23 ms·

The U.S. housing market vs. the Canadian housing market

241 points by rufus_foreman 3y ago

samr71 3y ago
The housing market in the Anglosphere is a gigantic Ponzi scheme. That these countries shortsightedly decided to make housing the primary driver of middle class wealth will go down as of the the greatest own-goals in history. 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.
- deleted 3y ago
  [deleted]
- cjbgkagh 3y ago
  Don’t forget they have to import lots of people to keep the ponzi scheme going.
  - bell-cot 3y ago
    Lots of ever-richer-and-richer people.
- acover 3y ago
  The incentives are hilariously broken. 60-70% of the population owns homes and want to restrict new construction, while the federal government wants to solve economic problems with 2.5% immigration.
  - gre 3y ago
    Is restricting new construction the problem? I believe the problem is airbnb, mega-corporations/banks buying up and renting out homes, homes that sit empty trying to get exorbitant rental rates, vacation homes and non-homestead homes that sit empty... 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.
    - harmmonica 3y ago
      Tangential to the broader topic here, but what's just happened in NYC with Airbnb, provided enforcement actually takes place, is going to be very telling in the coming months and could have far-reaching implications for the housing market, specifically in those markets that are popular Airbnb destinations. I have a very small, entry-level apartment in a popular downtown neighborhood in NYC (yep, I'm a landlord--guilty!). Tenants usually only stay for a year or two given a bunch of different reasons, but the reason I bring that up is that I have a long history with the NYC rental market. 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/ 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.
- generic92034 3y ago
  I think this is not specific for the Anglosphere.
  - phatfish 3y ago
    Indeed, a strange comment considering that Chinese property companies are the ones billions in debt and were using deposits buyers made on one property as leverage to build another somewhere else.
- tootie 3y ago
  -1 for abusing the term "Ponzi scheme" but otherwise I'm with you. Ponzi implies this was some elaborate conspiracy with a puppeteer at the top when it reality it's an emergent property of 50 years of misaligned incentives playing out in similar ways across multiple nations in similar ways. 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.
  - epicureanideal 3y ago
    > 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. There's plenty of demand for housing. There's no reason we can't build more to meet that need, other than regulation.
    - hungryforcodes 3y ago
      This is true and not true. Desirable land aka location is where everyone wants to buy. This drives the price up. Building in the middle of nowhere increases available housing, but doesn't solve the problem really, because no one wants to live there. 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.
      - ghaff 3y ago
        >In theory remote work could help with this problem, but honestly it's really only available to workers who work in offices. 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.)
- gonzo41 3y ago
  Australia is afflicted by this insanity as well. We have Trillions tied up in housing. Yet productivity and economic complexity are on the decline because everyone is trying to flip houses and make housing into an investment vehicle rather that invest in new businesses.
  - swores 3y ago
    A minor pedantic point: not "as well", since the comment you replied to talked about "in the Anglosphere" which by pretty much any definition certainly includes Australia :)
- rcme 3y ago
  The real estate market in the US is one of the cheapest in the world relative to incomes. Perhaps real estate is actually more valuable than you’ve been lead to believe.
  - epicureanideal 3y ago
    > The real estate market in the US is one of the cheapest in the world relative to incomes. 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...
    - poulsbohemian 3y ago
      How would you categorize it as being different 20-30 years ago than today? I ask because my observations of friends and family who were buying / selling in that era is that the more things change, the more they stay the same. When I think about the baby boomers I know who have real wealth, every one of them will tell you a story of buying real estate in the 70s and 80s…
      - almost_usual 3y ago
        The early 80s were easily as unaffordable as now with the high rates then.
        poulsbohemian 3y ago
        Yes, and yet people bought and sold properties and those that held eventually saw their asset appreciate. And that’s my point - “Before all was the land…” is the start of many opening chapters on real estate, because oil, mining, timber, housing, commerce - it all ties back to this physical asset. It is innately an immovable asset thus it will always have value and that value will fluctuate (generally increasing…) based on its marketability and use. So sure - real estate is different in each decade, but overall the treatment of it as an investment has been true as long as there has been civilization. It ain’t a coincidence that retiring Roman soldiers were given land as thanks for their service.
- xwdv 3y ago
  The problem isn’t housing and zoning. The problem is people absolutely refuse to go live in places where housing is cheap because they’d rather live in the popular hotspots. 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.
  - jeffbee 3y ago
    Surprisingly, people don't think that living under a racist theocracy in Tulsa is a substitute good for living in a liberal democracy.
    - solarhoma 3y ago
      Wow, spoken like a truly superior progressive where the only morally good place to live in the world is SF. And, apparently every other city will get you killed due to racism. Please consider never leaving your ‘liberal democracy’ because folks like you destroy cities.
    - reducesuffering 3y ago
      Really? Painting all of the Midwest as a "racist theocracy?" Those $300k homes are also Nebraska, Kansas, the Dakotas, even blue states like Minnesota, Illinois, and Michigan.
    - poulsbohemian 3y ago
      You aren’t wrong, but I also want to throw out a challenge to anyone with similar thinking: help us. You might be surprised by the number of people living in deep red areas who crave political change. We can’t do it without political and financial support from the more liberal parts of each state / the country. There’s even the option of moving here and being part of boots-on-the-ground change. Some of these communities can and will change in my lifetime, even if it is a slow process. And the housing is cheaper too.
      - 3y ago
- tempsy 3y ago
  housing is expensive in coastal metros in 95% of the country you can buy a house for under $400k.
- almost_usual 3y ago
  > The housing market in the Anglosphere is a gigantic Ponzi scheme. What? Have you seen real estate prices in Hong Kong and Singapore? The US is pretty cheap compared to the rest of the world.
  - samr71 3y ago
    (Arguably Hong Kong and Singapore are in the Anglosphere but) Those are city states. Housing in Manhattan is really expensive too.
paganel 3y ago
Crazy to see how the second largest country in the world by surface is so dysfunctional when it comes to housing (similar point could be made about Australia, a continent in itself). 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.
- xienze 3y ago
  Canada is committed to absurd levels of immigration relative to population. The crucial difference between population growth by birth versus by immigration is that you get ~20 years for housing supply to catch up to every new person. With growth by immigration, every new person needs housing _today_. The Canadian government isn’t creating housing at anywhere near the same rate as immigration. It’s really not complicated to understand what’s happening.
  - reducesuffering 3y ago
    It's quite an outlier for having 500k immigrants per year, with a population of 39m. That's 1.25% per year. In 20 years, less than a generation, 25% of the population is entirely new. There's already a housing crisis and they're set to add 10 million people in 20 years? Build the housing first, otherwise you're just playing musical chairs and jettisoning people onto the street.
