CIBC Says House Prices to Rise

[jdobbin]

Wasn't sure where to place this although I think housing ought to be a priority to all three levels of government, business and the consumer.

http://www.ctv.ca/servlet/ArticleNews/stor...0418?hub=Canada

"Assuming a two per cent annual inflation rate, this means that house prices in Canada are expected to double by 2026,'' said Tal. "This increase, of course, will not be symmetrical -- with large cities seeing even larger increases in home valuations.''

Higher home prices generally mean higher financial gains by banks and other lenders who provide financing to homeowners.

I think this will present challenges to growth and basic needs of people over the next years.

I guess Calgary and Edmonton are good examples of major cities with growth that leaves people with good incomes homeless.

Housing stock is aging as well and refurbishment programs need to be considered to keep homes from being condemned.

Entry level housing and housing for seniors will be large and developing challenges in Canada.

[Charles Anthony]

refer to jDob's archive in his post #4 below.

[ScottSA]

Banks have done nothing but predict long term growth, always and everywhere. What they are horrible at is predicting short term fluctuations, since they do nothing but predict short term growth too. All they have ever done is predict growth, unless it is after the fact and we are in the midst of a recession, in which case they predict that it will be over soon.

[jdobbin]

I have a few thoughts.

1) Of the three levels of government, housing should only be a concern of municipal governments and only with regards to the homeless.

2) I put little weight on an economic prediction of 20 years -- particularly from a commercial bank who makes money by providing financing for the purchase of houses.

3) It is very difficult to interpret the statements in that article because the distinction between real and nominal prices is not clear. This:

The housing market is expected to fluctuate in the next 20 years, but the bank predicts average real house prices will mirror the performance of the past two decades.

comes close. However, it would be helpful if the article mentioned what happened in the past two decades but it does not.

4) Let us go back in time and find out what the CIBC predictions were in 1987 for today's housing prices. Hmm??

5) Last but not least, I personally do not think this is much of a politicial issue.

Most municipal governments don't have the resources to provide housing for the homeless. As per our constitution, municipalities are creatures of the provinces and they keep cities on a tight leash in terms of the money the can raise.

In other words, provinces are involved because they want to be.

The Feds are involved because they are CMHC.

I have no idea what the predictions of 1987 from CIBC were. I wish I could find something. Anything really.

Housing isn't limited to just the homeless and almost every decision a municipality makes is in regards to its affairs has something to do with housing.

I find it to be a very political issue but primarily a Federal one, I don't know. Certainly the Feds can't be left out of the picture though.

[Slavik44]

See, I think we run into some major problems with these long term predictions and then trying to make implications on current society based off of this suggested future world. I think on the surface it sounds scary but when we look at the situation a bit more, we realise that under the surface, the prediction are either wrong or not as big of deal as we make them out to be.

The first thing we have to come to grips with is that the housing Market, is a Market, and as such is subject to the forces of supply and demand. We must also recognize that Demand is not perfectly inelastic.

What I want to say is that, If you have a yearly income of 120,000 before taxes the calculators seem to indicate you can get a 400-500K mortgage. Unless Canadian financial institutions overhaul their mortgage calculation schemes, this will continue to be true.

Meaning that if housing prices were to double in twenty years, their would have to be people capable of making such purchases, people eligable for mortgages in the multi-million dollar range. Obviously, we have some people capable of qualifying, but not a whole lot.

The implication is this: 1) People's salaries will continue to increase allowing them to continue to chase up the value of property or 2) The DYNAMIC housing Market will not continue to increase at a flat and static rate for the next twenty years.

It will probabley be a combination of both. But we must understand that the market in most major metropolitan cities could not support houses doubling in prices and so if it could in the future, then obviously the issue would overblown because salaries will also have gone up.

That isn't to say that the future is going to be rosy, and not to worry about a thing, we may very well encounter problems, and issues of affordibility in the lower middle class. But, we can not simply sit back and say "oh my god" housing prices are going to double, no one will be able to buy a house...the obvious answer is that if house prices doubled...they doubled for a reason...because people and a large number of people were able to buy houses. Because houses that nobody buys or nobody can buy, sit on the market...and the price is eventually cut to attract customers.

