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Real Estate Affordability and Rising Interest Rates - Is this article an F-ing joke?


cougar

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I came across this article on CBC yesterday:

https://www.cbc.ca/news/canada/london/they-bought-their-home-in-march-2022-why-this-ontario-couple-calls-the-purchase-a-nightmare-1.6750229

 

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Or I would have advised this nice couple to just send a request to Trudeau to wave all their loans and payments.  The guys came all the way from Brazil way back, a whole 3 years ago and they decided to buy this measly $750,000 house, obviously two new cars and added two dogs to go with them just to have a roof over their heads.

They deserve a trouble free life for all their long sufferings.

Edited by cougar
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  • cougar changed the title to Real Estate Affordability and Rising Interest Rates - Is this article an F-ing joke?

There is a crisis in Canada and not enough attention is paid to it. While housing prices are almost doubled past 5 years, rental prices are going through the ceiling all over Canada specially in Toronto and Vancouver where a one bedroom rental is over $3000 monthly. Situation in the rest of Canada is not much better as average rental price in Canada is over $2400. This means one has to have an income of over $100,000 before tax in order to be able to rent an average apartment or house in big cities and less than 10% have such privilege.

Governments at different levels are not doing enough. In fact the Federal policy on interest rates helps to deepen this crisis as mortgage rate rises people can't afford to buy houses so they go for rentals instead and the large number of immigrants the Federal government is importing into Canada also contributes significantly to aggravating the crisis.

Edited by CITIZEN_2015
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On 2/17/2023 at 11:09 PM, cougar said:

I came across this article on CBC yesterday:

https://www.cbc.ca/news/canada/london/they-bought-their-home-in-march-2022-why-this-ontario-couple-calls-the-purchase-a-nightmare-1.6750229

 

....deserve a trouble free life for all their long sufferings.

Like so many others, bought what they thought they deserved and then the reality hammer hit them in the wallet.

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1 hour ago, West said:

The governments move to communism. Shoot up housing prices through low interest rates then crank up rates so people foreclose. That's the plan... very sick people

Why would communists want people to foreclose?

Genuine question.  I have no idea either way.

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4 minutes ago, bcsapper said:

Why would communists want people to foreclose?

Genuine question.  I have no idea either way.

Because then the gov't can step in, buy up housing and "provide" it to the people at an "affordable" rate.

Communism sells based on the idea that you personally will no longer have risk or be denied the things you like.  "If you just allow communism, you'll have your nice house no matter what happens in the market - EVERYONE will have a nice house".

If the markets collapse and the gov't can step in (as we saw in other countries such as England just after ww2) then the gov't gains more control over people and people get used to the gov't handling all their affairs. Pretty soon people become afraid to do anything on their own and become entirely dependent on the gov't.


Remember - there is no more effective way to enslave people than to provide for their every need.

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3 hours ago, CdnFox said:

Because then the gov't can step in, buy up housing and "provide" it to the people at an "affordable" rate.

Communism sells based on the idea that you personally will no longer have risk or be denied the things you like.  "If you just allow communism, you'll have your nice house no matter what happens in the market - EVERYONE will have a nice house".

If the markets collapse and the gov't can step in (as we saw in other countries such as England just after ww2) then the gov't gains more control over people and people get used to the gov't handling all their affairs. Pretty soon people become afraid to do anything on their own and become entirely dependent on the gov't.


Remember - there is no more effective way to enslave people than to provide for their every need.

Interesting concept.  When do you see this mass buyout happening?

Once they've enslaved them by providing for their every need, what are they going to make them do?

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The gov't that can barely get your passport or EI cheque to you in a timely and orderly fashion is controlling housing prices?
The one that upped my assessment 6 yrs ago by $800 after we did $65,000 in improvements? And then last year assessed us 60% more over 2021? The one that says 7% yearly inflation means a loaf of bread or a pork chopdoubles every year?

Why they must be communist, they make and build houses, raise cattle, grow wheat and refine the oil... the company name on my paycheck was fake for all those years I worked. The foreman was secretly a commissar.. I suppose if I ever sell my principal residence, they'll take all my money away and turn it into a Drag queen library/Free heroin dispensary too....

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1 hour ago, bcsapper said:

Interesting concept.  When do you see this mass buyout happening?

Historically when a significant portion of the public cannot find or afford housing on their own and the market forces have been stifled to the point where they cannot correct it naturally, and civil unrest threatens.  With the current lack of construction vs the current and planned population increases i would say probably not that far down the road.

1 hour ago, bcsapper said:

Once they've enslaved them by providing for their every need, what are they going to make them do?

