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Comment by wubrr | Hacker News Reader

Canada is not building enough housing, but you're 100% right about the government propping up the housing prices any way it can.

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My city is popping up condos at a rate I haven't seen since I was in China in the 2000s.

I bet 80%+ of that is bought by investors before construction completes.

They openly advertise on the side of the buildings that x% of units are already sold while there's barely a frame up.

If enough housing was being built, then the expected return on houses would be negative and investors wouldn't be buying them.

You're ignoring the fact that most of the new supply being purchased by investors means they have more power to increase rents, re-leverage their existing real-estate and buy up more. Continuously increasing real-estate prices and rents until the bubble bursts.

If everything worked based on the most basic econ101 principles, we wouldn't have any bubbles in the first place.

Which city, and how long has that been the case? There's likely quite a bit of backed up demand. Typically when supply doesn't meet demand, the price goes up, the supply responds, and only after that does the price level off (or come down).

Nearly 7% of the entire Canadian work force is building new houses.

That's double the next closest industrial country.

Canada doesn't have a supply issue, it has a demand issue.

There’s no such thing as a demand issue. Canada should consider importing immigrants who can work in construction in addition to the billions of dirty Chinese money. Problem solved.

If your government creates artificial demand - that's a demand problem.

The demand isn't real. It's synthesized from unsustainable government policies.

Set interest rates to -100% - see what happens to housing demand.

Is that a supply problem? Should Canada build 800 trillion houses to fill the appetite for free government money that will eventually implode? Or is it a demand problem because your government is dumb?

I don’t understand. This theory implies that a significant percentage of Canadian houses are empty due to speculation. Is there any evidence for that theory?

Looking a bit online it feels like this might be a disproven theory https://financialpost.com/real-estate/busting-the-myth-of-ca...

Also just on a very fundamental level - outside of luxury housing, why wouldn’t investors rent out the houses they’re sitting on? Sure it’s nice to own an appreciating asset but isn’t it also nice to rent it for 10% of its value yearly?

They didn't say they are empty?

Most investors aren't keeping their properties empty. The empty places are generally owned wealthy people as a second/third home, or as means for foreigners to offshore their wealth. And this accounts for a tiny fraction of the housing supply compared to domestic/corporate real estate investors.

The demand is absolutely real. People are actually buying these properties. The prices are subsidized by government policy. Instead of fixing the supply side of the equation, Canada has decided to give away money so cheaply that normal people can afford the obscene prices for real estate. Interestingly, increasing the number of people that can afford a house without changing the supply makes prices go up. Who knew?!

Immigration is the natural effect of people moving to where the market price of labor “demands” they move. Doesn’t seem that artificial.

What? The market price of labor always 'demands' that it be lower... literally import millions of 3rd world immigrants into any first-world country and you will see housing shortages, infrastructure shortages, wage decreases/stagnation, and increased corporate profits.

Seems that would mean its a supply issue? I mean sure, Airbnb does suck as in a lot of areas they skirt under the normal hotel rules/taxation but wouldn't building more help this problem?

50% of the workforce could be involved in construction, but if the product being built is slowly-approved with intensive white collar labor permitting single family spec development, not many new units will come out at the other end. A measure like workforce input needs to consider productivity.

The point is supply does not match demand. Immigration is unlikely to ever be low enough to counter the housing demand at this point - every single corporate/lobbying group in Canada is pushing for more immigration, and every single relevant political party is very clearly signaling that they will always bow to these demands.

And I agree that a lot of our economy and workforce is already dedicated to building housing - increasing this is not a realistic solution.

The only realistic way to improve the supply/demand is to disincentivize the investors from gobbling up the majority of our new housing supply.

I hope not to come across as condescending, but in normal usage a demand issue is one in which there's not enough demand (think: the global financial crisis in 2008/9). When there is too much demand and not enough supply as clearly seems the case here, irrespective of why that's true, that's a supply issue.

What does that mean? Sorry for being dense, but are the two not related?

Furthermore, what solutions are there? People advocate building to allow for natural supply<->demand relationships to curb the absurd home price increases.

Isn't more supply simply one of the biggest factors to lowering the prices? Of course, purchasing homes via speculation is also a huge issue - but that affects supply too, no? So does AirBnB, Renters, etcetc. All things which reduce supply of owner avail homes, driving up the price of homes and furthering the cycle.

My understanding of all this is absurdly minimal, though. I just own a home (in the US), and that's about it. So please correct me if i'm wrong. Thoughts?

Demand in Canada in entirely from immigration, there's an obvious solution.

Ah, so is this tied to your previous comment? Ie you're saying ~"not a supply issue, it's a demand issue" and you mean that there is an artificial demand causing the supply to be insufficient. That the supply would be otherwise sufficient, if not for the external sources of demand.

I'm not familiar with the immigration issue in Canada, i'll have to peek at that. Appreciate your clarity

> Nearly 7% of the entire Canadian work force is building new houses.

Source? No really. This is shocking to me. 3% of Canadians work in construction and I suspect the majority of them are not working on housing. Do you mean 7% of the workforce participates in housing development and maintenance tangentially? Like, including lawyers, lobbyists, politicians, the portion of construction workers who aren't building roads and film sets, other craftsmen, people doing renovations, plumbers, hvac, insurance, inspection, etc.

Canada also has a lot of red tape around new builds that draws out the development process significantly, a lot of which necessitates all the other labor going into building too little housing for the population growth.

I cant find the source of that, but here's some information on the new construction lagging immigration.

https://www.fraserinstitute.org/studies/canadas-growing-hous....

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