scarcest resource HN has: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que....
Normally we downweight the follow-up (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...), but in this case I let the follow-up "win" because it has a slightly more neutral basis for discussion, and the topic is flame-prone to begin with.
Obviously I'm not suggesting that all do, but some will.
By definition an owner occupier doesn't own a vacant property - only investors do, so the higher the proportion of investors the higher the proportion of underutilised properties.
They invariably get rented out; you won't make any money for places that sit vacant...
You do if capital gains are sufficient (which has been true in many markets up until very recently).
Even in your hypothetical, you're still strictly better off renting it while capturing the gains. The mostly-empty cities in China is about the only place that I know of where vacant properties are being held as investment, but even there the problem is lack of demand rather than anything to do with who owns it.
This whole topic seems like a specialization of https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo...
I think they (the government) needs to:
1. Build regional passenger rail from from major cities to smaller surrounding towns to encourage development.
2. Provide favorable taxes and loans to developers with a hard requirement that, say 20%, of the units being built must be below market rate that is tied to inflation(?). And involve a government agency to manage these below rate units. Such agency also sets that rate based on the person's income.
3. Increase the local taxes on empty units (say units that sit empty for more than 3 months). The longer they sit empty the higher the rate (up to some maximum). Use extra revenue to fund #1 and #2 above
4. Extra tax corporations that make, say, over $1B in profit from real estate investments. Waive it if they participate in #2 above. Use extra revenue to fund #1 and #2 above
5. On the low end of the market finance building SROs and very high density housing for people that are struggling and simply cannot afford much.
I'd like to see literally any kind of rail, but for rail to be viable the Feds would actually have to enforce the law that passenger trains get priority. They're the only people who can sue about it and that's basically why Amtrak sucks. New rail is largely a pipe dream if we can't even leverage the miles and miles of rail we already have.
Subsidiaries would help, since most placed want to grow, but can't. Encouraging municipal internet would help since remote work could bring money into more rural areas and kick start the process of making them worth living in. Honestly, I just think we need strategies to encourage people to leave cities and more to smaller places. Or at least establish new cities outside of the normal bounds of the city a bit further away. The US has the space. There's no reason for everyone to crowd together.
Builder's remedy, now being exercised in California. <https://en.wikipedia.org/wiki/Builder%27s_remedy>
https://fred.stlouisfed.org/series/QAUR628BIS
This place is wild for property. It’s a mania and I feel the country has reinvented the landed gentry of the UK.
I wonder if it will be just as fashionable in the future. All you need is a parking garage and a bathroom to make it scale!
I've heard people say they used the shower at their gym, but also that the gyms don't like this and are pushing back.
If you’re living in a van in the Bay Area to try and get ahead as a knowledge worker you’re doing the Bay Area backwards.
The point of living in the Bay Area is to get a higher paying job, not save money. How much you save on rent a month is pretty negligible when you’re competing with high earners when buying a home.
Saving 3k a month in rent nets you an additional 36k a year. It doesn’t matter, some people make this in as an after tax bonus within a month.
For example if you plotted similar lines for each of the nine census divisions in the US, how much of an outlier would Canada still look like? What if one tried to make some synthetic Canada-like regions of the us where people are more clustered in big cities?
It seems plausible to me that Canada would still stick out, but I’m not sure by how much.
If somebody is willing to leave their home country, immigrate to Canada, and work hard enough to afford the rent/mortgage of those prices, it must be much worse in their home countries.
I can’t really explain it otherwise. It is obvious that it must be the increase in population increasing those prices, and people born in Canada do not have that many kids.
https://www.numbeo.com/property-investment/rankings_by_count...
Vancouver not quite NYC/SF yet, but seems pretty damn expensive compared to many jurisdictions in the USA!
My friend told me it didn't used to be this bad (we've known each other for years and he used to complain about how many homeless people there were in American cities when he visited me), but the population, at least from his perspective, seems to have surged in recent years. At the time he blamed COVID, which I am sure had an effect, but I had no idea how bad affordable housing had gotten in that country (although maybe I should have noticed since he always gripes about making STEM money and not being able to afford to live alone in Toronto).
I remember something he said once that has really stuck with me. Last time I visited he told me the homeless used to be the fringes of society that fells through the social safety net. But now in Toronto they seem to be a class all their own.