    - likenesstheft 3y ago
      It’s a shell game. A less informed population won’t notice that the political dynasties continue to live luxurious pompous lives off everyone’s backs, and the informed will be too busy in an unfair competition over scraps. Unless there is a huge surplus of housing, college space, and well paying jobs…your leadership is selling you out in a gambit to take in people who will gladly keep voting for them in return for 10% of the typical Canadian lifestyle. You need new leaders who put citizens first, not last.
    - Jerry2 3y ago
      Canada is taking in around 2 million immigrants per year. They're taking in over 900,000 students per year alone. [1] [1] https://www.cbc.ca/lite/story/1.6948733 https://www.cbc.ca/lite/story/1.6948733
lilboiluvr69 3y ago
Last time I visited Toronto I was shocked by the amount of not just homeless people but loud and disruptive or mentally ill homeless people. I remember hearing a blood curdling scream coming from a crowd. I ran over to look, it was just this homeless man screaming at the top of his lungs as people walked past him. 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.
- gedy 3y ago
  You are correct, but I don't think we can ignore the massive drug abuse problem, that has progressively gotten worse over the past 50 years, and especially 20.
  - tmnvix 3y ago
    I would argue that the rise in drug abuse is a consequence of societal issues - not the cause. 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).
    - gedy 3y ago
      I disagree, based on people in my life who weren't disadvantaged by society. Drugs rot people, similar to alcohol.
- dghlsakjg 3y ago
  Just a note: STEM money in Canada is significantly less than STEM money in the US, especially factoring in exchange rates.
Sytten 3y ago
One thing driving this bubble is that we just don't build enough houses compared to the number of immigrants we accept. The liberal government is just starting to accept that fact. Kinda ironic that for years the the rest of Canada told Quebecers they were racists because we were pushing back against immigration and now it's a mainstream view.
- kjkjadksj 3y ago
  Immigration is a good thing. California would not be the fifth largest economy by gdp without 40 million people moving there over its short history. Its only a bad thing when your elected officials choose to scapegoat them to mask their own incompetence with policy making. Immigrants are also moving where there are jobs to be had, but you never see a politician who is against immigration be against attracting more business in their district no sir e.
- kchandra 3y ago
  The problem can be solved in two different directions - accepting fewer immigrants or building more housing (perhaps both for some stretch of time to ensure that citizens can afford housing and build families). Long-term though I don't see a way for the Anglosphere to thrive unless immigration increases, given low birth rates.
matt3210 3y ago
I’ve met lots of engineers living in vans in the Bay Area. I can’t imagine how the lower income people remain housed.
- floodedburner 3y ago
  Been there, done that. I agree with this for the bay area, living in a vehicle seems like the only chance at getting ahead. 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!
  - freedomben 3y ago
    just curious, what did you do for a bathroom? and how long ago was this? 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.
  - almost_usual 3y ago
    > Been there, done that. I agree with this for the bay area, living in a vehicle seems like the only chance at getting ahead. 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.
    - boringg 3y ago
      Bay area strategy is equity lottery ticket over the last decade. Now it is wait and position yourself for the next cycle to begin.
  - hindsightbias 3y ago
    There are far more stealth sprinters on the street than there were two years ago. Every block has one.
joenot443 3y ago
This is probably the most pressing topic in Canadian politics at the moment. Cost of housing, both to buy and to rent, has scaled greatly out of pace with Canadian salaries. Our PM and his cabinet recently went on a retreat with the intention of creating an action plan on how to get us pointed in the right direction. They came back empty handed. [1] 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 https://archive.ph/CZE3y [2] https://www.middlesexcentre.on.ca/sites/default/files/2021-07/Middlesex%20Centre%20Planning%20Guides%20-%20Site%20Plan%20Approval.pdf https://www.middlesexcentre.on.ca/sites/default/files/2021-0...
- lifechoseme123 3y ago
  ...has the Canadian government acknolwedged the role played by Chinese financial elites, laundering money through Canadian real estate? Have they identified the root causes?
- 3y ago
inSenCite 3y ago
Interesting the recent focus on the Canadian market. FT just publiched an opinion peice last weekend on why we are not a global leader. Basically low pop density -> limited competition -> limited innovation & productivity 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.
- Zircom 3y ago
  Oh no, the absolute horror. Homeowners will end up having actually spent money to have somewhere to live instead of making more money just by virtue of owning a home. Plenty of people are already living that reality, it's called renting.
  - zdragnar 3y ago
    Who do you think you rent from?
    - Zircom 3y ago
      A corporation that owns hundreds of homes, and I can say with a completely straight face that the world would probably be better off without them.
  - spiderice 3y ago
    So your solution to people currently getting screwed is to screw more people? And you wonder why these policies don’t make it through.
    - Zircom 3y ago
      If we want to fix the situation someone is eventually going to end up with the short end of the stick. I don't think it's entirely unfair that the people that have benefited for decades from the current situation end up with said short end. 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.
pharmakom 3y ago
Anyone have similar charts including UK, Australia, NZ?
TheRealPomax 3y ago
And of course, the idea that there is "one housing market" in Canada, and presumably the US, is very much part of the problem.
- mitthrowaway2 3y ago
  How so? Can you clarify what you mean?
  - r-s 3y ago
    Some bigger cities (such as Edmonton, 1M people) still have a somewhat sane real estate market. In Edmonton a single family detached home averages around 450k CAD, while average household income is over 120k.
- martythemaniak 3y ago
  Yeah, the US housing market is just too broad to be talked about as one thing. This used to be the case in Canada, where housing was really bad in Vancouver and Toronto, but alright elsewhere. This is just not the case anymore and the last ~5 years or so the Vancouver/Toronto problem has become very widespread. Small cities and town now have insanely high costs as well.
  - randcraw 3y ago
    So have undeveloped land prices risen as much as existing houses? It seems like the obvious solution is to add new housing outside of town to serve the unmet demand, as every metro area in the US has done for over a century. With so much land and so few people, why hasn't Canada done this too?
    - TheRealPomax 3y ago
      Because most of Canada is uninhabitable. It's like asking why the entire state of Alaska has fewer people than live in Seattle if it has so much land. And not "metro Seattle", just... Seattle.
unreal37 3y ago
Canada doesn't really have any other industries other than real estate. Oil and mining, sure. But after that, four of the top 8 industries are centered around real estate.
- glouwbug 3y ago
  Top ~15% GDP is real estate followed by manufacturing
ikerrin1 3y ago
It may have something to do with urban design and zoning in the two countries. Candace has far fewer exurbs and higher suburban density. You can’t just add new housing stock by moving beyond a city’s boundaries.
- diogenescynic 3y ago
  Zoning laws have become weaponized. I would bet that the more zoning laws passed, the higher prices have increased. In places like San Francisco, neighbors can fight your permits and delay your building by years/decades depending on how much effort is put in. California stopped building enough housing supply to meet demand in the 1970s and since then has slowed new housing construction. We need to reverse this.
