183
Canada likely sitting on the largest housing bubble of all time: Strategist - BNN Bloomberg
(www.bnnbloomberg.ca)
this post was submitted on 23 Aug 2023
183 points (96.0% liked)
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Even though I had to pay though the nose to buy a house years ago, I hope for a crash so that people are not screwed forever more.
What I find really odd is the commercial market in smaller towns, its cheap as shit.
Crashes only hurt regular people. People who have money/capital can wait it out and then buy even more housing to make the bubble bigger next cycle.
source: lived through 2008 and that fucking sucked
Yeah well high prices only hurt regular people, too!! It's almost like we're getting fucking squeezed by our economic masters, eh?
Same and I don't think a housing crash would hurt just the poor like say a 2008 style crash (it would still hurt the poor because everything does). I also don't think there is any other option other then a crash, things are too out of hand bubble wise. It would be cool if someone in power could get crazy serious about the issue but there is no will and it is likely to late.
I mean partly due to real estate now the largest contributor to the gdp (https://www.statista.com/statistics/594293/gross-domestic-product-of-canada-by-industry-monthly/ ) and partly due to the abundance of non home real estate supply, Canada is in a situation of not so much being in a bubble but being the bubble. In a 2008 type crash you have a large group of people with enough capital that could by out the foreclosed houses, the upper middle class (but not all of them https://www.cbc.ca/radio/day6/episode-407-the-waffle-house-index-trump-book-quiz-the-big-trip-photographing-spain-s-ghost-towns-and-more-1.4821840/photographing-spain-s-ghost-towns-10-years-after-the-financial-crisis-1.4821871 ).
But I think Canada's next crash will not be part of a world wide event and will be a value crash more then a mortgage crash at a time when that upper middle class is narrowing. When a value crash happens the people who would buy the majority would see their own equity take a hit, limiting how much appetite most would have for buying more. the ultra rich put their money in real estate for investment or laundering, they would be effected but not as much long term (nice to be rich).
Then you have the companies, most are leveraged to the teeth and are not even concerned with the rental income in a lot of cases (they still get all the rent they can, they just see it as a side effect). In the case of a value crash they would be underwater and go overnight, this does not mean other larger entities would not jump in to buy them for pennies on the dollar, but it would remove a lot of the intensive that exists right now. This might mean rents go up when these companies get desperate but the renting class can not bare much more and would likely result in another crisis.
In short term this next crash (unless something really drastic or shady is done) will be incredibly bad for everybody, but in the medium term the poor have little to no capital to lose compared to everyone else and should see prices collapse and due to that being Canada's largest business now would have to cater to the new market. In the long term many here in power would be back trying to pump up the housing bubble and most ultra rich would be hesitant to invest in a market that has shown it is a bubble (think Japan, Grease, Ireland, China, etc.).
2008 was not a regular speculative housing crash. It was a result of an incredibly fraudulent system propagated by the banks.
Because there's zero opportunity in small towns. Another major issue with Canada right now
I am doing well in small towns mostly due to the impression that there is no opportunity. Starting a small business in a major city is nigh impossible without a lot of money, but small towns don't. The issue I see most often is people opening places in small towns without any business plan or market research, leading to failure. I think some of that will change when more business realizes that they can save money by going to a smaller town.
My dad ran a business in a small town his whole life and said it's not a good idea anymore. Been a struggle for him for the last like 20 uears. Always told me to never be a business owner so I'll follow that advice
My parents said the same thing, my biggest regret in life was listening to them.
Not everyone can work remote
We did that a little over a decade ago. One thing to watch out for is that it could be a one way trip. We're now retired. The lower wages mean that the retirement income is also lower. That would be fine, except that now we're looking at what the future holds for health care and driving. We're fine as long as we can stay here, but anything that forces us back to the city means absolute destitution.
That's not an actual solution though. Not everyone is in a position to simply uproot like that, when you may need services that aren't available in small towns, or you might be caring for someone who can't move, or you might just be part of a tight-knit family or community and moving takes away more support than independence gives. Even if that's irrelevant, not everyone can simply find a job in a small town because every job doesn't exist in the same way everywhere. Think there's a lot of demand for administrative assistants in Irvine, AB? And that's not even counting the fact that while people can work remotely (assuming the destination has decent internet, which depending on how small & remote the town is is not a guarantee), there's plenty of companies whose policies have removed it because they need to justify their investments in real estate and middle managers.
Even if we assume a genie appears and gives everyone who wants it the opportunity to find fulfilling jobs that they can work from small towns, exactly how long are those prices going to stay low as soon as people jump ship from the cities, or worse, once real estate investment companies are able to create income properties in these same places?
And that's not counting the fact that it's expensive to move, and especially moving a long way. Even if you just rent a U-haul and chuck all of your junk into it, the truck costs, fuel costs, there's usually hookup fees for services, you may not be able to work during this time if you can work remote, or you may have to go without pay if you're between jobs... It's not an insignificant barrier to entry and that's assuming you're young and healthy and none of those are concerns. Moving away from major cities is potentially a workable solution for some people, but it doesn't solve anything and it doesn't help the people who most need help.
There are a lot of jobs that only exist in big cities.
The downtown strip of the town I grew up in (about 2hrs from Toronto) is a ghost town. I doubt retailers want to risk starting a lease on a commercial property when in many situations, brick&mortar isn't much of an asset.
That is the crazy part I am talking full on buying not renting. I run a few stores in more rural areas and my company just bought the building because the owner would not rent/lease to us but would sell it for less then you could buy a shed for.
I guess it is crazy you could buy a storefront in a small town for much less then a house in a small town (maybe a protip?).