Praying for a real estate crash - Macleans.ca
 

Praying for a real estate crash

The have-nots of housing are watching, mad as hell, as homeowners glory in their paper fortunes. And they’re starting to lash out.


 

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A year after getting married, Alex Taylor and Rachel Tuttle decided it was time to buy a home and start a family. The two Vancouver residents were in their late 30s, and each had stable, full-time jobs—Taylor served as an urban planner while Tuttle worked for a credit union. They were debt-free, and after years of hard work, frugal living, and the sale of a previous home Tuttle had owned in England, they had a down payment ready. The couple figured they could buy a fixer-upper in Vancouver’s historically low-income Downtown Eastside neighbourhood. But soon after starting the hunt in 2015, their hopes were dashed. Detached homes were averaging $1.2 million, and even though Taylor and Tuttle qualified for a mortgage, they would have faced steep monthly payments of $4,000. They adjusted their expectations and set their sights on a townhouse on the outskirts of the city. Still, the cost was too high. “It felt very risky to put that much of your savings into one investment,” says Tuttle.

That risk hasn’t stopped plenty of their peers from diving into the white-hot real estate market. Some got in before the bubble; others took the plunge more recently in a fit of panic as it seemed prices would never stop escalating. Taylor and Tuttle sensed an opportunity last year, when the province put in a place measures, including a foreign buyer tax, to temper runaway house prices. Sales slumped, but prices are picking up again. “It’s discouraging,” says Tuttle. “We look at people who bought two years ago and they’ve now made 30 per cent on their purchase. You definitely feel like you’ve been left behind.” Taylor is tired of talking about the issue. “I know it’s mean to say and I know it would hurt those of our friends who completely over-extended themselves,” he says, “but honestly, we’re praying for a crash.”

He’s not the only one. As prices in Vancouver and Toronto have skyrocketed and affordability has eroded, scores of Canadians fear getting permanently shut out of the country’s two largest regions. Paying for all of the costs associated with a detached home in the Vancouver area requires 121 per cent of median household income; for a condo, it’s 46 per cent of income, making it Canada’s least affordable city, according to economists at the Royal Bank of Canada. Toronto isn’t far behind. Aggregate housing costs are 64.6 per cent of income, the worst level since 1990, when interest rates spiked.

Soaring prices have for months stoked resentment between the haves and have-nots of housing, as young, educated Canadians who in the past could be assured a shot at purchasing a home and achieving financial stability feel the opportunity slipping away. With every price spike, the antipathy has deepened, but the hostility has come into sharper relief after Ontario followed B.C.’s example this spring by introducing its own market-cooling measures. In May, sales dropped 20 per cent compared to the year before in the Greater Toronto Area while active listings surged 42.9 per cent from a record low. Those are the kinds of numbers that cause indebted homeowners to sweat, but serve as a balm for those on the sidelines in Toronto: like Taylor in B.C., many now openly cheer for the market to collapse.

Alex and Rachel at their rental home in Port Moody. (Photograph by Christopher Morris)

Alex Taylor and Rachel Tuttle outside their rental home in Port Moody, B.C. (Photograph by Christopher Morris)

Nowhere is the antagonism more evident than on social media. Facebook and Twitter are home to daily (even hourly) outrages, of course, but a recent Toronto Life article touched off a firestorm and revealed deep frustrations about the state of the housing market. The author, Catherine Jheon, recounted the “nightmare” renovation she and her husband undertook, sinking hundreds of thousands dollars into a “crack house” purchased almost on impulse, with seemingly little to no concern for the low-income tenants who were evicted in the process. Many saw the couple as the worst kind of gentrifiers: privileged, callous and clueless. Jheon and her husband made numerous bad decisions during the renovation, but were still able to continue borrowing money (including from a wealthy relative) and ultimately rewarded for their fecklessness with a palatial detached house in an up-and-coming neighbourhood. On social media, readers expressed intense loathing (“I hate these people so much,”) threats of physical violence (“Dear god, I want to punch them in the face,”) and a longing for karmic justice (“I’ve never wanted the entire real estate market to completely collapse until now”).

(Twitter)

Crash sc2

It’s not all jealously, envy and social media griping. Missing out on home-ownership often means missing out on housing stability and security. Rental markets in Toronto and Vancouver are extremely tight, units suitable for raising families in are highly coveted, and being subjected to the whims of a landlord can make for a precarious existence. Hundreds of tenants in Toronto’s Parkdale neighbourhood, for example, have been withholding payments for more than two months to protest steep rent hikes in apartments meant to be rent-controlled. Many believe the goal is to squeeze them out so the building’s property management firm can re-list the units at market rates, well above what the current tenants are paying. Last month, the firm’s CEO nearly ran over a tenant advocate with his truck.

