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>Almost all of Canada cannot qualify for a home at current housing prices. How are you quantifying this? If this is true, how is it not reflected in some manne

>Almost all of Canada cannot qualify for a home at current housing prices. How are you quantifying this? If this is true, how is it not reflected in some manner in prices? In other words, who are are the buyers propping up prices? I'm not trolling, because if what you're saying is true it suggests that there is something fundamentally fraudulent about the Canadian housing market.

Fervicus 3y ago
Canadian housing market is full of fraud at all levels, from people falsifying incomes, to real estate agents, to money laundering [0]. [0] - https://www.reca.ca/consumers/financial-considerations/money-laundering-real-estate/ https://www.reca.ca/consumers/financial-considerations/money...
gemstones 3y ago
The buyers are foreign to Canada (investors), so the effects don’t affect the Canadian economy as directly as you might expect.
shagmin 3y ago
I don't have a source on me but I've read plenty about wealthy people in other countries buying large amounts of Canadian real estate as a store of value, even if it sits vacant. Mostly people in countries where there aren't so many great places to invest. But I don't know off hand if that's just a drop in the bucket compared to other things or what.
- cscurmudgeon 3y ago
  That is just vanilla racism/xenophobia. https://news.westernu.ca/2023/01/expert-insight-canadas-ban-on-foreign-homebuyers-is-unlikely-to-affect-housing-affordability/#:~:text=Data%20that%20tracks%20foreign%20buyers,Canadian%20residential%20properties%20in%202020 https://news.westernu.ca/2023/01/expert-insight-canadas-ban-.... Data that tracks foreign buyers and owners in Canada are scarce and patchy. The Canadian Housing Statistics Program shows that non-residents only own about two to six per cent of Canadian residential properties in 2020. Edit: Those numbers are in line with the US. Why is the US real estate market not that crazy then?
  - rossdavidh 3y ago
    Hmmm...2 to 6 percent of a market can be more than enough to make a difference, even a sizeable one, if there is already a shortage. Now, there is still the question of why there is a shortage, but 2 to 6 percent in an already tight market is more than enough to spike the prices. Of course, China shows that you don't need outsider investing to create a ridiculous property affordability situation.
  - electrondood 3y ago
    No, it is a fact. The same happens in the US. Real estate is, at worst, used for sanction evasion and money laundering, and at best, as a loophole for citizens of restrictive countries to extract more of their money from those countries. All of these create an incentive to overbid on real estate. Where I live, this is a known issue. In fact, the top real estate companies specifically try to attract foreign investors, and have stated so publicly. Look at the chart in the article. Home prices plummeted in 2022, when the Canadian government enacted a 1% Underused Housing Tax (UHT) on Canadian residential property that is considered vacant or underused. [0] https://sgp.fas.org/crs/misc/IF11967.pdf https://sgp.fas.org/crs/misc/IF11967.pdf [1] https://www.brookings.edu/articles/the-impact-of-treasurys-pilot-program-on-stemming-the-tide-of-dirty-money-into-us-real-estate https://www.brookings.edu/articles/the-impact-of-treasurys-p... [2] https://www.reuters.com/world/us/us-set-unveil-long-awaited-crackdown-real-estate-money-laundering-2023-08-10/ https://www.reuters.com/world/us/us-set-unveil-long-awaited-... [3] https://gfintegrity.org/press-release/new-report-finds-u-s-real-estate-sector-a-safe-haven-for-money-laundering/ https://gfintegrity.org/press-release/new-report-finds-u-s-r... [4] https://www.faegredrinker.com/en/insights/publications/2023/1/fincen-warns-of-potential-sanction-evasion-by-russian-entities-involved-in-us-commercial-property-investments https://www.faegredrinker.com/en/insights/publications/2023/... [5] https://lewisbrisbois.com/newsroom/legal-alerts/foreign-investors-in-u.s.