Be careful with people trying to predict how markets will move.
The last decade has been Groundhog Day compared to the 80’s. Complaints of limited supply, people saying “these prices are the new normal”, people taking on more and more debt.
To me the most obvious indicator of a bubble is the disconnect between wages and home prices.
Toronto has almost the same home prices as San Francisco yet: 1) wages are lower, 2) taxes are higher and 3) mortgages can’t be fixed for 30 years.
Fundamentally it just doesn’t make sense. Sure immigration can drive demand, but the affordability issue remains. What’s driving it is speculation - people think they’ll make a lot of money so they take bigger and bigger risks - fraudulent mortgages, “interest rates have to come down” mentality, “the government will never let housing prices drop” mentality, private mortgages that let borrowers leverage up way beyond government standards.
I have no idea when it will correct but I’m confident that they will - they always do.
That may be true, but houses aren't that expensive. If you're, say, Austin Matthews making $13MM per year in Toronto, you can still buy a lot of houses. That capacity is not diminished by some tech mogul in SF making $130MM per year.
The question is, as always, will something better come along? Indeed, housing is the purchase of last resort. Give people something better to buy and they will! People in Canada especially are happy to buy real estate like mad at this juncture because, frankly, what else is there to buy? Canada doesn't offer much else. You're not going to work to make $13MM just to hold an IOU forevermore. People making $13MM want to collect on what they've created and have something to show for it.
The US housing market crashed back in 2006 because tech started showing promise ("Web 2.0", mobile shortly thereafter) and the money left housing to buy into the newfangled tech. It's not clear what Canada's equivalent will be. Granted, it's banking heavily on skilled immigrants to come up with something, so there is possibility of yield. Time will tell.
This is definitely the first time I’ve read this. Do you have more info on that?
This would be a particularly unique explanation for the bursting of property bubbles all over the world (like, does this also explain the Irish property bubble crashing?).
If you look at the statistics, the houses in Canada aren't being bought up by rich people, they are being bought by middle and upper-middle class Canadians. Even the "investors" tend to be individuals buying one housing unit as an "investment".
> The US housing market crashed back in 2006 because tech started showing promise
That's wildly revisionist and doesn't really make sense. "Tech started to show promise" so you're saying that people stopped by homes? How many middle class Americans (who make the majority of home owners) shifted their investments from housing to speculative tech stocks? I think you overestimate the penetration of tech into the middle class - most people I knew hadn't even heard of AirBnB until 5+ years after they become "hot" in Silicon Valley.
Sales don't happen in a vacuum. The middle and upper-middle have to pay that much because second in line is willing to pay almost as much. Matthews could make an offer of $999,999 on every house for sale in Toronto. He may not get any of them in the end, but in doing so he forces you to pay at least $1,000,000 if you want one.
After all, if you were the only interested party you could just throw a couple of bucks out there and eventually some seller will have to give in. Landowners will not hold a property only worth a couple of bucks in perpetuity. If nothing else, property taxes will eventually compel them to unload it. It's other interested buyers that push you to pay more.
> "Tech started to show promise" so you're saying that people stopped by homes?
Sure. Again, not a vacuum. To stick with the hypothetical for the sake of illustration, let's say Matthews was making such offers but now is enthralled by some AI startup in Montreal instead. By removing those $999,999 offers from the equation, that gives more room for you to come in at a lower price.
Sure, but your examples don't make any sense. Matthews isn't bidding $999,999 on every house. Nor will sellers agree to $2 just because there aren't other buyers.
Property taxes are actually quite low in Toronto compared to other cities. $6k per year on a $1M house is pretty low carrying costs that will prevent you from taking a $999,998 loss.
> To stick with the hypothetical for the sake of illustration, let's say Matthews was making such offers but now is enthralled by some AI startup in Montreal instead
But the overlap between home buyers in Toronto and tech investors who do seed rounds in Silicon Valley is very small, especially for entry level homes.
But that's what the house is worth. As the saying goes, something is only worth what someone will pay for it, and $2 is the only possible offer here, given the hypothetical scenario.