  - ikerrin1 3y ago
    I can’t speak to SF, but there have been so many construction towers in Canadian cities. They are densifying rapidly, but a lot of it have been condos and apartments.
mabbo 3y ago
I bought a condo in Toronto in 2015 for $592,000 CAD. I live here and quite like it. It's been my home for eight years. 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.
- enraged_camel 3y ago
  >> 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).
- tempsy 3y ago
  Canada’s housing market is much more vulnerable to “popping” than the US because everyone’s mortgage rate resets every 5 years. Let me know what happens to prices when everyone has to pay 8% soon.
  - aquaticsunset 3y ago
    Unless legislation changes, investors will just scoop up the sales and keep property values high. It's a pessimistic take but I don't see any deviation from this path (in Canada and the US).
    - tempsy 3y ago
      Investors paying 8% can’t make the math work either.
      - 3y ago
oh_sigh 3y ago
How can any government ever tackle this issue when many millions of people have already invested huge chunks of their future earnings into the scheme? Explicitly saying "go pound sand" isn't going to work politically, but at the same time the government is implicitly saying that to people who don't own a house.
- reducesuffering 3y ago
  A slow bleed by leveling out home prices. No appreciation, but no decline. Just let inflation catch up.
  - tmnvix 3y ago
    Yep. Keep price rises in check by slowly introducing wealth taxes (LVT, capital gains, whatever). Balance this with decreased tax-take from income. Also ensure that central bank remit takes proper account of property inflation to keep interest rates in check (i.e. not letting them get too low while house prices are rising too quickly).
    - zbrozek 3y ago
      Don't forget actually building homes cheaply.
hiAndrewQuinn 3y ago
I have a wild guess that the entire Anglosphere experiences these kinds of housing inflation issues due to a kind of slow moving collective action problem w/r/t which languages to learn to get the big wages. Housing prices in non-Anglosphere cities worldwide rarely hit these same kinds of extremes.
- disgruntledphd2 3y ago
  Well, except for Hong Kong, Singapore and Tel Aviv. Which is to say, while it's definitely a problem in the Anglosphere, it's not limited to it.
- mcntsh 3y ago
  You're wrong, most EU countries have a worse income-to-housing-price ratio than Canada/Aus/US/NZ. https://www.numbeo.com/property-investment/rankings_by_country.jsp https://www.numbeo.com/property-investment/rankings_by_count...
  - aden1ne 3y ago
    That site uses some wild assumptions about what constitutes household income.
dang 3y ago
Related ongoing thread: Investors account for 30 per cent of home buying in Canada, data show - https://news.ycombinator.com/item?id=37445732 https://news.ycombinator.com/item?id=37445732 - Sept 2023 (129 comments)
- pxmpxm 3y ago
  Why is that relevant? It's not as if those properties remain vacant, that wouldn't exactly make sense from the investor perspective. 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.
  - chongli 3y ago
    The investors aren't building the houses. They're not developers. They're speculators. They're the real estate equivalent of scalpers buying up all the Taylor Swift tickets and reselling at huge markups. Except they're doing it with shelter, a basic human need, rather than a luxury entertainment product.
    - amadeuspagel 3y ago
      Developers build houses so that they can sell them, and use the proceeds to build the next house.
      - chongli 3y ago
        Houses aren't being built. We've had a huge reduction in construction essentially since 2008. This is why the scalper analogy fits: it's a largely fixed supply with skyrocketing demand and investors see it as a gold rush.
        amadeuspagel 3y ago
        > Houses aren't being built. 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.
jedberg 3y ago
One big difference between Canada and the US is tax policy related to housing. In Canada, you don't pay capital gains on the sale of your home. In the USA you do if the gain was over $250k ($500k if you're married). So this creates a huge incentive in Canada to buy a house, renovate it while you live there, and then sell it and apply the entire gain to your next purchase. It means Canadians who are already in the system can afford a lot more house in their subsequent purchases, especially at the high end.
- larsnystrom 3y ago
  Capital gains taxes on your primary residence stops older people (who have large unrealized gains in the home they own) from selling their large, built-to-accommodate-a-family house to buy something smaller in a more convenient location. They’re not able to buy something in the same price bracket after selling, because of capital gains taxes. So old people stay in their large homes and younger people, who would actually need that larger house, can’t get into the market. 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.
  - jedberg 3y ago
    It makes it more efficient by allowing the price to go more towards the natural price, which is high due to lack of inventory. 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.
    - maxerickson 3y ago
      The lack of inventory isn't particularly natural.
  - floren 3y ago
    Aren't you exempted from capital gains tax if you reinvest the money within a year or whatever?
ilrwbwrkhv 3y ago
Canada is a country filled with risk averse people who have been brainwashed into thinking real estate as the only investment which "smart" people do. The result is a country which severely lacks innovation, has huge problems of oligopoly at every level, healthcare and social nets falling apart at the seams and housing which is out of control. But hey, look at how much the 50 year old risk averse granddad has through sitting on properties for 30 years like some perverted dragon. 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.
- VHRanger 3y ago
  [citation needed]
- edrxty 3y ago
  It seems like societies start to have issues when they become too risk averse and comfortable. Humans are actually really good at handling risk and even negative outcomes and it's very central to our nature. The problem is when the risk probabilities become so small that we can't actually assess them so we start doing absolutely ridiculous things to continue mitigating them.
- jt2190 3y ago
  We can explain this without "brainwashing": Risk-taking Canadians move to the United States, leaving behind the risk-averse. ;) 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.
  - otoburb 3y ago
    >>In reality, Canada and the U.S. have a "common market" of sorts that allows talent to move back and forth fairly easily. 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 https://www.nature.com/articles/nm1299_1336a [2] https://www.randstad.ca/employers/workplace-insights/job-market-in-canada/a-primer-on-the-canada-tech-brain-drain-and-how-to-solve-it/ https://www.randstad.ca/employers/workplace-insights/job-mar...
great_psy 3y ago
Implicitly, this speaks volumes about how much worse life is in other countries. 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.
- georgeburdell 3y ago
  I have some familiarity with one prominent immigrant group in Canada. Shame keeps people already here from talking about how hard life is, because of the pre-conceived notion that Canadian life is easier. There is no feedback loop
  - glouwbug 3y ago
    We certainly aren't dying of malaria or religious war
    - georgeburdell 3y ago
      I don’t think most immigrants to Canada have those concerns
llm_nerd 3y ago
Canada is currently entering catastrophe levels, but because of lagging consequences people don't realize how much of a disaster is before us. There is a collective delusion that has sustained some profoundly self destructive policies. The toll is coming due. 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. https://archive.ph/4xWtC https://archive.ph/4xWtC 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.
- 88913527 3y ago
  Stuff like UBI sounds less insane if that's your alternative, and if it's truly as bad as you're suggesting it is. I wouldn't know the Canadian market well enough but based on armchair knowledge of list prices, paired with the knowledge of lower wages, it doesn't seem too far off.
