CMHC forecasts 32-per-cent drop in new home construction due to inflation, labour shortages (during housing shortage)

[CdnFox]

https://www.theglobeandmail.com/business/article-cmhc-home-construction-inflation-labour-shortage/

Canada’s housing agency predicts that home building could plunge 32 per cent this year, calling it an “alarming” situation given the dearth of affordable places to live in the country.

The rising cost of building materials, a shortage of construction workers and higher interest rates mean housing starts could drop 19 per cent year-over-year under the current conditions, Canada Mortgage and Housing Corp. said in its annual housing market outlook, released Thursday. But if inflation persists and interest rates remain high for longer than expected, housing starts could drop as much as 32 per cent to 176,890 units, the agency said.

So - fun fact. Most of that slowdown will be exactly where new immigrants are being landed, the major metros and surrounding areas.

I'm going to say it now - this is civil unrest in the making. We're bringing in close to 500 THOUSAND people per year - we were not building nearly enough homes when we were bringing in 300 thousand. And now we're going to drop to a minimum 20 percent below that level.

That means we're falling short by about 150 - 200 thousand homes for what we need for our population growth,

Which WILL pressure inflation which WILL keep interest high which WILL mean we'll be close to the 32 percent.

We're kinda effed here i think.

[Nationalist]

Here's a novel idea.

Stop importing people. Promote natural population growth and family.

[myata]

It always happens right out of the blue. Not to worry, your good government knows.

[ExFlyer]

I think inflation is a small part of it.

As they said "cost of building materials, a shortage of construction workers and higher interest rates " are the factors.

The shortage of labour seems to be the biggest issue around my area. I see labourer jobs open paying $30+ per hour (tradesmen much higher)  and yet, no takers. No workers, nothing being built or, it takes a very long time to build a house.

No one want to work outside in the rain or snow anymore, let alone work with your hands. The trades are in real trouble.

Blaming immigration is senseless. Most immigrants do not have a job, are refugees, let alone have the funds to buy a home.

Edited May 1, 2023 by ExFlyer

[CdnFox]

3 hours ago, ExFlyer said:

I think inflation is a small part of it.

As they said "cost of building materials, a shortage of construction workers and higher interest rates " are the factors.

Inflation and interest rates are the big ones, believe me. Not so much that they're so high, but that they're volatile right now. The bank isn't seeing what it wants thanks to trudeau's ongoing spending, so interest rates may well go up yet again, there's likely a recession coming as a result of the bank putting the breaks on the economy, there's a great deal of uncertainty and that's what stops developers. That instability also affects labour costs and material costs. 

If they knew interest rates and labour costs and such were going to stay where they are right now they'd be out building their little hearts out.

3 hours ago, ExFlyer said:

The shortage of labour seems to be the biggest issue around my area. I see labourer jobs open paying $30+ per hour (tradesmen much higher)  and yet, no takers. No workers, nothing being built or, it takes a very long time to build a house.

It's not the biggest problem. But it's a problem.

3 hours ago, ExFlyer said:

No one want to work outside in the rain or snow anymore, let alone work with your hands. The trades are in real trouble.

That and a shocking percent are taking 'social sciences' in university instead of 'electrician' training at the trade schools. There's a real push for eveyrone to get a university education but really what we need the most is people taking carpentry and electrical and plumbing type courses. And there's not a lot of encouragement for that. Harper did a few things but those programs are long gone.

3 hours ago, ExFlyer said:

Blaming immigration is senseless. Most immigrants do not have a job, are refugees, let alone have the funds to buy a home.

They rent.  And that takes up a unit.

Immigrants have to have somewhere to live, IF there are not enough homes for everyone to live in then it won't matter who owns or who rents, the prices will be so high that some people will be cut out of the market and then what do they do?

[CdnFox]

4 hours ago, Nationalist said:

Here's a novel idea.

Stop importing people. Promote natural population growth and family.

