[xerxes]

It's not just Toronto and Vancouver — Canada's housing bubble has gone national

$1:

When people picture red-hot real estate markets, they most likely think of soaring prices for the condos dotting Vancouver's skyline. They might also conjure up the bidding wars for massive mega-mansions in and around Toronto.

But they're likely not thinking about properties like Barb Armstrong's quiet bungalow in picturesque Perth Ont., about an hour southwest of Ottawa.

Even so, Armstrong's four bedroom, three-bath home was swept up into a bidding war worthy of any big city this month. It sold for $150,000 over her asking price of $529,900 —and the offer didn't come with any conditions.

"It was quite a shock to see that that amount of money was coming our way for sure," she said. "It was over our expectation and we were really blown away."

Armstrong and her husband were lukewarm on selling at first, but a realtor friend explained how hot the local real estate market had become, with families from Ottawa and even as far away as Toronto drawn to Perth by its comparative affordability and bucolic lifestyle.

"We thought, 'Well, jeepers, maybe we should go for it now," Armstrong said. The couple listed their home in mid March. Thirty-five viewings later, they had 11 offers on the table. She says she feels like they won the lottery.

Half a country away, on Vancouver Island, Lars Reese-Hansen isn't surprised to hear about buyers taking their best shot at getting into the market, however they can. He sold his 60s-era single family home in the Comox Valley last fall, and planned to buy elsewhere in B.C. this spring.

He's looking to downsize into something newer with less maintenance as he heads into retirement but he can't find anything that fits the bill, even though he's casting a wide net and is willing to compromise.

"Most of the places that I requested to view are sold before I actually get a foot out the door," he said.

Reese-Hansen recently lined up four newly listed homes to see that he thought had potential. Just as he hopped in the car to drive down the highway to see them, his realtor called to say they were already gone.

Record high prices
Canada's housing market is indeed flush with cash at the moment, with the national average selling price hitting an all-time high of $678,091 in February. That's up more than 25 per cent from the same month last year, pre-pandemic.

Against all odds, the pandemic seems to have prompted a flurry of buying by Canadians spending more time at home than ever before.

While there's a perception that high prices are mostly a problem in big cities like Toronto and Vancouver, sales are booming just about everywhere, with bully offers becoming the norm.

Paul Martin, president of the Rideau St Lawrence Real Estate Board that covers Perth, Ont., where the Armstrongs live, says "the market just took off," last year.

"We've seen our property prices jump close to 50 per cent in the area," he said.

About a third of the new buyers are from Toronto, he says, despite the region being about three hours from the city. About half are from Ottawa, which is closer but still up to an hour away.

One of the area's major draws is extra space as more people ponder permanently working from home.

Underpinning the frenzy are record low interest rates, which are lower than they've ever been, built on the back of Canada's central bank slashing its lending rate to practically zero to stimulate the economy out of COVID-19.

Pandemic exacerbated pre-existing problems
Economist Mike Moffatt, senior director at the Smart Prosperity Institute, an Ottawa-based think-tank, says low mortgage rates are key to what's happening, but they're not the only factor.

If it were just cheap lending, markets should be heating up fairly evenly across the country. But they're not. Some smaller towns an hour or more outside the orbit of large urban centres are faring better in real estate than some big cities.

Though he lives in Ottawa, Moffatt hails from southwestern Ontario and he says affordability issues were a problem there even before the pandemic because of supply and demand issues. The area's population was increasing largely from new immigrants and foreign students, and now pandemic-era low rates have poured gasoline on those fires.

"Cottage country places in southwestern Ontario — Woodstock, Ingersoll, Tillsonburg — those are the places seeing the big price increases," he said.

The numbers back that up. According to data from the Canadian Real Estate Association, prices in Owen Sound are up by 29 per cent in the year up to February 2021. They're up 39 per cent in Tillsonburg, by 36 per cent in Woodstock, and by 26 per cent in Guelph. All those markets have fared better than the Greater Toronto Area, where CREA's House Price Index has risen by about 14 per cent in the same time frame.

"It's fuelled by that the coupling of white-collar professionals who have a lot of money right now and globally low interest rates."

