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Apr 25, 2022·edited Apr 25, 2022

Agree with the article, but I'll provide a 'careful what you wish for' caveat.

Let's assume the market corrects itself; either because it crashes as the pool of buyers for $1M+ homes isn't there or smart policies across the country start bringing sanity back to the market. Now, the pace of those kinds of adjustments are incredibly hard to predict. If it happens fast, who feels the most pain?

Not the boomers and GenXers who bought cheap and now have substantial paper wealth. My house it probably worth a bit more than double what I paid for it a dozen years ago on paper, but that doesn't really impact my day-to-day life. And, if the market suddenly corrects by 30 - 50%? I'll still have pretty substantial gains by any historic standard.

Now, think about the young family that just leveraged everything to get one of those million dollar homes. They had to put a quarter of a million down and are still carrying a pretty hefty mortgage. A correction wipes out the equity (and any LOC) and they still have to carry a really huge mortgage in the face of increasing interest rates.

I worry about those families and think we need to tread carefully as we fix this problem. I'm actually *not* sure what the appropriate approach is. We need more housing and everything people are proposing (streamlined zoning, YIMBY, etc) are the right thing to do. But potentially some young families may get squeezed twice -- once paying at the top of the market and again as the market corrects.

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💯 I, an early gen x-er, have been telling you millennials to support the most libertarian Conservative candidate since you were old enough to vote. I haven't got much traction. I confidently expect to be saying "I told you so" for the rest of my life. Enjoy!

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(Banned)Apr 25, 2022·edited Apr 25, 2022

If The Line let you put in pictures, I could show you the one of my parents and 6 other adults (proprietor not shown) that lived in a 'boarding house', a form of housing for the desperate, that we still haven't regressed back to. 9 adults in a 1400 sf house, 1946-1947, one of them with WW2 PTSD, tended to scream at 3AM, waking them all. We've had housing crises before!

They bought a 1200 sf bungalow in 1951 for $9000, sold in 1969 for $21,000 a 5.5% yearly increase. I bought a 1954 bungalow a few miles away at the bottom of Calgary's "dollar sales" crash era, 1985, for $89,000, sold it for $704K some 29 years later, a 7.5% yearly value increase. But, we also spent over a hundred thousand on major upgrades during those years, I believe an economist would calculate that I, too, really only got about 5-6% appreciation of the total investment, per year.

My boomer point being that 5-6% appreciation, maybe a percent better than average stock market returns, if you pick an index fund, goes WAY way back in history, to the end of WW2. That I know of. You're pushing against large economic headwinds if you want it to increase more slowly in value than steel plants and malls do.

The real problem may just be that wages and salaries for the bottom 90% have not kept up with the stock market, with the appreciation of *all* assets. You know, we read about that all the time? "90% of the growth from globalism went to the top 10%", and "billionaires got richer in the pandemic, while millions went broke", a duplicate of headlines from 2008 about that crisis?

But, after about 50 such income-inequality stories, we turn our thoughts to housing, and suddenly it isn't "young people are too poor", it's "prices are too high".

I live in the West End of Vancouver, at one point calculated as more-dense than Manhattan(!), and I can take a 15-minute walk, past 9 different "high-rise coming soon" mini-billboards, which show Unit-counts; and count up some 2000 dwellings in the offing in one square kilometre. That doesn't include the 45-storey hotel, in perfectly good condition, that was recently torn down to put up two high-rise condo towers on busy Robson street; my 9 are three blocks over. We're sure doing our bit!

[I asked my Mom if anybody ever complained about the 3AM wakeups. She looked at me like I'd just crawled out from under a rock, and should return. It was Veteran's Affairs that didn't "get" PTSD until recently. Actual veterans always did.]

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One point missed here is that there will likely need to be a readjustment of expectations regarding what type of home people will be able to afford in the future. In a lot of cities, there simply isn’t the land to build more single detached family homes. However, that’s what a lot of people feel entitled to own because that’s what they grew up with. In some cities, there’s more room to grow if politicians can get over the aesthetic arguments against “sprawl.” Nobody is going to find more land for single home neighborhoods in the middle of Vancouver or the center of Toronto. The land (and houses) that exist are still in demand, and will simply get more and more expensive. The solution to building more homes in these areas is densification, but people will have to get used to the idea of smaller spaces - townhomes or condos. I don’t think that’s going to go over well. I’ve got friends whose anger at the housing market is less that they can’t afford anything, and more that they can’t buy the same sort of house they grew up in, in the same neighborhood. I don’t know how you solve that problem in a growing country, particularly when the growth is concentrated in big cities.

