house prices, rate increases, new build costs, resale homes

[Varoufakis]

IMO the biggest unknown is where this European crisis is headed...
It is a US-led Nato vs. Russia and allies conflict... you can put in the basket of allies all the countries that voted against or abstained in the vote for the sanctions against Russia:
that includes the two heavyweights China and India, 16 African countries, and others...
If Russia and allies or partners start to form a sizable block trading commodities away from the almighty US dollar, beware..
The Euro is already collapsing (5-year low) and the RUB/USD is at a 5-year high despite the USD strengthening vs major peers.
The charts below, EUR/USD, RUB/USD, and RUB/EUR sum up the story.
You would not expect the RUB to do this well when sanctions against Russia were considered... quite the opposite happened.
Europe is already preparing, psychologically, their people for a tough winter. Could be a nightmare in the works as we speak. See the crisis in Italy.
Is Europe going to say fuck Ukraine, fuck NATO, I am buying Russia's natural gas for the short term?
In the medium and long term, we will see a return of the nuclear option...the French government is seeking a take over of EDF, the power company...

For now, this inflation may have peaked already, based on where the oil and agriculturals are headed ... both peaked already.
The central banks, in this scenario, are behind the curve. Slow to react, late to act. Who still remembers the famous "transitory inflation"?

So to go back to the topic, if the conflict ends now with a positive outcome, those rate increases will slow and possibly reverse and the housing bubble will go back to "normal"...otherwise, the worst is yet to come.

RUB = Russian Ruble, EUR = Euro , USD = US Dollar

 

[Abjectpatient]

House prices will probably never go down especially in Toronto due to mass immigration which is the singular cause of housing price increases. Densification is ludicrous. Do we want to live in a city like Honk Kong where all you see are 60 story condo towers everywhere, no green space, mass traffic, crowds of people everywhere? The government is trying to destroy the traditional way of life where people owned a single detached house. Ask yourself this, do you want to live in a cramped condo or would you rather have your own house with lots of space and a backyard? Do you want to take the bus everywhere or would you rather drive and not be stuck in traffic.

There is no singular issue involved in this at all. Many countries such as South Korea are suffering from the same cost issues now, with apartments nearing an average of 1mil a piece in Seoul, yet the countries population is set to decline.

 

[Abjectpatient]

The housing market is coming off of insanity level with speculative increases being stripped from the housing prices. It will settle down to where it is supposed to be. This will still be high prices as housing is limited. Your house is an inflation hedge.

The Government needs Developers to build. Developers will flex their might soon to get favourable conditions to maximize their profits. The hope is that we refocus on density as opposed to sprawling out with single-family dwellings. SFDs are much faster to build.

Won't happen until the municipalities reduce all the red tape in the approval process. As it stands it can take years before breaking ground. That and telling all the NIMBYs to pound dirt.

 

[Anbarandy]

Won't happen until the municipalities reduce all the red tape in the approval process. As it stands it can take years before breaking ground. That and telling all the NIMBYs to pound dirt.

Yesh, this way developers can continue to produce unaffordable for the masses, micro units strictly for investor property grabbers more quickly, at even greater profit, more shoddily, more structurally suspect, less safe, without paying for the necessary hard and soft infrastructure and without a single, solitary community benefit any fuckin where they effin please except of course around their own homes.

 

[Abjectpatient]

Yesh, this way developers can continue to produce unaffordable for the masses, micro units strictly for investor property grabbers more quickly, at even greater profit, more shoddily, more structurally suspect, less safe, without paying for the necessary hard and soft infrastructure and without a single, solitary community benefit any fuckin where they effin please except of course around their own homes.

Housing, according to many, to be the only commodity on the planet that can defy the simple relationship of supply and demand.

 

[Mr.Know-It-All]

Rents are through the roof... higher than pre-covid. If and when home prices come down further and it makes mathematical sense (i.e. cashflow positive), investors will flow back into the market. That is the sweet spot.

At the moment it doesn't make sense to buy an investment property in Toronto.

Yes, the tide is going out and we're going to see who isn't wearing clothes. The good times are over and the smart money is on the sidelines waiting for prices and rents to eclipse perfectly.

 

[curr3n_c1000]

Yes due to government spending too much like social benefits packages, covid packages, sending money to foreign countries, giving free hotels and monthly paychecks to refugees. You described inflation, the most hideous form of tax.

That plays a part in it, but it's mostly because of emerging markets globally.

Damned if you do, Damned if you don't. Not every story has a happy ending.

 

[CLOUD 500]

There is no singular issue involved in this at all. Many countries such as South Korea are suffering from the same cost issues now, with apartments nearing an average of 1mil a piece in Seoul, yet the countries population is set to decline.

Even though South Korea's population is set to decline, this is now in 2022. The country is one of the most densely populated countries with 1302 people per square mile that is why apartments are nearing 1 mil a piece.

