Housing Bubble II: The Quest To Build Enough Homes Where People Actually Need Them

[Coldrsx]

Just chatting with a major developer in Calgary - typically the market has 5 months of inventory... they are under a month right now. He sold 79 condos in January in -30C, a record month by more than 30% and has raised his prices by 15% because of that in a month. That's 2.5 units a day in a single project... unreal.

[Build.It]

Coldrsx, has he told you where most of these buyers are coming from?

I've been wondering if Calgary's real estate boom is largely being driven by GTA and Vancouver equity being moved to Calgary, and am curious if this is actually the case.

[Coldrsx]

Originally Posted by Build.It

Coldrsx, has he told you where most of these buyers are coming from?

I've been wondering if Calgary's real estate boom is largely being driven by GTA and Vancouver equity being moved to Calgary, and am curious if this is actually the case.

Van/Tor but many coming out of rental product given that they are now paying $1700-2500/month and while interest rates are still 'high', their rents and that threshold are making people choose to build equity over continuing to rent and so it is a lot of existing Calgarians.

*he primarily builds modern suburban multi-fam with prices under $500k.

[Build.It]

Interesting. Thanks!

[theman23]

Per Scotia Bank: Canada housing shortfall by 2030 expected to be 5 million, not 3.5 million as previously predicted by the CMHC.

https://www.bloomberg.com/news/artic...short-cibc-say

Not surprising. The CMHC model was based on historical growth rates. Even their "high growth rate" scenario, which estimated a shortfall of 4 million units, was using a growth rate about half of what we're experiencing now.

But CIBC’s Tal says that even if that cap works as intended, growth in other types of non-permanent residents would still ensure about 2% annualized population growth, or 6 million new people over the next seven years. That kind of growth coming on top of the already-bigger than anticipated population means Canada will need to build considerably more housing than the government thought, Tal said.
“There are no credible forecasts, targets, or capacity plans across governments for non-permanent residents — the population which accounts for the vast majority of the planning shortfall. That must change,” he wrote. “Meaningful forecasting, targets, and integrated planning must be conducted for all permanent and temporary visa approvals to be meaningful.”

Unfortunately, no one from the governing party has even acknowledged the challenged of the 3.5 to 5 million shortfall when discussing the housing crisis.

Apparently immigration minister Marc Miller doesn't feel it would be useful to have population growth forecasts....because he expects the Conservatives to kick them out of office within the next year and cut things anyways? I take it back, this guy is probably dumber than Ahmed Hussein. Holy shit.

In an interview with Bloomberg News, Immigration Minister Marc Miller acknowledged the recent migration surprises have immediate public policy implications, and agreed the government “could do a better job of dealing with the aggregate numbers so people know what they’re they’re solving for.”
Still, he pushed back on suggestions that more predictable population forecasts would have resulted in matching investments in housing and social services from provinces and cities.
“Let’s not fool ourselves in thinking that even if we were to project out for 10 years, that people would automatically adjust, because people get elected and unelected based on their ability to fulfill promises to the people that got them there,” he said. “They sometimes get elected on cuts.”

[Xelebes]

So basically we need to be building 1 million homes per year.

Which means my 10 million houses in 10 years thread was on the mark.

[casper]

Interesting project in Victoria.

Site has some building on the site from the 1860s that have not been occupied since 1979 when it housed a scrap business.

The current property owner has spent 13 years trying to get a permit. When they finally did interest rates went up and they needed to switch to condos. I did not know this but it looks like a building can finance for a higher percentage if they are building a strata building vrs rental.

https://www.timescolonist.com/local-...edium=facebook

[giallo]

• Video Link

[whatnext]

This is exactly why none of these governmental loans to spur housing will work. The market won't build if conditions aren't favourable. That's why governments need to build it themselves.

CMHC reports annual pace of housing starts in January down 10% from December
OTTAWA — Canada Mortgage and Housing Corp. says the annual pace of housing starts in January fell 10 per cent compared with December.
Canadian Press

OTTAWA — Canada Mortgage and Housing Corp. says the annual pace of housing starts in January fell 10 per cent compared with December.

The national housing agency says the seasonally adjusted annual rate of housing starts came it at 223,589 units for the first month of the year compared with 248,968 for December 2023.

The decrease came as the annual pace of urban housing starts fell 11 per cent to 208,119 units, with the pace of multi-unit urban starts down 14 per cent at 164,789 units and single-detached urban starts up 0.08 per cent at 43,330 units.

The annual rate of housing starts in Toronto were up 179 per cent, boosted by an increase in multi-unit starts, however Montreal fell 28 per cent and Vancouver dropped 55 per cent due to drops in multi-unit starts....

https://www.biv.com/news/real-estate...cember-8310993

[Nashe]

Originally Posted by whatnext

CMHC reports annual pace of housing starts in January down 10% from December

And December wasn't great:

...'cept for here, I guess.

