- cross-posted to:
- canada@lemmy.ca
- cross-posted to:
- canada@lemmy.ca
the housing crisis has been created by banking practices that have directed excessive amounts of credit into the property market, and especially residential mortgages. As a result, buyers can bid prices up to ever-higher levels, resulting in a market where people must pay more for the same type of housing. Hence financialization can be defined as an inflationary tendency in the housing market that is induced jointly by banks’ desire to expand mortgage lending and buyers’ confidence that the value of their properties will rise.
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However, the image of a bubble bursting and prices returning to a more rational “equilibrium” level does not seem to apply to the housing market. Because housing is a necessity, people are willing to pay high prices for it. Bidding wars can therefore persist even when relative supply grows, so long as credit markets enable them.
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A bank owned condo is going up for the market in my complex. they want 395000 and the thing mentions 25% down. So like 100k down. I could not afford to live here if I did not already even if my financial siuation was rosey. This is some of the cheapest real estate in the area. Its insane.
Because housing is a necessity, people are willing to pay high prices for it. Bidding wars can therefore persist even when relative supply grows, so long as credit markets enable them.
Right, that’s why I see rural houses literally falling over because nobody wants to live in them. /s
Supply and demand applies to food. It definitely applies to housing.
The central argument of this is that because the number of houses per adult is the same as 1989, the housing supply is fine. And then they have the audacity to claim other people are cherry-picking. No mention of average household size being different now, even just considering adults (nor mention of urbanisation). There’s little effort to support their own theory with numbers, either.
Not to mention, that very same graph has a noticeable dip right in the recent years where it’s become an issue. They’ve just scaled the graph so it’s not emphasised. 1989 was the last time it was so low.
Housing size is specifically addressed:
On top of that, the square footage of housing units in Canada has on average been growing across all housing types, which should in theory provide more flexibility for people to live with roommates.
Housing units are bigger and there are more of them per capita any way you slice it: by population, by number of adults, or by number of households.
They make a very compelling argument that the big change is not anything to do with supply, it’s entirely a result of easing burrowing standards and increased access to credit. It’s not as simple a story, but it actually offers a reasonable explanation for the observed data, while ECON101 Supply & Demand arguments don’t match the data. Doesn’t matter if it makes sense if it’s wrong.
I think a big part of the supply problem and the generational difference in ownership is the size creep of homes. Homes have been getting bigger and bigger to support the same sized families meanwhile wages have stagnated. Thats all extra flooring, walls, insulation, labor to build, energy to heat, wires to run, property taxes to pay etc. We need to change the way the supply is skewed and start offering more reasonably sized homes.
Sure if you want and can afford a 2500+ sqft 3 storey house then shop for that, we build lots of those, but we don’t build lots of 500-1200 sqft homes which reflect the size of starter homes from decades ago. Many homes this size need to be custom built or are built by smaller developers. We don’t see entire neighborhoods of these sized homes anymore. Same goes for apartments, they’ve experienced luxury condo creep despite demand for that level of luxury being met already.
The problem with building a 500-1200 sqft home is that most of the price is in labor and land. So it doesn’t cost a lot more to make that a 1500-2500 sqft home instead, which will in turn give more profit.
Housing is not fungible. It doesn’t matter how much supply there is in the middle of nowhere; lack of supply in the places people actually want to live is a shortage.
Also, it has fuck-all to do with financialization and everything to do with restrictive zoning laws that enshrine single-family. Y’all are literally prohibiting building more density; WTF did you think was gonna happen?!
2020 had that effect, where work from home spurred people to move to some of the extremely low cost areas but that just meant that the absolute cheap houses under 80k were all bought up and 100k is the floor. But that was a one time adjustment.
It def is both financialization and zoning. Restrictive zoning increases the value of housing hence line goes up.
Rezoning is framed as increasing supply and affordablity, instead of decreasing values of existing homes. When both will happen.
The irony is that decreasing the value of homes really is the inevitability. Because rezoning encourages redevelopment, that redevelopment generally includes more dense and theoretically more affordable housing types. But developers still want to make money, so they are built to maximize profit, not affordability. So it suggests that if they sell, other houses have less demand, and demand will fall. But that hasn’t been borne out.
It def is both financialization and zoning. Restrictive zoning increases the value of housing hence line goes up.