I think we do have to tie immigration levels to our infrastructure builds. In other words, we can have as many new people as we have new homes, new schools and new hospitals to support them so to speak.

The fact is we are short over a million homes right now in this country. That's why housing and rental prices are so high.  We will now see that gap radically increase in the next few years.

And it takes about 3 years to 4 years to go from start to move in  on  new projects on average, so once this slow down is reallly felt it'll be years before we can even think about catching back up.

[Nationalist]

3 hours ago, CdnFox said:

I think we do have to tie immigration levels to our infrastructure builds. In other words, we can have as many new people as we have new homes, new schools and new hospitals to support them so to speak.

The fact is we are short over a million homes right now in this country. That's why housing and rental prices are so high.  We will now see that gap radically increase in the next few years.

And it takes about 3 years to 4 years to go from start to move in  on  new projects on average, so once this slow down is reallly felt it'll be years before we can even think about catching back up.

Or...we could shut down this rush of immigrants...at least until the market catches up.

[eyeball]

7 hours ago, Nationalist said:

Or...we could shut down this rush of immigrants...at least until the market catches up.

It is catching up. Rapidly.

https://www.abettertentcity.org/

The future of housing is in dodging and eventually just ignoring the nimby-based zoning at the base of so many of the regulatory impediments to housing.  There's simply not enough building inspectors to turn the rising tide of humanity that has nowhere to live or call home - and we haven't seen anything yet. Climate change will bring a tsunami.

[CdnFox]

2 minutes ago, eyeball said:

It is catching up. Rapidly.

https://www.abettertentcity.org/

The future of housing is in dodging and eventually just ignoring the nimby-based zoning at the base of so many of the regulatory impediments to housing.  There's simply not enough building inspectors to turn the rising tide of humanity that has nowhere to live or call home - and we haven't seen anything yet. Climate change will bring a tsunami.

But wouldnt' that make his point even more strongly? Reduce inflow until we can get production up to speed? Which is probably at least  a decade off.

[eyeball]

24 minutes ago, CdnFox said:

But wouldnt' that make his point even more strongly? Reduce inflow until we can get production up to speed? Which is probably at least  a decade off.

Only if you ignore the point I just made.  The market is keeping up in unexpected ways and you can bet there are other advocates for the human right to a home paying attention to Waterloo.  Production isn't going to slow down to match the speed at which regulations change.  So go around, over, or as people have increasingly been doing for years, under the regs.

Mark my words there will be a building boom in Better Tent Cities around the country as producers scramble to produce before regulators get around to putting a stop to them. The ones that do get built will be grandfathered in.

And just when so many conservatives are now getting all woke to the social benefits of affordable housing. ?

Edited May 2, 2023 by eyeball

[CdnFox]

2 hours ago, eyeball said:

Only if you ignore the point I just made.  The market is keeping up in unexpected ways and you can bet there are other advocates for the human right to a home paying attention to Waterloo.

Oh - seriously i thought you were joking. The market isn't keeping up in ANY way in the slightest. And it isn't with micro homes either.

We went into the pandemic with about a million too few homes in total. We've been falling behind about 100 thousand homes each and every year. Immigration is skyrocketing, and home construction is falling.  We are no where remotely even close to keeping up, we are falling so far behind it's unbelievable.

If you thought it was catching up  we're not. The rate we're falling behind is accellerating.

2 hours ago, eyeball said:

 

  Production isn't going to slow down to match the speed at which regulations change.  So go around, over, or as people have increasingly been doing for years, under the regs.

There's no way to build homes 'under the regs' in ANY kind of substantial numbers at all.

2 hours ago, eyeball said:

Mark my words there will be a building boom in Better Tent Cities around the country as producers scramble to produce before regulators get around to putting a stop to them. The ones that do get built will be grandfathered in.

There will not. Sorry but that's not a thing.  There might be an increase but nothing even remotely like what's necessary even a little bit.