Absolutely someone will give in to the $2 offer eventually. People pass on. The estate isn't going to leave the property just sitting there paying $6k per year doing nothing, when, again, it is only worth $2. It is not worth $1M in this hypothetical scenario. I don't know where you dreamed up that idea. Given the conditions of the hypothetical, there is literally only one buyer, and that buyer is only paying $2. It's a $2 house no matter how you slice it.
Again, it's other buyers willing to pay more that push you to pay more.
> But the overlap between home buyers in Toronto and tech investors who do seed rounds in Silicon Valley is very small, especially for entry level homes.
A few things:
1. Even just one party losing interest in buying a house who has decided to reallocate the funds to a different investment can start to change the dynamic. This idea that every homebuyer needs to consider investing in something else is unfounded.
2. There are knock on effects when someone provides seed funding. Maybe they sold their stocks in Coca Cola to cover the seed, for example. That opens a vacuum that someone else needed to fill – can't sell Coca Cola stock to nobody. Eventually the money is going to be drawn away from housing given the change in allocation, even if through many layers of indirection.
3. The money also isn't leaving necessarily because of investment. There is also an outflow on the consumer side. Tech wasn't showing promise because nobody wanted anything to do with it... If you were prepared to spend every last dime you have on your house to buy into a market you otherwise couldn't afford, but then Jobs just announced that "one more thing", that shiny new iPhone is beyond your grasp. But you want it! It's so cool. So now what you are willing to spend on a house has been reduced, and when you make an offer it isn't going to come in as high. Multiply that out across many players and soon there is a lot less interest in keeping the prices high.
Meanwhile empty housing is at very low levels and barely makes a dent (about 1%)
When you have 4 professional adults sharing a 3 bedroom house, there’s a supply shortage.
Two income families were common by the eighties. Women's participation in the workforce was >50% by 1980 and has only increased to 60%.
Talks about Ontario having immigration of 1.2 million but 800000 is temp visas for study.
Be careful with that million population growth number - it might not mean what you think!?
https://globalnews.ca/news/10386750/canada-41-million-popula...
It became a trend in china's rich circles to invest in canadian housing market as way to hide money from ccp and to flex your wealth.
Chinese new money are prone to trends, and at scale it can have terrible results for city like Vancouver - quick google - "Chinese homebuyers accounted for nearly one-third of Vancouver's real estate market during 2015"
Second, Canada had absolutely terrible business development investment. There is no capital to make use of the increase in population and as a result the GDP per capita is going negative every quarter.
Now that the quality of life in Canada is dropping, highly skilled Canadians are trying to get out as fast as they can making the Canadian market even less competitive.
I don't think this combination of variables has been present in previous population booms (post WW2). I think we are in new territory here being pushed aggressively by a few companies trying to find even cheaper labor than what was possible.
Net migration per 1,000 people (2023) figures[2] are: Australia 6.4, Canada 5.4, New Zealand 4.8
So Australia's immigrant population is also growing 20% faster than Canadas. (albeit emmigrant numbers included so perhaps I'm oversimplifying - I'm not familiar with Oz - but New Zealand has significant outflows).
[1] https://en.m.wikipedia.org/wiki/List_of_sovereign_states_by_...
[2] https://en.m.wikipedia.org/wiki/List_of_sovereign_states_by_...
Canada welcomed 471,550 new permanent residents in 2023 and had an increase of roughly 550,000 temporary residents. That's a net influx of over 1M people for a country of over 40M. Most of Europe takes in about 1% of population in immigration not 2.5%. Australia targeted 195,000 permanent places and a total of 548,000 places across permanent and temporary programs. For a country of 26M that's 2.1% which is still extremely large but well below 2.5%.
Also even if we use your numbers, Canada mostly accelerated immigration in 2023 and 2024 but already by 2021 our immigration percentage was up to 23% according to our census so your numbers are badly out of date for measuring recent immigration. In terms of reaching 30% with a net influx of over 1M immigrants a year over those two years, Canada could be as high as 27% immigrant now. Which even if it is lower than the raw total in Australia I'm sure we can acknowledge is a very rapid change that puts major strain on services.
I do try to write clearly, but I think you've replied thoughtlessly.