South Korea Population 2024 (Live)

worldpopulationreview.com

Trudeau is trying to turn Canadian cities into another China and South Korea where apartments will go to 1 mil a peace. Trudeau does not care he is a millionaire. I rest my case keep population sparsely populated is the way to keep the quality of life best for everyone and not just the rich.

 

[CLOUD 500]

There is no singular issue involved in this at all. Many countries such as South Korea are suffering from the same cost issues now, with apartments nearing an average of 1mil a piece in Seoul, yet the countries population is set to decline.

This article summarizes how bad over population is. It always means more profits for corporations and the government but for the rest it means more poverty and lower wages. Higher population means more pollution, overcrowding, traffic chaos, high rents, expensive houses, high food costs, and the list goes on. None of it good for the average joe but great for someone who runs a business and the government. If you check all the countries there is a direct correlation between high population and high rents. Germany is the only country that beats Canada for most immigration and Germany is a very expensive country.

The Cost of Overpopulation Around the World

Living costs are a big overpopulation problem.

ca.news.yahoo.com

 

[rhuarc29]

I think it's funny that now that housing prices are starting to cool, there are all these panicked articles coming out about the central bank going too far, and how many worries are on the horizon in housing, etc etc. It's very clear that wealthy homeowners are the focus, and not the entire generation of young people who have, in large part, been priced out of the housing market.

My parents bought their first house for $60K (about $117K in today's dollars) back when interest rates were double digits. They put down $12K, and had the rest paid off within 5 years, despite not being particularly well off. That very same house sold last year for over $400K. That's nearly a quadrupling of price, despite accounting for inflation! What few young folks have managed to buy into the housing market are often exhaustively chained to their mortgages, and likely also their parents who signed on because it was the only way their child could get a house! My younger brother is in this situation and I honestly feel so bad for his position, basically relegated to 25 years of just scrapping by. What a life.

 

[csmitting]

Houses are 20-30% off their (like someone else noted) highs from about 6 months ago. Prices have come down pretty close to 2020.

West of Toronto detached 2-3k squ feet houses have gone from selling for 1.4-1.5 to selling at 1-2mm.

my old neighborhood in Toronto, prices are close to what they were in 2019.

stock markets showing similar pattern, the 2020-21 Covid spending overheated economic spike is reversing. (Coincidentally, like classic Econ theory says should happened when the economy surpasses full employment)



There is still room for more interest hikes, prime is sitting around 4.75 inflation is 8, in real terms interest rates are negative.

I think will see another 1% hike (probably spread out) and the Feds will announce the removal of the stress test (which is sitting at 7%).

 

[Mr.Know-It-All]

 

[Gstep]

This article summarizes how bad over population is. It always means more profits for corporations and the government but for the rest it means more poverty and lower wages. Higher population means more pollution, overcrowding, traffic chaos, high rents, expensive houses, high food costs, and the list goes on. None of it good for the average joe but great for someone who runs a business and the government. If you check all the countries there is a direct correlation between high population and high rents. Germany is the only country that beats Canada for most immigration and Germany is a very expensive country.

The Cost of Overpopulation Around the World

Living costs are a big overpopulation problem.

ca.news.yahoo.com

But, but, Elon Musk says underpopulation is the biggest threat to human society, so which is it!? Just can't win with these people

 

[CLOUD 500]

But, but, Elon Musk says underpopulation is the biggest threat to human society, so which is it!? Just can't win with these people

He is an idiot for saying that. He is the richest man with a large corporation and underpopulation represents a threat to his profits. The more people there are, the more they will consumer his products, the more money he will make.

 

[rhuarc29]

He is an idiot for saying that. He is the richest man with a large corporation and underpopulation represents a threat to his profits. The more people there are, the more they will consumer his products, the more money he will make.

I wouldn't say that. It's just one half of the equation. Overpopulation is a threat to our planet and underpopulation is a threat to our economic system.

 

[Steve_Stevens]

Lots of nice houses on sale everywhere. Lowball offers will be accepted, look for the desperate seller cause they are everywhere.

 

[Goodoer]

Lots of nice houses on sale everywhere. Lowball offers will be accepted, look for the desperate seller cause they are everywhere.

I don't think this is the general acceptance. Sellers are taking their homes off the market and waiting. Yes, you'll get some motivated sellers (sellers without help), but I believe you'll have more people unwilling to actually realize their loses.

I got into the market a long time ago. I find it amazing that if I got into the market 5 years earlier, I'd be at least twice as wealthy (on paper).

 

[NiceToMeetYou]

Great news for the first time home buyers and investors, RBC's report said that "

Per RBC's report, home resales are expected to fall by another 17% in Canada by early next year, which follows a previous drop of 13% between January 2021 and January 2022.

"Cumulatively, this 42% plummet (from record-high levels) since early 2021 would exceed the peak-to-trough declines of all four previous national downturns (-33% in 1981-1982, -33% in 1989-1990, -38% in 2008-2009 and -20% in 2016-2018)," the report says."