2 hours ago, eyeball said:

And just when so many conservatives are now getting all woke to the social benefits of affordable housing. ?

That's not really happening either    But - while "affordable housing" the way you mean it isn't going to help, the fact is that in the non political sense of the words people do have to be able to rent or buy a place to live and that's not going to happen if the current circumstances continue.

I don't think you get how bad this is, or how badly we're going to be falling behind.

[Nationalist]

6 hours ago, eyeball said:

It is catching up. Rapidly.

https://www.abettertentcity.org/

The future of housing is in dodging and eventually just ignoring the nimby-based zoning at the base of so many of the regulatory impediments to housing.  There's simply not enough building inspectors to turn the rising tide of humanity that has nowhere to live or call home - and we haven't seen anything yet. Climate change will bring a tsunami.

Ah yes...climate change.

Oh climate change, oh climate change. Oh how we love thee.

Perpetual fear and hysteria, is the comfort we seek for humanity.

You give us purpose and a weapon to use, when truth just isn't enough.

And if the masses starve and rot, well hell, that's just bloody tough.

[Moonbox]

Biggest factor is interest rates. There's no mystery here.

Folks were getting mortgages as low as 2.6-2.7% before the pandemic.  When they were buying rentals, they were paying effective rates (deducting interest rates for income) of around 1.7% (40% marginal rate, let's say).  Rates now are closer to 4.5%.  The effective interest rate for the same scenario would therefore be 2.7% - a roughly 60% increase to the carrying cost of the mortgage for real-estate investors.  

It's not quite so dramatic for people who bought their first home, but it's still scary.  Folks who fully-financed in 2019 for a home purchase will have paid almost nothing off their principle, and will see their interest expense all of the sudden increase by 40% in 2024.  

While there may be a supply and/or labor shortage, it's hard to overstate the effect that financing costs are 40-60% higher for home purchase/construction than it was a few years ago.  

Edited May 2, 2023 by Moonbox

[eyeball]

5 hours ago, Nationalist said:

And if the masses starve and rot, well hell, that's just bloody tough.

Much of that mass will come here to escape the starvation. So you think it will get bloody too do you? You're probably right but I doubt that'll stop it.

[eyeball]

9 hours ago, CdnFox said:

I don't think you get how bad this is, or how badly we're going to be falling behind.

You have no idea how much I actually do get it. The number of small liveaboard boats and shacks in the bush are probably the most obvious signs around here. The RV a co-worker of mine parked out in the back is another.  Like most of my neighbour's.

Little underground suites in basements above garages and the like have always proliferated and they're all pretty much being grandfathered into legal suites because the need for housing has become so acute.

But yeah the cost of materials and regulations around here have jacked up the price of a new home to around $400 a square foot.  The number of liveaboard boats alone is keeping pace, the collapse of the fishing industry is providing lots of cheap boats.

[CdnFox]

7 minutes ago, eyeball said:

The number of small liveaboard boats and shacks in the bush are probably the most obvious signs around here. The RV a co-worker of mine parked out in the back is another.  Like most of my neighbour's.

Sure. "Urban camping" has become a thing as well, where people live in campers or rvs right in the city moving around from time to time. There's youtube channels dedicated to it.

But that doesn't even begin to scratch the surface of what's coming if we don't either control population growth or build more homes. Or both. You can't have a million people living in the bush.

7 minutes ago, eyeball said:

Little underground suites in basements above garages and the like have always proliferated and they're all pretty much being grandfathered into legal suites because the need for housing has become so acute.

Sure - again tho that is just moving more people into existing homes. That works - for a while.  And we're already nearing the end of that as well, once homes reach capacity and there's no new ones there's a problem.

7 minutes ago, eyeball said:

But yeah the cost of materials and regulations around here have jacked up the price of a new home to around $400 a square foot.  The number of liveaboard boats alone is keeping pace, the collapse of the fishing industry is providing lots of cheap boats.