The difference is that financialization is a symptom of the problem, not the cause of it. It is enabled by the imbalance between supply and demand caused by the zoning laws restricting the supply.
Rezoning is framed as increasing supply and affordability, instead of decreasing values of existing homes. When both will happen.
“Increasing affordability” and “decreasing value” are mathematically equivalent statements, so yeah. Obviously.
(In fact, that’s why the problem is so hard to solve: NIMBY homeowners will claim to be all for “housing affordability” in theory, but in reality they absolutely hate it because they benefit from prices being high. Zoning that restricts density is a symptom of society being held hostage by the already-privileged, demanding ever more subsidies for themselves)
What is the reason, besides finacialization, that restricting supply makes sense?
Zoning laws are made by people elected by those who financially benefit from stricter zoning laws.
You literally say this in your parentheses statement.
Stricter zoning preferences come after one has a financial stake in housing.
Financialization is the root cause.
Financialization occurs irrespective of supply and demand by making more credit available. It’s literally injecting money into that specific market. Once people see prices rising, the rising prices become part of the product - people buy as much housing as they can as an investment vehicle. It’s like the effect of people buying a stock because it goes up. Everyone I know has either bought additional property as investment or wanted to but couldn’t afford it.
Housing is seen as a huge part of Canadians’ retirement planning. Politicians are afraid to do anything to lower the price of housing (remember Carney’s housing minister saying they didn’t want to reduce house prices?) because they think they’ll be punished by voters. Because of that, house prices keep increasing.
It’d be great if there was a bi-partisan consensus to gently let the air out of the balloon by carefully lowering the amount of money available in mortgages, or the amount of money exempt from taxes on the sale of a primary residence. By all means, increase supply at the same time, but we also need to make homes less of an asset.
Letting air out can happen a lot quicker if you give a good reason to people not to care about their home price. For example by providing an equivalent or otherwise decent government pension. My inlaws fall into that bucket.
I agree with letting air out of the balloon slowly. That’s what rezoning and densification shoots to do. It is slow because development is slow. But limiting available capital (ie: competing for mortgages)? In what world does that make sense? And if primary residence cap gains aren’t exempt, then anybody that had to move for work would get screwed. That’s a corporate friendly policy, not a people friendly policy. The goal here is for people to own houses, and for there to be penalties for owning more than one. But that’s exactly where policy is right now.
I agree with letting air out of the balloon slowly. That’s what rezoning and densification shoots to do.
My experience with densification was seeing 600k houses (that I could almost afford) be replaced with 2-4 1.1m houses (that I could not afford).
We should pursue densification and rezoning are positive for many reasons, but price isn’t one of them.
But limiting available capital (ie: competing for mortgages)? In what world does that make sense?
A world where prices are increasing faster than wages. We’ve had historically low interest rates since 2008, which has made borrowing large sums easier, meaning people can afford to pay more for houses.
That was great for people who got in early: they could get cheap money that wouldn’t reduce their quality of life. But it means they could bid up the price of houses. Folks coming after had to pay higher and higher prices, until they did start to see a quality of life hit.
But also a supply shortage, out in Vancouver anyway. People dividing living rooms in half to act as bedrooms
It’s not a housing shortage, it’s a pricing issue.
If you do the math based on statscan data, there are FAR more bedrooms in Canada than people, even if you assumed couples never slept together and kids never shared a room.
People are splitting rooms to make it more affordable, not because rooms don’t exist.
There are retired couples, or families with a single kid, living in 4-5 bedroom houses in Vancouver, because they either don’t want to downsize, or they can afford the space so they buy more than they need.
The problem ais the distribution of housing, some people have too much, and some people don’t have what we would reasonably consider enough.
There is also some distribution issues around where those houses are located compared to the desires of where people want to live. If someone has a house in Edmonton, but wants to live in Vancouver in a similar house and can’t afford it, is that a housing shortage in Vancouver? I would argue it is not.
Where we define that “reasonable” line is where an ACTUAL shortage would come in. How much housing is reasonable for each person, and how reasonable is the location they want that much housing in?
However, I don’t believe we have crossed that line. In my opinion we need to regulate the market better in order to have the distribution more aligned with overall social benefit. Of course we need to continue building more units with the population and to replace buildings over time, but policy could re-distribute the existing housing more fairly without needing a single one of those today.