-real-estate-now-subject-to-greater-scrutiny https://lewisbrisbois.com/newsroom/legal-alerts/foreign-inve...
    - cscurmudgeon 3y ago
      > No, it is a fact. The same happens in the US. Then why is the Canadian real estate market so much f'ed up than the US market?
- Tiktaalik 3y ago
  There likely was a great deal of this at some point before 2015, but in 2015 BC finally started tracking who was buying homes and brought in a foreign buyer tax and since there there's been only ever more scrutiny on foreign buying, and from everything I've read foreign buying has fallen off a cliff. Because there was no data tracked before 2015, whether or not there was indeed a significant amount of foreign buying remains speculation and theory but there are some signs that support the notion that it was important. For example major luxury condo builder Westbank has significantly reduced their operations in Vancouver, pivoting away from super luxury homes explicitly marketed as pied-a-terres and in the pages of Monocle magazine and are now building increasingly in the USA and even Japan. Some of their projects in Vancouver changed from being condos to rental. That this all happened post foreign buyer tax suggests that foreign buyers were a critical part of their business plan and they needed to remarkably change it after foreign buyers went away.
swarnie 3y ago
The R/canada subreddit had a good breakdown last week Essentially 92% of Canadians can't afford the average home based on the average income. I think if you do "top" of the last month it'll be near the top.
ttul 3y ago
My household is in the top 1% of income earners. We cannot afford a house in our exurb. 20 years ago, with this level of income, it would have been trivially affordable. Yes, I rent for $4250 a home that you can buy for $1.7M. The distortion here is beyond ridiculous. The equivalent mortgage would be something like $7K before property taxes and maintenance. Because you can’t imagine government moving fast enough to change policy, the only way out is likely a sudden and shocking collapse in home values caused by the bond market failing to continue its belief that Canada is sound.
- nucleardog 3y ago
  I was renting a $1.4m home for $2200/mo in Vancouver. Something like a $10k/mo mortgage payment for 25 years at current rates. But they had bought it like 6 or 7 years before so _their_ mortgage was substantially lower. We haven’t even seen the full brunt of this—every time one of these properties changes hands at this point as the current owner cashes out, we’re going to see one more of these “affordable” rentals off the market in one way or another. (Either they hike the rent to the point of unaffordability, occupy it themselves, or leave it sit empty to just store or accumulate value.) And just to put it in some perspective—to afford that shitty run down house I was renting, you’d need to be making somewhere around $720k/yr pre-tax to pay the mortgage and maintain the “1/3 toward housing” ratio. People in Canada do not make $720k/yr.
  - ttul 3y ago
    Absolutely this. A friend considers herself too poor to afford a house in Vancouver. Her company makes $10M a year and she peels off 10% net profit. Only in Vancouver…