[Changing City]

Originally Posted by whatnext

This is exactly why none of these governmental loans to spur housing will work. The market won't build if conditions aren't favourable. That's why governments need to build it themselves.

CMHC reports annual pace of housing starts in January down 10% from December
OTTAWA — Canada Mortgage and Housing Corp. says the annual pace of housing starts in January fell 10 per cent compared with December.
Canadian Press

OTTAWA — Canada Mortgage and Housing Corp. says the annual pace of housing starts in January fell 10 per cent compared with December.

The national housing agency says the seasonally adjusted annual rate of housing starts came it at 223,589 units for the first month of the year compared with 248,968 for December 2023.

The decrease came as the annual pace of urban housing starts fell 11 per cent to 208,119 units, with the pace of multi-unit urban starts down 14 per cent at 164,789 units and single-detached urban starts up 0.08 per cent at 43,330 units.

The annual rate of housing starts in Toronto were up 179 per cent, boosted by an increase in multi-unit starts, however Montreal fell 28 per cent and Vancouver dropped 55 per cent due to drops in multi-unit starts....

https://www.biv.com/news/real-estate...cember-8310993

I have no idea what the 'annual rate of housing starts' is when reporting a single month of housing development activity. But it presumably reflects mostly what happened in the previous 11 months, not the current month.

In CMAs in Canada (which is all CMHC report on a monthly basis) in January there were 12,037 starts last year, and 13,639 in January 2024. So housing starts last month were 13% higher than the same month last year.

It's a bit soon for the governmental loans for rental projects to show in the data, because CMHC only count a housing start when the project reaches grade, so many of the projects that the government has offered a grant won't count yet, but starts of rental housing in CMAs were 18% higher in January 2024 than in the same month in 2023.

This year there were 135,800 rental units under construction in CMAs in January, and in the same month last year there were 118,813, so 14% more were being built in January this year than last. Condo construction was also higher, with 165,011 being built, compared to 157,826 in January last year. Single family dwellings were down from 63,294 to 52,032 under construction. The government doesn't give loans to build those.

[GenWhy?]

Doing the Lord's work. Thank you, Changing.

[whatnext]

Welcome to Vancouver, land of the $2.4 million "starter home". An article from the G&M on the January market which also illustrates the absolute uselessness of Trudeau's foreign buyers "ban".

A busy January has Vancouver realtors bullish on the market
KERRY GOLD
VANCOUVER
SPECIAL TO THE GLOBE AND MAIL
PUBLISHED FEBRUARY 16, 2024
FOR SUBSCRIBERS

Vancouver realtors are hoping that recent frenzied activity is a sign that the market in 2024 is on the upswing.

Listing agent Amar Manuel received 27 offers on a house at 3607 Dunbar St. last week, and although he expected it would draw attention priced at just under $2.3-million, the seasoned realtor was still shocked at the number of bidders. He listed it on a Monday and took offers a week later, so it sold within seven days.

About 100 groups came through the open house. Most bids were serious offers, and they came from families that wanted to get a foothold in the high-end, west side neighbourhood, says Mr. Manuel. The price reflected the house’s need for repairs, and its location on a busy arterial road. But it’s also perfectly liveable and has a basement suite with a potential revenue stream. And it sits on a 50-foot-wide lot, which is larger than the area’s 33-foot-wide average. The property, which was owned by an investor and rented out, was listed at $2,298,000, which is low for a west-side detached house that isn’t a teardown. The assessed value is $2,411,500.

Because the deal hasn’t completed, the listing agent would not disclose the sale price.

Open this photo in gallery:
The assessed value of 3607 Dunbar St. is $2,411,500.
RE/MAX SELECT PROPERTIES

“It’s a starter home for a young family looking on the west side,” says Mr. Manuel....

.....Long-time realtor Lorne Goldman says the west side detached house market is the barometer of B.C.’s housing market. He recently saw a property in the Arbutus Flats neighbourhood receive eight offers, listed for $3 million plus.

“In my experience, after decades in this business, I can tell you that when the market goes sour, the first place it goes sour in the province is the west side, and when it starts to get going again, the first place is the west side,” says Mr. Goldman. “It’s been that way for a long time.....

Goldman doesn’t believe the federal government’s extension of the foreign buyer ban until 2027 will have any meaningful impact on prices.

“It will be minimal,” says Mr. Goldman. “Conversely, what political party is going to jump in and say, ‘We need to bring foreign buyers back?’ The perception in the public is that if we have the ban, we see prices drop. It didn’t happen.

“And if you have a foreign buyer who is intent on buying in Canada, they will have a relative, or a friend who could circumvent the rules.”...(bold mine)

https://www.theglobeandmail.com/real...on-the-market/

[Coldrsx]

Banff receiving their Housing Action Plan funding today to the tune of $4.6mil.

[casper]

Originally Posted by whatnext

Welcome to Vancouver, land of the $2.4 million "starter home". An article from the G&M on the January market which also illustrates the absolute uselessness of Trudeau's foreign buyers "ban".