In my experience many people use drugs. Those that abuse drugs almost always had existing problems prior (mental health, destitution, a sense of hopelessness, etc).
The larger houses in "nice" neighborhoods are going for 4/5 million, so they're not getting purchased by anyone in the working class, by which I mean anyone who relies on regular employment income to live.
https://www12.statcan.gc.ca/census-recensement/2021/dp-pd/dv...
Amazon opened big offices in both cities (bias: I was one of the early Amazon people in Toronto) and quickly grew by outbidding other employers on good developers. Then other companies opened offices to do the same to Amazon. Now there's a pretty big dev economy.
Canadians want to be in Canada. That's why I moved back from Seattle, knowing it would affect my comp badly.
https://www.statista.com/statistics/184955/us-national-healt...
Before I moved to Canada I never had a company that covered all my deductibles and only one that covered my entire premium. That kind of benefit is extremely rare. It is truly a privilege of the rich to not have to think about the cost of health care in America.
Meanwhile in Canada I can go to any doctor in the province and know that I will never see a bill, and never be told that my insurance won’t cover the cost, and never have to argue on the phone about whether a procedure ordered by a doctor was necessary. It doesn’t matter if I am employed by Facebook, unemployed, or taking a few months of paternity leave.
Foreigners don’t think that everybody goes bankrupt for a few stitches. They think it’s a travesty that anybody is in that position.
“Canada is on track to host around 900,000 international students this year, Miller said in an interview that aired Saturday on CBC's The House. That's more than at any point in Canada's history and roughly triple the number of students who entered the country a decade ago.”
There is a perverse incentive to attend what amount to for-profit scams in Canada owing to their immigration policies giving preference to folks with Canadian degrees.
Also the idea that Canada can retain folks with a Canadian degree is hilarious: the location factor for backwater rural Washington is higher than the location factor for Vancouver or Toronto: you think those students are gonna stay in Canada after they graduate instead of moving South and getting paid twice the amount for the same position? Because if you do, that's another bit where you have some learning to do.
America’s immigration system, in contrast, is generally merit-blind. You do not get extra points for a degree and so there is no incentive to pursue a qualified American degree. The US path for an international student seeking citizenship is based on work after the degree: sponsorship by an employer. The Canadian path for an international student IS the degree.
See also https://macleans.ca/longforms/fraud-canada-education-interna... and https://www.politicstoday.news/politics-today/ottawa-signals... in case you care to do some learning of your own.
The fact that Toronto and Vancouver haven't even set up container apartments in several places around the city is all the proof you need that folks don't care, which means they shouldn't be given a choice on whether or not to solve the problem. This should get mandated with fines for the city itself if it doesn't help the people who can't help themselves because the system's been designed to prevent them from getting help.
The problem is that "help" means different things to different people.
For years, the general view was that addicts in Canada got help via safe injection sites, first responders trained in administering naxolone, free housing available, and no real consequences for petty crime. Keeping them out of jail and making sure they had housing and clean drugs was seen as helping them.
It's only been in the past ~2 years, now that it's spiraled out of control during COVID, that some are redefining "help" to mean forced rehabilitation and/or institutionalization and keeping them off the streets if they commit crime. But there's no consensus on this.
I haven't seen much good research on the best way to solve homelessness, but most cross-city analyses suggest that high rent (and low housing density) is the main determinant of homelessness rates: https://sci-hub.ee/10.1111/1467-9906.00168
Note that "extreme poverty," "low-wage jobs," and welfare recipients were not significant factors.
A second study claims the "the availability of low income housing and of mental health care are the strongest predictors. Relatively modest investments in improving availability of these services would provide considerable payoff in reducing homelessness": https://sci-hub.ee/10.2307/800641
A third study I can't find now concluded that 25th-percentile-rent (rather than median rent) was the most significant factor (ie, availability of affordable housing).
Yes, people on the streets should be helped. But if 4 people fall into homelessness for every 1 person place in permanent supportive housing (this is the ratio in SF [2]), we will never "solve homelessness."
[1] https://www.mckinsey.com/industries/public-sector/our-insigh...
[2] https://hsh.sfgov.org/about/research-and-reports/pit-hic/#20...
I think in some part, you do. I think a significant portion of homeless became that way through the stress and despair of affording $2k+ rents on a meager income, dealing with the lack of hope by turning to alcohol and possible other drugs, leading to a downward spiral where they end up on the street, abusing drugs for years, and eventually turning into the destitution you see.