Buyers in small towns are finding themselves priced out of their own markets because local salaries can't compete with the buying power of out-of-towners.

"We're going to have a lot of both political and economic problems if we price an entire generation of young families from ever owning a home," Moffatt said.

Back in B.C., the frenzy is so great that some people are resorting to buying without ever setting foot in their new homes. That's what happened to Ean Jackson and his wife Sibylle Tinsel. They recently sold their home in Vancouver and were looking to downsize somewhere farther afield.

The couple settled on the tiny community of Powell River, B.C., about 100 kilometres up the coast. They have friends in the area so it was always a long-term plan, but their home sale sped up their timeline.

There were few houses available when they started looking, and what was there was hard to see given pandemic restrictions. "We couldn't get up there in time to even see the place," Jackson said in an interview.

So they did what millions of Canadians did while shopping for consumer goods this year — they shopped online and hoped for the best.

Their realtor was able to give them a walkthrough of the interior and exterior via video, and they liked what they saw enough to put down an offer.

hough they are excited for this new chapter, it "all feels very awkward," Jackson said.

"It feels really strange. And we look at each other at dinner time just about every night and say, 'Did we do the right thing? … Did we get ripped off? Or is this going to work out?"

Ultimately Jackson says he knows the answer to that last question is yes because they love what the area has to offer, but he does feel for new young families trying to buy in at current levels.

"You save up for three or four years, you get the price that you think, and then the house just got twice as expensive," he said.

"I can't see this lasting, though. It's got to end sometime."

https://www.cbc.ca/news/business/housing-bubble-small-towns-1.5973134

Frankly, I don't see it ending anytime soon. With supply so low and demand so high with low interest rates fueling the madness, this won't end until the richest own all the houses, and we all have to rent like peasants as the prosperity gap grows and grows.

Seriously though, this wont end without either a major crash or a massive dose of communism to keep the prices even remotely reasonable for us plebes.

[Thanos]

Hope for a collapse, with at least six months of consecutive deflation. If it doesn't go that way then the K-shaped recovery will be the final downfall of the middle and working classes. This can't continue, either by the market deflating naturally or by the governments getting involved by bringing back price controls on practically everything, especially real estate.

Where are the anti-inflation fanatics now, the ones who said shit like Reaganism/Thatcherism and massive financial deregulation was necessary to stop inflation dead in it's tracks? Are they still around preaching that gospel? Or did they all retire comfortably after making their fortunes on the misfortunes of those they victimized, and off of hyper-inflated real estate? Rotten sons of bitches!

[bootlegga]

Thanos Thanos:

Hope for a collapse, with at least six months of consecutive deflation. If it doesn't go that way then the K-shaped recovery will be the final downfall of the middle and working classes. This can't continue, either by the market deflating naturally or by the governments getting involved by bringing back price controls on practically everything, especially real estate.

Where are the anti-inflation fanatics now, the ones who said shit like Reaganism/Thatcherism and massive financial deregulation was necessary to stop inflation dead in it's tracks? Are they still around preaching that gospel? Or did they all retire comfortably after making their fortunes on the misfortunes of those they victimized, and off of hyper-inflated real estate? Rotten sons of bitches!

A collapse is coming, the only question is when.

Millenials and Gen Z don't seem interested in living in the suburbs in McMansions, so you can expect Boomers and Xers who own them to get left holding the bag. The younger generation seems content to live downtown in condos or to buy expensive older homes nearer the core (although I'm sure some do move out of the core), which is a big factor in driving the cost of housing up, especially in Vancouver and Toronto.

I had two choices when I bought about a decade ago, a 900 sq foot home built 70 years ago near the core or a new 1600 sq foot home outside the core -and the home outside the core was 20-255% less than the smaller home in the core. I don't regret it, but I predict I'm not going to see the huge growth the Boomers did when I retire in 20 or so years. My retirement fund will be my RRSPs and TFSAs, not my home, which I'll be happy to break even on.

[CDN_PATRIOT]

I don't ever want to own a home, because it's a trap and a half. Everyone has this
mentality that home ownership is the thing to do. Mortagages, maintenance, insurance,
property taxes, no thanks!