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That is an excellent further discussion on the housing market, Justin. However, as an old-timer I take great exception to "nearly-two-thirds of the country who own their own homes are making off like bandits in this hot market".

As a senior, I have paid my dues to the Canadian economy for 60 years. As a senior in this present climate on a fixed income (which is meager at best and there is nothing in the budget for us), I am struggling to heat my home and put food on the table.

So if you could get the government, any government, to follow up on your ideas, I would greatly appreciate it.

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I own a condo in Edmonton, AB. Originally I bought it as a a place for my children to live while they attended university. But after their graduations I decided to keep it as part of my retirement funding plan, because I worked in an industry that didn't provide a pension plan. It gives me a small monthly income to help pay for my retirement. I also own farm land that I rent out. As I read about the housing crises in our nation I can't help but notice a few things. The value of my condo rental property has dropped significantly in the past few years. It is now worth 33% less then I paid for it in 2008. So I'm a little confused by all the cries of unaffordable housing when you could easily buy a 1,000 sq. ft., 2 bedroom condo, in Edmonton, AB. for as little as $125,000. Spend another $10,000 to $20,000 in renovations and your have a modern starter home to live in. Which brings me to the second observation that I've made.

It seems that today, the younger couples feel they need the gigantic home, with all the latest in bells and whistle, to live in. Now if the trend was for young couples to have many children in their family unit, I could see an argument for a larger home, but that's not the case at all. We have smaller family units these days. When I first got married 33 years ago, and we decided to enter the house ownership market, we didn't go out and buy the 3,000 sq. ft. home, that came with the much high price and cash down requirement. We started out by buying something smaller and affordable, and as our family grew in size we upgraded to something bigger, but never more then we really ever needed. We didn't need the 3000 sq. ft. home with the 3 baths, game room, theatre room, walk-in closets, vaulted ceilings, hardwood floors, or granite counter tops, and the 1/4 acre yard for the dog to run in.

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I am not sure why there is so much singular finger pointing at the feds. Yes, the increase of immigration is part of it. But provincial and municipal governments and suburban life styles are a BIG part of it too. The political capture by the status quo at the local level is incredible. Want to see what political participation looks like ? Suggest building a new condo in an area that is just single family homes. The pitch forks and torches will be out faster than you can say "voted out next term"

Anyways, what felt like the "best explainer" out there for the situation was this segment on The Agenda

https://www.youtube.com/watch?v=-Bg7DC7n-eU

The arguments the two analysts (who specialize in this field) made sounded pretty compelling to me. The fact that NZ, AUS, US are all seeing similar dynamics doesnt let us off the hook, but at least we can look to other places to see what better or less shitty policies might look like.

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Apr 25, 2022·edited Apr 25, 2022

Govt needs to build or fund building of housing of all types. Worked really well after WWII. Boomers not to blame for problem. Started with Govts not taking responsibilities seriously on many fronts, including housing. Building houses in a hurry where environmental factors are breezily dismissed won’t work either. Lots of ways to fix this. Taking money back from boomers is silly. It will come back regardless — either to govts or to their kids in large amounts. Just like boomers got it from WWII generation. All you have to do is watch them (us!) drop dead. Which is occurring right now. Check the obits. Lots of good news on my generation there. We are beginning to disappear. I lost five friends in last few weeks. That should help you greatly…with your housing issues.

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I shouldn't put in so many comments, but this is no opinion, just some reading material from decades of following this story.

1) Not right to compare Edmonton and Regina and Calgary to Toronto and Vancouver, because of inherent growth problems near a coast, vs in the wide-open plains spaces. Dr. Paul Krugman calls is "Flatland" vs "The Zoned Zone" of tightly-zoned coastal cities. His 2005 column escaped the NYT paywall via this blogger:

https://www.serendipit-e.com/blog/2005/08/flatland_vs_the.html

2) Witold Rybcznski is a wonderful read on all architecture subjects, including urban design and housing, and many of his older pieces are outside the Slate.com paywall now:

https://slate.com/author/witold-rybczynski/2

(the top piece on that page, about "what kind of cities do we want, compact or sprawling" is highly relevant)

But in particular, he wrote a great piece in 2007:

https://slate.com/culture/2007/04/why-do-we-live-in-houses-anyway.html

..about how it is NOT some "North American" thing to want SFD houses rather than rowhouses, or condos. People all over the world choose their own box, *if they can get the space*; SFD is very popular in sub-Saharan Africa (spacious).