  - creato 3y ago
    I don't see how UBI helps. It would help if home prices were low enough such that builders aren't incentivized to build, but high enough that people can't afford them. But that isn't the scenario. In the current scenario, UBI or any other form of rent subsidy is just going to go almost directly into property owners bank accounts.
    - midasuni 3y ago
      UBI would simply increase housing costs. The only way it wouldn’t is if UBI was funded from a land value tax, but even that would require enough housing in non desirable areas.
  - chiefalchemist 3y ago
    Unless there's in increase in housing supply, UBI will simply increase what the market can bear. That is, in due time, the UBI "advantage" will end up in the pocket of landlords.
amadeuspagel 3y ago
Canadian housing prices are not irrational. Assuming that no new housing gets built in canada, but canada keeps welcoming immigrants, no new supply but increasing demand, the prices will rise even further.
- stevenhuang 3y ago
  The supply may be so limited that it may even be the case the demand from the limited amount of people able to afford it at these levels already exceeds it. 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.
- personomas 3y ago
  This is the real problem. We stopped building cities. Yet population continues to grow.
taxman22 3y ago
There is certainly a housing problem in Canada, but isn't some of this attributable to the Canadian dollar getting weaker since 2009? It went from 1=1 to $1.4CAD to $1 USD today. Real housing prices will increase as wages in Canada decrease in USD, and asset prices increase in CAD.
dan-robertson 3y ago
I wonder how much other things like urbanisation need to be controlled for. Eg skimming Wikipedia, over 40% of canadas population is in urban areas with a population over 500k whereas the percentage for the US is much lower. (Though my guess is that different classifications for ‘urban area’ mess up my quick counting). 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.
jmyeet 3y ago
The problem here is capitalism generally and neoliberalism specifically. 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.
- refurb 3y ago
  No, the problem isn't capitalism, since many other countries that are capitalist don't have the same problem with housing prices (e.g. Japan). 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.
fnetisma 3y ago
If you talk to anyone here in Canada there is bipartisanship. Real Estate owners and non-owners both agree housing prices to be a huge issue around Canada right now, but the former would never budge on reducing the prices as a means to a solution. They have too much invested too late. Non-owners on the other hand want price corrections to take place, but systemic issues such as a rising population due to immigration [1] and increasing construction costs [2] are causing upward pressure. [1] https://www.cbc.ca/amp/1.6938242 https://www.cbc.ca/amp/1.6938242 [2] https://thoughtleadership.rbc.com/proof-point-soaring-construction-costs-will-hamper-canadas-homebuilding-ambitions/#:~:text=Up%2051%25%20since%20the%20start,the%20first%20quarter%20of%202020 https://thoughtleadership.rbc.com/proof-point-soaring-constr....
- MichaelZuo 3y ago
  There is no 'bipartisanship' on this issue as all major parties strongly support at least some mixture of policies that are known to increase housing prices. 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.
  - fnetisma 3y ago
    Sorry, I wasn’t clear enough, I don’t mean bipartisanship in the political sense. I mean bipartisanship between two groups of people namely real estate owners and people who don’t own real estate. At a general level, sellers want high prices and buyers want lower prices, but the level at which the prices are right now is simply way too high if compared with income per capita to be justified for a home purchase, and correction to “USA levels” assuming that’s the baseline is also not justifiable as home equity is a huge chunk of everyone’s wealth
aborsy 3y ago
Everyone talks about the housing crisis in Canada. But the post also includes the curves for income growth. Unfortunately, unlike US, the wages simply don’t increase much in Canada. The purchase power is bad.
b3d 3y ago
The current leadership can’t solve this because it would directly contradict their election talking points.
codeisawesome 3y ago
So many people in this and every thread online (there’s a deluge on Reddit / Instagram even, almost feels like astroturfing) complaining about immigrants. Perhaps it’s convenient to blame other people. 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.
- GenerocUsername 3y ago
  It's not astroturfing. Its a major contributor, and has been weaponized to the point that large portions of the population are trained to immediately dismiss any mention of it.
  - codeisawesome 3y ago
    The reason I use the term astroturfing is the complaint posts / comments all look & sound very similar with minor variations, like a “shaped charge” that detonates peoples’ emotional centers and taps into primal emotions like hatred and fear of the Other. 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.
    - Anon_Forever 3y ago
      >primal emotions like hatred and fear of the Other. 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.
AbrahamParangi 3y ago
I think this is an extremely important problem for progressive governments to solve because at the moment they’re doing an extremely bad job of it and opening up opportunities for someone to say: “I am willing to do what is necessary to solve the problem - restrict immigration, ban foreign ownership, eliminate environmental and bureaucratic review”
b3d 3y ago
If we can’t have a discussion without people accusing others of being racist or xenophobic instead of refuting their arguments with data and concrete analysis, then we can’t have a discussion at all. 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.
LikeBeans 3y ago
IMO this needs government intervention. Not just in Canada but the US too. And I think it will require a multi prong approach. There is no one single solution but several needed concurrently. 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.
- junofan 3y ago
  Everything points to our politicians being fine with owners becoming richer and nonowners just being poorer.
- iteria 3y ago
  In the US, there's no real way to force a city to build if they want to and honestly, they shouldn't be forced to. I've seen a city build up fast and it's ugly when the infrastructure lags the amount of people in an area. 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.
richardw 3y ago
Australia is in the same boat. I think this is a similar graph: https://fred.stlouisfed.org/series/QAUR628BIS 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.
tamimio 3y ago
The problem with the Canadian housing market can be summarized in: - 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 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.
isykt 3y ago
The Canadian market is crazy, but comparing it to the US is not very illustrative. The US market is far more expansive, due to the amount of usable land and having 10x the population. A better comparison might be Canada to California.
Tiktaalik 3y ago
Housing becoming so incredibly unaffordable in Canada in recent years (average rents in Vancouver for a one bedroom now touching $2700) are making it a very tenuous argument that any engineer working in Canada should be being paid any less than one in a higher cost of living area of the United States. Vancouver not quite NYC/SF yet, but seems pretty damn expensive compared to many jurisdictions in the USA!
TriangleEdge 3y ago
This is an issue that matters to me a lot. According to StatCan, I was within the 10% income for my age group in 2017 and I wanted to have a home in Ottawa. Condo, townhouse, or detached didn't matter to me much. I went on Zillow and Kijiji to find near 0 availability. I compared homes to Seattle and found beautiful homes that I could afford, In safe neighborhoods with school with good ratings nearby. I did some more research and became resentful. My core question became: why can I make 2x the salary in the US and pay less for better homes? I became and still am resentful. I feel like I am nothing in Canada.

