Author Topic: Garth Turner - Real Estate in Canada  (Read 488744 times)

wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #310 on: February 12, 2015, 10:24:39 AM »
Higher interest rates lead to a slower economy which inturn leads to job losses. This leads to housing bubbles being pricked.

How does it matter what the reason for high paying jobs being lost is?

If the commodity crash casuses widespread job losses in an economy that is dependent on that sector - the end result should be the same.
« Last Edit: February 12, 2015, 10:30:35 AM by wisdom »


wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #311 on: February 12, 2015, 10:30:00 AM »
If regulated FIs could lend with 0% down and looked at financing based on stated income or equity based lending.

I wonder what the unregulated sector would have had to do to stay in business. They had to go further out on the curve to stay in business.

It is very easy to beat the system here and enough individuals have been doing it as they see this as a guaranteed route to riches - why because apparently everyone wants to live in Canada so foriegners will keep paying higher prices.

frommi

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Re: Garth Turner - Real Estate in Canada
« Reply #312 on: February 12, 2015, 10:31:58 AM »

Before the housing crashes in Netherlands, Spain, US, Japan interest rates were rising.

Also, did the housing market crash because of the recession? Or was the recession caused by the housing crash?

Thanks, good questions! Looks like i have to read more.

KCLarkin

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cwericb

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Re: Garth Turner - Real Estate in Canada
« Reply #314 on: February 12, 2015, 10:55:37 AM »
It is exactly two years since this thread started and back then ago the consensus was that Canada was in a housing bubble about to pop. Yet not only has there been no pop, but prices have continued to rise.

I am not saying that there are no serious concerns nor am I suggesting that there may not be a pricing correction in the Canadian housing market. However, the Canadian market is not quite the same as in the U.S. and many other countries. A lot of people here have a reasonable amount of equity in their homes above their mortgages and many mortgages are insured by the Canadian Government (CMHC). In the past we have seen CMHC step in to help stabilize prices during a correction and when prices dropped in the past they rebounded fairly promptly.

Remember the law of supply and demand.  At one time we used to have nuclear families where 2, 3 generations would live in the same house. Now it seems everyone has their own house or condo.

In general our population is well educated and many singles live in their own homes and condos. Today’s high divorce rates means you now need two houses where previously only one was needed. Immigration also drives our housing industry.

Here is something else that seems to be overlooked. Our houses are more expensive to build and probably last longer because of that. They have to meet high snow load criteria, withstand high winds and very cold temperatures. That means a high quality level and makes them more expensive to build. Materials are also expensive because they must travel greater distances to and service smaller markets in many cases. Our houses must be very well insulated, require much more expensive heating systems, and because our houses are built tight we often require air exchange systems to keep the air fresh and humidity levels in check.

So perhaps our housing is expensive, but there may be more value in them as well.

Just my opinions.
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wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #315 on: February 12, 2015, 10:58:57 AM »
Is it that much different from the US - our demographics or the cost to build.
« Last Edit: February 12, 2015, 11:01:33 AM by wisdom »

wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #316 on: February 12, 2015, 11:02:36 AM »
The oil crash is a possible catalyst and things tend to stay irrational longer than one can imagine - even though it sounds like a cop out - it is true.

wisdom

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Re: Garth Turner - Real Estate in Canada
« Reply #317 on: February 12, 2015, 11:05:48 AM »
Another number to check out - if this has been true for a while - better quality builds - why has an average house in the US been more expensive until 2008.

Or did these codes come into effect after 2008.

Liberty

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Re: Garth Turner - Real Estate in Canada
« Reply #318 on: February 12, 2015, 11:17:02 AM »
It is exactly two years since this thread started and back then ago the consensus was that Canada was in a housing bubble about to pop. Yet not only has there been no pop, but prices have continued to rise.

I'm sure people were saying that in 1998 and 1999 too. The market can stay irrational a very long time.

I've always said that I have no idea about the timing of any correction or crash, just that pricing doesn't make sense, and what can't go on forever will stop at some point. In the meantime, I'm renting.

All the excuses I hear about Canada being different ring hollow to me. Vancouver is not Paris or New York, Canada isn't 2x more desirable to live in than the US, our economy isn't booming, land is not scarce, our debts are incredibly high (people take out their equity through HELOCs) and now that almost everybody owns, who will the marginal buyer be, esp as boomers retire and downsize (few other investments than their homes, right?), etc. CMHC isn't some magical institution that can snap its fingers and make everything right.
« Last Edit: February 12, 2015, 11:32:40 AM by Liberty »
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KCLarkin

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Re: Garth Turner - Real Estate in Canada
« Reply #319 on: February 12, 2015, 12:21:35 PM »
All the excuses I hear about Canada being different ring hollow to me. Vancouver is not Paris or New York, Canada isn't 2x more desirable to live in than the US, our economy isn't booming, land is not scarce, our debts are incredibly high.

I don't know what stats you are using but remember that averages are misleading. Average U.S. housing prices might appear cheaper but most of the cheap cities are not desirable. Anyone want to move from Toronto to Detroit, Buffalo, or Cleveland? The really desirable cities (San Francisco, LA, San Diego, NY, Miami) are expensive even after the housing meltdown.

The other factor that people are ignoring is land use policies. Land is scarce in Vancouver and Toronto. In 2005, the Ontario government introduced the Places to Grow Act designed to promote intensification. This has limited the supply of single family homes (and resulted in a condo boom).

Housing prices are certainly elevated but when you can control for supply constraints and interest rates, I don't know that we can be certain there is a bubble. We will only know in retrospect.