22 per cent of Canadian homebuilders cancel projects amid high rates despite severe housing shortage

[CdnFox]

https://archive.ph/FA8kM#selection-4603.0-4618.1

22 per cent of Canadian homebuilders cancel projects amid high rates despite severe housing shortage

Rate hikes will continue to keep building momentum “muted,” report finds, sparking calls for an “all-hands-on-deck approach” to housing crisis.

At a time when Canada desperately needs to build more housing — and Premier Doug Ford is opening up part of the Greenbelt to be developed — the construction industry “remains downbeat” amid high interest rates, with 22 per cent of Canadian homebuilders cancelling projects entirely in the second quarter of 2023.

The Canadian Home Builders’ Association (CHBA) released its second-quarter report last week, which saw the construction of both single- and multi-family units remain low but increase slightly in the second quarter — an improvement from the lows recorded in the fourth quarter of 2022.

 

The slowdown in new builds is concerning, said CHBA CEO Kevin Lee, as Canada needs to build 5.8 million homes within the next 10 years to close Canada’s current housing supply gap.

“Canada needs to build 3.5 million more homes than the 2.3 million we normally would over the next decade to make up Canada’s housing deficit and help address affordability,” he said. “This is an important target. It will take a comprehensive approach by all levels of government to pursue this with any level of success.”

 

 

Edited August 15, 2023 by CdnFox

[CdnFox]

We were not building nearly enough homes -  and now we're going to be building even less.  While raising our population at historic rates.

Pretty quick you're going to need two incomes per household to get by - one entirely just to pay the rent and one to pay for everything else for the both of you.

 

[ExFlyer]

5 minutes ago, CdnFox said:

We were not building nearly enough homes -  and now we're going to be building even less.  While raising our population at historic rates.

Pretty quick you're going to need two incomes per household to get by - one entirely just to pay the rent and one to pay for everything else for the both of you.

 

Why would or should a contractor build a house when they cannot get labour and cannot guarantee sales?

[CdnFox]

3 minutes ago, ExFlyer said:

Why would or should a contractor build a house when they cannot get labour and cannot guarantee sales?

well while those are issues - they're not really the hold back.  That would be a problem if we're talking about doubling production but right now we're reducing it.  The people and product is there and can be calculated and addressed. Ther'es ways around that.

It's the uncertainly with interest rates that is driving this. You don't know how much the cost of the money you're going to borrow is going  to be - and WORSE you don't know what mortgage rates will be when you finish the project and that determines what people can pay for the places. So only the most lucrative of builds are worth doing - otherwise there's risk.  And builders don't like risk.

 

[ExFlyer]

18 minutes ago, CdnFox said:

well while those are issues - they're not really the hold back.  That would be a problem if we're talking about doubling production but right now we're reducing it.  The people and product is there and can be calculated and addressed. Ther'es ways around that.

It's the uncertainly with interest rates that is driving this. You don't know how much the cost of the money you're going to borrow is going  to be - and WORSE you don't know what mortgage rates will be when you finish the project and that determines what people can pay for the places. So only the most lucrative of builds are worth doing - otherwise there's risk.  And builders don't like risk.

 

Here in Ottawa, building sites are nearly closed. Help wanted signs everywhere. Every builder has help wanted signs for all trades. Even the reno market is looking for workers.

Yes, mortgage rates are an issue but, re-sale homes are flying off the market. Up from last year. They have the same mortgage issues, but are selling.

I am not sure that interest rates are the problem for builders or new home buyers.

[CdnFox]

4 minutes ago, ExFlyer said:

Here in Ottawa, building sites are nearly closed. Help wanted signs everywhere. Every builder has help wanted signs for all trades. Even the reno market is looking for workers.

I am acutely aware of the labour situation but it is not as bad as you might think and they will ALWAYS be looking for more people. Not having enough means building goes a little slower, not that it stops. Like i said - it may be a real issue when we're talking about where we need to be, but it's not why building is declining,

Quote

Yes, mortgage rates are an issue but, re-sale homes are flying off the market. Up from last year. They have the same mortgage issues, but are selling.

