| To: Rocket Red who wrote (32691) | 6/12/2024 10:27:10 PM | | From: Old_Sparky | | | | He also constantly says that talking about off topic subjects is a no-no. Like Vancouver sea level rise. But forest fires in BC are a definite severe weather event. Huh? Forest fires are a weather event? Since when?
Hey its his board, he can make the rules. Its just that....... |
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| From: teevee | 6/13/2024 11:11:29 PM | | | | | | How many Canadians has Trudeau murdered and how many more will die? Turn on volume at top of page in link and listen to the end:
facebook.com |
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| From: russet | 6/15/2024 11:10:19 PM | | | | | | Time for even the majority of stupid Canadians and world citizens to realize that housing prices reflect real inflation. The government bullshit figures are total bullshit. Housing is real inflation. The government figures are bullshit
Think about that, and tell me how you feel.
Gonna vote for the idiot Trudeau and the Liberals and NDP again, you idiots!!!! If you do you are the cause of inflation. Your stupidity voting for idiot liberals and ndp hurt us all. Socialism does not work for the middle class, or any class but the rich elites.
June 14, 2024 | The Canadian Housing Bubble Needs To Burst
Hilliard MacBeth
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Real residential house prices in Canada have grown by more than four-fold since 1970. This means that house prices have grown much faster than inflation, and housing unaffordability is extreme compared to the past and other countries like the U.S.
Can the housing market in Canada be fixed?
This chart shows prices indexed to 100 in 1970 up to the end of 2023, with data from the Bank for International Settlements (BIS). This index has been deflated by the rate of inflation. The recent drop in the Canadian index happened when inflation soared to 7 percent in 2022 and house prices declined.
Source: MacBeth MacLeod Partners, BIS
The chart shows three other countries — the U.S., Germany and Australia. Two of those countries never achieved the levels seen in Canada, although the U.S. tracked Canada’s bubble until 2006 when the sub-prime mortgage meltdown and the Global Financial Crisis knocked 38 percent off prices. And Germany never experienced a bubble due to stricter rules for mortgage lending. As a result only about 40-50 percent of Germans are owners while the remainder live as long-term renters. Australia is similar to Canada.
The Canadian house price bubble continued to grow almost without interruption until recently. In the 1990s there was a long pause in the bubble, but prices were not expensive before then so it was only a modest decline of 25 percent from the peak in 1989 to a bottom in 1998.
For house prices to form a bubble of the size reached in 2022 there had to be a large amount of mortgage credit on generous terms provided to a large number of borrowers. Rising house prices allowed lenders to pretend that these loans were sustainable. And these mortages were bearable for a number of years, as interest rates were kept close to zero from 2010 to 2020. But since rates have increased from below 1 percent on variable mortages to more than 5 percent house prices have started to slide. With higher rates it has become difficult for many households to make their mortgage, auto and credit card payments.
And some households cannot make their payments. For the first time since 2020 Canadian households are starting to miss payments on mortgages. This is significant because people will skip payments on credit cards and auto loans before they miss a mortgage payment.
According to Equifax, as reported in the Toronto Star on June 11, total mortgage balances reaching “severe delinquency” exceeded $1 billion for the first time in Ontario. And Canada-wide, 1.26 million consumers have missed at least one payment on a credit commitment in early 2024.
The house price correction will gain momentum when unemployment soars — it is already at 6.7 percent in Ontario.
Foreclosure action on houses and condos will be the blunt force that pushes prices much lower. So far this has been avoided by mortgage amortization extensions and lender forbearance. But lenders, regulators and governments have run out of ways to delay the inevitable crash.
Hilliard MacBeth |
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| To: russet who wrote (32700) | 6/16/2024 12:52:08 AM | | From: russet | | | | Where are all the $100,000 after tax income earners that can afford these stupidly high home prices? Must be all the Trudeau billionaire immigrants from palestine and syria etc. Perhaps the ones on all the most wanted police lists all across the country for murder and violent crimes. Remember, a vote for Trudeau liberals and NDP will bring more of them into the country.
June 11, 2024 | Canadian Home Prices Moving Lower For Math Reasons
Danielle Park
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It is wildly unpopular to say this, but Canadian home prices need to move much lower. And yes, I, too, stand to lose net worth as they do.
Immigration is unlikely to prevent mean reversion here. Immigrants need places to live, to be sure, but historically, it took an average of 7 years before immigrants were able to buy a home in Canada. And that was when prices were more affordable than today.
At the moment, home affordability is at its worst since mortgage rates were north of 18% in 1981. The driver of unaffordability today is not interest rates (historically average); today, unaffordability is driven by prices being impossible multiples of household income (i.e., 5 to 12 times the average household income versus long-term norms of 2 to 4x).
Where I live, one hour north of Toronto, new listings are up about 66% since the end of February. Properties are sitting on the market, and would-be sellers are still asking prices paid when mortgage rates were under two percent compared to the 5% range today.
Recently, “reduced” and “new price” listings have been popping up. This lovely custom home on my walking circuit in a premium area across from the lake was built on spec during the pandemic. So far, as shown below, the price has been reduced by 22% to $1.69m from $2.195m two years ago.
 A vacant lot around the corner has been marked down 58% to an ask of $495K from $1.195m three years ago (see listing history here). This lovely home in the same neighbourhood sold for $1.8m in February 2022 and is now listed 17% lower at $1.49m after months on the market (see price history here).
The trouble is that even at the $1.49m asking price, with a 20% (299k) downpayment, the mortgage payment would be $7,387 a month, $8,195 a month, including property taxes. That requires $98,340 a year in after-tax income to cover the mortgage and property taxes (as shown below), let alone all life’s other expenses.
 Less than 10% of Canadian households earn more than $100k a year before tax, never mind after (see Is a $100k salary enough for a comfortable life anymore?).
The reality is that most homeowners today would be hard-pressed to qualify for a conventional mortgage at current asking prices and interest rates to buy their current homes.
Yes, the Bank of Canada has started easing base rates in the banking system and is likely to respond to a weak economy and rising unemployment with more cuts in the months ahead. But that’s not all that’s needed here. |
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