241 points by rufus_foreman 3y ago

The housing market in the Anglosphere is a gigantic Ponzi scheme. That these countries shortsightedly decided to make housing the primary driver of middle class wealth will go down as of the the greatest own-goals in history. 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.

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cjbgkagh 3y ago
Don’t forget they have to import lots of people to keep the ponzi scheme going.
- bell-cot 3y ago
  Lots of ever-richer-and-richer people.
acover 3y ago
The incentives are hilariously broken. 60-70% of the population owns homes and want to restrict new construction, while the federal government wants to solve economic problems with 2.5% immigration.
- gre 3y ago
  Is restricting new construction the problem? I believe the problem is airbnb, mega-corporations/banks buying up and renting out homes, homes that sit empty trying to get exorbitant rental rates, vacation homes and non-homestead homes that sit empty... 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.
  - harmmonica 3y ago
    Tangential to the broader topic here, but what's just happened in NYC with Airbnb, provided enforcement actually takes place, is going to be very telling in the coming months and could have far-reaching implications for the housing market, specifically in those markets that are popular Airbnb destinations. I have a very small, entry-level apartment in a popular downtown neighborhood in NYC (yep, I'm a landlord--guilty!). Tenants usually only stay for a year or two given a bunch of different reasons, but the reason I bring that up is that I have a long history with the NYC rental market. 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/ 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.
generic92034 3y ago
I think this is not specific for the Anglosphere.
- phatfish 3y ago
  Indeed, a strange comment considering that Chinese property companies are the ones billions in debt and were using deposits buyers made on one property as leverage to build another somewhere else.
tootie 3y ago
-1 for abusing the term "Ponzi scheme" but otherwise I'm with you. Ponzi implies this was some elaborate conspiracy with a puppeteer at the top when it reality it's an emergent property of 50 years of misaligned incentives playing out in similar ways across multiple nations in similar ways. 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.
- epicureanideal 3y ago
  > 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. There's plenty of demand for housing. There's no reason we can't build more to meet that need, other than regulation.
  - hungryforcodes 3y ago
    This is true and not true. Desirable land aka location is where everyone wants to buy. This drives the price up. Building in the middle of nowhere increases available housing, but doesn't solve the problem really, because no one wants to live there. 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.
    - ghaff 3y ago
      >In theory remote work could help with this problem, but honestly it's really only available to workers who work in offices. 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.)
gonzo41 3y ago
Australia is afflicted by this insanity as well. We have Trillions tied up in housing. Yet productivity and economic complexity are on the decline because everyone is trying to flip houses and make housing into an investment vehicle rather that invest in new businesses.
- swores 3y ago
  A minor pedantic point: not "as well", since the comment you replied to talked about "in the Anglosphere" which by pretty much any definition certainly includes Australia :)
rcme 3y ago
The real estate market in the US is one of the cheapest in the world relative to incomes. Perhaps real estate is actually more valuable than you’ve been lead to believe.
- epicureanideal 3y ago
  > The real estate market in the US is one of the cheapest in the world relative to incomes. 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...
  - poulsbohemian 3y ago
    How would you categorize it as being different 20-30 years ago than today? I ask because my observations of friends and family who were buying / selling in that era is that the more things change, the more they stay the same. When I think about the baby boomers I know who have real wealth, every one of them will tell you a story of buying real estate in the 70s and 80s…
    - almost_usual 3y ago
      The early 80s were easily as unaffordable as now with the high rates then.
      - poulsbohemian 3y ago
        Yes, and yet people bought and sold properties and those that held eventually saw their asset appreciate. And that’s my point - “Before all was the land…” is the start of many opening chapters on real estate, because oil, mining, timber, housing, commerce - it all ties back to this physical asset. It is innately an immovable asset thus it will always have value and that value will fluctuate (generally increasing…) based on its marketability and use. So sure - real estate is different in each decade, but overall the treatment of it as an investment has been true as long as there has been civilization. It ain’t a coincidence that retiring Roman soldiers were given land as thanks for their service.
xwdv 3y ago
The problem isn’t housing and zoning. The problem is people absolutely refuse to go live in places where housing is cheap because they’d rather live in the popular hotspots. 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.
- jeffbee 3y ago
  Surprisingly, people don't think that living under a racist theocracy in Tulsa is a substitute good for living in a liberal democracy.
  - solarhoma 3y ago
    Wow, spoken like a truly superior progressive where the only morally good place to live in the world is SF. And, apparently every other city will get you killed due to racism. Please consider never leaving your ‘liberal democracy’ because folks like you destroy cities.
  - reducesuffering 3y ago
    Really? Painting all of the Midwest as a "racist theocracy?" Those $300k homes are also Nebraska, Kansas, the Dakotas, even blue states like Minnesota, Illinois, and Michigan.
  - poulsbohemian 3y ago
    You aren’t wrong, but I also want to throw out a challenge to anyone with similar thinking: help us. You might be surprised by the number of people living in deep red areas who crave political change. We can’t do it without political and financial support from the more liberal parts of each state / the country. There’s even the option of moving here and being part of boots-on-the-ground change. Some of these communities can and will change in my lifetime, even if it is a slow process. And the housing is cheaper too.
    - 3y ago
tempsy 3y ago
housing is expensive in coastal metros in 95% of the country you can buy a house for under $400k.
almost_usual 3y ago
> The housing market in the Anglosphere is a gigantic Ponzi scheme. What? Have you seen real estate prices in Hong Kong and Singapore? The US is pretty cheap compared to the rest of the world.
- samr71 3y ago
  (Arguably Hong Kong and Singapore are in the Anglosphere but) Those are city states. Housing in Manhattan is really expensive too.

paganel 3y ago

Crazy to see how the second largest country in the world by surface is so dysfunctional when it comes to housing (similar point could be made about Australia, a continent in itself). 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.