It's not the same mortgage issue at all. If they could build the homes in a week it would be the same issue but depending exactly where they are in the process its 1 - 3 years before the buildings can be turned over to a new owner.  So - what's mortage rates going to be in 2 years?  They're talking about raising interest rates again in september - how much will they have to raise them before the inflation is under control? The actions of the feds aren't helping restore confidence in stability either. 

And THEN there's their own borrowing rates.  They tend to be floating - so how much are they going to have to pay in interest over those 2 - 3 years on the costs of building the homes?

Everyone remembers when interest rates shot up to 20 percent practically overnight.

So they could pay far more for building the property and find that buyers can afford far less.  That's the barrier.

[WestCanMan]

1 hour ago, CdnFox said:

We were not building nearly enough homes -  and now we're going to be building even less.  While raising our population at historic rates.

Pretty quick you're going to need two incomes per household to get by - one entirely just to pay the rent and one to pay for everything else for the both of you.

Silly little conservative: like the budget, housing needs will balance themselves.

I wish I was kidding, but honestly they will.

The days of 1 or 2 Canadians living in a studio, 2 or 3 Canadians living in a 1-bdrm apartment, 4 people living in a 2-bdrm apartment are over. That's old-skool thinking.

The housing shortage actually will balance itself just by Canadians lowering their standards to something that was unimaginable 30 years ago. 

It's not unusual now for homes in Canada to have 2 or more entire families sharing small apartments. 

There are areas where it's not uncommon for Realtors to show up for showings while there are still people sleeping on kitchen floors. I'm not talking about partiers from the night before either, just children who live in homes where they don't even share a bdrm: they don't have one. They share a kitchen. 

The population will increase by a lot and the amount of living space will not increase proportionately. This is Justin Trudeau's Canada. For real. It's his country, you're just a peon here. 

[CdnFox]

34 minutes ago, WestCanMan said:

Silly little conservative: like the budget, housing needs will balance themselves.

I wish I was kidding, but honestly they will.

The days of 1 or 2 Canadians living in a studio, 2 or 3 Canadians living in a 1-bdrm apartment, 4 people living in a 2-bdrm apartment are over. That's old-skool thinking.

The housing shortage actually will balance itself just by Canadians lowering their standards to something that was unimaginable 30 years ago. 

It's not unusual now for homes in Canada to have 2 or more entire families sharing small apartments. 

There are areas where it's not uncommon for Realtors to show up for showings while there are still people sleeping on kitchen floors. I'm not talking about partiers from the night before either, just children who live in homes where they don't even share a bdrm: they don't have one. They share a kitchen. 

The population will increase by a lot and the amount of living space will not increase proportionately. This is Justin Trudeau's Canada. For real. It's his country, you're just a peon here. 

I wish i could say you're wrong.

If i  was a younger person today, i'd be buying a motorhome and urban camping already.

[eyeball]

If you're a property owner I'd say screw the nimby's, ignore the rules, renovate an 'in-law' suite into the place, fix up a spot for an urban camper and cash in on the demand.

[CdnFox]

4 minutes ago, eyeball said:

If you're a property owner I'd say screw the nimby's, ignore the rules, renovate an 'in-law' suite into the place, fix up a spot for an urban camper and cash in on the demand.

It's a good idea but people are afraid to be landlords right now.

B.C. homeowners reveal they have the space but are reluctant to rent: poll

Over a third of British Columbian homeowners have space in their home that could be rented out but isn’t.

https://vancouversun.com/news/local-news/bc-homeowners-reluctant-rent

 

And who can blame them? During covid many gov'ts just said "Well you have to let renters stay for free - because apparently you're responsible for paying for social services now. "

Bad tenants are hard to get rid of.  Gov'ts like that in bc won't let you raise  rents higher than inflation despite the fact that insurance costs for example went through the roof  for stratas - and yet when inflation went up they said "oh... well.. we can't let you raise it THAT much.... ".

