Average Canadian house price rose to $716,000 in April — up by $100K since January

[CdnFox]

https://www.cbc.ca/news/business/crea-housing-data-1.6843592

After plunging due to interest rate hikes throughout last year, the average price of a Canadian resale home has now increased for four months in a row, new numbers showed Monday.

The Canadian Real Estate Association said Monday that the average selling price of a home that sold on its MLS system in April went for $716,000. That's the fourth monthly increase in a row, and it marks a collective increase of more than $100,000 since the start of the year.

And this was as i predicted - a lot of kids out there were HOPING for higher interest rates believing that it would drop housing prices to be more affordable. But the lull is short lived as long as they're not building enough homes.  NOW prices are going to go up higher than they were before AND a mortgage is still going to cost a lot more money than it did before as a result of higher interest rates

The good news is the builders will soon start coming back to the market. The bad news is they weren't building enough homes when they were in the market anyway. And the worse news is that that'll still leave even LOWER construction levels for a few years.

I don't know what the kids today are going to do - this drives up rent as well.

[Dougie93]

15 minutes ago, CdnFox said:

https://www.cbc.ca/news/business/crea-housing-data-1.6843592

After plunging due to interest rate hikes throughout last year, the average price of a Canadian resale home has now increased for four months in a row, new numbers showed Monday.

The Canadian Real Estate Association said Monday that the average selling price of a home that sold on its MLS system in April went for $716,000. That's the fourth monthly increase in a row, and it marks a collective increase of more than $100,000 since the start of the year.

And this was as i predicted - a lot of kids out there were HOPING for higher interest rates believing that it would drop housing prices to be more affordable. But the lull is short lived as long as they're not building enough homes.  NOW prices are going to go up higher than they were before AND a mortgage is still going to cost a lot more money than it did before as a result of higher interest rates

The good news is the builders will soon start coming back to the market. The bad news is they weren't building enough homes when they were in the market anyway. And the worse news is that that'll still leave even LOWER construction levels for a few years.

I don't know what the kids today are going to do - this drives up rent as well.

it's the twenty year inflation of the money supply coming home to roost

too many dollars chasing too few homes, wages not keeping pace

the only remedy would be to remove dollars from the market

by the central bank raising interest rates well above the inflation rate

but that would be double digit interest rates imposed in a very short time

which would implode the entire debt laden economy, including provincial governments going into crisis

[I am Groot]

24 minutes ago, CdnFox said:

https://www.cbc.ca/news/business/crea-housing-data-1.6843592

After plunging due to interest rate hikes throughout last year, the average price of a Canadian resale home has now increased for four months in a row, new numbers showed Monday.

The Canadian Real Estate Association said Monday that the average selling price of a home that sold on its MLS system in April went for $716,000. That's the fourth monthly increase in a row, and it marks a collective increase of more than $100,000 since the start of the year.

And this was as i predicted - a lot of kids out there were HOPING for higher interest rates believing that it would drop housing prices to be more affordable. But the lull is short lived

When you have a federal government determined to flood the country with immigrants, refugees, temporary foreign workers, and foreign students. 

https://betterdwelling.com/canada-didnt-have-a-real-estate-supply-shortage-but-its-gov-may-create-one-bmo/

https://ca.finance.yahoo.com/news/trudeaus-immigration-policy-worsening-housing-174006902.html

https://cibccm.com/en/insights/articles/in-focus-housing-demand-from-newcomers-even-stronger-than-perceived/

Edited May 15, 2023 by I am Groot

[CdnFox]

5 minutes ago, Dougie93 said:

it's the twenty year inflation of the money supply coming home to roost

too many dollars chasing too few homes, wages not keeping pace

the only remedy would be to remove dollars from the market

by the central bank raising interest rates well above the inflation rate

but that would be double digit interest rates imposed in a very short time

which would implode the entire debt laden economy, including provincial governments going into crisis

Nope. Sorry bud, but it's got nothing to do with that. The only part that was accurate was the too few homes part.

It's as simple as this - for well over a decade we have not been building enough homes to match our increases in population. We've fallen short by about 100,000 homes per year. For ages now.

So at this point we're about a million homes short of what we need for our population. And the population is rising. And trudeau wants it to rise faster.  And home construction is actually going down at the moment and wasn't enough before.

That's what's leading to the prices going back up even tho interest rates have. People sat on the sidelines while interest rates were climbing , but now they're jumping back in because rents are insane and they're worried if prices go up further they'll never own. And this price increase drives rents up too.

The ONLY solution is to build massively more homes for a sustained period.