xienze 3y ago
Canada is committed to absurd levels of immigration relative to population. The crucial difference between population growth by birth versus by immigration is that you get ~20 years for housing supply to catch up to every new person. With growth by immigration, every new person needs housing _today_. The Canadian government isn’t creating housing at anywhere near the same rate as immigration. It’s really not complicated to understand what’s happening.
- reducesuffering 3y ago
  It's quite an outlier for having 500k immigrants per year, with a population of 39m. That's 1.25% per year. In 20 years, less than a generation, 25% of the population is entirely new. There's already a housing crisis and they're set to add 10 million people in 20 years? Build the housing first, otherwise you're just playing musical chairs and jettisoning people onto the street.
  - likenesstheft 3y ago
    It’s a shell game. A less informed population won’t notice that the political dynasties continue to live luxurious pompous lives off everyone’s backs, and the informed will be too busy in an unfair competition over scraps. Unless there is a huge surplus of housing, college space, and well paying jobs…your leadership is selling you out in a gambit to take in people who will gladly keep voting for them in return for 10% of the typical Canadian lifestyle. You need new leaders who put citizens first, not last.
  - Jerry2 3y ago
    Canada is taking in around 2 million immigrants per year. They're taking in over 900,000 students per year alone. [1] [1] https://www.cbc.ca/lite/story/1.6948733 https://www.cbc.ca/lite/story/1.6948733

lilboiluvr69 3y ago

Last time I visited Toronto I was shocked by the amount of not just homeless people but loud and disruptive or mentally ill homeless people. I remember hearing a blood curdling scream coming from a crowd. I ran over to look, it was just this homeless man screaming at the top of his lungs as people walked past him. 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.

gedy 3y ago
You are correct, but I don't think we can ignore the massive drug abuse problem, that has progressively gotten worse over the past 50 years, and especially 20.
- tmnvix 3y ago
  I would argue that the rise in drug abuse is a consequence of societal issues - not the cause. 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).
  - gedy 3y ago
    I disagree, based on people in my life who weren't disadvantaged by society. Drugs rot people, similar to alcohol.
dghlsakjg 3y ago
Just a note: STEM money in Canada is significantly less than STEM money in the US, especially factoring in exchange rates.

Sytten 3y ago

One thing driving this bubble is that we just don't build enough houses compared to the number of immigrants we accept. The liberal government is just starting to accept that fact. Kinda ironic that for years the the rest of Canada told Quebecers they were racists because we were pushing back against immigration and now it's a mainstream view.

kjkjadksj 3y ago
Immigration is a good thing. California would not be the fifth largest economy by gdp without 40 million people moving there over its short history. Its only a bad thing when your elected officials choose to scapegoat them to mask their own incompetence with policy making. Immigrants are also moving where there are jobs to be had, but you never see a politician who is against immigration be against attracting more business in their district no sir e.
kchandra 3y ago
The problem can be solved in two different directions - accepting fewer immigrants or building more housing (perhaps both for some stretch of time to ensure that citizens can afford housing and build families). Long-term though I don't see a way for the Anglosphere to thrive unless immigration increases, given low birth rates.

matt3210 3y ago

I’ve met lots of engineers living in vans in the Bay Area. I can’t imagine how the lower income people remain housed.

floodedburner 3y ago
Been there, done that. I agree with this for the bay area, living in a vehicle seems like the only chance at getting ahead. 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!
- freedomben 3y ago
  just curious, what did you do for a bathroom? and how long ago was this? 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.
- almost_usual 3y ago
  > Been there, done that. I agree with this for the bay area, living in a vehicle seems like the only chance at getting ahead. 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.
  - boringg 3y ago
    Bay area strategy is equity lottery ticket over the last decade. Now it is wait and position yourself for the next cycle to begin.
- hindsightbias 3y ago
  There are far more stealth sprinters on the street than there were two years ago. Every block has one.

joenot443 3y ago

This is probably the most pressing topic in Canadian politics at the moment. Cost of housing, both to buy and to rent, has scaled greatly out of pace with Canadian salaries. Our PM and his cabinet recently went on a retreat with the intention of creating an action plan on how to get us pointed in the right direction. They came back empty handed. [1] 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 https://archive.ph/CZE3y [2] https://www.middlesexcentre.on.ca/sites/default/files/2021-07/Middlesex%20Centre%20Planning%20Guides%20-%20Site%20Plan%20Approval.pdf https://www.middlesexcentre.on.ca/sites/default/files/2021-0...

lifechoseme123 3y ago
...has the Canadian government acknolwedged the role played by Chinese financial elites, laundering money through Canadian real estate? Have they identified the root causes?
3y ago

inSenCite 3y ago

Interesting the recent focus on the Canadian market. FT just publiched an opinion peice last weekend on why we are not a global leader. Basically low pop density -> limited competition -> limited innovation & productivity 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.

Zircom 3y ago
Oh no, the absolute horror. Homeowners will end up having actually spent money to have somewhere to live instead of making more money just by virtue of owning a home. Plenty of people are already living that reality, it's called renting.
- zdragnar 3y ago
  Who do you think you rent from?
  - Zircom 3y ago
    A corporation that owns hundreds of homes, and I can say with a completely straight face that the world would probably be better off without them.
- spiderice 3y ago
  So your solution to people currently getting screwed is to screw more people? And you wonder why these policies don’t make it through.
  - Zircom 3y ago
    If we want to fix the situation someone is eventually going to end up with the short end of the stick. I don't think it's entirely unfair that the people that have benefited for decades from the current situation end up with said short end. 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.

pharmakom 3y ago

Anyone have similar charts including UK, Australia, NZ?

TheRealPomax 3y ago

And of course, the idea that there is "one housing market" in Canada, and presumably the US, is very much part of the problem.

mitthrowaway2 3y ago
How so? Can you clarify what you mean?
- r-s 3y ago
  Some bigger cities (such as Edmonton, 1M people) still have a somewhat sane real estate market. In Edmonton a single family detached home averages around 450k CAD, while average household income is over 120k.
martythemaniak 3y ago
Yeah, the US housing market is just too broad to be talked about as one thing. This used to be the case in Canada, where housing was really bad in Vancouver and Toronto, but alright elsewhere. This is just not the case anymore and the last ~5 years or so the Vancouver/Toronto problem has become very widespread. Small cities and town now have insanely high costs as well.
- randcraw 3y ago
  So have undeveloped land prices risen as much as existing houses? It seems like the obvious solution is to add new housing outside of town to serve the unmet demand, as every metro area in the US has done for over a century. With so much land and so few people, why hasn't Canada done this too?
  - TheRealPomax 3y ago
    Because most of Canada is uninhabitable. It's like asking why the entire state of Alaska has fewer people than live in Seattle if it has so much land. And not "metro Seattle", just... Seattle.

unreal37 3y ago

Canada doesn't really have any other industries other than real estate. Oil and mining, sure. But after that, four of the top 8 industries are centered around real estate.

glouwbug 3y ago
Top ~15% GDP is real estate followed by manufacturing

ikerrin1 3y ago

It may have something to do with urban design and zoning in the two countries. Candace has far fewer exurbs and higher suburban density. You can’t just add new housing stock by moving beyond a city’s boundaries.

diogenescynic 3y ago
Zoning laws have become weaponized. I would bet that the more zoning laws passed, the higher prices have increased. In places like San Francisco, neighbors can fight your permits and delay your building by years/decades depending on how much effort is put in. California stopped building enough housing supply to meet demand in the 1970s and since then has slowed new housing construction. We need to reverse this.
- ikerrin1 3y ago
  I can’t speak to SF, but there have been so many construction towers in Canadian cities. They are densifying rapidly, but a lot of it have been condos and apartments.