Unless you like fighting all the time and are prepared to charge insane rates to make it worth while why would anyone even consider renting out their space?

 

[Army Guy]

3 hours ago, ExFlyer said:

Why would or should a contractor build a house when they cannot get labour and cannot guarantee sales?

Here in NB building homes is a very costly endeavor, i was quoted last year from a builder to build a 2800 sq foot home like the one i already had was quoted at 880 k , that price was just the home, did not include a garage, landscaping, paved drive way ....the one i have now i paid 380 k just 4 years ago. He was saying that many different reasons are responsible, high cost of lumber, same for other building supplies, and some of what you mentioned, labor, got to be competitive ...

and of course people moving from out west, selling homes for multi millions and then buying here , this reason has driven the cost of homes to double and triple in the last 3 years...mostly people from Ontario, who can work from home... they continue to arrive by the boat loads, looking to score on cheap housing for them , not for local NB's who are now out priced in the market...Now we listen to them bitc* and complain about nothing to do here...no night life, no major attractions...i ask do you hunt or fish...NO, do you do any out door sports like four wheeling or side by siding, NOPE, like camping ,NO... This is the country, dip shi*, what did you expect...some do convert to being rednecks and learn to enjoy the great outdoors, others just move back...

 

 

[WestCanMan]

2 hours ago, CdnFox said:

I wish i could say you're wrong.

If i  was a younger person today, i'd be buying a motorhome and urban camping already.

People do it. 

I know a guy who sold his house and started living in his 40'er about 18 months ago, waiting for the market to tank so he could buy back in for a cheaper price. 

He timed his sale a bit too early, but he might get his wish if interest rates keep going up. 

[CdnFox]

1 hour ago, WestCanMan said:

People do it. 

I know a guy who sold his house and started living in his 40'er about 18 months ago, waiting for the market to tank so he could buy back in for a cheaper price. 

He timed his sale a bit too early, but he might get his wish if interest rates keep going up. 

Well the problem he'll face is that home-to-person ratios are not going down.  So prices will still tend to go up or be stable. it's more of a question of how many will be squeezed out of the bottom.

We may see little 'panic blips' in the market with slight downturns which vanish quickly - if i were him and that happend i'd get back in as soon as possible. I think high home prices are going to be a thing for quite a while.  At best  it may grow a little more slowly if it ever finds it's top end.

[eyeball]

3 hours ago, CdnFox said:

Over a third of British Columbian homeowners have space in their home that could be rented out but isn’t.

So what about space on their land or in their building that they could sell or lease? The solution to housing is density, diversity creative architecture and progressive adaptive zoning.

[CdnFox]

1 minute ago, eyeball said:

So what about space on their land or in their building that they could sell or lease?

Still means having a tenant.

Some provinces may still see that but a lot won't after covid.  Here in bc for example this is what happened.  Remember most rentals are strata lots these days, they're not building much purpose built rental stuff. So - the insurance for strata went up all of a sudden and without warning by 200-600 percent. It's the largest single expense for most stratas to begin with. So some people saw their fees jump 25 - 100 percent. 

But the gov't didn't allow them to pass it on to renters.  So.. fair enough, whatever

Then covid hit - and if your tenants didn't pay you weren't allowed to evict them. No compensation, So many landlords were stuck with nothing for their units. They were expected to pay for those people free of charge. That went on for a couple of years.

Then inflation shot through the roof.  Higher strata fees again but hey - at least the law says you can raise the rent by the same amount as inflation! SO not so bad. 

Except - they changed the law and said no.  Can't raise it.

Meanwhile if the tenant trashes the place it's hard as hell to get them out. 

Nobody wants to take that risk any more. Rental units are getting sold off, rents are going up like crazy - a SMALL two bedroom is going for 3500 a month in burnaby right now (someone i know just rented) and it's just getting worse.

8 minutes ago, eyeball said:

The solution to housing is density, diversity creative architecture and progressive adaptive zoning.