And again - that buys a little time but you can't have a million boats.People are also moving out of the cities and taking up rural and suburban areas that weren't as 'in demand' before as well, and that buys a little time.  But at the end of the day, those are bandaids on a gushing wound.

At the current immigration pace, within about 5 years we're going to see the strain become insane. And homeowners will start compaining about tent cities and urban camping, and gov'ts will be very concerned about permanent camping in the woods with fire seasons geting worse and worse, and there will be NO WAY to fix it anytime soon.

Gov'ts better get their heads out of their asses and make sure stuff is getting built or some of the riots we've seen in europe will wind up being our daily news here.

[eyeball]

9 minutes ago, CdnFox said:

But that doesn't even begin to scratch the surface of what's coming if we don't either control population growth or build more homes. Or both. You can't have a million people living in the bush.

You can when the desert they left becomes uninhabitable.

It's not the growth of population that's the issue anymore it's simply the population. Sustainability is the issue.  We're boxed in.

BTW if you can't grow your population how do you grow your economy?

 

[CdnFox]

11 minutes ago, eyeball said:

You can when the desert they left becomes uninhabitable.

No, it's not a problem of where they come from. You just can't. It doesn't work.  And then the borders get shut OR the guns come out.

11 minutes ago, eyeball said:

It's not the growth of population that's the issue anymore it's simply the population. Sustainability is the issue.  We're boxed in.

Well it is growth. When things grow out of control they tend to completely overtake their surroundings and wipe out available resources and then you have a mass starvation event.

But we're not planning for our growth, we're deliberately forcing growth much faster than we can cope with.

11 minutes ago, eyeball said:

BTW if you can't grow your population how do you grow your economy?

 

Well there are several ways, the super - short answers are efficiency and new products.  But at the end of the day you can't grow either your economy or your population faster than you can provide for it, or you wind up with inflation and resource shortages (homes, schools, medicine etc).

[eyeball]

1 hour ago, CdnFox said:

No, it's not a problem of where they come from. You just can't. It doesn't work.  And then the borders get shut OR the guns come out.

It could be a problem if they start coming from the US. They'll bring guns. It seems climate change will probably impact the US harder than other countries. It has some of the worst weather on the planet where people live in the millions. This scenario is probably still a couple decades away. But when the water hole gets smaller the animals get meaner.

1 hour ago, CdnFox said:

Well it is growth. When things grow out of control they tend to completely overtake their surroundings and wipe out available resources and then you have a mass starvation event.

We're not at that point which is why we'll increasingly be a destination as other places do approach it. 

 

1 hour ago, CdnFox said:

But we're not planning for our growth, we're deliberately forcing growth much faster than we can cope with.

We've known this for well over a century and should have started planning decades ago to force it to shrink when we could have controlled it. It's out of our hands and in nature's now.

1 hour ago, CdnFox said:

Well there are several ways, the super - short answers are efficiency and new products.  But at the end of the day you can't grow either your economy or your population faster than you can provide for it, or you wind up with inflation and resource shortages (homes, schools, medicine etc)

Exactly what's happening all around the planet - all around us in other words.

Oh well tomorrow is another day as they say.

[CdnFox]

4 hours ago, eyeball said:

It could be a problem if they start coming from the US. They'll bring guns.

then we'll secure our borders.  And america will be just as good/bad a place to hide out as canada so why would they.

4 hours ago, eyeball said:

We're not at that point which is why we'll increasingly be a destination as other places do approach it. 

we are at that point internally. We are growing fast and support resources are not. We are VERY close to that within our borders.

4 hours ago, eyeball said:

 

We've known this for well over a century and should have started planning decades ago to force it to shrink when we could have controlled it. It's out of our hands and in nature's now.

None of that is remotely accurate.

For well over a century this wasn't a problem - the inflow of people was about teh same as our growth in homes and medical/education facilities. SOME strain but nothing serious.