A better comparison might be Canada to California.
It's a shame really. Canada could have been a great country like one of the Scandinavian ones. Instead it is like watching a trainwreck in slow motion.
In reality, Canada and the U.S. have a "common market" of sorts that allows talent to move back and forth fairly easily. On top of this, cities tend to "specialize" in certain industries, and it's much easier to move the talent to the industry than move then industry to the talent.
This means that Hollywood stays in Los Angeles, and Canadian actors move south; Silicon Valley stays in San Francisco and Canadian programmers move south; Wall Street stays in New York and (some) Canadian Bankers move south.
Unfortunately, it's not really a two-way net-zero exchange, but majority one-way from Canada to the US. This is the main reason that the brain drain has been discussed since, well, forever, but the earliest that an easy Google search refers to brain drain acceleration since '89[1].
To be fair, the US has been draining brains via the seductive American Dream from all countries around the world since it's founding, but it's particularly painful because of the cultural overlap that you referred to in your comment that make migrating down south so particularly tempting.
The (not) funny part is that some suggestions to combat brain drain is to aggressively increase immigration of skilled immigrants[2], which brings us back full circle.
[1] https://www.nature.com/articles/nm1299_1336a
[2] https://www.randstad.ca/employers/workplace-insights/job-mar...
Yes, I know that people can’t live in the Yukon Territory, but, even so, there’s a lot and lot of space to build housing further South.
Canada passed 40 million population this year and will hit 41 in a few months.
A large percentage of immigrants are becoming pregnant the year they immigrate. Let's assume there is no interaction with the native population. For the example's sake, let's assume 500k is evenly split men and women. let's assume 40% of the immigrants have a child in the first year.
Total immigrants divided by gender times 40% percent having a child in the first year: 500k / 2 * 0.4 = 100k
That means a theoretical 500k immigration rate is actually 600k after one year.
And, in fact, for the hypothetical sake assume the same thing happens in year two as the original women have a second child in year 2 and now the original population has become 700,000.
Interesting that some in Canada respond to the problem by expecting the government to do something all the time. They serve the poison and you want their antidote too? Canada’s leaders are doing a pretty great job of setting the stage for a housing takeover so they can conveniently come up with a solution that makes them more central and more powerful.
Do they overly regulate construction and make it hard to do business?
Well, official government policy is creating immense housing demand and adversely affecting citizens. If you want population growth via infinity immigration, you as the government need to do something about creating additional housing, simple as that.
However the limiting agent in this environment is governments willingness to zone and permit new housing construction. The aggregate supply of housing is mostly a function of government policy. One issue is that while it may be popular at federal level to boost housing supply, housing policy is mostly enacted through local government.
Yep. So they cause the problem in order to be the ones who conveniently have the solution. One that has the added benefit of keeping them more and more central and overreaching over your lives.
For example in most South East Asian countries it's impossible to buy land as a foreigner (basically a house).
Just this one rule alone would help the situation in Canada as there is alot of foreign ownership with as I understand it no restrictions.
Regulations favoring Canadian citizens wouldn't violate the spirit of the private market, and would certainly help Canada.
Many people (including me) believe it should be government's responsibility to make sure its citizens can have a reasonable standard of living, including housing, water, food, etc.
Whether that's by directly providing it (building and managing social housing, state-run energy provider, etc.) or by managing policies that enable private companies to offer stuff to a satisfactory level, both can work and it's debatable (and the debate varies depending on the specific areas).
But if private companies aren't doing as much as is needed then it should be the government's job to fix that, regardless of whether the fix is providing services directly to the people who need it or providing support to private companies so that they can do so.
They can help.. by getting the hell out of the way. Let people build and the problem will solve itself.
When the government “helps” we end up with situations like college tuition prices 10x-ing.
If they're already at an ideal low of red tape (keeping in mind we probably don't want to get rid of laws that require things like making sure buildings are safe both for the occupants and for the builders), and aren't restricting the market in any foolish ways, but the market still isn't providing enough housing, then I disagree that the government shouldn't actively try to improve the situation.
Citing an example of a government apparently doing a bad job doesn't mean that every job a government does has to be bad. Otherwise seeing a private building company doing a bad job leads to also thinking private businesses shouldn't be allowed either.
