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Yes, we have an under-supply of housing. I completely agree with you. But it's nothing new and certainly not responsible for the price increases since COVID.
I think part of the inflation for COVID and earlier is a desire to get out of the city.

Add declining interest rates, and we've seen house prices increase as people budget the mortgage payment.

So with the increase I think people are holding onto their in city property because real estate has "done well".
My house value has almost tripled in a decade, I understand the emotional desire to hold on

Also we've been underbuilding for decades, so there isn't much slack to pick up the variations in demand.
 

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The price increases since Covid seem pretty straightforward to me: super low interest rates, plus stimulus. A combination of regular home buyers, plus real estate investors who want to add to their portfolios for "rental income".

People decide to buy houses based on the mortgage payments. When people can suddenly get 0.99% mortgages, they pursue buying home that they previously could not. That additional buying pressure drives prices up.

Add to this all the real estate investors who greedily buy up homes to rent out to others. The zero rate environment created by the Bank of Canada encourages this as well, due to yield-chasing. People figure they can get a rental income (yield) with super cheap mortgages.

I have a solution for sky high home prices. Jack up interest rates to at least 3% and dramatically scale back the CMHC program.
 

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The price increases since Covid seem pretty straightforward to me: super low interest rates, plus stimulus. A combination of regular home buyers, plus real estate investors who want to add to their portfolios for "rental income".

People decide to buy houses based on the mortgage payments. When people can suddenly get 0.99% mortgages, they pursue buying home that they previously could not. That additional buying pressure drives prices up.

Add to this all the real estate investors who greedily buy up homes to rent out to others. The zero rate environment created by the Bank of Canada encourages this as well, due to yield-chasing. People figure they can get a rental income (yield) with super cheap mortgages.

I have a solution for sky high home prices. Jack up interest rates to at least 3% and dramatically scale back the CMHC program.
There is supply and demand side policies that need to change. Making it easier to leverage up to buy property seems pro-cyclical. When housing is stretched, we should be making it harder to lever. We also need to make it easier to build smaller scale (low/mid-rise) higher density housing in traditionally SFH neighbourhoods. That means making it legal to build triplex, quadplex, etc. housing. These neighbourhoods are typically very inefficient to service and are a burden unless they can be densified. Density doesn't need to mean 50 story condos. It also doesn't mean we can't have SFH, but there should be affordable choices other than SFH in each neighbourhood.
 

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I took a drive around our city last night, and there is building going on everywhere.

Single family homes, condos, townhouses, rental apartments, high rises.

The problem isn't building homes. It is building homes that are affordable for "average income" folks.

Garth Turner did the numbers on his blog and it requires a $250K income to buy an average home, which is about 1% of the population.

Today our city and just around the edges of it has 417 listings for sale, so it isn't like there are no homes for sale.
 

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^ Ie. be on the Sunshine List before you can consider purchasing an "average" home.

Look at the city of glass (Toronto), the "average" "condo" (not a "house") hovers around $500K for 1,000 square feet or less. I would say more than half of them are not home-owners considered - they're either rentals, AirBnB or basically a speculative-based "investment".

No wonder the prices go insane on houses since a 'fancy apartment" can cost $500K (if not more) already.
 

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I was shocked at how many listings are for homes listed for $1.5 million to $2.5 million and up.

I watched them build those homes just up the road from us and they originally cost $350K 15 years ago.

Who the heck in our city is buying all these multi-million dollar homes ? It must be people selling for $4 million in Toronto and moving here.

Or.....when I was delivering I went to huge mansions that had expensive cars in the driveway and young people living in the homes.

They were primarily from Arab countries and I asked a guy who owned a favored Arab restaurant they hung around and ordered from...where these kids got the money to be living in these homes and driving exotic cars. He laughed and said......drug money.

These young guys don't go to school. They don't work. They just live in big homes, drive around in expensive cars and order takeout Arabian food.

They are just placeholders of real estate for their parents back home, who probably own homes all over the place.
 

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I took a drive around our city last night, and there is building going on everywhere.

Single family homes, condos, townhouses, rental apartments, high rises.

The problem isn't building homes. It is building homes that are affordable for "average income" folks.