Everybody should be guaranteed shelter, but owning property in the city of our choosing is not a right. Nevertheless, Canada is a nation of homeowners—nearly 70 per cent of households own their dwelling (in the Greater Toronto and Hamilton Area, around 120,000 owners possess more than one residential property.) Everything in society pushes us toward home-ownership, from popular culture to social pressure, not to mention government policy. The Canada Mortgage and Housing Corporation provides mortgage insurance to buyers, transferring the risk from private lenders to taxpayers, helping to ensure the availability of low-cost capital to purchase homes. First-time buyers can withdraw up to $25,000 each from an RRSP account tax-free for a down payment, score tax rebates, and forgo capital gains tax on the sale of a primary residence. In 1983, a researcher for the University of Toronto looked at federal direct spending and tax expenditures related to housing, which totalled more than $6-billion at the time. Roughly 95 per cent of those dollars assisted homeowners; private renters accounted for the remaining five per cent. When urban and real estate economist Frank Clayton revisited the topic nearly three decades later, he found the ratio had barely budged.

While housing policy was crafted to ensure Canadians had equal opportunity to purchase a home, runaway prices are driving a wedge between those who can afford to and those who can’t. “Housing has helped the rich get richer, as the poor get poorer,” said CMHC president Evan Siddall in a speech this month. As prices escalate, homeowners build up equity that can serve as a retirement fund. A Manulife survey found nearly 20 per cent of Canadians expect to use home equity to help finance retirement; another survey from TD Bank Group, meanwhile, found 70 per cent of millennials expect to be working well past age 60. Tuttle and her husband fear that not owning a home means they’re falling behind financially. “The primary purpose of a house will be to have somewhere to live of course, but it would be a pretty solid and safe investment as well,” she says. “There’s not really a good alternative for people like us to put our money into other than real estate.”

House-rich Canadians are taking full advantage of price gains, tapping into home-equity lines of credit and (to non-owners, at least) flaunting their conspicuous consumption. The Financial Consumer Agency of Canada found the number of households with a HELOC and a mortgage against their home has increased nearly 40 per cent since 2011, prompting commissioner Lucie Tedesco to caution this month the trend “may lead Canadians to use their homes as ATMs.” Last year, Canadians withdrew $12.8 billion in home equity to fund renovations, according to Scotiabank Economics, and another $3.6 billion for “other” purposes. HELOCs can be risky, to be sure, but it’s a source of financing non-homeowners simply cannot access.

“A lot of people have these totally unsustainable lifestyles they’re only able to pull off because, by doing nothing but sit on their ass, their net worth goes up by a few grand every month,” says Toronto resident Phillip Mendonça-Vieira. “I don’t think there’s anyone who doesn’t own property who’s not secretly, like, ‘F–k you, guys. This is unsustainable.’” Mendonça-Vieira has taken a keen interest in housing. He co-founded a group called BetterTO to organize discussions on issues facing the city—the first, held in March, focused on housing. The 30-year-old has shared a rental for the last two years; the owners of the house took advantage of the city’s exorbitant prices and cashed out a few months ago. Mendonça-Vieira faces the prospect of moving again, at a time when he and his partner would like to settle down in preparation for having kids in the near future. Had Mendonça-Vieira, who runs a small startup, and his partner, a lawyer, been in this situation a year or two ago, they might have been able to purchase a home. But then the average home price soared more than 30 per cent since the start of 2016 alone. “Frankly, it’s kind of inconceivable to own a house,” he says.

A friend, however, recently suggested buying a property with Mendonça-Vieira and his partner, and the trio has started sending each other property listings. He’s not getting his hopes up. “If we don’t find something in the next six months, I don’t think we ever will,” he says. Renting would be an acceptable—provided they could find a unit to accommodate a family, and they had stability of tenure (as a renter in Toronto, he’s had to move about once every 18 months.) “I’d like to know I can have a place to hang my hat,” he says. “The way policy has been set up in most of Canada, the only way to achieve that is to own property.”