Work for the betterment of the gov't of course. Which those in power will use to live the good life. You'll notice putin for example is not a poor person :)  Nor is the chinese leader, and even Castro always had good food.

It's the same as it always is -  they used to be called plebeians, then surfs, then peasants and now 'the working class'.  It's not terribly new.

 

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1 minute ago, herbie said:

The gov't that can barely get your passport or EI cheque to you in a timely and orderly fashion is controlling housing prices?

No, they are 'out of controll'ing housing prices :)  Controlling them would require a great deal more skill and effort. It's always easier to break something. The gov'ts incompetence is what prevents them from managing passports and ei cheques and now infrastructure to population ratios.  This is about a failure to manage, not a management.

1 minute ago, herbie said:


The one that upped my assessment 6 yrs ago by $800 after we did $65,000 in improvements? And then last year assessed us 60% more over 2021? The one that says 7% yearly inflation means a loaf of bread or a pork chopdoubles every year?

You're not making much sense there. Are you suggesting you believe the federal gov't increased the property tax assessment on your home? That's not quite how it works actually.

And as to inflation the over all inflation rate may very well be different for various items or even catagories.  Porkchops can double and anchovy paste and mustard stay the same - so they say 'food' went up by 33%. For you personally it may seem like more because you're more likely to buy a pork chop than anchovy paste.

1 minute ago, herbie said:

Why they must be communist, they make and build houses, raise cattle, grow wheat and refine the oil... the company name on my paycheck was fake for all those years I worked. The foreman was secretly a commissar.. I suppose if I ever sell my principal residence, they'll take all my money away and turn it into a Drag queen library/Free heroin dispensary too....

Reading that reminds me that they've somehow managed to screw up making dope sales profitable as well despite the number of users out there :)

There really isn't anything useful to be said about that part of your post.

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4 minutes ago, CdnFox said:

Historically when a significant portion of the public cannot find or afford housing on their own and the market forces have been stifled to the point where they cannot correct it naturally, and civil unrest threatens.  With the current lack of construction vs the current and planned population increases i would say probably not that far down the road.

Work for the betterment of the gov't of course. Which those in power will use to live the good life. You'll notice putin for example is not a poor person :)  Nor is the chinese leader, and even Castro always had good food.

It's the same as it always is -  they used to be called plebeians, then surfs, then peasants and now 'the working class'.  It's not terribly new.

 

I don't see the civil unrest coming.  I think the government could do a much better job of preventing foreign ownership and speculation in the real estate market but they can't currently do anything about interest rates, which are a worldwide phenomenon.  People who buy twice the house they need because they can get a 3% interest rate on a $500000 mortgage without giving consideration to the possibility of a rise in the rate have little cause for complaint.

Putin is not a communist, and China is only communist if one accepts their definition of the term..  Castro could be accused of such but as the far and away best description of how communism works is Animal Farm it's not surprising he had plenty to eat. 

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1 minute ago, bcsapper said:

I don't see the civil unrest coming.

The banks do.

https://financialpost.com/news/economy/cibc-dodig-canada-risks-social-crisis-housing-immigration

and we've seen that before many times in europe. The thing that has always set canada apart and allowed us to have massive immigration per capita vs other countries is our ability to provide the integration and infrastructure needed.

When that isn't there, it tends to be 'new' and 'young' canadians who suffer the most, in that order. And that always begins to lead to unrest.

 

5 minutes ago, bcsapper said:

I think the government could do a much better job of preventing foreign ownership and speculation in the real estate market

Honestly that's pretty much meaningless.  There is one issue which is the source of ALL issues - we are not building enough homes for our population. We havent been for decades. Reports suggest we've fallen short 100 thousand homes per year just to prevent things from getting worse since 2016. And that's when they started looking, i guarantee it predates that.

If you build enough homes, foreign investment (which we've always had), rental prices, immigtation, everything else becomes a null issue.  And if you DON"T address that absolutely nothing else will resolve the problem.

Quote

they can't currently do anything about interest rates,

They absolutely could. The gov't has many many tools it could use to address Canadian inflation which the banks have already noted are at least 1.5 -2 percent higher than they need to be due specifically to carbon tax and monetary policy.

But that's almost another topic entirely. Interest rates low or high, we have the same housing issues.

9 minutes ago, bcsapper said:

People who buy twice the house they need because they can get a 3% interest rate on a $500000 mortgage without giving consideration to the possibility of a rise in the rate have little cause for complaint.

Well technically that's true regardless of what the interest rate is.  And a lot of the people complaining did not buy 'more home than they need' although this story certainly seems like an example of one who did.