At the end of the day both companies and governments are run by humans, who are capable of doing great things and terrible things, and of doing them both well and badly.
The response should be to argue about what a good government initiative could consist of, not to say that if there's a problem they should just throw their hands up in the air and pray that it improves by itself.
I'm not challenging you on this, I'm really curious to know why you said this.
why can't people live in the YT?
https://www.cbc.ca/news/canada/north/whitehorse-home-prices-...
Not to mention that food and transportation costs are also very high.
All this to say that that makes it difficult to potentially set up big human settlements in there.
Worse yet, these nonsense housing and zoning policies have no end in sight, as homeowners are disproportionately those richer, older, and more established, and so will continue to vote in greater numbers for these policies.
When I was in LA, I met up with a friend who brought another friend as a tagalong. He had a job at a software company nearby which we got a tour of, but he lived with his parents 40 minutes away. That night I stayed at an airbnb a three minute drive from the office that would have been perfect for the guy to own and live in. The airbnb was a 2br/2bath with electric locks on the outside and inside doors so they could double-rent it for the night.
Landlords, empty houses, and airbnb are destroying the lives of young people.
"The" implies one driving issue but like most big problems, the current housing crisis has a number of drivers.
Think of a grease fire where the people throwing water on it are making it worse. So are the people pouring gas on it. So are the idiots with the big fans trying to blow it away from their own stuff.
Another search states that there are 329,283 airbnbs in California in 2021. These should go to families first.
New York has 955,437 empty houses according to a quick search, and it's 4th behind Florida, California, and Texas. Take away renting out houses, short-term or otherwise, and sell those houses to people who don't have a first house, the crisis would away. It's simply greed.
No - that's really an issue all over. Especially when viewed thru the broader lens of counterproductive zoning.
But not this particular greed - only. Maybe not even mostly. Whatever (temp) relief would be found by (permanently) forcing owners of empty dwellings to divest - that relief would be quickly overrun by the issues of an overly-constrained housing supply.
> Take away renting out houses,
I'd be homeless.
The problem is compounded by the fact that new entry-level housing isn't built and that the old stock is deterioriating. Please, no fairytales about hand-me-downs here, you cannot subdivide an exurban 3600 sqft cardboard palace into 3 1200 sqft condominia. Zoning regulations are against it, and the infrastructure (water, electric, roads, schools) would require a massive upgrade.
This will see some natural reversion as families become forced together.
That's going to be especially rough ride after 80 years of erasing the housing that could accommodate those families.
Those things certainly aren't helping, but they represent only a small number of total housing units. The main cause is lack of new units. We fall further behind every year.
[1] https://www.census.gov/library/stories/2022/05/housing-vacan...
The problem is the for-profit housing industry.
Skyrocketing Rents & Skyrocketing Homelessness: Why Are US Homes for Profit Not for Living In?
https://podcasts.apple.com/us/podcast/skyrocketing-rents-sky...
This is true. I live with my 5 adult sons because the alternative is homelessness for all of us.
> Building more houses is not simply the answer
Not the answer because there is no the answer. It is one critical part of the way out tho.
> since they are unaffordable to the people who need them.
Also true. While unaffordable housing dominates new builds, we are extending the growing homelessness crisis out another generation or so.
It is a major problem, yes.
> I believe the problem is airbnb
What? No? Short term rentals are under 1% of housing stock. Population growth in the US is somewhere between 0.5-1% per year, so even if you got rid of all short term rentals that solves your housing issues from just population growth for two years at most.
> mega-corporations/banks buying up and renting out homes,
This I don't know about. I think at least 25% of housing rental stock total, something like 10-15 million units, is just individual owners.
I don't know to what extent that forces market prices.
> homes that sit empty trying to get exorbitant rental rates,
The vacancy rate is what like 5% for rentals? 5% rental vacancy for rentals is a little high, but e.g. a 2% vacancy rate would exist if people move on average once every four years and it takes only a month to turnaround to a new tenant. 5% isn't all that high.
> vacation homes and non-homestead homes that sit empty...
Vacancy rate for housing that isn't rentals is under 1%.
The reason people don't want new construction is because it's ideologically comforting. For increasingly large swathes of the population (largely young, urban, leftist), it's far more important to denounce BlackRock, TechBros and Gentrification than to save $1000/month in housing costs. It's pretty incredible.