Largely. Although density can be an issue. People think it costs less per sq ft to build a massive 500 unit tower vs a 75 unit lowrise, but it doesn't. It's about twice as much for the highrise. So - theres a line. but generally speaking density is better.

[eyeball]

3 minutes ago, CdnFox said:

Still means having a tenant.

Not after subdividing or using some sort of strata arrangement.

[Moonbox]

3 hours ago, Army Guy said:

Here in NB building homes is a very costly endeavor, i was quoted last year from a builder to build a 2800 sq foot home like the one i already had was quoted at 880 k , that price was just the home, did not include a garage, landscaping, paved drive way ....the one i have now i paid 380 k just 4 years ago. He was saying that many different reasons are responsible, high cost of lumber, same for other building supplies, and some of what you mentioned, labor, got to be competitive ...

A lot of that is just not enough people to do the work.  The contractors offer dumb prices to people because they're already busy and don't need the work.  If someone wants to grossly overpay they'll do it, otherwise they don't really care.  

Things like lumber are more expensive now, but that's not the main thing driving up costs.  On a 2000 sq foot home in Ontario, lumber costs maybe bumped prices up by $60,000 per home, max.  That's assuming folks are paying 2.5x the lumber cost that they did before 2020.  

[CdnFox]

15 minutes ago, eyeball said:

Not after subdividing or using some sort of strata arrangement.

Well if it's strata or subdivision they will sell to a new owner - and sure people are doing that.  Old rental buildings are being bought up and converted to strata for example.  But - then the people who buy the strata's dont' do it to rent. They do it to live in, because they're concerned about rentals.  Which drives the price of rentals up because there's more renters and fewer spaces - and more sophisticated investors or investment companies buy up some of those stratas and REALLY jack the prices while offering lower service.

Now it's 3500 in greater vancouver for a newer but SMALL 2 br - it'll be that for a 1 bedroom within about 18 months. What younger kids earn that for god's sake? What new canadian does? Thats after tax .

[ExFlyer]

15 hours ago, CdnFox said:

Well the problem he'll face is that home-to-person ratios are not going down.  So prices will still tend to go up or be stable. it's more of a question of how many will be squeezed out of the bottom.

We may see little 'panic blips' in the market with slight downturns which vanish quickly - if i were him and that happend i'd get back in as soon as possible. I think high home prices are going to be a thing for quite a while.  At best  it may grow a little more slowly if it ever finds it's top end.

The news confuses us.

Are housing builds up or down?

Some say up  https://financialpost.com/real-estate/housing-starts-pace-jumps-june

Some say down https://ca.finance.yahoo.com/news/housing-starts-cool-canada-under-150949627.html

[SpankyMcFarland]

In fairness, these headlines are transferable to many countries at the moment. We need greater population density in Canadian cities. The ranch-style house and large garden are no longer fit for purpose in our suburbs. The nimby geezers will have to be taken on and that calls for rare political bravery. 

[CdnFox]

57 minutes ago, SpankyMcFarland said:

In fairness, these headlines are transferable to many countries at the moment.

That is the weakest and most loser - oriented reply you can offer.  There is NOTHING about any other country that's causing this in Canada. This is entirely a home made issue and trying to excuse it like that is mildly disgusting.

Quote

We need greater population density in Canadian cities.

Our densities are already pretty high.  If you go higher it means building very tall buildings - which is vastly more expensive.  It costs about the same to build a 500 sq ft apartment in a high rise as a 1000 sq foot townhouse or apartment in a low rise.  So after a certain point density just drives costs up.  Cities love it because higher prices means higher tax revenues. 

So no - density really isn't the solution. Especially in a country that is closer to the bottom end of people per sq ft.

Quote

The ranch-style house and large garden are no longer fit for purpose in our suburbs. The nimby geezers will have to be taken on and that calls for rare political bravery. 

 True - the townhouse model is much much more efficient  -  but neither are the problem right now.  It's not that there' s no land.  It's not that the developers don't have somewhere to build. It's that it's not worth it for them to take the risk to build right now.  And at the same time our population is not only increasing but increasing at an ever-increasing rate of increase   And that is 100 percent on trudeau.