What makes matters more frustrating is homeowner opposition to rental and multi-unit developments. “We have a housing shortage, and a large group of people who don’t want more housing—often people who already have secure housing, and who get richer if there is a shortage,” says Daniel Oleksiuk, a member of Abundant Housing Vancouver, an organization that advocates for changing zoning practices to build more multi-unit housing. “There’s a class of landowners that passively grow wealthy, and another class that’s struggling to pay rent,” he says. “That’s not the Canada I learned about growing up.”

To take one example, a developer submitted a proposal to turn a derelict church building in the Douglas Park area of Vancouver into multi-unit development. Residents of the area—made up of multi-million dollar, single-family homes—mobilized under the umbrella of the Douglas Park Neighbours Association (DPNA). Lawn signs bearing messages such as “Ozone Yes. Rezone No” sprung up, and residents voiced their complaints to the city. By most measures, the project was modest: the developer intended to build just 10 units. Last year, the developer submitted a new proposal for only six units, plus reduced space for bicycle parking. “It’s death by a thousand cuts,” Oleksiuk says.

DPNA member Dale Leibel, who purchased his Douglas Park home in 1999, says the organization suggested a plan to the developer that would maintain the same level of density, but is more in-tune with the single-family feel of the neighbourhood (the developer was unavailable for comment). Still, the neighbourhood fears the proposal could set a precedent. “If all of a sudden there becomes multi-family applications put forward, it will change the feeling of the neighbourhood,” Leibel says. “When I walk out my door in Douglas Park, it’s alive, it’s breathing. It’s the ideal neighbourhood everybody wants, and I don’t think we want to take changes to a neighbourhood that’s working lightly.”

The DPNA opposes the current six-unit plan, too. Proposed lockout suites raise “the possibility of Airbnb rentals and higher density,” warns to the group’s website. The association lists a litany of other complaints, including noise and dust during construction and threats to property values. Meanwhile, the DPNA is offering “TAKE A STAND” t-shirts and lawn signs through its website.

At a time of nosebleed prices, debt-fuelled spending and opposition to density, who wouldn’t want the market to take a hit, if only out of spite? The reality, though, is that house-price corrections don’t take place in isolation—and there are far-reaching consequences.

One way for price growth to halt or even fall is for interest rates to rise. But affordability wouldn’t necessarily improve since mortgage carrying costs would also rise. An even less attractive remedy is a recession. A severe economic shock could be devastating for heavily indebted households, curb consumer spending and business investment, and send house prices cratering.

But recessions, of course, are often accompanied by a spike in unemployment. Anyone waiting for a crash could find themselves out of a job when and if it happens—hardly an ideal situation in which to secure a mortgage and buy a house. “You would have to be in a position to do it when the economy is going through its toughest time,” says Robert Kavcic, a senior economist with the Bank of Montreal. The ideal opportunist would need stable employment, a down payment squirrelled away and impeccable market timing. And even a 30 per cent correction in Toronto house prices would still leave homeownership a remote prospect for many. “Homes in Toronto would be more affordable, but they would still be reasonably expensive by Canadian standards,” says Jean-François Perrault, chief economist at Scotiabank.

As it stands, the fundamentals underpinning housing markets in Vancouver and Toronto remain strong—local economies are growing, immigration is robust and interest rates are low. Vancouver’s market dipped after the implementation of the foreign buyer tax last year, but prices are rising again. By one measure, it took eight months for the city’s market to overtake its previous high. Toronto, where the provincial government put in place a similar measure in April, looks to be on the same path. “We’re more likely to see something like Vancouver rather than a prolonged fall in prices that would somehow make Toronto housing much more affordable,” Perrault says.

Emelia and Christie with their children at home in Vancouver. (Photograph by Christopher Morris)

Symington Fedy, second from left, with her family in Vancouver (Photograph by Christopher Morris)

It’s a bitter pill for many. After 20 years of renting in Vancouver, actress and playwright Emelia Symington Fedy has come to the realization that she’ll never have secure housing—let alone own a home—in the city she loves. Fed up with her city’s real estate market, she’s packing up her family and moving to Halifax. “It’s heart-breaking,” she says, “but living here is not good for my mental health.” She had been renting in Vancouver’s Downtown Eastside for ten years, during which time she’d built a successful local theatre company, a strong community of friends, and had had two children with her husband who also works in the arts. She had no intention of moving, until pressure from the housing frenzy began weighing on her. Fearful that her landlord would “renovict” her at any moment, her “momma bear instincts” kicked in and she began craving the security of home-ownership. But in Vancouver, on two artists’ salaries, that wasn’t an option. “The way rents have gone up, if we were kicked out of our [three-bedroom] home, we would have to live in a one-bedroom basement,” she says.