As to their right to complain however - Trudeau AND the BOC were shouting to the heavens just a year and a half ago that interest rates would stay low for the foreseeable future and woudln't go up. That's why it's ok we were borrowing all that money if you'll recall.  So. some might say they have a LITTLE right to be a titch annoyed that the gov't made a promise, then the gov't actions made breaking that promise inevitable.

Having said that you're correct, people should plan for a little volitility. Young kids today don't remember the 80's and think that inflation stays at 2 percent forever and interest rates are at about 1.5 because they have been as long as they can remember, and that has lead many to make a serious mistake that they are now paying for.

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5 minutes ago, CdnFox said:

The banks do.

An economist does.  And he's not talking about civil unrest he's talking about a social crisis. We have those already.  Poverty, homelessness, drugs, etc. 

10 minutes ago, CdnFox said:

Honestly that's pretty much meaningless.  There is one issue which is the source of ALL issues - we are not building enough homes for our population. We havent been for decades. Reports suggest we've fallen short 100 thousand homes per year just to prevent things from getting worse since 2016. And that's when they started looking, i guarantee it predates that.

If you build enough homes, foreign investment (which we've always had), rental prices, immigtation, everything else becomes a null issue.  And if you DON"T address that absolutely nothing else will resolve the problem.

No it's not.  Making houses affordable is as important as building houses.  There's not much point in building houses if no-one can afford them.  Perhaps that's why construction starts are low.  No-one is going to invest in construction if their sales are doubtful.

14 minutes ago, CdnFox said:

They absolutely could. The gov't has many many tools it could use to address Canadian inflation which the banks have already noted are at least 1.5 -2 percent higher than they need to be due specifically to carbon tax and monetary policy.

But that's almost another topic entirely. Interest rates low or high, we have the same housing issues.

The Bank of Canada raises the interest rate to combat inflation, which is a worldwide phenomenon.  It's not an exact science, or they would be much better at it.  All government banks, not just ours.  The carbon tax is a tax.  Government imposes taxes.  Rightly or wrongly.

 

18 minutes ago, CdnFox said:

Well technically that's true regardless of what the interest rate is.  And a lot of the people complaining did not buy 'more home than they need' although this story certainly seems like an example of one who did.

As to their right to complain however - Trudeau AND the BOC were shouting to the heavens just a year and a half ago that interest rates would stay low for the foreseeable future and woudln't go up. That's why it's ok we were borrowing all that money if you'll recall.  So. some might say they have a LITTLE right to be a titch annoyed that the gov't made a promise, then the gov't actions made breaking that promise inevitable.

Having said that you're correct, people should plan for a little volitility. Young kids today don't remember the 80's and think that inflation stays at 2 percent forever and interest rates are at about 1.5 because they have been as long as they can remember, and that has lead many to make a serious mistake that they are now paying for.

Fair enough, that's what ballot boxes are for.  I have to admit, I did not hear Trudeau and the Bank of Canada stating that interest rates were going to stay low, but that's because I don't have an iron in that particular fire.  Maybe I wasn't paying attention.

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2 hours ago, bcsapper said:

And he's not talking about civil unrest he's talking about a social crisis

Social crisis and civil unrest go hand in hand. We've had demonstrations and worse over some of the issues you mentioned. 

2 hours ago, bcsapper said:

No it's not.  Making houses affordable is as important as building houses. 

Nonsense. You cannot make houses affordable without building more.  If we build enough for our needs then they become affordable, you absolutely cannot do it the other way around.

There is no way to make homes affordable if there isn't enough homes.

2 hours ago, bcsapper said:

There's not much point in building houses if no-one can afford them. 

The rich can afford them so  no problem. There's no point buying a home as a foreigner if they can;'t be sold or rented either is there.  So that's not the issue.

Housing starts are down due to instabilities in the market. Remember, developers borrow money too in order to build homes and they're just as worried those rates may go up. You can't say how much you should play for the land today if you don't know what your interest rates will be till you sell, which is usually about 3 years later.

If we have enough homes then prices fall, same as with any product. If we have enough homes then rents also go down. If we have enough homes it really doesn't matter how many are owned by foreigners, there's still enough for people to live.

If we don't have enough then you can't fix anything. Rents continue to go up and owning a home continues to go up. People haven't realized this much but the cost of OWNING a home has STILL been going up for everyone except those who can afford to pay cash. You still pay a higher mortgage now that rates are higher even if prices are down.

Everything comes back to the number of houses.

Quote

Fair enough, that's what ballot boxes are for

Sure. Unfortunately Canadians made the wrong choices there and now the damage is being done. There is no way to 'quickly' fix the problem, it will be generational. By the time Justin leaves office even if he is voted out in the next election the developers will be focused mostly on producing higher end homes for the upper half of the income scale and there simply won't be enough build to go around.