I'm happy to live in my apartment and not have to worry about most of that. My main
dream (that I've had for over two decades) is to buy a 14-foot widebody aluminum
boat with a 9.9 Merc and a trailer. That's all I need.

Don't give a damn about a house.

-J.

[Thanos]

CDN_PATRIOT CDN_PATRIOT:

I don't ever want to own a home, because it's a trap and a half. Everyone has this
mentality that home ownership is the thing to do. Mortagages, maintenance, insurance,
property taxes, no thanks!

I'm happy to live in my apartment and not have to worry about most of that. My main
dream (that I've had for over two decades) is to buy a 14-foot widebody aluminum
boat with a 9.9 Merc and a trailer. That's all I need.

Don't give a damn about a house.

-J.

This I agree with. I hate to think how much further I'd be ahead right now if I'd rented something and pounded all that money I spent on real estate into RRSP's or stocks instead. My curse I guess, to be so susceptible to the conventional wisdom of the time "oh, you have to buy property, everyone who's anyone has to buy property". And now I have no real estate and no savings either, and I'm also far too old to ever take advantage of either option ever again. Yay me!

[xerxes]

I’d be happy with a nice townhouse. I live in a condo and living around other people can be frustrating.

All I’d want is a slightly bigger place with a little hard so my dog can run around in. A house would be nice but I remember when I was younger and still living with my parent and the costs awww listed with having your own house. Need a new roof? $10k+. New driveway? $10k+. Fencing? Way more than it seems like it should cost.

The other cost rarely talked about, IMO, is the social cost of runaway house prices. You need young people to create and sustain a culture in a city like Vancouver or Toronto. If they have to move because it’s unaffordable or live there, but are house poor, then cities slowly die and become nothing more than tourist attractions for the Uber rich.

[raydan]

I paid $14,000 for my first house, $80,000 for the second.

[Caelon]

Just because they have a couple of examples from outside Ottawa and on Vancouver Island does not make it a national housing bubble. There are 8 other provinces and the majority of the area in the two mentioned provinces without a buying frenzy. EG Thunder Bay, Sudbury, Kamloops, Dawson Creek, etc

[craig11QM]

Caelon, and almost all of those areas have the same issues with real estate prices. Honestly, sometimes it's way better to make a complete renovation of your current or a potential house, than to buy a new one. And the final result would be the same. Here is a site ( url: https://designlike.com/10-tips-on-how-t ... our-house/ ), which can be pretty helpful for those people, who want to find a reliable and trustful contractor for any kind of house renovation.

[herbie]

Yes, even here. There's multiple choices of $400,000 homes here where there's no jobs, only 1 small sawmill still running, no doctors, no shopping, no bus, train, no theatre, two restaurants left (both shitty "Chinese", the sole pub is for sale, the Legion closed and is now a homeless shelter.... and only two hours off the main highways.
And the lady down the street is listed at $119K even though her BC Assessment is $48,000 and the bank let one six doors down on a bigger lot go for $39K when they finally locked up the meth dealer that owned it........

[CDN_PATRIOT]

The bubble needs to collapse, and hard before anything changes. The main issue is that the real estate industry are the ones responsible for driving up prices and helping to initiate ridiculous bidding wars on properties/homes that aren't worth the price.

One of the main reasons I've never been interested in property (aside from being poor) is real estate agents and brokers. As far as I'm concerned, they're all greedy, opportunistic cucks that don't give a damn about anything but the money. They don't want to help you 'get a deal' or 'find the best price' or anything like that.

All they want is their commissions and fees, the rest of society be damned. I've known several people (a couple friends as well) who had no interest in selling real estate, but got their licenses on the side because the call of the $$$$$$ was too great. One even told me that she 'doesn't give a damn about the human element at all" because "it's easy money more than anything else."

-J.

[Sunnyways]

I don’t see any reason to be optimistic about lower prices in the near future. Interest rates look like they are going to stay low and that means potential buyers are able to borrow up to their necks.

[CDN_PATRIOT]

Doesn't matter to me, per se. I'm a renter for life. The only two ways I could potentially own a home would either be due to winning the lottery, or divine intervention. Neither are in the cards.

-J.