5 ms·

SFU Prof: Why Toronto housing is becoming as unaffordable as Vancouver's

19 points by kareemm 9y ago

vkou 9y ago
If anyone doubts the premise of this article, and still thinks that lack of supply is the problem, I encourage them to visit Vancouver. There is construction everywhere, with 40-story towers springing up like mushrooms, all across the metro area, creating mini-downtowns. On the edges, mountainsides are being clear-cut, and replaced with suburbs. Almost none of the infrastructure to support it is paid for by the people who are benefiting from the housing crisis. Most provincial funds come from taxing people who contribute value, by doing useful work, instead of leeching off the system.
- franzen 9y ago
  It's not supply. It's speculation. >From 2000 to 2010, the population of New York increased by 2.1 percent while the US Census reported that the number of occupied housing units increased by more than twice that amount, 5.3 percent. . . . If we could build our way out of our affordability crisis, the ratio of housing costs to income should have gone down during this period. However, average rents and the share of income spent on rent both increased well above inflation over the same period. [0] [0] https://www.jacobinmag.com/2017/02/new-york-housing-gentrification-affordability-de-blasio/ https://www.jacobinmag.com/2017/02/new-york-housing-gentrifi...
mabbo 9y ago
I bought my condo less than 2 years ago. The same unit, 11 floors lower, is now for sale for 80% more than I paid. Same condition, just worse view from the balcony. Toronto maaaybe has a bubble going on. (If I can sell for $1m more than my mortgage, I'm going to retire in my 30s and move somewhere cheaper. So far, that looks like it could actually happen).
- 52-6F-62 9y ago
  Good luck with that. It appears hard to know when the getting is good. I'm stuck in the rental loop. Looking outward and seeing rents have increased by at least 200-300 dollars a month for similar sized units is disheartening. It's hard enough to save as it is.
- loader 9y ago
  With enough money there are countries that would be happy to let you retire there.
manishsharan 9y ago
There are a couple of issues that this article misses : a) Why is the rent in Toronto going through the roof ? If people were merely flipping houses, why would they bother with renters ? In Vancouver, the rents in condos were very low. In Toronto, the rents are high and increasing . b) The author mentions Brampton as relatively unaffected due to south asian diaspora concentration. However, Mississauga has similar concentration of South Asians and the housing market has seen a similar appreciation in prices. Is it possible that people find Toronto to be a great city and want to move here ? I know of several families that moved out of mcmansions in Brampton because schools in Toronto are so much better ? Ordinary citizens may be parking their money in Toronto real estate because they may be unsure of the future value of their stock investments.
- toomuchtodo 9y ago
  Vancouver is taxing foreign (i.e. Chinese) money pouring into real estate there, so demand shifted to Toronto (which doesn't have the same tax on foreign purchasers levied yet). https://www.bloomberg.com/news/articles/2016-09-22/foreign-buying-plummets-in-vancouver-after-new-property-tax https://www.bloomberg.com/news/articles/2016-09-22/foreign-b...
mnm1 9y ago
Vancouver, San Francisco, London, New York, Toronto, Seattle, etc. all have the same issue with foreign investments in real estate. Maybe they should consider not selling residential real estate to people who are not permanent residents and won't reside in it in regions where this is a problem.
msie 9y ago
"With limited data, those who had their eyes open often had to rely on anecdote. But inconveniently for the real estate lobby, the inferential, and no longer just anecdotal, case was growing stronger and stronger. The report I wrote last year on Vancouver, for instance, which made the case that foreign capital was playing a major role, did not rely on a single anecdote. All the data it presented were carefully gathered, some of them by Canadian governments. But the evidence had to be pieced together to get a clearer grasp of the issue – including by eliminating other alleged, but ultimately insufficient, causal contributors. When the B.C. government finally collected data, then, it was no surprise that the amount of “foreign citizen buying,” about 13 per cent, in Vancouver was much more than the 3 to 5 per cent estimated by the real estate industry." "Why did speculative buying and total sales suddenly pick up in 2014–15 after a few years of stability? The obvious explanation is that capital flight from China acted as a catalyst." Josh Gordon: It's all the fault of the foreigners. Government: But they only make up 13% of the buyers. Josh Gordon: Ok, foreigners only make 13% of the buyers but they're a CATALYST. Um ok, so no one else is to blame?
- Jack000 9y ago
  In 2014 the CAD was nearly at parity with USD, now it's 0.74 The average price of goods has increased accordingly. As far as I can tell the actual value of a house has stayed about the same, and the purchasing power of Canadians has gone down. Foreigners are a convenient scapegoat, but the 15% tax in Vancouver was barely a speed bump. The chart in this article is pretty misleading as it implies that the tax worked and deflected the foreign buyers to Toronto, when in fact prices has rebounded well beyond the previous peak.
  - kareemm 9y ago
    > when in fact prices has rebounded well beyond the previous peak. Feb 2017: "The average resale price in Greater Vancouver was $878,242 in January, down 18.9 per cent from a year earlier, when it stood at $1.038 million, according to numbers from the Canadian Real Estate Association." Source: http://www.huffingtonpost.ca/2017/02/15/vancouver-average-house-price-january-2017_n_14775268.html http://www.huffingtonpost.ca/2017/02/15/vancouver-average-ho...
justforFranz 9y ago
Let's face facts, housing is a plaything for the ultra-rich.
bryanlarsen 9y ago
The author successfully demolishes a strawman. He's right, the problem was not caused by supply side limitations, but a demand side surged. But the people he's demonizing aren't arguing that. They're saying that the problem can be solved supply side. Build enough housing and prices will stabilize. Easier said than done, but that's the only true long term solution.