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Big fan of Ling, and happy to read him here at The Line. Can’t help but notice that there are only three links in this piece that link back to a source and many more statements made without providing a source for context.

I trust Ling. I like Ling. I like The Line too. So when I say this it’s coming from a place where I want to make sure everyone’s asses are covered and we don’t get into mindless arguments: Please enforce a standard of linking to sources whenever statements are made. If there is one currently in place, I’m not sure how this piece got through it.

I know I feel vastly more reassured when a publication’s essays and editorials consistently link back to a source to provide additional context (and bulletproofing!) to the points contributors are making.

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Love this article Justin, and great insightful comments below. None of this skyrocket in home prices really makes any sense, and is hard to blame on any one variable. I think the unprecedented massive flood of free money in the early pandemic, coupled with an equally puzzling rise on stock prices, is causing massive inflation, and much of this flows into housing. Few families can afford the houses they are overbidding for in my limited circles

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I feel like a really nice supplement to this is the report on "cost-disease socialism" from the Niskanen centre last year: https://www.niskanencenter.org/wp-content/uploads/2021/09/Cost-Disease-Socialism.pdf

Or, from a different angle, the idea of "Supply-Side Progressivism".

Canada's left still feels far from taking either lesson.

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Apr 25, 2022·edited Apr 25, 2022

I vehemently disagree that building a fourplex, or a sixplex, on a single family lot is ultimately better to resolve this situation. Also blaming municipalities for holding things up. Perhaps it’s just everyone’s perception that they need to own a home, or better yet, developers having the ear of our politicians, while laughing all the way to the bank. Owning a home has never been affordable. You want to know what it’s like to live in a Utopian existence where mayors and developers are best buds and transform quiet, affordable regular neighbourhoods into slick, high rise condo buildings-where developers own city blocks of single family homes that have been rented out for decades to the same families- only for them to be tossed out to build unaffordable condo towers? We’ve got the “award winning” neighbourhood of Langford, BC, as a shining example. Locals are fed up with non stop construction and the erosion of their once livable community. It’s delusional, to ask for even more government over reach, when they can’t even take care of the basics. Why the hell would we want them to do even more?

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Interesting article, but no acknowledgement was made regarding the cost of building which has also significantly escalated house prices. Absolutely we need more housing and Jen's and Justin's ideas are good, but housing is expensive from the ground work up.

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As a 66 yr old boomer with 7 more years on my mortgage (we weren’t financially able to buy a home until 1990 and have had to re-mortgage twice since then) I would be happy to see the market fall by 40 per cent so my 35 yr old daughter and her husband could have a fighting chance of getting out of their rental. Every time the govt puts in these inflationary measures it infuriates me. When I die my kids can have my small house. In the meantime, my husband and I need somewhere to live, too. What are boomers to do? As an aside, another inflationary measure was put in this week, where the retail price threshold for rebates on EV’s was raised substantially. I expect the auto retailers inflate their base prices accordingly.

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Mr. Ling makes the classic error of jumping to conspiracy to explain a phenomenon before ruling out simple incompetence. Of course with the complex inter-relationships among federal government policies and responsibilities, even incompetence is rarely a simple matter. Sorting it out and reducing incompetence can start with a strategic overview of priorities a concept that is wholly alien to the current Government.

Housing supply is certainly one of the priorities now, no doubt, especially as it is directly related to another priority namely immigration which can be expected to result in population growth.

Another one is housing affordability which is related to house prices and interest rates.

But prices are related to supply. And supply is responsive to interest rates.

Governments like to focus on these issues one at a time. Affordability can be tackled with subsidies and incentive programs. "We'll make it easier to save for a down payment" etc. But these programs have a direct impact on prices themselves. Or we can cut the demand for housing by non-voters and impose taxes and disincentives on non-residents. Or we can reduce overall demand for housing by hardening the qualification criteria for mortgages (which btw, just makes housing more unaffordable).

And of course, as excess demand for housing combines with demand for commodities and assets generally, we need to respond by raising interest rates (a classic and sensible tool to rebalance supply and demand in the economy).

In the smorgasbord of policy that we now have, the Government can point to something it is doing to address the needs of every constituency: Higher interest rates to fight inflation. For new homebuyers: tax subsidies for them and tax penalties for non residents. etc etc.

I share my street with a local politician who recently chortled over the fact that our houses have risen greatly in value over the past year. More accurately, he could have pointed to the deterioration in the value of money.

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