[Dougie93]

5 minutes ago, CdnFox said:

The ONLY solution is to build massively more homes for a sustained period.

but the inflation of the money supply has driven the price of building a new home through the roof

so new homes are going to be more expensive than the existing supply, not less

[Dougie93]

16 minutes ago, I am Groot said:

When you have a federal government determined to flood the country with immigrants, refugees, temporary foreign workers, and foreign students. 

https://betterdwelling.com/canada-didnt-have-a-real-estate-supply-shortage-but-its-gov-may-create-one-bmo/

https://ca.finance.yahoo.com/news/trudeaus-immigration-policy-worsening-housing-174006902.html

https://cibccm.com/en/insights/articles/in-focus-housing-demand-from-newcomers-even-stronger-than-perceived/

but this is where Canada is caught in the demographic trap

the Canadian population is collapsing

a contracting population is a contracting economy

but that cannot be tolerated under the debt burden

so Canada needs the immigrants to prop the debt up

[CdnFox]

13 minutes ago, Dougie93 said:

but the inflation of the money supply has driven the price of building a new home through the roof

so new homes are going to be more expensive than the existing supply, not less

irrelevant.  This problem existed for decades and has steadily been getting worse. And the high costs and inflation of a new home isn't in the home - it's in the land. 

Even if new home building costs fell to half what they are now - it woudln't make a difference. They simply aren't building enough and they havent' for over a decade.  I would argue 2 decades really, starting around 2000. But for a minimum of one.

Not only are we not building enough homes but the way our systems are right now it's structured so that we never will - building will ALWAYS lag need because of the processes involved.  So unless something radically changes housing prices will continue to go up

[Dougie93]

14 minutes ago, CdnFox said:

irrelevant.  This problem existed for decades and has steadily been getting worse. And the high costs and inflation of a new home isn't in the home - it's in the land. 

Even if new home building costs fell to half what they are now - it woudln't make a difference. They simply aren't building enough and they havent' for over a decade.  I would argue 2 decades really, starting around 2000. But for a minimum of one.

Not only are we not building enough homes but the way our systems are right now it's structured so that we never will - building will ALWAYS lag need because of the processes involved.  So unless something radically changes housing prices will continue to go up

you can never build enough fully detached homes to satiate the demand of 500,000 immigrants per year

most of these immigrants are coming in under the merit based points system

so they have money to spend

and a fully detached home is the destination in life

even renovated two room condos around here go for $800,000

semi detached is $1,000,000 +

fully detached bungalow starting at $1.2 million

brand new condos is $1,000,000

brand new fully detached is $2,000,000 plus

never mind young people, old people can't afford homes

the radical change to reduce the home prices is to raise interest rates above the rate of inflation

but the young & old people are just as screwed then,

since they couldn't afford the interest on the price reduced homes

Edited May 15, 2023 by Dougie93

[myata]

The mindless ride is bound to end somewhere. The entropy will take care of this.

[impartialobserver]

I do not know about Canada but one of the hidden costs involved (at least in NV and OR) is the cost of getting permits. The bureaucratic costs that are set upon the builder make the prospect of building low cost (and therefore low profit) homes somewhat unlikely. Second, with CA expats and their high cash flows willing to pay steep prices.. that prices out the locals. 

[CdnFox]

1 hour ago, Dougie93 said:

you can never build enough fully detached homes to satiate the demand of 500,000 immigrants per year

most of these immigrants are coming in under the merit based points system

so they have money to spend

and a fully detached home is the destination in life

even renovated two room condos around here go for $800,000

semi detached is $1,000,000 +

fully detached bungalow starting at $1.2 million

brand new condos is $1,000,000

brand new fully detached is $2,000,000 plus

never mind young people, old people can't afford homes

the radical change to reduce the home prices is to raise interest rates above the rate of inflation

but the young & old people are just as screwed then,

since they couldn't afford the interest on the price reduced homes

True. If we're going to build enough it'll be townhomes and apartments.  and even those are getting tough to afford as you note.

[CdnFox]

1 hour ago, myata said:

The mindless ride is bound to end somewhere. The entropy will take care of this.

Unless our population starts to decrease there isn't going to be any entrophy. We're falling further and further behind.

[Dougie93]

6 minutes ago, CdnFox said:

True. If we're going to build enough it'll be townhomes and apartments.  and even those are getting tough to afford as you note.

those are going for $800,000 in Southern Ontario

 

[Dougie93]

34 minutes ago, impartialobserver said:

I do not know about Canada but one of the hidden costs involved (at least in NV and OR) is the cost of getting permits. The bureaucratic costs that are set upon the builder make the prospect of building low cost (and therefore low profit) homes somewhat unlikely. Second, with CA expats and their high cash flows willing to pay steep prices.. that prices out the locals. 

in 2014 I thought $400,000 was expensive for a fully detached bungalow

now you couldn't buy a shack for $400,000

the prices have tripled in less than a decade

that's not fees & taxes, that's runaway inflation

[eyeball]

1 hour ago, myata said:

The mindless ride is bound to end somewhere. The entropy will take care of this.