People just don't realize how bad of a problem that is going to be

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10 minutes ago, CdnFox said:

Social crisis and civil unrest go hand in hand. We've had demonstrations and worse over some of the issues you mentioned. 

Nonsense. You cannot make houses affordable without building more.  If we build enough for our needs then they become affordable, you absolutely cannot do it the other way around.

There is no way to make homes affordable if there isn't enough homes.

The rich can afford them so  no problem. There's no point buying a home as a foreigner if they can;'t be sold or rented either is there.  So that's not the issue.

Housing starts are down due to instabilities in the market. Remember, developers borrow money too in order to build homes and they're just as worried those rates may go up. You can't say how much you should play for the land today if you don't know what your interest rates will be till you sell, which is usually about 3 years later.

If we have enough homes then prices fall, same as with any product. If we have enough homes then rents also go down. If we have enough homes it really doesn't matter how many are owned by foreigners, there's still enough for people to live.

If we don't have enough then you can't fix anything. Rents continue to go up and owning a home continues to go up. People haven't realized this much but the cost of OWNING a home has STILL been going up for everyone except those who can afford to pay cash. You still pay a higher mortgage now that rates are higher even if prices are down.

Everything comes back to the number of houses.

Sure. Unfortunately Canadians made the wrong choices there and now the damage is being done. There is no way to 'quickly' fix the problem, it will be generational. By the time Justin leaves office even if he is voted out in the next election the developers will be focused mostly on producing higher end homes for the upper half of the income scale and there simply won't be enough build to go around.

People just don't realize how bad of a problem that is going to be

Who do you think is going to build them if no-one can afford them?  No-one is going to build houses based on the idea that when they've built enough of them, the prices will fall and they'll be able to sell them.  With land and construction costs being erratic that applies even more.

 

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Please make an effort to recognize sarcasm. I know it's difficult on this forum where so many have so little political knowledge they claim gov'ts are communist and then demand actual communism as a solution while still condemning it.. just like they demand 'strong leadership', glorification of tradition, militarism, myths of a lost past and nationalism and hatred of immigrants yet claim that you, not they are fascists.

Short of re-establishing the Homesteader's Act they can do very little about housing. Can't order anyone to build more, can't order the banks to lend money and you don't want them to build apartment with their own money. You still couldn't afford one if they did with today's costs and standards.

Just re4ad another request by a young family looking for a 3 bdrm rental or rent to own for $1000 a month max. Get real FFS. If they coughed up $20K up front and signed for 10 years I know dozens of places here in the boonies but you know damn well they can't even come up with that. And they're expecting that shit in Vancouver, Toronto, Calgary etc.

Was all we could do with two $1500/mo incomes and 18% interest 40 yrs ago to get a $65,000 home.

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11 minutes ago, bcsapper said:

Who do you think is going to build them if no-one can afford them? 

Well if NOBODY can then the gov't will build them and control where people live.  Which the libs would love :)

11 minutes ago, bcsapper said:

 

 

No-one is going to build houses based on the idea that when they've built enough of them, the prices will fall and they'll be able to sell them.  With land and construction costs being erratic that applies even more.

But lots of people can afford them. Homes are selling right now. We're in a serious low and there were still 35 k homes sold in January - the worst month of the year for homes sales.

It's just the lower end of the economic scale that can't afford them so they'll build for the top end. Pretty easy.

You're missing the problem entirely.  And the fact is the way our system is designed and operating right now developers will ALWAYS build behind demand, never in front of it.  I mean - what's your excuse for why we weren't building enough homes for since 2016, when prices were increasing year after year and homes were being sold as fast as they were finished?

You are correct that we have to make a number of changes in order to get developers to catch up right now. The system is designed to punish developers for building homes ahead of need.  The interest rate issue will resolve itself in the next 3 or 4 years max and possibly much sooner, and then those buyers who have been waiting will come into the market and home prices will go up again, but we still won't be building enough homes.

And if your point is that it's going to take real work to solve that, along with a fair bit of time, then yes. That's kind of my point :)

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1 minute ago, herbie said:

Please make an effort to recognize sarcasm. I know it's difficult on this forum where so many have so little political knowledge they claim gov'ts are communist and then demand actual communism as a solution while still condemning it.. just like they demand 'strong leadership', glorification of tradition, militarism, myths of a lost past and nationalism and hatred of immigrants yet claim that you, not they are fascists.