I am just not onboard that new housing is the crux of the problem when there are perfectly good existing houses that are being misused. We should fix the exploitation and also build new housing, but focusing only on new housing as a solution misses the problems of renting and airbnb and excessive hoarding by the well-off.
Imagine what would happen to the housing market if people were forced to sell off their excess rental houses and only keep one house. The people who can afford to own these excesses can afford to deal with the consequences of having to downsize.
For past decades we should have been tearing down single family houses near core and replacing them with better density. And building new denser suburbs with good connectivity to core while also offering necessary services for regular living.
The number of owner-occupied housing units in the USA has gone from 70m in 2001 to 86m today [1]. The number of total housing units has gone from 118m to 145m over the same period [2]. 70/118 is 59.3%. 86/145 is ... also 59.3%!
I agree that it feels counterintuitive. I share the sense that there are more entities playing landlord than there used to be, but it doesn't seem to be borne out in data. A possible contributing factor is that AirBNBs are more prevalent in the cities that attract visitors, for free market reasons.
IMO an underrated part of the US housing crisis (in addition to construction's failure to keep up with population growth, which I think is most of the story) is the fact that the fraction of households consisting of only one person more than doubled from 1960 to 2020, from 13% to 27% [3]. That same article notes that 25% of LA households consist of one person.
[1] https://fred.stlouisfed.org/series/EOWNOCCUSQ176N
[2] https://fred.stlouisfed.org/series/ETOTALUSQ176N
[3] https://www.census.gov/library/stories/2023/06/more-than-a-q...
I had a tenant move out this summer and for the first time in years (barring 2020 when Covid was in full swing), the place usually rents out within days of it being listed. This year, however, it not only didn't rent out right away, but required decreasing the rental rate to finally find a tenant. And this when all the industry stats stated that comparable apartment rental rates, as of June, were up 8% yoy. Now there are of course myriad reasons this particular apartment could be facing headwinds, but I am more or less convinced that the magnitude of the shift from short-term to long(er) term rentals that has been happening in anticipation of the Airbnb ban is the reason for this drop in rental rates. And just to quantify this n=1 data point, the price drop from last year's rental rate was 5%. If you believe the industry stats saying that prices were up 8% yoy in June, which likely were based on Q2 stats, well before short-term landlords would've been faced with the Airbnb ban, this may actually mean that the rental rate drop was ~12%.
Nothing about what I wrote above is scientific, but if these numbers (https://www.wired.com/story/airbnb-ban-new-york-numbers/) are to be believed, it seems likely that the drop in rental rate is largely attributable to the Airbnb ban. The yoy Q4 '23 numbers, when the ban will have been in place for the entire quarter, will confirm or deny all of this. If confirmed, though, will be interesting to see if other cities start to aggressively cut back on Airbnb in an effort to reduce rental rates. Again, not saying this is hard data, but if regulating Airbnb more or less out of existence resulted in a 12% drop in rental rates across major markets nationwide, that would be an amazing lever to almost-immediately decrease rental rates, even though the knock-on effects of declining real estate valuations would potentially cause significant problems. And I say that as a happy Airbnb user, a landlord and a homeowner. Things have just gotten too out of whack with the housing market so you have to somewhat cheer the possibility that there's actually a (low-caliber) silver bullet to reduce rents more or less overnight.
But I'd still prefer it to be the way it was 20-30 years ago, than how it is now. So much more affordable in the past...
Interest rates were quite high (and surprisingly variable, as a modern observer) in the early 1980s, peaking at almost 20% and spending a lot of time in the teens [1]. However, the median house price [2] was still low relative to median household income -- at the interest rate peak of 18.9% at the end of 1980, the median house sale price was 66k, and the median household income was 21k [3], for a ratio of about 3.1. In 2022 the median house sale price was about 450k, and the median household income was $71k [4], for a ratio of about 6.3!
I think the mortgage rate difference does mean the 80s were still worse if you took out a long mortgage at the given rates. However, 1) you could also save for much less time and buy a house with a smaller mortgage, and 2) there seem to have been a lot of since-closed loopholes [5] like assumable mortgages (from my limited understanding: you essentially take over the current owner's mortgage, along with its lower rates from when they bought house) that meant a lot of people were technically buying houses with much lower effective rates.