Garth Turner did the numbers on his blog and it requires a $250K income to buy an average home, which is about 1% of the population.

Today our city and just around the edges of it has 417 listings for sale, so it isn't like there are no homes for sale.
The fact that there is more demand than supply drives up prices. Building more housing and expanding supply will help to suppress prices. Canada has very high household growth, we need to build a lot of units.
 

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^ Ie. be on the Sunshine List before you can consider purchasing an "average" home.

Look at the city of glass (Toronto), the "average" "condo" (not a "house") hovers around $500K for 1,000 square feet or less. I would say more than half of them are not home-owners considered - they're either rentals, AirBnB or basically a speculative-based "investment".

No wonder the prices go insane on houses since a 'fancy apartment" can cost $500K (if not more) already.
Condos in Toronto are now well over $1000 psf. So a 1000 sqft condo is 1M+.
 

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Condos in Toronto are now well over $1000 psf. So a 1000 sqft condo is 1M+.
I never understood the logic of buying a massive condo. I like living in a city (living in both central Toronto and Vancouver have been great) but to me, the whole idea was a lean city lifestyle.

I have a small apartment. But if I wanted a ton of space (and I might some day), wouldn't it be much nicer to live in a house, somewhere outside a city center? I can think of plenty of locations in Canada where I could happily live.

But I don't understand the appeal of buying a huge condo in a place like Toronto or Vancouver. Just seems like poor value to me. Not only is it over a million bucks, but you're also going to pay a few thousand bucks in monthly condo fees.
 

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There is a similar problem for renters, that there are rental units and more being built, but they are luxury units with high monthly rental fees.

The key word in these stories is "affordable" for people with "low or average incomes". That puts a one bedroom unit at around $750 a month, which are few and far between.

Landlords are skirting around rental laws by performing minor "upgrades" and then jacking the rent up forever. Another is move in to boot out tenants and then rent for a higher amount.

The rental problem is caused by the lack of home ownership at the low end of housing. We need a lot more affordable homes.........not million dollar homes or pricey luxury rentals.

Where do they think we are.........Miami Beach oceanfront ?

This is Canada and we have vacant land up the wazoo. The only reason for high prices is greed.
 

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The solution is time tested and simple.

Use the CMHC to buy land, service land, place factory built homes on concrete basements on land, sell units online, provide mortgage guarantees with 0% down and low interest rates.

Voila....problem solved. People get an affordable home and the government gets their money back. Cut out all the land speculators, builders, real estate agents, and other costs.

Relieve the pressure on rental units.

MPs should get off their lazy butts and get it done.

 

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I never understood the logic of buying a massive condo. I like living in a city (living in both central Toronto and Vancouver have been great) but to me, the whole idea was a lean city lifestyle.

I have a small apartment. But if I wanted a ton of space (and I might some day), wouldn't it be much nicer to live in a house, somewhere outside a city center? I can think of plenty of locations in Canada where I could happily live.

But I don't understand the appeal of buying a huge condo in a place like Toronto or Vancouver. Just seems like poor value to me. Not only is it over a million bucks, but you're also going to pay a few thousand bucks in monthly condo fees.
You can't buy a detached house anywhere in the GTA for 1M.
 

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The solution is time tested and simple.

Use the CMHC to buy land, service land, place factory built homes on concrete basements on land, sell units online, provide mortgage guarantees with 0% down and low interest rates.

Voila....problem solved. People get an affordable home and the government gets their money back. Cut out all the land speculators, builders, real estate agents, and other costs.

Relieve the pressure on rental units.

MPs should get off their lazy butts and get it done.

Sprawl is not the answer. Go move to 1980s USSR.
 

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Calgary housing prices are going crazy lately. We saw a house in 2019 and asking was $375k and they were willing to sell for $365k. However, nobody bought it at that time. Just one washroom in 1,100 sqft house and very old carpet.

They haven't done any work since then and now that house is sold for $480k this week. Not sure who is buying those houses and how are they going make any money in the near future since the interest rate is going up?
 

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In our city you can drive in any direction 5 minutes and be in vacant land or a hundred miles.

Most Canadian cities are similar with a couple of exceptions like Toronto and Vancouver.
 
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