Instead, she and her family will live in a four-bedroom heritage home in the north end of Halifax where their monthly mortgage payments are roughly half the cost of renting a two-bedroom apartment in Vancouver. “I walked into that house and I started to bawl,” she says. “I can see us there. I can see the kids in the tiny rooms. There was something about this little nest that no one can evict me from—that feeling brought me to tears.”

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Praying for a real estate crash

  1. It’s more like hate for my country. That they up immigration in a housing crisis. Dont build enough homes. I worry about my mental health from not owning a home. We need to organize a union of nonhomeowners and sue the federal government. Our population is barely growing without immigration. Yet we have to move across country and find work .. We are making our kids immigrants inside their own country. Yes. Canada is a bad country. I hate it.

    • As a homeowner in an outlying suburb of Vancouver I too, would like a crash, not all of us homeowners are a bunch of gloating toads licking our lips over our paper gains. I worry about the future of my country, especially for our millennial son and his generation.
      I feel every level of government has let us down on this issue, particularly on foreign investment in property, much of it done with dirty money being laundered. In Vancouver there seems to be a never ending supply of expensive condos being built, most marketed offshore in China. There are an incredible amount of homes left empty here which makes me furious. There should be an immediate moratorium on foreign ownership of property until government can get a handle on the situation. Then only allow purchase by those who can prove they earned the money here in Canada and pay Canadian income tax. And maybe slow immigration down too until we take care of the people who are already here, how about that for a thought?

      We had already more than doubled our money on our house in 20 years before the Chinese money started flowing into our neighbourhood a few years ago making prices go absolutely crazy here. That was good enough for us as our house is our home, not a piggy bank. We are not those people talked about in the article, borrowing money against our home to finance a lifestyle we couldn’t otherwise afford, I don’t know anybody doing that.
      As Canadians we need to get a lot more vocal and angry and pressure our governments (every level) to take this a lot more seriously and take care of Canadians first, Canadians who are actually working and paying taxes here, to the convenient Canadians who purchased their passports through the federal investment scheme which has since been shut down. Quebec and PEI are still running these schemes though and they should be shut down.

      • no edit function? sorry that should read not the convenient Canadians….instead of “to” the ….

    • Owning a home is probably not the best investment in the world these days. Renting for now isn’t the end of the world and shouldn’t threaten your mental health. I agree that we should build more homes; there’s something wrong with financing/permitting that we are always behind on this. There is also a problem with zoning, especially in Vancouver, that prevents the needed density from being built. Immigrants benefit our economy – one obvious example is the need to build more homes – I don’t think it’s right to blame them when we can’t solve our own local economic problems. People need to realize that big cities are our economic engines and they are going to grow and change and we need to prepare for that instead of wishing it wasn’t happening.

      • OwenB – the issue isn’t immigration, but the kind of immigration and whether we are admitting immigrants who are, on the whole, making a net contribution to Canada. Of the total population of the greater Vancouver region, nearly 10% is made up of folks who arrived on the immigrant investor class. This class of immigrants pays less income tax on average after 10 years than those who came under the refugee class. This is despite the fact that we admitted refugees under a humanitarian premise while we admitted investor class immigrants with the intention of improving our economy. Instead, this class has a very high rate of reporting no income, and pays on average $1500/yr in income tax, presumably because they are making their income elsewhere, often in low social service/low tax environments but settling their families in Canada in a relatively high social service/high tax environment. When 10% of your population is wealthy, does not pay significant taxes but accesses services, it pulls apart the underpinnings of the social contract. This category is greatly reduced for the moment, but wealthy families are finding ways of optimizing the system in other ways to achieve the same deal.

        This isn’t about building more supply. We have been on a building spree for 15 years – there is enough supply coming online as in most years greater Vancouver has built more homes than we have added households. The problem is that we are misallocating the supply being built and allowing those who don’t pay local taxes to compete with those who do. What wealthy family wouldn’t want a deal where they get free schools, free health care, clean air, nice parks, etc. etc. etc. while other people pay the taxes that supply these benefits? We simply cannot afford to build enough supply for this category of global family.

        So, the first step is to fix the fact that we have a 20th century taxation system that assumes you earn your income where you receive your social benefits. We have to crack down on the illegal movement of money across borders. In other words, we have to adapt to the new globalized economy and restore the idea that the system, by and large, is fair.