[SpankyMcFarland]

1 hour ago, CdnFox said:

That is the weakest and most loser - oriented reply you can offer.  There is NOTHING about any other country that's causing this in Canada. This is entirely a home made issue and trying to excuse it like that is mildly disgusting.

Quite an animated response. Does no other country have similar problems at the moment? Would a Conservative government have completely avoided this problem? 100%?

 

1 hour ago, CdnFox said:

 densities are already pretty high.  If you go higher it means building very tall buildings - which is vastly more expensive.  It costs about the same to build a 500 sq ft apartment in a high rise as a 1000 sq foot townhouse or apartment in a low rise.  So after a certain point density just drives costs up.  Cities love it because higher prices means higher tax revenues. 

So no - density really isn't the solution. Especially in a country that is closer to the bottom end of people per sq ft.

Greater density is part of the solution along with proper mass transit systems etc.etc.. Toronto’s rail and subway system is rudimentary. And look at Calgary. The LRT started well and then expansion ground to a halt. 
 

 

[CdnFox]

Just now, SpankyMcFarland said:

Quite an animated response.

No, this is an animated response: 

 

My response was plain text and factual

Quote

Does no other country have similar problems at the moment? Would a Conservative government have completely avoided this problem? 100%?

No other country matters.   It's a loser excuse.  Should we allow guns to be given to our criminals because the US has a problem with guns? It's stupid.

As to the conservatives there's no doubt the problem would not have been as severe.  They had much better control over immigration, everyone loved their immigration policies. If they did NOT take the appropriate steps then they should be held to account the same way.  They have the same power.

Quote

Greater density is part of the solution along with proper mass transit systems etc.etc.

Why?  

It's the kind of thing people tend to parrot without understanding the math. But-  perhaps you've studied it more than most,  explain to me why it is a substantial part of the problem and show your math. Obviously it's going to be a little general but you should be able to demonstrate where this would solve anything.

[SpankyMcFarland]

4 hours ago, CdnFox said:

It's the kind of thing people tend to parrot without understanding the math. But-  perhaps you've studied it more than most,  explain to me why it is a substantial part of the problem and show your math. Obviously it's going to be a little general but you should be able to demonstrate where this would solve anything.

What is unique about Canada’s housing problem? And if there are unusual factors, there are also surely many that are seen elsewhere? I have no particular expertise in this area but I know what we’re doing isn’t working. 

Edited August 16, 2023 by SpankyMcFarland

[CdnFox]

20 minutes ago, SpankyMcFarland said:

What is unique about Canada’s housing problem?

So are you admitting you can't answer the question about why density is a big part of the solution? LOL -  Spanky!  C'mon bud, step it up

As to Canada there are quite a number of unique issues.  First - for the last 10 years we've been slowing down building in relation to population growth significantly - and it wasn't great before that. This is due to a number of factors but what it boils down to is that the way the system is designed at this point, it seriously punishes developers from building enough homes in advance of need. Construction will ALWAYS trail need . That's not the way it is in most countries.

And that creates problem number 2 - we're SEVERELY behind in the number of homes we need. While other countries kept up we are at the bottom of the list in homes to population, so at this point just to get back to where others are and get on solid footing we need about 1 million MORE homes than we usually build AND we need to increase the number of homes we build.

The liberals knew this was an issue in 2015 - they ran on fixing it, it was part of their platform.  It's been noted that since 2016 we've  built 100 thousand homes per year FEWER than the MINIMUM amount needed to keep the problem from getting worse.

We also have challenges that are unique to canada for municiple provincial federal roles that must be addressed.

But the number one issue is that in the last half decade immigration has gone bonkers and is about to go mega-bonkers.  Canada has always had  a world leading immigration rate but trueau is sending that skyward.

So we- unlike most others - were not building enough homes already.  NOW we're radically increasing the number of homes we need.  That is a uniquely Canadian issue.

There are other unique to canada factors but that should start you off.

 

I'm very disappointed you chickened out over defending the density thing