So ... I question the claim that the early 80s were easily as unaffordable as now.
[1] https://fred.stlouisfed.org/series/FEDFUNDS
[2] https://fred.stlouisfed.org/series/MSPUS
[3] https://www.census.gov/library/publications/1982/demo/p60-13...
[4] https://www.census.gov/library/visualizations/2022/comm/medi...
[5] https://www.marketwatch.com/story/how-people-bought-homes-in...
In the 40's - 60's, the US was the manufacturing powerhouse while Europe and Asia were rebuilding. The US had the baby boom and the enormous natural resources to lean into that growth.
After some decades, we grew to a point that labor became increasingly expensive. Workers wanted more, consumers wanted more for less. So we outsourced the lower-end manufacturing jobs to lower cost of living areas, and ultimately shipped them overseas to developing economies.
The US now does mostly high-cost, value-add. We're sitting at the top of the production food chain and labor costs a tremendous amount. Fewer people, as a percentage of the population, are able to fill these jobs due to the high skill required.
20-30 years ago the end of the post-war tailwinds. We've been experiencing the US operate in a global economy where our lower class doesn't have access to what were once well-paying jobs. We moved those over to cheap overseas labor, and we benefitted greatly from the lower cost of goods.
Our highly compensated knowledge workers are pushing prices up at the high end, and there's less middle ground.
The middle and upper classes will be fine. It's those at the bottom that are suffering. Instead of providing means to lift our poor up and into the middle class, we're lifting laborers in India, Vietnam, and Mexico out of poverty and into their own growing middle classes. (Which I think is absolutely great for them. I just wish we could also help our own lower class.)
- https://www.numbeo.com/property-investment/rankings_by_count...
- https://knoema.com/infographics/hyjmcxd/housing-affordabilit...
- https://www.nationmaster.com/nmx/ranking/house-price-to-inco...
- https://www.statista.com/statistics/237529/price-to-income-r...
This hints at a fairly incomplete puzzle.
For example :A low-end US residence requires 4+ typical income earners to meet minimal bills needed to stay housed.
That would imply that in most of the world, a typical household has a much higher number of income earners living in the residence - they have many earning-adults under one roof.
I'm skeptical that most of the world is dominated by 5-10 adults living in US sized houses. So what's the rest of the picture look like?
The postwar years saw a huge boom in housing construction which created a few decades of housing availability that may just never exist again nor should it. Housing as a vehicle for building wealth and housing becoming unaffordable for the younger generation are two sides of the same coin.
There's plenty of demand for housing. There's no reason we can't build more to meet that need, other than regulation.
In theory remote work could help with this problem, but honestly it's really only available to workers who work in offices. People with physical jobs like Amazon warehouse workers and restaurant staff and construction workers...all have to live somewhere near where they work.
And I daresay that even most of the professional class who could live anywhere in the country they wanted to probably don't want to live in or near some small midwestern city or many of the other places where housing is relatively cheap. (Some of that is preserving future employment options but even if you take that off the table, there's still almost certainly a common preference for at least the general vicinity of large mostly coastal cities--and tons of excuses why this location or that location is a non-starter.)
More importantly, the proliferation of the personal automobile made suburbs possible and unlocked a one-time dividend of cheap housing that was "close" to the city (in terms of travel time, not distance). That suppressed prices for a while, but now we're returning back to historical trends.
To be sure, there's a distinct difference between housing as a vehicle for preserving wealth vice building it, where the underlying grift of the real estate industry is in having normalized the country to the perverse idea that the latter is both healthy and sustainable.
You want a cheap house? Sub 300k? Come to the Midwest, you’ll get one easy. Oh what’s that? You’d rather live right in downtown San Francisco or Manhattan? Well…
Sometimes I think about just selling my expensive city apartment and moving out to a small rural mountain town and finding a wife there.
A remote tech worker can buy quite a lot of house in the midwest if they keep all or most of the salary they were getting while living in a coastal city.
Especially if you didn't grow up there, the weather is killer.
And there is still plenty of space in the popular places, if people were allowed to build there.
But the people who are already there do everything in their power to prevent it.
There is also an abundant supply of weather.
That's the problem though. Unless you grew up with it, most people do not like the extreme weather in the midwest. Both too hot and too cold.