Its kinda like when Grandma talks about the candies that cost her a cent to buy...The cost of liquorish has jumped over 100% in the past 60-70 years, but not to worry judging by the obesity rates children are geting their fair share.

[Charles Anthony]

One more thing, I believe the purpose of this CIBC research-forecast-report-press-release-whatever is simply a glorified advertizement. All they want is their name in the papers and we are currently feeding their marketing strategy.

Anyway.

Its kinda like when Grandma talks about the candies that cost her a cent to buy...The cost of liquorish has jumped over 100% in the past 60-70 years, but not to worry judging by the obesity rates children are geting their fair share.

Excellent! I like your imagery.

jDob,

I am deleting my post #2 and providing a link to your archived version above. I lay the integrity and safety of my original post in your guardian hands. Thank you in advance.

[Renegade]

1) Of the three levels of government, housing should only be a concern of municipal governments and only with regards to the homeless.

Certainly an interesting statement for an anarchist to make!! Why should they be concerned?

[Charles Anthony]

Certainly an interesting statement for an anarchist to make!! Why should they be concerned?

Mainly because the homeless usually occupy "public" spaces which in turn are under the "authority" of municipal governments.

I am grasping at giving government a role in this matter. Thus, I would rather a lower level of government be "responsible" than a higher level of government. Everybody other than homeless people often have more choices when it comes to settling their problems with respect to shelter. To put it a different way, the OP discusses an issue which is nothing more than a luxury. My sympathies -- if I were to have any -- go out to the homeless before it goes out to others in this matter.

[fellowtraveller]

I guess Calgary and Edmonton are good examples of major cities with growth that leaves people with good incomes homeless.

No, they are no such thing.

People with average incomes and regular lives can still afford homes in both cities.

Prices are still less than those in Vancouver and Toronto.

Alberta still leads the nation in disposable income.

[Renegade]

Mainly because the homeless usually occupy "public" spaces which in turn are under the "authority" of municipal governments.

I would say that municipal governments are more concerned about use of space rather than homelessness. IOW, if the homelessness could be trucked somewhere so that they didn't intefere with the use of public's space, it would also solve the municipal government's problem but not necessarily cure homelessness.

I am grasping at giving government a role in this matter. Thus, I would rather a lower level of government be "responsible" than a higher level of government. Everybody other than homeless people often have more choices when it comes to settling their problems with respect to shelter. To put it a different way, the OP discusses an issue which is nothing more than a luxury. My sympathies -- if I were to have any -- go out to the homeless before it goes out to others in this matter.

It somewhat depends on how you see homelessness. Personally I don't see homelessness as a problem. I see it as a symptom of a problem. That problem being that people are unable or unwilling to improve their economic cirmcumstances. I woudl actually say that the greater ability to effect the choices an individual has is at the federal level. For example it can encourage people to move to more economically viable areas.

[jdobbin]

No, they are no such thing.

People with average incomes and regular lives can still afford homes in both cities.

Prices are still less than those in Vancouver and Toronto.

Alberta still leads the nation in disposable income.

Who are the homeless then? So many of then seem to have jobs in Alberta but can't find housing.

[geoffrey]

Who are the homeless then? So many of then seem to have jobs in Alberta but can't find housing.

Alot of them don't have the resources to find one. I have university friends living off student loans and the such, four of them squeeze into a 3 bedroom (not the nicest area of town, that's for sure) for $1200 a month... so $300 a person. I'm about to transition into a nicer condo with a couple of friends, $1800 for the three of us (so $600 each, incl. condo fees and heat/hydro).

It's possible to do if you know a few people to go in on a house or apartment together. It might not be comfortable, or nice, but minimum wage earners really shouldn't feel entitled to anything above the absolute minimum in comfort and conveniences.

Realistically Dobbin, someone can't live solo on minimum wage anywhere in Canada. I have a hard time believing that $1200-1300 a month before taxes and all that other stuff really gets you far anywhere.