JamesM

As a single guy living in a condo with no garden and only two to an elevator has absolutely sucked during Covid.

However in normal times the low maintenance of a small condo is ideal as is the underground parking during an Ontario winter.

scrubbedexpat091

Popular by choice or simply popular because houses are 1 million + and less and less can afford a house forced into apartments and condos.

Shard

By choice for some. You can be in the city, in a higher density area, less commuting.

CanadaJimmy

Scotiabank just released a report that says with have a chronic housing supply shortage, and we have the the lowest number of housing units per 1,000 residents of any G7 country.

https://www.scotiabank.com/ca/en/abo...-12-2021-.html

Lack of supply is the core reason house prices are out of control. Low interest rates are just pouring gasoline on the flame.

I'm pro immigration (well, it would be pretty hypocritical if I wasn't!) but even I'm alarmed at the prospect of welcoming 400K immigrants when the borders reopen with such little housing stock.

scrubbedexpat091

I just read an article based on this report, only those who have their head in the sand haven't realized this, and while immigration is important to keep Canada going into the future, I do think we may be a little over zealous and bringing in too many people too quickly and that isn't sustainable, maybe need to slow it down a bit to more sustainable levels each year.

JamesM

I don't see how more immigration drives house prices at this point in Toronto.

Given the state of salaries whether five people want a house or twenty people want a house- none of them can afford the current asking price so eventually it will have to dip to sell.

We're beyond the rational point of affordability in my opinion because the average salary is $60 to $70k while the average property price is $910k.

I also don't see many immigrants rolling into Canada with a $91k deposit when you look at the breakdown of their countries of origin and the GDP's of those places: https://www.immigration.ca/where-wil...e-from-in-2021

This is a bank report with a bias for maintaining their investment in housing stock.

CanadaJimmy

More supply would lower prices though, so not sure how that is in the banks’ interest to advocate for it. My take is that they are concerned with the limited supply creating a bubble that puts them at risk.

I agree that immigrants are not the cause of rising prices, but I worry that with limited supply there simply won’t be enough housing to go around. That doesn’t mean they are to blame. And that downpayment amount is exactly the point, immigrants arrive here and then struggle to build a life for themselves just like everyone else.

Also the income to price ratio is skewed by equity held by parents that is passed down. Like a game of monopoly, wealth is just accumulated and passed down and becomes less and less equitable the more time passes.

JamesM

This is a great point. Also many buying the average house price are selling a property that has experienced a similar rise.

It typically comes down to first time buyers and this theory potentially holds if the majority of first time buyers are not immigrants.

I'm looking forward to the crash and hope it is sooner; mainly because I'm tired of listening to people who say it can't crash. It's frustrating speaking to people who've never picked up an economic text book (and I'm not firing this at you at all Jimmy!)

Moses2013

They definitely are accustomed to renting apartments and in the past it made perfect sense. Rents were affordable and those who lived in the city and wanted a bit of outside space could easily lease a garden allotment (Schrebergarten). Now you have long waiting lists and could even wait for 10 years to get a garden allotment. Many are happy to rent and not everyone wants a garden but according to data in recent years and especially now during Covid, more and more people dream of having some form of outside space. The dream of ownership has certainly increased, be it houses or apartments. Ironically yesterday with Israel in the news I heard something about Lebanon and couldn't believe how expensive property is over there, especially Beirut.

abner

I did a deep dive into German (and Dutch) rental arrangements, from an Anglo expat's perspective, for a potential relocation just over a decade ago, that eventually fell over during the GFC. (So, a view informed/constrained by expat considerations, a mildly-above-median income profile, and mostly English-language source material, plus considerable well-meant anecdotal advice/viewpoints from my would-be German colleagues. Take it FWIW...)

My take on it then, was that German tenancy laws are much more favorable to tenants than the Anglosphere-country (UK, US, Canada, Australia, NZ) average, and are particularly geared towards sustaining stable, longterm tenancies in dwellings of whatever type (houses, townhouses, apartments).

But that didn't mean that my colleagues, in the German office I was looking to relocate to, did not nonetheless prefer to own, rather than rent, their dwellings..

dbd33

In Switzerland traditionally houses were bought outright, people saved the money and bought a house for cash. In recent times mortgages have become more common but deposits are still huge compared to the UK and Canada. I thought this was also true of Germany. If so, price comparisons aren't really informative.

abner

You're looking at the "average" numbers all wrong, in several dimensions:
- the income measure that drives property prices for Toronto, on the lower end, is "median household income *for Toronto*" rather than any less localized "average salary" measure.
- there is also a quickly-ramping "accumulated wealth" element to Toronto RE prices (very hard to define and measure -- I've yet to see a solid metric for it), representing the equity that the 2nd/3rd/4th-time buyer brings into each successive purchase. But that doesn't drive entry-level housing prices. Rather, it puts more established areas out of reach to first-time buyers.

In relation to recent immigrants, one might expect them to fall short on both measures, but that is not necessarily the case with a skills-based bias to the immigration intake. That's "in my experience / IMHO" -- i.e. anecdotal bias freely acknowledged.

But FWIW:
- Recent "skills-based intake" immigrant households often match or exceed median household income levels by having the main breadwinners work additional jobs, and/or having a higher-than-typical number of household members contributing at-least-some marginal income.
- Per capita GDPs of the major country sources of Canada's immigration numbers aren't very relevant when the immigration eligibility criteria are geared to providing a path for the educated middle to upper-middle class of a country like India, and/or a well-qualified cohort of health-services workers from a country like the Philippines.
- And, the extended families of those skilled first-generation immigrants often have more capital than one might expect, to provide down-payments on first-house purchases, even in Canadian-market terms.

Moses2013

This is a study in Germany from last year and if you translate from Google
https://www.presseportal.de/pm/12620/4677469

While in 2010 interest rates of around 4 percent per year were required for ten-year loans, the terms today are mostly below one percent. According to Interhyp, the steadily falling interest rate level has led to an increase in the demand for real estate. The average purchase price of a property financed by Interhyp, including ancillary costs, was an average of 277,000 euros in 2010, 403,000 euros in 2019 and an average of 434,000 euros in the first half of 2020. In the first half of 2020, the increase was more than seven percent. Looking at the average square meter prices, there is an increase in the first half of 2020 compared to the previous year's average of six percent (3,330 euros 2020 compared to around 3,140 euros 2019). Compared to the annual average for 2019 and 2018, the increase in square meter prices was only slightly higher (around seven percent). Although there are regional and also in the months differences in the price development, and in some cases also temporary price declines, overall, however, the increasing tendency outweighs in 2020. This is reflected in the mortgage applications. "During the corona crisis, we saw high demand for real estate and financing, even if there were fluctuations over the months," says Jörg Utecht. "In March and April, shortly after the all-time low in building interest rates and at the beginning of the corona crisis, a particularly large number of people decided to buy and finance." There are currently a lot of inquiries about construction financing. " The corona crisis has put more focus on one's own living situation, "says Jörg Utecht." The high demand for financing in the first half of the year despite the restrictions imposed by lockdown and distance rules shows that people are turning more to living. The desire for their own home and the security that goes with it has grown in many. "

dbd33

I don't think that address the issue of deposits, all of that could be true even if one had to put down 50% of the price of a house, as opposed to 4%, or so, here. The very debt ratios here are, I think, a matter of concern as they'll hasten the market collapse when it comes.

Shard

Interesting, thank you. I did see a good show about a famous German property developer (Channe 4 I think) and there does seem to be housing pressures in Deutcheland.