Not entropy, just the limits nature is imposing on our species growth. The only way around this is to figure out how to live with zero or even negative growth or move off planet into space where we could grow to our heart's content.

[CdnFox]

1 hour ago, Dougie93 said:

those are going for $800,000 in Southern Ontario

 

Yeah, better than 2 million for a detatched

But also there's population density issues, and we can bill more townhomes and apartments faster.

and sadly - i think 800 is going to look like a steal in 3 years. When there's not enough supply to meet demand - people pay more and the people who can't get left out. we'll see more people unable to rent or own, kids won't leave their parents till they're around 50 if ever, nobody will be able to have their 'own' place anymore.

And then things get ugly.

[Dougie93]

8 minutes ago, CdnFox said:

Yeah, better than 2 million for a detatched

But also there's population density issues, and we can bill more townhomes and apartments faster.

and sadly - i think 800 is going to look like a steal in 3 years. When there's not enough supply to meet demand - people pay more and the people who can't get left out. we'll see more people unable to rent or own, kids won't leave their parents till they're around 50 if ever, nobody will be able to have their 'own' place anymore.

And then things get ugly.

as I say, they can't raise interest rates above the rate of real inflation without inciting a crisis

so I would expect more inflation

although the inflation rate in Argentina is 104% right now

so it has a lot of room to grow here

[CdnFox]

1 minute ago, Dougie93 said:

as I say, they can't raise interest rates above the rate of real inflation without inciting a crisis

so I would expect more inflation

although the inflation rate in Argentina is 104% right now

so it has a lot of room to grow here

Well we've seen inflation drive interest rates above 20 before in our lifetimes. And the stagflation that followed.

I think we're a year or three away from the bank hitting it's target range again. There will be a recession and that will help.

[Dougie93]

3 minutes ago, CdnFox said:

Well we've seen inflation drive interest rates above 20 before in our lifetimes. And the stagflation that followed.

but in 1981 the debt ratio was 25% of GDP

now it is 135%

there is too much debt, public, private & household now

raising rates to 20% with the debt based economy of today,  would incite a depression

[CdnFox]

4 minutes ago, Dougie93 said:

but in 1981 the debt ratio was 25% of GDP

now it is 135%

there is too much debt, public, private & household now

raising rates to 20% with the debt based economy of today,  would incite a depression

True.  But if that were to be the NEXT gov's problem to deal with....   Politics is often not about what's in the best interests of the people.

 

[Dougie93]

Just now, CdnFox said:

True.  But if that were to be the NEXT gov's problem to deal with....   Politics is often not about what's in the best interests of the people.

 

whichever government, whichever central bankers

they are unlikely to choose a deflationary spiral into a Great Depression by sudden shock

so I would expect more inflation, worse than the 1970's

then that in of itself may incite a deflationary spiral out of control of the central banks

although perhaps only into a secular bear market or shallow depression

[Dougie93]

in a way, we are already in a depression right now

I call it the Silent Depression

it's being masked by debt and money printing

but as soon as you take those punch bowls away

then the depression becomes apparent

[CdnFox]

14 minutes ago, Dougie93 said:

whichever government, whichever central bankers

they are unlikely to choose a deflationary spiral into a Great Depression by sudden shock

Well they can if they believe their gov't will be out of power and the next gov't will have to clean up the mess, and then they can roll back into power when that gov't is hated by everyone for doing what was necessary.

Now the next gov't will likely try to prevent it spiraling into depression but they may or may not be successful.

14 minutes ago, Dougie93 said:

so I would expect more inflation, worse than the 1970's

then that in of itself may incite a deflationary spiral out of control of the central banks

although perhaps only into a secular bear market or shallow depression

Certainly not implausible. At some point high inflation has to break the economy and then there's a reset.

[Dougie93]

1 minute ago, CdnFox said:

Certainly not implausible. At some point high inflation has to break the economy and then there's a reset.

the quantitative easing forces the interest rates to net negative when inflation adjusted

net negative means what it says

they are bailing away furiously with massive liquidity : yet still the ship is sinking

[CdnFox]

18 minutes ago, Dougie93 said:

in a way, we are already in a depression right now

I call it the Silent Depression

it's being masked by debt and money printing

but as soon as you take those punch bowls away

then the depression becomes apparent

Well, recession maybe.  Depression might be stretching it - but then again there's no really solid definition so many economists might well agree with you.