OrangeMango

I think this is purely a question about supply and demand.

Cheap money, low interest rates push demand up, together with more people entering the market and the workforce, and if supply is limited, than prices go up. And then there is commercial lending for construction companies. Thus finance controls so to speak the market or has a strong influence on it.

Affordability issues with housing usually occur in countries where the financial industry is strong.

The NDP has little options. Sure, one can tax 2nd homes for out of town owners, or something like that or flipping homes just for profit, it makes the market a bit fairer, but doesn't solve the affordability issue.

Now, if the era of cheap money is over, but also at the same time, less and less gets built, it may mean a correction of the market, things going slower, but not a huge drop in prices.

kinolo

Prices dropping in Vancouver a little. It's noticeable looking at the 'Sold For' prices on Redfin. If they go back to pre-pandemic levels (unlikely, but one can dream!) then I may finally buy somewhere.

JamesM

Down 16% in 5 months in the GTA.

All pandemic gains will be wiped out.

There are more rate rises coming and it takes 4 to 6 quarters before rate rises are truly felt.

Those who believe the Canadian housing market has the fundamentals to sustain the ridiculous prices we once had had the ridiculous growth are in for an awakening.

You won't see the prices of February 2022 again for at least half a decade.

If you want to buy then the end of next year will be a good time.

CanadaJimmy

Not sure about that. I bought my house for $850k, similar homes around here are still selling for $1.2 million. Not sure were are ever going back to that without a major increase in supply, which doesn't seem to be happening.

kinolo

Do you meant you think at the end of this year or the end of 2023? I do think that places like Langley which had massive gains during the pandemic will see the largest falls. Not too sure about metro Vancouver though.

JamesM

Your house will be at $850k by the end of next year regardless of your biases, denial and tint in your rose glasses.

Reduced demand and less affordability will see to that.

The supply myth is agent poppy cock and FOMO. Nothing more.

The interest rate rises are here to stay and property market corrections in Canada are long and painful.

Moses2013

You could be right and I thought the same, but these days I'm actually sceptical and anything can happen. You just need a million refugees in the next 2 years and although interest rates will increase, the 4 bed house will just house 4 families rather than 1 family.
https://www.gatewayvisasolution.com/...0three%20years!

CanadaJimmy

Pretty sure it's fundamentally rooted in how highly we restrict new construction, at least in BC. The ALR, Zoning, NIMBYism and so on. High interest rates aren't going to fix neighbourhoods locked in amber and as such they will become harder to buy into over time.

In cities with fewer restrictions like Calgary and Edmonton, we see much better housing affordability, regardless of interest rates.

I personally have nothing against prices falling, I don't plan on selling any time soon. I just genuinely don't think we are doing enough to make housing affordable. The supply issue is meant as more of a call to action than something I am trying to propagate. I want my kids to be able to afford their own homes.

Time will tell.

Moses2013

And the idea that more supply will reduce prices doesn't seem to work, unless you build the right type of property. When you build apartment blocks with 1 or 2 beds and little outside space then the value of other properties (houses, larger apartments) goes up as they are more desirable.

JamesM

Affordability is how much people can spend.

If one person has a dollar and a house is ten dollars they can't buy the house unless the price drops. If ten more people turn up with a dollar none of them can buy the house either unless the price drops.

The assumption that the house will continue to go up when no one can afford it is again more realtor FOMO.

Supply, Immigration, no land....poppy cock.

The driver behind house prices for the last decade was low interest rates.

Moses2013

The assumption If one person has a dollar and a house is ten dollars they can't buy the house unless the price drops isn't correct either. You just have to look around now and more larger families put their money together, so while each person only has a dollar, ten have 10 dollars. Then there are other examples like the Miri family in Germany and you have more than 10.000 family members. In Canada this is starting and in one way it's a bit like new clans appearing (not crime though)
https://bc.ctvnews.ca/40-of-vancouve...ests-1.5812376

JamesM

Larger families are smart enough to wait the market and it's decline out now. No one wants to buy something that is losing money every month.

Moses2013

It's easy for you and me who bought properties when prices were at an all time low, unfortunately many families don't have a choice. If you can't even get a rental you either risk becoming homeless or take what you can get. I agree that prices will drop in some parts be it Canada or globally, but there's just too many people and enough money out there.

JamesM

Prices down for a 6th consecutive month and this is the CREA with their vested interest and positive spin:
https://www.theglobeandmail.com/busi...estate-august/

Wait until the market fully absorbs the interest rate rises which takes 4 to 6 quarters.

We'll also see 5%+ policy interest rate from BOC next year.

It's going to be an all out blood bath in another 6 months.

dbd33

Time to trade up then, expensive properties fall harder than cheap ones. Perhaps a place with an indoor and a pool.