There is also some distribution issues around where those houses are located compared to the desires of where people want to live. If someone has a house in Edmonton, but wants to live in Vancouver in a similar house and can’t afford it, is that a housing shortage in Vancouver? I would argue it is not.
It absolutely is. Houses aren’t fungible; they don’t fucking move! A house in Edmonton is not a substitute for a house in Vancouver!
I argue it is not, because unreasonable desire shouldn’t be part of “housing” conversations.
If every single person wanted a detached house on Robson Street, that’s clearly just stupid and should be ignored. It’s not a supply shortage. If everyone wanted a 3-bedroom condo unit overlooking Kits beach, that’s also clearly unrealistic. It’s not a supply shortage.
Think about it this way, if you earned the same amount you currently do, and condos and houses were $1000 per bedroom each to buy outright anywhere you wanted. What would you end up with? I suspect it wouldn’t be a 1 bedroom condo in a bland area of town. You’d probably have a house somewhere near your work, a condo downtown, maybe a cabin up at a lake.
You may not want 10 different places, so the demand for housing is not infinite, but it’s orders of magnitude greater than anything that’s realistic to supply.
If we use that logic, we will always be in a supply shortage no matter how much we build, because there will never be enough inventory available to push prices down to $1000 per bedroom.
Which is why I don’t consider that original situation a supply shortage in Vancouver. Once you bring “reasonable” into the conversation, there’s already enough supply to meet the reasonable needs of the population. As I said before, the problem is the price and current distribution.
I argue it is not, because unreasonable desire shouldn’t be part of “housing” conversations.
If every single person wanted a detached house on Robson Street, that’s clearly just stupid and should be ignored.
You’re right that it’s stupid, but that’s what the laws attempt to do! It Is literally illegal to replace single-family houses with denser housing in the vast majority of Toronto, Vancouver, etc. That means everybody who doesn’t fit in those houses is physically displaced to the exurbs, never mind that the increasing demand with no accompanying increase in supply makes prices skyrocket.
I don’t care about your nonsensical attempt to redefine what words mean; that’s objectively a shortage!
Shortages are what restrictive zoning laws are designed to do, and they are working exactly as intended. If you don’t like that outcome, the only sane thing to do is abolish them.
You haven’t been keeping up with the changes in the law. There is no such thing as single family zoning inside cities in BC anymore.
The provincial government made it so that essentially any property in a municipality over 5000 people is allowed to have 3 units if it’s under 280 square meters, or 4 units if it’s over 280 square meters.
If it’s greater than 280 meters near frequent bus service(15 minutes or better during daytime hours), it goes up to a minimum allowance of 6 units.
Any property within 800 meters of a rapid transit exchange or 400 meters of a regular transit exchange also gets automatic zoning allowing a massive upgrade to number of stories for condo/apartment buildings.
Again, there’s no shortage, there’s plenty of housing available, it’s just that there’s a lot of over-housed people who are hogging properties they don’t reasonably need.
You haven’t been keeping up with the changes in the law. There is no such thing as single family zoning inside cities in BC anymore.
The provincial government made it so that essentially any property in a municipality over 5000 people is allowed to have 3 units if it’s under 280 square meters, or 4 units if it’s over 280 square meters.
In other words, they capped supply at a slightly higher level than it was before. Whoop-de-fuckin’-do, it’s still a cap!
(Also, BC policy does fuck-all for Ontario.)
Again, there’s no shortage, there’s plenty of housing available, it’s just that there’s a lot of over-housed people who are hogging properties they don’t reasonably need.
Again, that is factually untrue. You’re so Hell-bent on finding scapegoats you can’t even think rationally.
“slightly higher level”
They quite literally multiplied it by no less than 3, everywhere.
How much supply are you looking for here?
Again, that is factually untrue.
No, it isn’t, and it’s very easy to double check.
Go look at the section of that statscan data that shows number of total units by bedroom count. Even if you assume that 4+ bedrooms is only 4, the total bedrooms in Canada is about 40.5 Million and that data was as of 2021, when the population from Statscan was a little under 37 million.
Like I said before, even assuming nobody ever sleeps in the same room, and using the worst case for counting bedrooms where no house has more than 4, there are still 4 million excess bedrooms in this country.
Once you account for couples, it’s probably close to 10-15 million excess bedrooms with nobody sleeping in them.