MSN

Home Prices In Canada Could Drop By A LOT In A 'Historic Correction'


Canada's housing market could see a "historic correction" in the coming months, which could see house prices drop, according to a recent report from RBC.

The global housing market has faced a major crisis, with the cost of homes soaring during the pandemic. Now, RBC is predicting that national home prices could drop by more than 12% as of early next year.

"We expect the downturn will deepen in the coming months with both resale activity and home prices reaching lower levels than we previously anticipated," RBC stated.

The Royal Bank of Canada said that home resales could fall by 23% this year and 15% in 2023 — with the "national benchmark price to drop more than 12% from peak to trough by the second quarter of 2023."

Per RBC's report, home resales are expected to fall by another 17% in Canada by early next year, which follows a previous drop of 13% between January 2021 and January 2022.

"Cumulatively, this 42% plummet (from record-high levels) since early 2021 would exceed the peak-to-trough declines of all four previous national downturns (-33% in 1981-1982, -33% in 1989-1990, -38% in 2008-2009 and -20% in 2016-2018)," the report says.

So, what's causing this likely dip in home prices and home resales?

Well, RBC says that with housing market demands weakening "significantly" and affordability being stressed in most parts of the country, prices are bound to drop.

The Bank of Canada's rising interest rates also plays a role. After increasing the interest rate by 1% — bringing it to a 14-year high of 2.5% — RBC predicts that the rate is only expected to go up. "We still expect the overnight rate will reach 3.25% by October," the report states.

This will ultimately close "the last window of super cheap borrowing costs available to buyers."

While Canada's housing market as a whole will see a decline, the report states that Ontario and British Columbia will be affected the most.

"Our forecast has home resales in British Columbia and Ontario cumulatively sagging 45% and 38%, respectively, in 2022 and 2023, setting the stage for a home price index drop exceeding 14% from quarterly peak to trough in both provinces."

This welcome cooldown following a hectic housing crisis will certainly diminish some of the financial burden put on many new homeowners.

RBC says that the correction will most likely occur over sometime in the first half of 2023 and last "approximately a year — with some markets likely stabilizing faster than others."

 

[fall]

IMO the biggest unknown is where this European crisis is headed...
It is a US-led Nato vs. Russia and allies conflict... you can put in the basket of allies all the countries that voted against or abstained in the vote for the sanctions against Russia:
that includes the two heavyweights China and India, 16 African countries, and others...
If Russia and allies or partners start to form a sizable block trading commodities away from the almighty US dollar, beware..
The Euro is already collapsing (5-year low) and the RUB/USD is at a 5-year high despite the USD strengthening vs major peers.
The charts below, EUR/USD, RUB/USD, and RUB/EUR sum up the story.
You would not expect the RUB to do this well when sanctions against Russia were considered... quite the opposite happened.
Europe is already preparing, psychologically, their people for a tough winter. Could be a nightmare in the works as we speak. See the crisis in Italy.
Is Europe going to say fuck Ukraine, fuck NATO, I am buying Russia's natural gas for the short term?
In the medium and long term, we will see a return of the nuclear option...the French government is seeking a take over of EDF, the power company...

For now, this inflation may have peaked already, based on where the oil and agriculturals are headed ... both peaked already.
The central banks, in this scenario, are behind the curve. Slow to react, late to act. Who still remembers the famous "transitory inflation"?

So to go back to the topic, if the conflict ends now with a positive outcome, those rate increases will slow and possibly reverse and the housing bubble will go back to "normal"...otherwise, the worst is yet to come.

RUB = Russian Ruble, EUR = Euro , USD = US Dollar

I like that portion (in bold). Please, try to exchange rouble to USD at this exchange rate anywhere in the world (including Russia) and report back. It is called capital control: this rate is valid only if you want to sell USD, not to buy it

 

[fall]

I think it's funny that now that housing prices are starting to cool, there are all these panicked articles coming out about the central bank going too far, and how many worries are on the horizon in housing, etc etc. It's very clear that wealthy homeowners are the focus, and not the entire generation of young people who have, in large part, been priced out of the housing market.

My parents bought their first house for $60K (about $117K in today's dollars) back when interest rates were double digits. They put down $12K, and had the rest paid off within 5 years, despite not being particularly well off. That very same house sold last year for over $400K. That's nearly a quadrupling of price, despite accounting for inflation! What few young folks have managed to buy into the housing market are often exhaustively chained to their mortgages, and likely also their parents who signed on because it was the only way their child could get a house! My younger brother is in this situation and I honestly feel so bad for his position, basically relegated to 25 years of just scrapping by. What a life.

The issue is not with "wealthy homeowners". The two major problems with housing prices going down (especially if interest rates going up and high inflation is) are:

1) People with large mortgage have to spend less on everything less (lowering demand for regular products, and, therefore, leading to a recession)
2) Construction become less profitable (leads to sharp reduce in job availability, also leading to a recession)