        Once we’ve done that, then we can get to the issue of assessing whether supply side measures need to be aggressively pursued. It’s possible they do – the millennials are the largest cohort in Canadian history, after all. The City of Vancouver does need to allow more density along transit corridors and other changes you mention.

        But you’ve got to address the real problem of tax fairness first.

        Incidentally, when you frame it as a tax fairness problem, rather than an immigration problem, it targets the right group (those who have found ways of aggressively avoiding tax, regardless of their passport), rather than getting us mired in conversations about immigration, racism, etc.

        • Stephen – In general I agree with you about immigrant investors. The Quebec program should be shut down as it’s just sending immigrants to Vancouver anyway. BC (and Feds) need to address tax fairness to prevent people gaming residency and taking advantage of our public services, no doubt about it.

          However, I have to insist that the supply side is a real problem too. CMHC stats show Vancouver has been under-building relative to household formation since 2009. It’s pretty much balanced now but they track starts so completions have not caught up. Alternatively, vacancies and inventories are at pretty much record lows, and City stats (based on hydro bills, etc.) show the percentage of empty homes hasn’t really changed over the years; this too suggests a supply shortage.

        • Yeah … that’s the ticket. Rich people are the problem – along with their accountants. Perhaps the French solution Mr Guillotine??

  2. Canada should raise the interest rate.

    In the meantime…….move to another city.

    • Yes, more unemployment, that will help young people!

      • English please.

    • just so were clear you want Canadian citizens to move out of cities they may have been born in lived there whole lives with children so foreign investment can own empty houses?

  3. While I recognize the need for Canada to attract immigrants since our internal birth rate is too low to sustain us, I believe the amount allowed for Toronto and Vancouver (where most immigrants land) should be managed and minimized. With 150,000 coming to the GTA every year, they not only drive the housing market up across the full spectrum of housing, our infrastructure is in no way keeping up with that added demand.
    However, the biggest downward correction to the housing market will occur when our Central Bank decides to raise interest rates by as little as 0.5% and that flows through to mortgage rates. Sounds like a small amount but, for many home owners today who have a 2% mortgage, their monthly mortgage payments will increase by 25%. Of course when that happens, our free spending, debt amassing Ontario Liberal government won’t be able to service its debt either and the GTA housing market will be the least of anyone’s worries.

  4. I actually do have some sympathy for people who are getting shut out of the housing market, however that even has limits. When I attempted to buy my first house in 1984, interest rates were at 16% and higher and while friends were locking in at any price – I decided to bypass the nonsense. Ten years later (at 37) I bought a house with 7.5% interest rates. I ended up with a detached house, not because I wanted one but because the options for townhouses, condos etc was non-existent where I lived.

    Having said that, there are many people who think they must own property without really thinking about the cost and time required to minimally maintain a house – I see that on my street there are about 4 houses where the owner can not physically or financially maintain their property.

    But I also know several young people (late 20s/early 30s) that are buying property with large down payments because of choices that they made in their lives. They did not go to university but rather entered the workforce directly from high school and have moved up in the company or they took apprenticeship courses and are earning big bucks as trades persons. All going against the grain of the advice from their highschool teachers (who in fact have little experience in the world of work outside of the safe, environment of teaching).

    I also know many (too many) young people (same age group as those mentioned before) that spent way too much in university getting worthless degrees and can’t support themselves. BUT one of their main problems is that they refuse to lower their expectations and living at home allows them to continue in their delusions that they are owed at top of the line house with all the best finishes and appliances. Your gender studies degree will get you a job earning $30,000 a year (vs $80,000 for a plumber or $75,000 for an assistant manager of a grocery store) and you probably shouldn`t be spending $400 /month on clothes and the same amount eating out along with a 5 star resort 3 week holiday. They need to face up that they made a huge mistake in their university choice and they need to reverse it. In 5 to 10 years they will probably be in a position to put a down payment in a less hot housing market. Because, regardless of what governments do, the housing market will cool,

  5. Meanwhile, in Halifax, housing prices on the peninsula continue to increase beyond the means of locals due to the poor and desperate come from away who can’t afford to live in THEIR provinces.

    Trust me, the irony IS lost on them.

    • You’re right. Why would anyone want the h-e-double-hockey-sticks to live in Halifax (I’ve been there several times) … just joking. Perhaps it is unfortunate that Halifax has a modestly growing economy with job opportunities while at the same time a growing cohort of retired people are flexible / mobile in their choice of a place to live. As for the ‘poor and desperate’, are they crowding out the ‘locals’ living at the Public Gardens?