The only thing cities dislike more than an increasing population is a decreasing one. Given homeostasis is essentially traffic, suburban sprawl, etc we should let areas organically grow and shrink as people make choices. And areas that are appealing now will become unappealing either by cost or changing economies.
There's already been a significant migration from NY+CA to FL+TX: https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ...
Put another way, those houses are cheap because employment opportunities are limited.
I do have a lot of respect for the people who are able to make a sustainable living in a less dense area, but it’s not a reliable path for everybody.
Certainly nothing in the comment itself even hints at me considering entire communities of people as worthless.
Uhhh... Maybe consider giving away your laptop, and go live innawoods in a loincloth.
If you use "capitalist" dispargingly, while benefitting from it, I'd describe you as a hypocrite, naive, and immature.
If you're not a capitalist, stop accepting benefits created by capitalism.
Go find a deer, harvest its skin to clothe yourself, and drink from the local creek. ...or, continue being a comfy capitalist.
From what I discern, you've chosen the latter.
in 95% of the country you can buy a house for under $400k.
What? Have you seen real estate prices in Hong Kong and Singapore? The US is pretty cheap compared to the rest of the world.
The idea of private property (as distinct to personal property) is fundamentally flawed. Every aspect of your life becomes financialized, including basic needs like food, water and shelter as well as education and health care. All of this becomes simply a means of extracting every last possible dollar from you through mountains of debt and sky-high rents.
Withholding shelter in the wealthiest countries in the world just so a handful of people can have $120 billion instead of $100 billion in net wealth is beyond coercion. It's state-sanctioned violence.
The solution is social housing. In places like Vienna the majority of people (~60%) live in state-owned housing. The state essentially guarantees housing (mostly), as it should.
The provincial governments of Canada should build a pool of housing through a combination of building, eminent domain and taking ownership of foreclosed properties. You could even have a scheme where people who are in arrears on their mortgage get to convert their house to being state-owned (which they can continue living in) where the mortgage gets bought out at a discounted value, which is what would happen anywya if it were underwater.
The problem is the government interfering with the housing market by giving handouts under the guise of affordability, which just pushes prices even higher. Combine that with restrictions around building new houses, and nobody should be shocked we're in the situation we are.
No need to come up with a complex scheme for public housing. Vienna's system is already a big shitshow with a ton of people unable to access public housing.
Far better for the government to just get out of the way, and build enough supply that we don't see such a massive increase in prices.
- The housing market never crashed, it never reset like the US one in 2008, The government instead kept duct-taping the issue by printing more money, increasing and decreasing the interest rates, and now they are even increasing the period of mortgages to up to 70 and 80 years, all of that so the bubble won’t burst.
- Interest rates are not fixed, even the fixed ones will/can be changed after 5 years.
- The individual in Canada is 40% less productive than the one in the US (Statistics Canada and US Bureau of Labor)
- Canada barely manufactures or produces any industrial products, Canada's economy shifted from that as well as oil and the stock market into investing in housing, basically buying and selling houses became the core of Canada's economy.
- Over immigration, the country is accepting immigrants at a very high rate, Those immigrants are not construction workers but are skilled ones, they won’t work to build more houses, but they need to buy or at least rent, putting extra salt to the injury there, less supply and more demand will definitely increase the prices. This is without mentioning the ones who buy these as an investment, sometimes even without being a Canadian resident or citizen, making it even worse for locals, especially with Canadian low wages.
- Because we never had a crisis due to interest rates dropping to zero, boomers and GenX managed to buy houses, the country now has around 2/3 are actually owning a house, the problem with that is, your voter base majorities are AGAINST taking any action to reduce housing prices because it’s their investment, and they would even use that investment to buy more houses, while the ones who never bought one are not able to afford even the rent, right now, only 10% can afford to buy houses and those are already owners or just corporates.
I highly recommend watching this video it goes into more details
https://www.youtube.com/watch?v=XomvuLPiTWM
Solutions? None will be taken by any government as none wants to piss off their voters, but it should be just like the Japanese model, a harsh, non-democratic approach will surely fix it, also, Canada has a lot of land but still owned by the crown, and there’s basically not much of construction workers either, plus banning anyone who’s not citizen or resident to buy houses, all of that should bring up some solutions.
And yes, the majority (and growing) in this case would be called racist and xenophobic, because they have not been shown a single fact that runs counter to their argument. Not even an attempt. And you know what? They’re probably right.