Yeah that sounds like a significant difference.
I know nothing about Canada's immigration issues, but I did listen to a conservative podcast[1] the other day and at 20:30 it mentioned the 2023 numbers for Canada were:
• 1.27M immigrants
• 471k settling
• 804k temporary residents
So unless our sources are careful how they measure immigration there's a lot of scope for misunderstanding.
No idea why your number is 550k and the podcast mentions 804k.
> I'm 100% convinced your source has badly incorrect data for Canada.
The 249,000 number is sourced from a file provided by the World Bank. It isn't obvious where the World Bank get their number from. Don't ask me!!! Yeah, it looks wrong, but I don't care enough about the topic to go into it further.
Either way from the foreign born population percentages it is very clear that Australia and New Zealand have been accepting lots of immigrants for years and Canada would need to have much larger immigration numbers to get close to catching up.
If you are interested in the effects of immigration on Canada, then keep an eye on Australia and New Zealand to see how it is affecting them.
> For a country of 26M that's 2.1% which is still extremely large but well below 2.5%.
You are comparing chickens to bandicoots. Either compare residents or compare totals including temporary. You are being epically misleading to compare between the two.
From your own numbers, resident immigrant growth is ~1% for Canada (471k/40M) and 2.1% for Australia... I would guess New Zealand is around the 2% mark. I have little idea about temp numbers, but they are not zero.
I've personally just been looking at having a student guest rent a room at my place for $250 per week - students don't create as much pressure on housing. Permanent immigrants definitely do.
You seem to me to be trying to misinform.
When people talk about the problems of immigration they are not generally talking about temporary students and temporary workers. Might as well as add tourists on too - they are a contentious issue where I live.
I mostly care about immigration numbers, but you are using temp numbers. Yeah, Canada's temp numbers are whacko and that is discussed in the podcast: the temp student numbers surely can't be sustainable for Canada in the long term.
[1] https://thehub.ca/2024-03-29/this-government-is-oblivious-th...
Also I think you're just willfully misinterpreting me at this point because the 2.1% number for Australia included temporary residents. The number for Australia based on only new permanent residents is 195,000/26M = 0.75%
Your first post used the word "immigrants" and talked about the home building rates and the health care sector. Most people don't expect temporary immigrants to have a large impact on health care costs. So I think my initial misunderstanding of you is sensible. I would guess most people mean permanent immigrants when using the word "immigrants" - however I don't know your background...
We also obviously need to be careful when using annualised numbers. For example plenty of the students that come to New Zealand come to learn English over say two months (as I have just been learning since I'm looking at renting a room out to a student or worker).
6 student visas for two months consecutively has the same yearly impact on resources as 1 permanent immigrant. Adding tourist visa numbers to immigrant numbers would be similarly misleading for the same reason. Perhaps we need numbers for a snapshot of all visitors? The information is available to our immigration departments - they know how many people are currently in the country at any point in time.
If the 550k number is a sample at a point of time during the student year then it can be compared as an annualised number - but I can't know the context of your number without knowing your source. If it is a number of VISAs then the number needs to be annualised to work out impact on resources.
I completely agree that temporary immigration has an impact on resources and residents.
I believe that temporary immigration is nowhere near the impact that permanent immigration has on resources - especially in the long term where retired immigrants DO massively affect the health system costs. Temporary immigrants are mostly healthy and sick ones should be covered by travel insurance?
The podcast mentions one long term impact for Canada: that temporary immigrants can have a baby and Canada gives the baby citizenship.
In New Zealand we have massive numbers of tourists over our summer which has a heavy impact on our resources (including housing due to AirBnB). But tourists do pay their way and don't have a long tail of costs (retirement etcetera).
If we wanted to compare temporary residents, then I can include tourists during the tourism season, and suddenly you will find that the numbers for New Zealand are ridiculously high! However I have no idea what it's like for Canada. Our tourism season has a heavy impact - but mostly on tourist locations - less so on our metro areas (although I see personally see the impact of cruise ships on the suburb of Lyttelton in Christchurch).
I recall the podcast seemed to say that your problem with temporary immigrants was a sudden change and that the numbers likely would revert to something more sensible.