If you can't communicate properly, don't blame the others around you. I have no interest in taking into account your conversations with OTHER people when we're talking (unless i was at least party to that as well so i get the reference)

1 minute ago, herbie said:

Short of re-establishing the Homesteader's Act they can do very little about housing. Can't order anyone to build more, can't order the banks to lend money and you don't want them to build apartment with their own money. You still couldn't afford one if they did with today's costs and standards.

You can do TONNES about housing. You absolutely can encourage and entice builders to build more. You absolutely can work with banks (or start a national real estate development bank if you have to) in order to make more money available and building apartments is fine, just build more homes. Obviously it would be nice to see some thought go into an apartment/townhouse/detached ratio that makes the most sense but whatever. 

And you absolutely could afford it - it's the land cost that drives up prices so badly as a rule.

I'm not sure why you would think those particular things are not possible. In fact they're relatively easy.

1 minute ago, herbie said:

Just re4ad another request by a young family looking for a 3 bdrm rental or rent to own for $1000 a month max. Get real FFS. If they coughed up $20K up front and signed for 10 years I know dozens of places here in the boonies but you know damn well they can't even come up with that. And they're expecting that shit in Vancouver, Toronto, Calgary etc.

Most people aren't that dumb. Most people would be quite happy if they could pay 3 grand a month and have a home. Rent in vancouver is about 2700 now for a one bedroom. So lets not take the lowest denominator and pretend it's the average.

1 minute ago, herbie said:

Was all we could do with two $1500/mo incomes and 18% interest 40 yrs ago to get a $65,000 home.

Well sure. In fact - 65 grand at 18 percent interest would have run just about 1 grand a month in costs to own that home. So you spent 1/3 of your income on the house with your dual income.

If we could get housing prices down to 1/3 of hte average two person income i think the kids today would be pretty happy.

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12 minutes ago, herbie said:

Please make an effort to recognize sarcasm. I know it's difficult on this forum where so many have so little political knowledge they claim gov'ts are communist and then demand actual communism as a solution while still condemning it.. just like they demand 'strong leadership', glorification of tradition, militarism, myths of a lost past and nationalism and hatred of immigrants yet claim that you, not they are fascists.

Short of re-establishing the Homesteader's Act they can do very little about housing. Can't order anyone to build more, can't order the banks to lend money and you don't want them to build apartment with their own money. You still couldn't afford one if they did with today's costs and standards.

Just re4ad another request by a young family looking for a 3 bdrm rental or rent to own for $1000 a month max. Get real FFS. If they coughed up $20K up front and signed for 10 years I know dozens of places here in the boonies but you know damn well they can't even come up with that. And they're expecting that shit in Vancouver, Toronto, Calgary etc.

Was all we could do with two $1500/mo incomes and 18% interest 40 yrs ago to get a $65,000 home.

Please make an effort to use the quote feature.  I don't know who you're talking to.  I haven't seen any sarcasm on here yet, unless it's very well disguised.

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22 minutes ago, CdnFox said:

Well if NOBODY can then the gov't will build them and control where people live.  Which the libs would love :)

But lots of people can afford them. Homes are selling right now. We're in a serious low and there were still 35 k homes sold in January - the worst month of the year for homes sales.

It's just the lower end of the economic scale that can't afford them so they'll build for the top end. Pretty easy.

You're missing the problem entirely.  And the fact is the way our system is designed and operating right now developers will ALWAYS build behind demand, never in front of it.  I mean - what's your excuse for why we weren't building enough homes for since 2016, when prices were increasing year after year and homes were being sold as fast as they were finished?

You are correct that we have to make a number of changes in order to get developers to catch up right now. The system is designed to punish developers for building homes ahead of need.  The interest rate issue will resolve itself in the next 3 or 4 years max and possibly much sooner, and then those buyers who have been waiting will come into the market and home prices will go up again, but we still won't be building enough homes.

And if your point is that it's going to take real work to solve that, along with a fair bit of time, then yes. That's kind of my point :)

We're in a low, but only when compared to the last two years.

I considered moving to the east coast when I retired so I was keeping an eye on real estate and a small acreage with a decent house was well within my range until about two years ago.  Then it went ridiculously out of range, and now it's fallen back to just well out of my range.

They do a thing called price history on Realtor.ca  You wll have to trust me when I say I just went on there to find one and this is the first one I found:

Sep 18, 2017 Sold $184,000

Jun 15, 2011 Sold $181,000

Apr 27, 2007 Sold $148,500

Jun 23, 2004 Sold $128,500

The house is currently listed at $349000

https://www.realtor.ca/real-estate/25282664/207-charles-road-timberlea-timberlea

That's insane!

 

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