Even if you look at just BC data, it’s the same thing. If you switch BC out for Ontario, guess what… At least 15.1 million bedrooms, and 14.2 million people in 2021.
You need to stop spouting off about “factually untrue” when the facts don’t support your argument. There is more than enough housing available for everyone at the moment if it were distributed equitably. Homeowners and politicians are lying to you to keep profiting off your stupidity.
Across Canada maybe, but Vancouver is not like that. When a place comes up for rent landlords have mentioned they have 50 applicants the first few hours that day and have to take the ad down.
This metro area is building high density housing on previous forest and farm land, and they are always snapped up quickly. I forget that stats, but something like 1000 new people move to metro area every month from other countries and provinces.
The rent is high here because of a lack of units available. Among the financial BS with banks.
In Vancouver people build a minimum 200 sq foot outbuilding in the back yard and as long as it has bicycle storage it is considered a rentable housing unit.
Let me ask you a simple question. It has a very obvious answer too.
What if 5 million units magically appeared overnight in Vancouver and they were all available at “affordable” rates, so no more than 3x median annual household income. So around $150,000k for a 1 bed condo, and around $270 for a 3 bedroom townhouse.
How long would it take for those units to be snapped up by buyers?
I’ll tell you the answer, they would be sold as soon as people could talk to their bank.
People would straight up abandon their lives elsewhere for those units. From Halifax to Hope, there would be a migration like never seen before.
And the next day, Vancouver housing prices would still be higher than those new rates, because there would still be more demand and not enough available units driving the prices up.
This is the eternal problem with supply in desirable areas, there can never be enough of it.
Greater Tokyo has 40 million people, and even with the entire country losing something like a half a million people, Tokyo’s population is stable because of constant inbound migration from other areas. The moment costs drop, or jobs become available, someone else moves in to take it.
This isn’t a random side take either, Greater Tokyo has about 3x the density of Greater Vancouver. Tripling the current Vancouver population would be around 6 million new people.
Do you know how Tokyo stays somewhat affordable for housing? The per-person average square footage for housing is like 150-250 square feet. There are entire 4 person families living in 500 square foot apartments, and singles living in units so small you can touch the walls on both sides.
It’s not about a lack of supply, or rather, there is no possible way to reach a supply level that would reduce housing prices to affordable levels.
Instead, and here’s the genius trick, you change the demand. You introduce a tax on EVERYONE in Vancouver, not a small tax, a large tax, but you don’t tax the people, you tax the land they use. Maybe $100,000 a year for a detached house in the City of Vancouver, Maybe $10,000 a year for a condo in Vancouver. That money gets refunded to all Canadians equally, even to the people who live in Vancouver. This gives people an incentive to live outside of Vancouver, and the people who do get to live there subsidize the people who don’t get to live in such a desirable location. People who want a lot of land, pay for the privledge. People who are happy to share the land pay less, or even benefit from others who don’t want to share.
Exactly, that’s why the stats of housing as an average across Canada, don’t affect Toronto or Vancouver, its a supply and demand problem locally. The other bank , rates, foreign ownerships don’t help, but we just have too few homes out here, and more and more people arrive
Did you even read what I said.
It’s not a supply and demand problem locally. In fact, it’s the opposite of that. It’s a local supply problem, with a national demand issue.
That’s why all this nonsense about supply building is so fucking useless. You can’t supply all of the houses in Vancouver that are desired from the 41 million Canadians across Canada.
By all means keep building more, but unless you tamp demand down it will not matter.
That’s what I’m saying too. People keep moving here, because who wants to live in Winnipeg. And so Winnipeg has open units and we have to create more. Empty homes in undesired locations skew the country wide average too look like we have open housing everywhere and therefore house prices aren’t a supply/demand problem. But supply and demand is exactly what drives prices up her and low in less nice regions
Except that’s not what the data says, there are more bedrooms in BC than people, not even accounting for the fact that lots of people are couples and share a room.
It’s true for every location I’ve ever checked in Canada, including Metro areas like Vancouver and Toronto.
There’s a lot of excess bedrooms that are not being used for housing people.
I can’t speak for Vancouver, but in Ottawa, I’m in a suburb that has a tonne of empty nesters living in 4 bedroom houses. There are young families that could use that space, but the current residents have no incentive to move. Housing is so expensive that selling off and moving to a smaller place would be hard. It’s bizarre.