  6. There are lots of reasonably priced houses in Canada…….not everybody needs to live in Toronto or Vancouver.

    • We heard you the first time;
      “Let them eat cake, keep them out of my back yard.”

      • You hear, but you don’t listen.

        Mostly you just whine.

  7. Since the nimbys have a financial and community stake in new developments and a lot of influence in their neighborhood it might work a lot better to have a density shift tax that could apply to the whole city. Forget trying to influence any particular group of people that it should be their neighborhood changes and tax low density areas and give an equal break to high density ones. If people value the character of their area that’s great and they can pay for that value rather than in effect having others pay for it by forcing up property values. It would be far easier to find political support on a citywide level including the votes of renters and higher density areas and avoid local bureaucratic turf wars.

    • That’s a fantastic idea! I might do the Vancouver housing survey again just to propose it. One problem is that seniors do not have to pay property taxes; I believe they can defer them indefinitely at a 1% interest rate. The other problem is that a lot of voters would consider that unfair, just like the density they protest. I mean they protest school closures even though their populations are shrinking…

  8. The haves and the have nots… the whiney and the gloating. Have you Canadians stepped out of your own bubble and looked at international house prices? Real estate in major Canadian cities is not over valued, or out of line. And really if you think about it, it’s a hell of a good deal.

    In Johannesburg SA a 3 bedroom 1 bath home is listed for $850,000 R. A sales consultant avg. annual wage being $94,000 R. Or how about a 1 bedroom apartment in South Kensington, London for L895,000 where the average annual income for a Account Manager is L29,000 . Get my point and that’s only 2 international cities.

    I was a have not living in downtown Vancouver, renting an apartment realizing my chance of owing a home in was slim to nothing. You know what I did?? I stopped my whining and moved to another city in Canada where I could be have in the real estate market. Purchased a 4 bedroom 2 bath home for $192000, my income is lower than in Vancouver at $45,000. You do the math I’m still ahead of the ball game.

    The decision is yours: Do you want to own a home or live in a big city?? Stop expecting to have it all and wishing ill on your neighbours while praying for a real estate crash. This is the problem with the world around us we expect it all, never was their a time in history where everybody had it all. It just doesn’t happen. Owning Real estate is not a right. Having a roof over your head is a right. That’s All Folks!

  9. All articles on the current real estate situation focus only on Vancouver and Toronto, and many commenters seem to think that the solution is to move out of those cities. However, people don’t seem to realize that the problem extends well outside those areas. For example, in the Niagara Region real estate prices have risen precipitously in the last year and are still rising. Rents have increased in turn. I am currently looking at a $500/mth increase over last spring for similar rentals in the same neighbourhoods I looked at last year. There is little to no chance of me being able to purchase a home in the foreseeable future, but now I am facing homelessness in spite of having 2 working adults in the household – full time, and well above minimum wage. And for anyone on a fixed income the situation is dire. A 1 bedroom apartment costs more than 2/3 of my mom’s pension. Something has to give. And not everyone can blithely move to another province or a small town or rural area because our livelihoods aren’t that portable.

    • Exactly Nifer, the crazy prices have spread far beyond Vancouver, the line of affordability is probably Chilliwack or beyond now. Victoria on Vancouver island is now extremely expensive and prices as far up the island as Courtenay/Comox are through the roof. Plus in Courtenay/Comox rental vacancies are about zero. I can’t understand why people keep going on about supply when the GVRD has some 66,000 empty homes…that’s a lot of supply right there.

  10. ““It’s discouraging,” says Tuttle. “We look at people who bought two years ago and they’ve now made 30 per cent on their purchase.”

    Well, no. Until they sell, that “gain” isn’t anything other than perhaps a way to take on more HELOC debt. And when they do, unless they’re moving to Regina, their gains are nothing if they want to buy back into the same market. They’ve actually lost after transactional costs.

    A few astute people will sell at peak and then do something sensible with the real profit. The vast majority won’t. Most people are insanely greedy and will simply purchase another, even more expensive property.

    A bubble market is desperately unhealthy, not reason to celebrate. Homeowners are like gamblers – a few will get rich, most will crash and burn when they make one flip too many, or wait too long because their house will be “worth even more next year”. And just like gamblers, they love to tell you about their wins, but are strangely silent about their losses.

    Thousands of new listings every week in GTA now. Wonder how many of them will get the golden ticket they think they will? lol