I think the feds were well aware foreign buyers were not the main issue. The lack of housing starts was.

While it would be great to see the feds use magic to drive down the free market. The reality is its out of their control. What they should be focusing on is building social housing and co-op housing so those that can't get into a $2M house have an option.

Trudeau should also be putting money into regional rail. Re-establish the Fraser valley line to Abbotsford and Chilliwack, the BC Rail line up to Whistler and beyond as well as the Vancouver Island railway. That provides more options for those that may only need to come into the city once or two a well but can live in smaller centers.

Trying to reduce the cost of a single family home in the most expensive neighborhood in Vancouver is a lost cause.

[whatnext]

Originally Posted by casper

I think the feds were well aware foreign buyers were not the main issue. The lack of housing starts was.

While it would be great to see the feds use magic to drive down the free market. The reality is its out of their control. What they should be focusing on is building social housing and co-op housing so those that can't get into a $2M house have an option.

Trudeau should also be putting money into regional rail. Re-establish the Fraser valley line to Abbotsford and Chilliwack, the BC Rail line up to Whistler and beyond as well as the Vancouver Island railway. That provides more options for those that may only need to come into the city once or two a well but can live in smaller centers.

Trying to reduce the cost of a single family home in the most expensive neighborhood in Vancouver is a lost cause.

That’s simply not true. Foreign MONEY has been an issue since around 2005. As the article says, it isn’t just a direct buyer. It’s the astronaut parents buying Winnie a $3 million house while she gets her undergrad. I’ve given countless examples showing historical SFH Vancouver house prices taking off like a rocket shortly after the new millennium. That only happens when there’s a huge influx of buying detached from local incomes. We’ve been building supply well in line with historic norms.

[casper]

Originally Posted by whatnext

That’s simply not true. Foreign MONEY has been an issue since around 2005. As the article says, it isn’t just a direct buyer. It’s the astronaut parents buying Winnie a $3 million house while she gets her undergrad. I’ve given countless examples showing historical SFH Vancouver house prices taking off like a rocket shortly after the new millennium. That only happens when there’s a huge influx of buying detached from local incomes. We’ve been building supply well in line with historic norms.

At that point it is a domestic purchase. If the buyer is living in Canada or is a Canadian citizen it is a domestic sale.

We are not going to stop parents from loaning or giving money to their kids.

Yes, I do think the current pricing is unreasonable and would love to see them stop increasing. I just don't see the feds can do much to control the private market.

[ssiguy]

We can BAN any non-citizens from owning homes, ban all family reunification, reduce our immigration by one million, force developers to have 40% of housing they build being rental, bring in luxury taxes on homes ie 20% over $2 million, 30% over 3 million, have 70% of all new housing built within a new transit corridor be rentals, force people or businesses who own more than 2 houses in their province or 3 nationwide to sell them within a 24 month period lest they suffer a 50% sales tax levy, create rent-to-own apts, force our banks to ensure leaseholds under CMHC, and demand a certain percentage of all new housing being modular which are vastly quicker and cheaper to build and of uniformally better quality.

These are real things we can do and do today but Trudeau doesn't want to primarily because he is such a Patrician, that he fundamentally doesn't see any problems with the current situation. Remember, Trudeau did basically nothing about housing until last year when his poll numbers began to tank primarily due to housing costs/inflation. PP made it a real issue and then Trudeau decided he better do something but purely for political gain.

[whatnext]

Originally Posted by casper

At that point it is a domestic purchase. If the buyer is living in Canada or is a Canadian citizen it is a domestic sale.

We are not going to stop parents from loaning or giving money to their kids.

Yes, I do think the current pricing is unreasonable and would love to see them stop increasing. I just don't see the feds can do much to control the private market.

Then it is time to restrict sales to Canadian citizens only. Like Trudeau's laughable exemption of the Foreign Buyers Ban for international students. Why the hell does a student need to own property to go to school here? If renting is good enough for Canadians, it is good enough for them.

[someone123]

Originally Posted by casper

At that point it is a domestic purchase. If the buyer is living in Canada or is a Canadian citizen it is a domestic sale.

We are not going to stop parents from loaning or giving money to their kids.

I don't agree with this at all. Our residential property market is set up for citizens and permanent residents and gets preferential tax treatment that makes no sense for the wider interests of this country if it's used as a channel for foreign investment. The failure to correct this over the past decades is scandalous and a sign of corruption. There are other problems like people reporting difficult to verify foreign income and getting mortgages in Canada. There are other problems with the housing market to be sure like supply but this issue of a foreign influx of cash and nonpermanent residents is likely the single biggest factor now as without it we'd have almost nil population growth and a shrinking economy.

Unfortunately these property market issues didn't register as a problem until recently because the affordability problems were mostly local to BC and there's so much obfuscation and moralizing around these issues.