I'm sure we can agree that all 3 countries have economic issues with immigration.
New Zealand has been making new houses especially in Auckland and Christchurch. I believe Canada has been falling behind there. See https://news.ycombinator.com/item?id=38430062
And most developed countries are fucked for demographics in the future: permanent immigration is a short term solution but I reckon we are just punting the problem to the future. As a middle aged guy I can see the problem slowly building and I have been doing what I can to prepare!
Since immigration can be a sensitive topic, I want to be clear that I like immigrants and I have close friends and family by marriage that were not born in New Zealand.
All the best. I am hoping to visit Canada in the next 5 years to go skiing. Thank you for the conversation - I comment on HN to learn and I have learnt a few things! Cheers
My point is that picking a number at a point in time doesn't say much about the housing pressure - as the zero net tourists example shows.
Without knowing more about the number of temporary immigrants throughout the year (e.g. total number in Canada per month), the number of temporary immigrants as a yearly value is not much use (just as net zero tourists is not much use). Kinda depends on how quickly the temporary immigrants roll over.
Interestingly enough NZ and Australia have sharply reduced the number of working visas. https://www.rnz.co.nz/news/political/513642/immigration-chan...
Also, I noticed an article implying that Canada is much more successful at getting wealthy immigrants:
Immigration lawyers [in NZ] are worried by a dramatic drop in the number of millionaires receiving so-called golden visas. "If you have investors looking at options they're going to go for an easier option, they're going to go for Canada", he said.Ummm citations needed urgently. I would point out, immigration policy vs anyone without a passport is welcome are two complete scenarios that the only thing in common is that outsiders are coming in.
Unchecked immigration policy as a good thing is a myth. People from clashing cultures dont mix naturally. Only results are natural ghetos and cultural clashes.
Allowing undocumented people in without any due diligence, only advertises that undesirables from other countries can escape, or being dumped by more crafty foreign leaders.
The immigration as a positive is strictly related to being the cause for brain-drain effect. You want intelligent hardworking people in, not just anyone.
Also its better if people you are attracting are of similar heritage with similar values and culture. As those people assimilate to host cultures within a generation or two.
The european countries don't really have distinctive minorities from their neighbors. The inter-eu immigrants withing generation or two basically become a host country citizens.
I would point to Sweden and their current problems, also to the change of mind of the pro-unchecked immigration politicians. Who now are openly and publicly stating they were wrong.
Context for others: Sweden has no language, income, employment, or skills requirement <https://www.migrationsverket.se/English/Private-individuals/...> for obtaining citizenship.
In completely unrelated news, Arabic is now the second most spoken language in Sweden <https://digitaledition.chicagotribune.com/tribune/article_po...>.
Neither does the US. Like the US, it has a requirement of having lived in the country with residency for 5 years. In the US those 5 years are after getting a Green Card (permanent residency), not after getting the original dual intent visa that allowed for the Green Card.
The Swedish residence requirements seem par for the course[1], if more straightforward than for the US.
[1]: https://visaguide.world/europe/sweden-visa/residence-permit/
If we want society to continue updating its morals, why not update the morals about immigration as well?
Well… I wonder how that happened since it certainly wasn’t the case until the period between the mid/late 19th century and the 1940. I guess we’ll never know.
Well, exactly. Bringing in large amounts of immigration to support an economy that that largely revolves around property transactions will contribute to an increase in property prices but will drag down GDP per capita and drive up infrastructure costs. This is NZ.
Define "success?" Mass immigration to America from continental Europe eventually culminated in the 20th century in the dismantling of the American constitution and the republic the founders created. The resulting country is also completely ungovernable.
Generations of cheap immigrant labor ultimately created a materially rich society (for some people), but whether it has been a "success" is quite debatable.
Another way to look at it: By any reasonable measure — and for all its indisputable problems — the U.S. is clearly the most successful large, multi-ethnic society in all of human history. Sure, it's always a work in progress. But let's consider the movie, not just the freeze-frame.
When people can vote with their feet, it says something that net migration to the U.S. seems to dwarf that to, say, China [1] or India [2].