mabbo 3y ago

I bought a condo in Toronto in 2015 for $592,000 CAD. I live here and quite like it. It's been my home for eight years. 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.

enraged_camel 3y ago
>> 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).
tempsy 3y ago
Canada’s housing market is much more vulnerable to “popping” than the US because everyone’s mortgage rate resets every 5 years. Let me know what happens to prices when everyone has to pay 8% soon.
- aquaticsunset 3y ago
  Unless legislation changes, investors will just scoop up the sales and keep property values high. It's a pessimistic take but I don't see any deviation from this path (in Canada and the US).
  - tempsy 3y ago
    Investors paying 8% can’t make the math work either.
    - 3y ago

oh_sigh 3y ago

How can any government ever tackle this issue when many millions of people have already invested huge chunks of their future earnings into the scheme? Explicitly saying "go pound sand" isn't going to work politically, but at the same time the government is implicitly saying that to people who don't own a house.

reducesuffering 3y ago
A slow bleed by leveling out home prices. No appreciation, but no decline. Just let inflation catch up.
- tmnvix 3y ago
  Yep. Keep price rises in check by slowly introducing wealth taxes (LVT, capital gains, whatever). Balance this with decreased tax-take from income. Also ensure that central bank remit takes proper account of property inflation to keep interest rates in check (i.e. not letting them get too low while house prices are rising too quickly).
  - zbrozek 3y ago
    Don't forget actually building homes cheaply.

hiAndrewQuinn 3y ago

I have a wild guess that the entire Anglosphere experiences these kinds of housing inflation issues due to a kind of slow moving collective action problem w/r/t which languages to learn to get the big wages. Housing prices in non-Anglosphere cities worldwide rarely hit these same kinds of extremes.

disgruntledphd2 3y ago
Well, except for Hong Kong, Singapore and Tel Aviv. Which is to say, while it's definitely a problem in the Anglosphere, it's not limited to it.
mcntsh 3y ago
You're wrong, most EU countries have a worse income-to-housing-price ratio than Canada/Aus/US/NZ. https://www.numbeo.com/property-investment/rankings_by_country.jsp https://www.numbeo.com/property-investment/rankings_by_count...
- aden1ne 3y ago
  That site uses some wild assumptions about what constitutes household income.

dang 3y ago

Related ongoing thread: Investors account for 30 per cent of home buying in Canada, data show - https://news.ycombinator.com/item?id=37445732 https://news.ycombinator.com/item?id=37445732 - Sept 2023 (129 comments)

pxmpxm 3y ago
Why is that relevant? It's not as if those properties remain vacant, that wouldn't exactly make sense from the investor perspective. 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.
- chongli 3y ago
  The investors aren't building the houses. They're not developers. They're speculators. They're the real estate equivalent of scalpers buying up all the Taylor Swift tickets and reselling at huge markups. Except they're doing it with shelter, a basic human need, rather than a luxury entertainment product.
  - amadeuspagel 3y ago
    Developers build houses so that they can sell them, and use the proceeds to build the next house.
    - chongli 3y ago
      Houses aren't being built. We've had a huge reduction in construction essentially since 2008. This is why the scalper analogy fits: it's a largely fixed supply with skyrocketing demand and investors see it as a gold rush.
      - amadeuspagel 3y ago
        > Houses aren't being built. 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.

jedberg 3y ago

One big difference between Canada and the US is tax policy related to housing. In Canada, you don't pay capital gains on the sale of your home. In the USA you do if the gain was over $250k ($500k if you're married). So this creates a huge incentive in Canada to buy a house, renovate it while you live there, and then sell it and apply the entire gain to your next purchase. It means Canadians who are already in the system can afford a lot more house in their subsequent purchases, especially at the high end.

larsnystrom 3y ago
Capital gains taxes on your primary residence stops older people (who have large unrealized gains in the home they own) from selling their large, built-to-accommodate-a-family house to buy something smaller in a more convenient location. They’re not able to buy something in the same price bracket after selling, because of capital gains taxes. So old people stay in their large homes and younger people, who would actually need that larger house, can’t get into the market. 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.
- jedberg 3y ago
  It makes it more efficient by allowing the price to go more towards the natural price, which is high due to lack of inventory. 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.
  - maxerickson 3y ago
    The lack of inventory isn't particularly natural.
- floren 3y ago
  Aren't you exempted from capital gains tax if you reinvest the money within a year or whatever?

ilrwbwrkhv 3y ago

Canada is a country filled with risk averse people who have been brainwashed into thinking real estate as the only investment which "smart" people do. The result is a country which severely lacks innovation, has huge problems of oligopoly at every level, healthcare and social nets falling apart at the seams and housing which is out of control. But hey, look at how much the 50 year old risk averse granddad has through sitting on properties for 30 years like some perverted dragon. 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.

VHRanger 3y ago
[citation needed]
edrxty 3y ago
It seems like societies start to have issues when they become too risk averse and comfortable. Humans are actually really good at handling risk and even negative outcomes and it's very central to our nature. The problem is when the risk probabilities become so small that we can't actually assess them so we start doing absolutely ridiculous things to continue mitigating them.
jt2190 3y ago
We can explain this without "brainwashing": Risk-taking Canadians move to the United States, leaving behind the risk-averse. ;) 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.
- otoburb 3y ago
  >>In reality, Canada and the U.S. have a "common market" of sorts that allows talent to move back and forth fairly easily. 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 https://www.nature.com/articles/nm1299_1336a [2] https://www.randstad.ca/employers/workplace-insights/job-market-in-canada/a-primer-on-the-canada-tech-brain-drain-and-how-to-solve-it/ https://www.randstad.ca/employers/workplace-insights/job-mar...

great_psy 3y ago

Implicitly, this speaks volumes about how much worse life is in other countries. 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.

georgeburdell 3y ago
I have some familiarity with one prominent immigrant group in Canada. Shame keeps people already here from talking about how hard life is, because of the pre-conceived notion that Canadian life is easier. There is no feedback loop
- glouwbug 3y ago
  We certainly aren't dying of malaria or religious war
  - georgeburdell 3y ago
    I don’t think most immigrants to Canada have those concerns

llm_nerd 3y ago

Canada is currently entering catastrophe levels, but because of lagging consequences people don't realize how much of a disaster is before us. There is a collective delusion that has sustained some profoundly self destructive policies. The toll is coming due. 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. https://archive.ph/4xWtC https://archive.ph/4xWtC 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.