19 points by kareemm 9y ago

vkou 9y ago

If anyone doubts the premise of this article, and still thinks that lack of supply is the problem, I encourage them to visit Vancouver. There is construction everywhere, with 40-story towers springing up like mushrooms, all across the metro area, creating mini-downtowns. On the edges, mountainsides are being clear-cut, and replaced with suburbs. Almost none of the infrastructure to support it is paid for by the people who are benefiting from the housing crisis. Most provincial funds come from taxing people who contribute value, by doing useful work, instead of leeching off the system.

franzen 9y ago
It's not supply. It's speculation. >From 2000 to 2010, the population of New York increased by 2.1 percent while the US Census reported that the number of occupied housing units increased by more than twice that amount, 5.3 percent. . . . If we could build our way out of our affordability crisis, the ratio of housing costs to income should have gone down during this period. However, average rents and the share of income spent on rent both increased well above inflation over the same period. [0] [0] https://www.jacobinmag.com/2017/02/new-york-housing-gentrification-affordability-de-blasio/ https://www.jacobinmag.com/2017/02/new-york-housing-gentrifi...

mabbo 9y ago

I bought my condo less than 2 years ago. The same unit, 11 floors lower, is now for sale for 80% more than I paid. Same condition, just worse view from the balcony. Toronto maaaybe has a bubble going on. (If I can sell for $1m more than my mortgage, I'm going to retire in my 30s and move somewhere cheaper. So far, that looks like it could actually happen).

52-6F-62 9y ago
Good luck with that. It appears hard to know when the getting is good. I'm stuck in the rental loop. Looking outward and seeing rents have increased by at least 200-300 dollars a month for similar sized units is disheartening. It's hard enough to save as it is.
loader 9y ago
With enough money there are countries that would be happy to let you retire there.

manishsharan 9y ago

There are a couple of issues that this article misses : a) Why is the rent in Toronto going through the roof ? If people were merely flipping houses, why would they bother with renters ? In Vancouver, the rents in condos were very low. In Toronto, the rents are high and increasing . b) The author mentions Brampton as relatively unaffected due to south asian diaspora concentration. However, Mississauga has similar concentration of South Asians and the housing market has seen a similar appreciation in prices. Is it possible that people find Toronto to be a great city and want to move here ? I know of several families that moved out of mcmansions in Brampton because schools in Toronto are so much better ? Ordinary citizens may be parking their money in Toronto real estate because they may be unsure of the future value of their stock investments.

toomuchtodo 9y ago
Vancouver is taxing foreign (i.e. Chinese) money pouring into real estate there, so demand shifted to Toronto (which doesn't have the same tax on foreign purchasers levied yet). https://www.bloomberg.com/news/articles/2016-09-22/foreign-buying-plummets-in-vancouver-after-new-property-tax https://www.bloomberg.com/news/articles/2016-09-22/foreign-b...

mnm1 9y ago

Vancouver, San Francisco, London, New York, Toronto, Seattle, etc. all have the same issue with foreign investments in real estate. Maybe they should consider not selling residential real estate to people who are not permanent residents and won't reside in it in regions where this is a problem.

msie 9y ago

"With limited data, those who had their eyes open often had to rely on anecdote. But inconveniently for the real estate lobby, the inferential, and no longer just anecdotal, case was growing stronger and stronger. The report I wrote last year on Vancouver, for instance, which made the case that foreign capital was playing a major role, did not rely on a single anecdote. All the data it presented were carefully gathered, some of them by Canadian governments. But the evidence had to be pieced together to get a clearer grasp of the issue – including by eliminating other alleged, but ultimately insufficient, causal contributors. When the B.C. government finally collected data, then, it was no surprise that the amount of “foreign citizen buying,” about 13 per cent, in Vancouver was much more than the 3 to 5 per cent estimated by the real estate industry." "Why did speculative buying and total sales suddenly pick up in 2014–15 after a few years of stability? The obvious explanation is that capital flight from China acted as a catalyst." Josh Gordon: It's all the fault of the foreigners. Government: But they only make up 13% of the buyers. Josh Gordon: Ok, foreigners only make 13% of the buyers but they're a CATALYST. Um ok, so no one else is to blame?

Jack000 9y ago
In 2014 the CAD was nearly at parity with USD, now it's 0.74 The average price of goods has increased accordingly. As far as I can tell the actual value of a house has stayed about the same, and the purchasing power of Canadians has gone down. Foreigners are a convenient scapegoat, but the 15% tax in Vancouver was barely a speed bump. The chart in this article is pretty misleading as it implies that the tax worked and deflected the foreign buyers to Toronto, when in fact prices has rebounded well beyond the previous peak.
- kareemm 9y ago
  > when in fact prices has rebounded well beyond the previous peak. Feb 2017: "The average resale price in Greater Vancouver was $878,242 in January, down 18.9 per cent from a year earlier, when it stood at $1.038 million, according to numbers from the Canadian Real Estate Association." Source: http://www.huffingtonpost.ca/2017/02/15/vancouver-average-house-price-january-2017_n_14775268.html http://www.huffingtonpost.ca/2017/02/15/vancouver-average-ho...

justforFranz 9y ago

Let's face facts, housing is a plaything for the ultra-rich.

bryanlarsen 9y ago

The author successfully demolishes a strawman. He's right, the problem was not caused by supply side limitations, but a demand side surged. But the people he's demonizing aren't arguing that. They're saying that the problem can be solved supply side. Build enough housing and prices will stabilize. Easier said than done, but that's the only true long term solution.