this post was submitted on 30 Sep 2024
65 points (100.0% liked)

Canada

7185 readers
259 users here now

What's going on Canada?

Communities

🍁 Meta

🗺️ Provinces / Territories

🏙️ Cities / Local Communities

🏒 SportsHockey

Football (NFL)

  • List of All Teams: unknown

Football (CFL)

  • List of All Teams: unknown

Baseball

Basketball

Soccer

💻 Universities

💵 Finance / Shopping

🗣️ Politics

🍁 Social and Culture

Rules

Reminder that the rules for lemmy.ca also apply here. See the sidebar on the homepage:

https://lemmy.ca

founded 3 years ago
MODERATORS
[email protected]
65
Canada's housing affordability crisis may persist for years despite rate cuts (www.reuters.com)
submitted 1 month ago by [email protected] to c/[email protected]
34 comments fedilink hide all child comments
 

Buying a house may remain out of reach for many Canadians for the foreseeable future, with mortgage costs unlikely to fall enough to offset lofty home prices and weak spending power, economists and real estate agents say. 0 Even with expectations that Bank of Canada will keep cutting rates in the coming months, the issue of home affordability - which has strangled Prime Minister Justin Trudeau's poll numbers - is unlikely to fade before the next election.

The mandate for the Liberal minority government ends at the end of October 2025, but an election could come well before then, with the Conservative opposition spoiling to end Trudeau's nine-year run at the top.

"You won't get back to an affordable range for housing on a sustained basis for a decade," Tony Stillo, director at forecasting and analysis group Oxford Economics, said last week at a conference.

you are viewing a single comment's thread
view the rest of the comments
[–] [email protected] 4 points 1 month ago (1 children)

Supply needs to increase, but it can literally never increase enough given its current structure of investors and profiteering. As long as houses are bought by investors (anyone with two houses), then it means that normal people will be priced out as the investors push prices up higher than they should be. If house prices drop they’ll invest in building less housing.

I'm not sure you're familiar with the way the industry works. Builders and investors are very rarely the same people. Builders don't care if the buyer is going to live there or rent the property. Your theory also doesn't account for the ~80% of housing that is owner-occupied.

This is compounded by most new housing being multi-unit buildings that a single person cannot build on their own. When we had urban sprawl, you could still buy cheap land on the outskirts and build your own house if investors stopped building new developments, but with (very necessary) greenbelt policies, it eliminates that release valve, putting the housing market basically entirely in control of investors who’ll keep it inflated to profit themselves.

This is also quite the take — it's very rare to see anyone advocate for more urban sprawl or suggest that building more housing units drives up prices. If you want to live in an urban area, density is good because it means there's more housing supply. Land is the only finite resource in the equation, so making less efficient use of it in the hope that prices will come down is... Well, I'll need you to explain how that math is supposed to work.

[–] [email protected] 4 points 1 month ago* (last edited 1 month ago) (1 children)

I'm not sure you're familiar with the way the industry works. Builders and investors are very rarely the same people. Builders don't care if the buyer is going to live there or rent the property.

The fact that the entire condo market is built with investor sized units would suggest otherwise (or suggest that builders build what the market demands and if the market is all investors they will build investor focused units).

This is also quite the take — it's very rare to see anyone advocate for more urban sprawl or suggest that building more housing units drives up prices.

I agree, not sure where you saw that. Was it where I said that green belt policies are "very necessary"?

Land is the only finite resource in the equation, so making less efficient use of it in the hope that prices will come down is... Well, I'll need you to explain how that math is supposed to work.

The point is that policies that combat urban sprawl have also increased financialization of the housing market, both my making housing a more limited commodity (which incentivizes investors to buy), and by making it impossible to build a house unless you're a large corporation that can afford to build a multi-tenant building.

We unquestionably need to combat urban sprawl, but we should also be addressing the effects that those corrections are having on the housing market by de-incentivizing investors and profiteering.

[–] [email protected] 0 points 1 month ago* (last edited 1 month ago)

The fact that the entire condo market is built with investor sized units would suggest otherwise (or suggest that builders build what the market demands and if the market is all investors they will build investor focused units).

That's still fundamentally a supply (and by extension pricing) issue. Prices are high, therefore small units are the only thing people can realistically afford, therefore that's what developers build.

I agree, not sure where you saw that. Was it where I said that green belt policies are “very necessary”?

Here: "When we had urban sprawl, you could still buy cheap land on the outskirts and build your own house if investors stopped building new developments, but with (very necessary) greenbelt policies, it eliminates that release valve, putting the housing market basically entirely in control of investors who’ll keep it inflated to profit themselves."

The point is that policies that combat urban sprawl have also increased financialization of the housing market

How do you define "financialization" here, especially in the context of non-rental units? If we're talking about REITs, sure, but rentals are only a small part of the picture.

both my making housing a more limited commodity (which incentivizes investors to buy)

It also incentivizes builders to build, so as long as that isn't impeded, prices should stabilize. Unfortunately building is severely impeded, which is what I mentioned in my earlier post.

and by making it impossible to build a house unless you’re a large corporation that can afford to build a multi-tenant building.

Again, this is a land value issue, not one of construction costs. Of course land is going to be expensive in an urban centre, as it should be! It's a very limited resource. it makes much more sense to have two hundred people living on a building lot rather than four. Hence my confusion about your desire to reduce supply even further in order to reduce the price of housing.