[1] https://en.wikipedia.org/wiki/Immigration_to_China
[2] https://www.indiaspend.com/governance/millions-of-indians-se...
Looking at migrants is a misleading indicator of preference, because the choice to emigrate is an aberrational one. Just 7-8% of people in south or east Asia would emigrate if they had the choice: https://news.gallup.com/poll/245255/750-million-worldwide-mi....
Let's not forget that (European) immigrants were mostly wanted, so as to provide needed workers. Even the Chinese immigrants of the 19th century were wanted to help build railroads and the like. Racist anti-immigrant factions such as the Know-Nothings and the KKK never really gained the power needed even to try to stop immigration (with the notable exception of the Asian exclusion acts in the late-19th and early-20th centuries).
Scores of millions of Americans, including your servant, are descended from those European and Asian immigrants. Again, the "movie" is that over generations, those people became fully assimilated into American society and values.
As for "accommodating" the immigrants, that brings to mind Heinlein's dictum: Never argue with the weather. It's questionable whether the "British" America of, say, 1787, or even 1868, could have effectively prevented immigration.
We also shouldn't lose sight of the millions of involuntary "immigrants" who were brought here in chains from Africa.
Sure. I’m talking about the long-term effects of that deliberate policy choice.
> Again, the "movie" is that over generations, those people became fully assimilated into American society and values.
Quite a bit of evidence shows that core cultural values, such as levels of social trust and attitudes towards the nature of government, are durable across generations: https://cis.org/Richwine/Still-More-Evidence-Cultural-Persis.... Scandinavian Americans, German Americans, and Italian Americans to this day exhibit differing levels of social trust that mirrors those of their cousins back in Europe. The waves of immigrants didn’t “fully assimilate” into American society, they changed it into something entirely different.
An overlooked aspect of Donald Trump—who is barely a third generation American—is that he was the last nail in the coffin of British America. British American culture is no longer prevalent enough to sustain even one political party. The Trump GOP has dropped the distinctly British American idea of limited government and replaced it with a cult of personality that can appeal to immigrant Germans, Italians, and increasingly Latin Americans. If Trump acts like a Latin American dictator it’s because that’s what it takes to get all those people from disparate cultural backgrounds into a coalition that can get close to 50%.
People notice this shift, but because we have this mistaken notion that “white people” are a single group, we overlook what it means. It gets framed as the “death of the Reagan GOP.” It is, but more accurately it’s the death of the British American GOP.
Interesting. Does that take into account the mixing of cultures as the generations go by? My own immigrant ancestors came to this country in the 19th- and early-20th centuries — from four different countries in northern- and southern Europe; two different religions; and arguably three distinct subcultures. My own kids have three more countries stirred into the mix from my wife's side — and her outlook and attitudes have influenced mine in the decades we've been together. Then there's the influence of the different places I've lived and worked. I can't imagine I'm unique.
> more accurately it’s the death of the British American GOP.
Which "British America[]"? The New Englanders like the Puritans, and later the Adamses? The mid-Atlantic Quakers? The Virginians? The Cavalier enslavers who came from their Carribean sugar plantations to grow cotton? Very different subcultures. (And if you want to talk about "top-down," consider the southern American subcultures.)
And which British American GOP — the now-extinct liberal northeasterners and -Midwesterners? The hard-core racist Southerners who were right-wing "Democrats" until the Nixon-Reagan-Atwater "Southern strategy" coaxed them to the GOP? The California Reaganites of Proposition 13?
> If Trump acts like a Latin American dictator it’s because that’s what it takes to get all those people from disparate cultural backgrounds into a coalition that can get close to 50%.
My guess is that Trump appeals to a certain fearful, hero-worshipping, authoritarian mindset that's widely distributed among the human population, and whose adherents have far greater ability to communicate and organize than ever before. We see that mindset today in the followers of Putin, Orbán, Kim, Maduro, etc., as well as those of Trump. (For that matter, the fascist Oswald Mosley was a Brit.)