This issue has only begun in the last 20 years and only become very serious in about the last 10. And it is certainly not 'in natures hands'.

4 hours ago, eyeball said:

 

Exactly what's happening all around the planet - all around us in other words.

No, it's really not. About the best you can say is most places have more productivity increases than we do but they're not replacing growth with productivity or products.

[ExFlyer]

20 hours ago, Moonbox said:

Biggest factor is interest rates. There's no mystery here.

Folks were getting mortgages as low as 2.6-2.7% before the pandemic.  When they were buying rentals, they were paying effective rates (deducting interest rates for income) of around 1.7% (40% marginal rate, let's say).  Rates now are closer to 4.5%.  The effective interest rate for the same scenario would therefore be 2.7% - a roughly 60% increase to the carrying cost of the mortgage for real-estate investors.  

It's not quite so dramatic for people who bought their first home, but it's still scary.  Folks who fully-financed in 2019 for a home purchase will have paid almost nothing off their principle, and will see their interest expense all of the sudden increase by 40% in 2024.  

While there may be a supply and/or labor shortage, it's hard to overstate the effect that financing costs are 40-60% higher for home purchase/construction than it was a few years ago.  

The biggest factor is no one is going to build something for free.

Yes, interest rates are a factor for buyers but, they are a factor for builders as well. It costs them money to build and then it costs money to abide by the ridiculous regulations and requirements thrust upon them. All that added to the cost of a house and, remember they are in it for a profit.

Oh and, the builders cannot get labourers and the ones they get are demanding higher wages which, surprisingly, add to the cost of a house.

And lastly, buyers have to find 10% to put down on a house. that makes them have to decide between present chosen lifestyle and a house....

Blaming immigration may be a partial problem but not really because most, if not all, immigrants do not have the money to buy a house.

[Nationalist]

28 minutes ago, ExFlyer said:

The biggest factor is no one is going to build something for free.

Yes, interest rates are a factor for buyers but, they are a factor for builders as well. It costs them money to build and then it costs money to abide by the ridiculous regulations and requirements thrust upon them. All that added to the cost of a house and, remember they are in it for a profit.

Oh and, the builders cannot get labourers and the ones they get are demanding higher wages which, surprisingly, add to the cost of a house.

And lastly, buyers have to find 10% to put down on a house. that makes them have to decide between present chosen lifestyle and a house....

Blaming immigration may be a partial problem but not really because most, if not all, immigrants do not have the money to buy a house.

Ummm...

https://www.cnn.com/2023/01/01/business/canada-bans-home-purchases-foreigners/index.html

[Nationalist]

20 hours ago, eyeball said:

You can when the desert they left becomes uninhabitable.

It's not the growth of population that's the issue anymore it's simply the population. Sustainability is the issue.  We're boxed in.

BTW if you can't grow your population how do you grow your economy?

 

Boy is that a silly question. Here's a logical answer.

Unchain industry so they can mine our natural resources. Leave the farmers alone to farm.

Then...watch the economy grow like a weed.

[Nationalist]

21 hours ago, eyeball said:

Much of that mass will come here to escape the starvation. So you think it will get bloody too do you? You're probably right but I doubt that'll stop it.

Don't twist the meaning of my words there Tweenkie-poo.

And its past time we closed our borders. WAY past time.

[ExFlyer]

8 minutes ago, Nationalist said:

Ummm...

https://www.cnn.com/2023/01/01/business/canada-bans-home-purchases-foreigners/index.html

How is this news to you?

This is years old, before the pandemic. BC has prevented or tempered foreign home buying for "investments" for years assuming it would prevent the rise in home prices. Well, they were wrong weren't they?  This law, as of 1 Jan is just Trudeau trying to appease.

And besides, the topic has turned to immigrants, not foreign investors.

Edited May 3, 2023 by ExFlyer