88913527 3y ago
Stuff like UBI sounds less insane if that's your alternative, and if it's truly as bad as you're suggesting it is. I wouldn't know the Canadian market well enough but based on armchair knowledge of list prices, paired with the knowledge of lower wages, it doesn't seem too far off.
- creato 3y ago
  I don't see how UBI helps. It would help if home prices were low enough such that builders aren't incentivized to build, but high enough that people can't afford them. But that isn't the scenario. In the current scenario, UBI or any other form of rent subsidy is just going to go almost directly into property owners bank accounts.
  - midasuni 3y ago
    UBI would simply increase housing costs. The only way it wouldn’t is if UBI was funded from a land value tax, but even that would require enough housing in non desirable areas.
- chiefalchemist 3y ago
  Unless there's in increase in housing supply, UBI will simply increase what the market can bear. That is, in due time, the UBI "advantage" will end up in the pocket of landlords.

amadeuspagel 3y ago

Canadian housing prices are not irrational. Assuming that no new housing gets built in canada, but canada keeps welcoming immigrants, no new supply but increasing demand, the prices will rise even further.

stevenhuang 3y ago
The supply may be so limited that it may even be the case the demand from the limited amount of people able to afford it at these levels already exceeds it. 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.
personomas 3y ago
This is the real problem. We stopped building cities. Yet population continues to grow.

taxman22 3y ago

There is certainly a housing problem in Canada, but isn't some of this attributable to the Canadian dollar getting weaker since 2009? It went from 1=1 to $1.4CAD to $1 USD today. Real housing prices will increase as wages in Canada decrease in USD, and asset prices increase in CAD.

dan-robertson 3y ago

I wonder how much other things like urbanisation need to be controlled for. Eg skimming Wikipedia, over 40% of canadas population is in urban areas with a population over 500k whereas the percentage for the US is much lower. (Though my guess is that different classifications for ‘urban area’ mess up my quick counting). 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.

jmyeet 3y ago

The problem here is capitalism generally and neoliberalism specifically. 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.

refurb 3y ago
No, the problem isn't capitalism, since many other countries that are capitalist don't have the same problem with housing prices (e.g. Japan). 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.

fnetisma 3y ago

If you talk to anyone here in Canada there is bipartisanship. Real Estate owners and non-owners both agree housing prices to be a huge issue around Canada right now, but the former would never budge on reducing the prices as a means to a solution. They have too much invested too late. Non-owners on the other hand want price corrections to take place, but systemic issues such as a rising population due to immigration [1] and increasing construction costs [2] are causing upward pressure. [1] https://www.cbc.ca/amp/1.6938242 https://www.cbc.ca/amp/1.6938242 [2] https://thoughtleadership.rbc.com/proof-point-soaring-construction-costs-will-hamper-canadas-homebuilding-ambitions/#:~:text=Up%2051%25%20since%20the%20start,the%20first%20quarter%20of%202020 https://thoughtleadership.rbc.com/proof-point-soaring-constr....

MichaelZuo 3y ago
There is no 'bipartisanship' on this issue as all major parties strongly support at least some mixture of policies that are known to increase housing prices. 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.
- fnetisma 3y ago
  Sorry, I wasn’t clear enough, I don’t mean bipartisanship in the political sense. I mean bipartisanship between two groups of people namely real estate owners and people who don’t own real estate. At a general level, sellers want high prices and buyers want lower prices, but the level at which the prices are right now is simply way too high if compared with income per capita to be justified for a home purchase, and correction to “USA levels” assuming that’s the baseline is also not justifiable as home equity is a huge chunk of everyone’s wealth

aborsy 3y ago

Everyone talks about the housing crisis in Canada. But the post also includes the curves for income growth. Unfortunately, unlike US, the wages simply don’t increase much in Canada. The purchase power is bad.

b3d 3y ago

The current leadership can’t solve this because it would directly contradict their election talking points.

codeisawesome 3y ago

So many people in this and every thread online (there’s a deluge on Reddit / Instagram even, almost feels like astroturfing) complaining about immigrants. Perhaps it’s convenient to blame other people. 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.

GenerocUsername 3y ago
It's not astroturfing. Its a major contributor, and has been weaponized to the point that large portions of the population are trained to immediately dismiss any mention of it.
- codeisawesome 3y ago
  The reason I use the term astroturfing is the complaint posts / comments all look & sound very similar with minor variations, like a “shaped charge” that detonates peoples’ emotional centers and taps into primal emotions like hatred and fear of the Other. 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.
  - Anon_Forever 3y ago
    >primal emotions like hatred and fear of the Other. 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.

AbrahamParangi 3y ago

I think this is an extremely important problem for progressive governments to solve because at the moment they’re doing an extremely bad job of it and opening up opportunities for someone to say: “I am willing to do what is necessary to solve the problem - restrict immigration, ban foreign ownership, eliminate environmental and bureaucratic review”

b3d 3y ago

If we can’t have a discussion without people accusing others of being racist or xenophobic instead of refuting their arguments with data and concrete analysis, then we can’t have a discussion at all. 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.

LikeBeans 3y ago

IMO this needs government intervention. Not just in Canada but the US too. And I think it will require a multi prong approach. There is no one single solution but several needed concurrently. 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.

junofan 3y ago
Everything points to our politicians being fine with owners becoming richer and nonowners just being poorer.
iteria 3y ago
In the US, there's no real way to force a city to build if they want to and honestly, they shouldn't be forced to. I've seen a city build up fast and it's ugly when the infrastructure lags the amount of people in an area. 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.

richardw 3y ago

Australia is in the same boat. I think this is a similar graph: https://fred.stlouisfed.org/series/QAUR628BIS 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.

tamimio 3y ago

The problem with the Canadian housing market can be summarized in: - 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 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.

isykt 3y ago

The Canadian market is crazy, but comparing it to the US is not very illustrative. The US market is far more expansive, due to the amount of usable land and having 10x the population. A better comparison might be Canada to California.

Tiktaalik 3y ago

Housing becoming so incredibly unaffordable in Canada in recent years (average rents in Vancouver for a one bedroom now touching $2700) are making it a very tenuous argument that any engineer working in Canada should be being paid any less than one in a higher cost of living area of the United States. Vancouver not quite NYC/SF yet, but seems pretty damn expensive compared to many jurisdictions in the USA!

TriangleEdge 3y ago

This is an issue that matters to me a lot. According to StatCan, I was within the 10% income for my age group in 2017 and I wanted to have a home in Ottawa. Condo, townhouse, or detached didn't matter to me much. I went on Zillow and Kijiji to find near 0 availability. I compared homes to Seattle and found beautiful homes that I could afford, In safe neighborhoods with school with good ratings nearby. I did some more research and became resentful. My core question became: why can I make 2x the salary in the US and pay less for better homes? I became and still am resentful. I feel like I am nothing in Canada.