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> The supply crunch is caused by wealthy Canadians owning multiple homes Is it, though? I mean, that would drive up demand, but what happened to supply? If you

by rewmie 3y ago

> The supply crunch is caused by wealthy Canadians owning multiple homes Is it, though? I mean, that would drive up demand, but what happened to supply? If your hypothesis had any basis, wouldn't real estate developers rush to profit from that demand by building more homes? They wouldn't turn down all that free money, would they? And more to the point, why is that a government problem?

randomdata 3y ago
> but what happened to supply? Insufficient labour. Anyone who builds houses was booked up for years. It looks like this is finally starting to turn, but that doesn't help right now. You need to build houses in the past to be able to live in them now. With the strongest labour market possibly ever seen in Canada, you didn't find anyone going to build houses because they had no other work. So you throw more money at workers to try to compel them away from the work they were doing and into housing work, but that just... drives up the cost of housing.
- rewmie 3y ago
  > Insufficient labour. I'm not sure that explanation is plausible. Canada's housing stats show a drop in total investments in building construction, and a drop in housing starts. https://www150.statcan.gc.ca/n1/daily-quotidien/230818/dq230818a-eng.htm?indid=19277-1&indgeo=0 https://www150.statcan.gc.ca/n1/daily-quotidien/230818/dq230... https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-data/data-tables/housing-market-data/monthly-housing-starts-construction-data-tables https://www.cmhc-schl.gc.ca/professionals/housing-markets-da... If supply was catching up with demand to ride that gravy train, we would see in the very least an increase in investments. Why would anyone refuse to invest in a venture that's handing out free money? Also, labour costs don't account for more than 30% of the build cost, which is far below the current real estate prices. Even if they doubled salaries of construction workers, selling apartments in today's market would still be very profitable.
  - randomdata 3y ago
    > Canada's housing stats show a drop in total investments in building construction, and a drop in housing starts. Hence why the labour issues have started to turn... > If supply was catching up with demand Demand has backed away because an increasing number are not willing to take the risk on housing now. High interest rates and a lot of increased pressure for governments to do something means that a coming crash is highly likely and nobody wants to be the bag holder. Same reason rents have skyrocketed. If you can rent, why on earth would you buy a house right now? Indeed, housing tends to be highly sticky, but it's almost certain they will cost a whole lot less in a year or two. The downward trend is already quite visible, with average price in most markets peaking in 2022.
ttul 3y ago
I’m sure the supply side is constrained by various things that aren’t uncommon in other places. NIMBY zoning, terribly slow permitting, etc. But the demand side has been lit on fire by cheap money. It’s as if Canada is a country that pulls resources out of the ground, takes cash from foreigners, lends it out to boomers, and then buys houses. That’s all there is in the country now.

by rewmie 3y ago

randomdata 3y ago

> but what happened to supply? Insufficient labour. Anyone who builds houses was booked up for years. It looks like this is finally starting to turn, but that doesn't help right now. You need to build houses in the past to be able to live in them now. With the strongest labour market possibly ever seen in Canada, you didn't find anyone going to build houses because they had no other work. So you throw more money at workers to try to compel them away from the work they were doing and into housing work, but that just... drives up the cost of housing.

rewmie 3y ago
> Insufficient labour. I'm not sure that explanation is plausible. Canada's housing stats show a drop in total investments in building construction, and a drop in housing starts. https://www150.statcan.gc.ca/n1/daily-quotidien/230818/dq230818a-eng.htm?indid=19277-1&indgeo=0 https://www150.statcan.gc.ca/n1/daily-quotidien/230818/dq230... https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-data/data-tables/housing-market-data/monthly-housing-starts-construction-data-tables https://www.cmhc-schl.gc.ca/professionals/housing-markets-da... If supply was catching up with demand to ride that gravy train, we would see in the very least an increase in investments. Why would anyone refuse to invest in a venture that's handing out free money? Also, labour costs don't account for more than 30% of the build cost, which is far below the current real estate prices. Even if they doubled salaries of construction workers, selling apartments in today's market would still be very profitable.
- randomdata 3y ago
  > Canada's housing stats show a drop in total investments in building construction, and a drop in housing starts. Hence why the labour issues have started to turn... > If supply was catching up with demand Demand has backed away because an increasing number are not willing to take the risk on housing now. High interest rates and a lot of increased pressure for governments to do something means that a coming crash is highly likely and nobody wants to be the bag holder. Same reason rents have skyrocketed. If you can rent, why on earth would you buy a house right now? Indeed, housing tends to be highly sticky, but it's almost certain they will cost a whole lot less in a year or two. The downward trend is already quite visible, with average price in most markets peaking in 2022.

ttul 3y ago

I’m sure the supply side is constrained by various things that aren’t uncommon in other places. NIMBY zoning, terribly slow permitting, etc. But the demand side has been lit on fire by cheap money. It’s as if Canada is a country that pulls resources out of the ground, takes cash from foreigners, lends it out to boomers, and then buys houses. That’s all there is in the country now.