It’s using GSS data, which doesn’t identify ancestry in that level of granularity. But I suspect mixing changes the host culture significantly. My wife is of almost completely British American descent. I’m of completely Bangladeshi descent. But because in my culture married couples assimilate into the husband’s family, the kids are being raised with a strong dose of Bangladeshi traditionalism.
> Which "British America[]"? The New Englanders like the Puritans, and later the Adamses? The mid-Atlantic Quakers? The Virginians? The Cavalier enslavers who came from their Carribean sugar plantations to grow cotton? Very different subcultures.
The British America that was the confluence of those British sub-cultures—the things they agreed on and their distinctive conflicts. In particular, participatory self-government reflecting both Puritan small towns and Jeffersonian agrarianism has been supplanted by mass government.
The widespread American attitudes towards government is now similar to those in Bangladesh, which was shaped by half a millennium of Mughal and then British rule. The government is the administrator of a fractious and foreign population. “Democracy” is reduced to merely “voting.”
> My guess is that Trump appeals to a certain fearful, hero-worshipping, authoritarian mindset that's widely distributed among the human population, and whose adherents have far greater ability to communicate and organize than ever before.
That’s close to the same point that I’m making. Every society has conservatives and liberals—these are rooted in psychological traits. Specific conservative or liberal ideologies, however, are rooted in culture. When you change the country’s cultural mix, you change what kinds of political ideologies you need to carry a viable coalition. And when you fragment the culture, politics becomes much more about unifying around things that speak to gut-level reactions across cultures.
The small-government conservatism that would be popular in Rhode Island can’t win Florida. You need to cobble together a coalition of Mexicans in Arizona, Scots-Irish in West Virginia, Cubans and Puerto Ricans in Florida, Germans in Ohio, etc. And Trump is the manifestation of that.
But your kids aren't watching Bangladeshi TV, are they? And I'm guessing they don't run around with mostly-Bangladeshi friends.
You might be surprised how your kids are being influenced by your wife — and her family. I've read over the years that culture is transmitted primarily by the mother; that certainly fits what I've observed casually.
And let's not forget that at some point most kids tend to rebel — especially against authoritarian fathers (and then maybe later revert to what they remember from childhood).
> In particular, participatory self-government reflecting both Puritan small towns and Jeffersonian agrarianism has been supplanted by mass government.
Alexander Hamilton and his fellow Federalists would like a word. Jeffersonian thinking was certainly present at the Founding but was by no means dominant.
Sure, most people don't emigrate. That doesn't mean it's misleading that the U.S. is the migration destination of choice.
Really? The U.S. is notably less top-down than many other places that either of us could name. And nostalgia for an imagined bygone "British" past is unproductive.
That might be mixing up cause and effect…
And regarding the house prices... last year they built around 200k new homes (all types, including condos) for >1M new Canadians.
Are immigrants fungible?
There are some that say they can predict the movements of land speculation based economies. I'm familiar with old blog posts from back as far as maybe 2005 that predicted the crash in 2008 accurately.
There's guys predicting the end of the world tomorrow from an alien invasion also, and if it happens they'd have been right, but not any smarter.
and the reason that there is not enough housing available for the demand, the investment corpo is now buying up the housing as a new avenue of income and population is still growing is only pointing to prices growing indefinitely.
Unless there is a population crash, people suddenly stop requiring having place to live, or someone discovers personal pocket dimensions with free houses.
But I wouldnt expect it in next 10 years.
The housing crash happened in 2006, though. I suppose being able to predict the crash even a few months in advance is impressive, but as you're hazy about the years, it is possible that it was really 2006 and the crash had already happened, which isn't so impressive.
2008 was the securities crash. That is when the mortgage market started to crumble under the weight of housing no longer having the value it once did with mortgagers left underwater. The housing market had to crash beforehand in order for this to happen. Once one saw that the housing market had crashed, it wouldn't take too much of a Kreskin to realize securities were on the horizon.
Whereas in the US, anyone with a pre-2022 30-year fixed-rate mortgage now has a massive paper profit due to interest rates going up that can only be realized by slowly making their required payments. That gets vaporized instantly if they sell and pay off the mortgage.
I think governments (any party) will pull any lever available to prop up the market because of the role that property plays in the economy.