I’m surprised we’ve seen basically nothing from provincial or federal governments to improve housing/rental affordability. With riding interest rates, I was expecting at least a slump, but that hasn’t happened. Instead, we’ve seen amortizations grow rapidly.
The Office of the Superintendent of Financial Institutions has recommended
Removing the ability to extend amortization periods could exert downward pressure on some house prices, as it reduces the options available to help some borrowers meet their financial obligation
But (AFAIU) Parliament has ignored the recommendation. It’s a really shitty situation, that I don’t see a way out of.
Why would you be surprised?
More than 65% of Canadian homes are owned by the family that live in them. Given the propensity for owners to be older than average, and that the older you are the more likely you are to vote, that means the majority of voters have a vested interest in the price of their property.
The thing people fail to realize is that if we want affordable homes, current house values have to drop (by quite a bit) You can’t simply build new cheap houses, but have all other houses stay expensive. It’s not possible.
What’s more concerning is that the goverment fails to realize that expensive housing is killing the economy.
Forget about the fact a huge chunk of money is going into an unproductive asset. Young people and immigrants who can’t afford housing are gonna start looking elsewhere (US for example).
Who’s gonna pay taxes to sustain the older folks in their empty million dollars SFH??
I think of the two concerns, the unproductive asset is more serious. With all our investment dollars tied up, we will struggle to compete globally.
The young people looking elsewhere is less concerning. I know lots of young people talk about moving to the USA, but that is not so easy these days. Immigration to the USA from kinda is not trivial, and with unemployment in the USA slowly increasing, it is only going to get worse.
I’d bet on US having a much more robust and faster recovery than Canada. Their unemployment while slowly increasing, historically is still very low, and I’d guess if you’re in a specialized field immigration to US as a Canadian would be easy. I’m personally contemplating it.
And with bommers retiring I think the labour shortages will be with us for a while.
The reality is that there is no lobby group or investment class as represented in our government as landlords and real estate investors. Not oil, not lumber, not insurance, not mining, no other group even comes close. Something like 75% of MPs and MPPs own at least one investment property across the board regardless of party. They’re always going to vote in self-interest, regardless of what they tell you they stand for. That’s the problem.
In recent months, all of Canada’s big banks have reported a vast expansion in the number of mortgages on their books with amortization periods of 35 years or longer.
Holy shit. Longer than 35 years? Like… People are buying a home at 30 and not planning to pay it off until age 70?
That’s absolute insanity. I get that payments are rising with interest rates, but holy hell.
Then again, I’ve heard of so many people having their rentals sold out from under them that maybe I’d take a 40-year amortization if it was the only way to afford payments on buying a house. I can’t imagine being forced to move year after year with kids, yet I literally met a guy who’s had that happen to his family earlier this week.
Ya, 35+ years is a long time. I worked on mortgage application software for a bit for a major bank a few years ago and I don’t remember amortization periods being able to go past 30 years.
Edit: Holy shit, 25% ish of the major banks mortgage portfolios is of mortgages with 35+ year amortization periods.
Up to 35% already for CIBC’s customer base. Funny how our life expectancy went down down 2 years in a row, but our amortization periods keep going up. Almost like another disaster waiting to happen for our economy. ___
I mean, considering COVID, are you surprised?
Look on the bright side … 35 years from now, civilization as we know probably won’t even exist anymore, and that’ll include banks. Yay, no debt!
seen basically nothing
Really? The one party only stopped beating that drum to pieces so it could shriek about the inquiry.
Let the inquiry thing dry up as the nothingburger the inquiry itself is, and they’ll pick up the “only we the aristocrats can properly solve the housing crisis via our secret plan we don’t want to disclose today” drum and resume beating that one to bits.
Canada needs to adopt a public housing model. It’s the only way out of this hole.
Limit how many parcels/properties/acres any one person or business can own.
It would reduce the demand significantly and allow for people to offer less to buy a home when there aren’t 15 people trying to buy their fourth rental property.
Limits will always have loopholes:
Open a bunch of small shell companies, each with exactly enough properties to meet the limit
be nice of there were restrictions on corporate home purchasing also
Canada needs to make SO. MANY. CHANGES. Not just federally, but provincially and municipally too.
Saw a house go up, one open house with cars down the street, sold in a week over asking. The cheapest possible house in our town is over 500k, it’s really crazy.
The news last week was corporate pricing is raising costs, and interest rates were not having the desired effect. However this week we see interest rates going up, along the corporate price gouging.