Fervicus 3y ago

Canadian housing market is full of fraud at all levels, from people falsifying incomes, to real estate agents, to money laundering [0]. [0] - https://www.reca.ca/consumers/financial-considerations/money-laundering-real-estate/ https://www.reca.ca/consumers/financial-considerations/money...

gemstones 3y ago

The buyers are foreign to Canada (investors), so the effects don’t affect the Canadian economy as directly as you might expect.

shagmin 3y ago

I don't have a source on me but I've read plenty about wealthy people in other countries buying large amounts of Canadian real estate as a store of value, even if it sits vacant. Mostly people in countries where there aren't so many great places to invest. But I don't know off hand if that's just a drop in the bucket compared to other things or what.

cscurmudgeon 3y ago
That is just vanilla racism/xenophobia. https://news.westernu.ca/2023/01/expert-insight-canadas-ban-on-foreign-homebuyers-is-unlikely-to-affect-housing-affordability/#:~:text=Data%20that%20tracks%20foreign%20buyers,Canadian%20residential%20properties%20in%202020 https://news.westernu.ca/2023/01/expert-insight-canadas-ban-.... Data that tracks foreign buyers and owners in Canada are scarce and patchy. The Canadian Housing Statistics Program shows that non-residents only own about two to six per cent of Canadian residential properties in 2020. Edit: Those numbers are in line with the US. Why is the US real estate market not that crazy then?
- rossdavidh 3y ago
  Hmmm...2 to 6 percent of a market can be more than enough to make a difference, even a sizeable one, if there is already a shortage. Now, there is still the question of why there is a shortage, but 2 to 6 percent in an already tight market is more than enough to spike the prices. Of course, China shows that you don't need outsider investing to create a ridiculous property affordability situation.
- electrondood 3y ago
  No, it is a fact. The same happens in the US. Real estate is, at worst, used for sanction evasion and money laundering, and at best, as a loophole for citizens of restrictive countries to extract more of their money from those countries. All of these create an incentive to overbid on real estate. Where I live, this is a known issue. In fact, the top real estate companies specifically try to attract foreign investors, and have stated so publicly. Look at the chart in the article. Home prices plummeted in 2022, when the Canadian government enacted a 1% Underused Housing Tax (UHT) on Canadian residential property that is considered vacant or underused. [0] https://sgp.fas.org/crs/misc/IF11967.pdf https://sgp.fas.org/crs/misc/IF11967.pdf [1] https://www.brookings.edu/articles/the-impact-of-treasurys-pilot-program-on-stemming-the-tide-of-dirty-money-into-us-real-estate https://www.brookings.edu/articles/the-impact-of-treasurys-p... [2] https://www.reuters.com/world/us/us-set-unveil-long-awaited-crackdown-real-estate-money-laundering-2023-08-10/ https://www.reuters.com/world/us/us-set-unveil-long-awaited-... [3] https://gfintegrity.org/press-release/new-report-finds-u-s-real-estate-sector-a-safe-haven-for-money-laundering/ https://gfintegrity.org/press-release/new-report-finds-u-s-r... [4] https://www.faegredrinker.com/en/insights/publications/2023/1/fincen-warns-of-potential-sanction-evasion-by-russian-entities-involved-in-us-commercial-property-investments https://www.faegredrinker.com/en/insights/publications/2023/... [5] https://lewisbrisbois.com/newsroom/legal-alerts/foreign-investors-in-u.s.-real-estate-now-subject-to-greater-scrutiny https://lewisbrisbois.com/newsroom/legal-alerts/foreign-inve...
  - cscurmudgeon 3y ago
    > No, it is a fact. The same happens in the US. Then why is the Canadian real estate market so much f'ed up than the US market?
Tiktaalik 3y ago
There likely was a great deal of this at some point before 2015, but in 2015 BC finally started tracking who was buying homes and brought in a foreign buyer tax and since there there's been only ever more scrutiny on foreign buying, and from everything I've read foreign buying has fallen off a cliff. Because there was no data tracked before 2015, whether or not there was indeed a significant amount of foreign buying remains speculation and theory but there are some signs that support the notion that it was important. For example major luxury condo builder Westbank has significantly reduced their operations in Vancouver, pivoting away from super luxury homes explicitly marketed as pied-a-terres and in the pages of Monocle magazine and are now building increasingly in the USA and even Japan. Some of their projects in Vancouver changed from being condos to rental. That this all happened post foreign buyer tax suggests that foreign buyers were a critical part of their business plan and they needed to remarkably change it after foreign buyers went away.

swarnie 3y ago

The R/canada subreddit had a good breakdown last week Essentially 92% of Canadians can't afford the average home based on the average income. I think if you do "top" of the last month it'll be near the top.

ttul 3y ago

My household is in the top 1% of income earners. We cannot afford a house in our exurb. 20 years ago, with this level of income, it would have been trivially affordable. Yes, I rent for $4250 a home that you can buy for $1.7M. The distortion here is beyond ridiculous. The equivalent mortgage would be something like $7K before property taxes and maintenance. Because you can’t imagine government moving fast enough to change policy, the only way out is likely a sudden and shocking collapse in home values caused by the bond market failing to continue its belief that Canada is sound.

nucleardog 3y ago
I was renting a $1.4m home for $2200/mo in Vancouver. Something like a $10k/mo mortgage payment for 25 years at current rates. But they had bought it like 6 or 7 years before so _their_ mortgage was substantially lower. We haven’t even seen the full brunt of this—every time one of these properties changes hands at this point as the current owner cashes out, we’re going to see one more of these “affordable” rentals off the market in one way or another. (Either they hike the rent to the point of unaffordability, occupy it themselves, or leave it sit empty to just store or accumulate value.) And just to put it in some perspective—to afford that shitty run down house I was renting, you’d need to be making somewhere around $720k/yr pre-tax to pay the mortgage and maintain the “1/3 toward housing” ratio. People in Canada do not make $720k/yr.
- ttul 3y ago
  Absolutely this. A friend considers herself too poor to afford a house in Vancouver. Her company makes $10M a year and she peels off 10% net profit. Only in Vancouver…