Canada's so called "wartime" effort to build housing is aiming to build housing that is worse than what was built 70-80 years ago. Should we really be proud to be a country that needs a major program to build rental apartments, multi-plexes, and sheds in the new landed gentry's backyard? We need a little more ambition, even if it means boomers don't get to use their homes as a piggy bank.
It was a little disappointing that the single biggest driver of rising prices was not mentioned: inflated land costs caused by preventing cities from growing out as their populations grow. In some regions (for example Waterloo region) a lot now costs more than the house, and it's not due to physical land scarcity. It's less a problem of whether we can build enough housing than whether we can build enough housing while not giving up constraints that make it deliberately scarce and expensive. Builders already have many of the economies of scale that were kind of a novel invention when we were getting tracts of strawberry box houses, they just don't have the permission.
Even in literal wartime, we recognized decent homes matter for family life are are not solely boxes to warehouse workers. Post-war, there was a heaven and earth effort to build housing that (while modest) was an improvement in standard of living compared to what most had grown up with. Now, we seem to have a "wartime" effort towards managed decline, and are trying to squeak by with the bare minimum to warehouse people and to prevent riots from those locked out. Hard to muster up energy for that.
Great interview with Mike Moffatt but I am now very confused. I hear all the time about the housing crisis in Canada, which I take to mean a housing shortage. We need to build more houses! I can understand that.
But in this interview, Mike talked about the decline in demand for houses. Housing starts are down (and I know what that means now) and housing sales are down.
How can there be a shortage of housing (i.e. a rising demand) and decline in supply (i.e. a falling demand).
Demand in the way economists use it is more like "how many houses are people willing to buy at X price" rather than demand in the more usual sense of the number of people who need homes. The first is majorly affected by credit availability, even if there are people in unsuitable housing or doubled up. If prices fall to the point enough of those people can afford it (or if what they can pay increases), they will start to shoot up again if supply is limited.
What he's getting at is that ordinarily high resale prices (and despite the drop they are still high) drive new construction, which eventually lowers the prices of resale homes as people on the margin opt for the new stuff. The problem is that if the cost to build is too much higher than resale prices, despite those resale prices being unaffordable to people, nothing gets built. (This might be normal if the people left renting just don't have good enough incomes compared to hard building costs, but the argument here seems to be that there are barriers making new supply *unnecessarily* expensive.) So the demographic aspect of "supply shortages" doesn't really improve, and prices might spike again if credit availability or sentiment change demand (in the willingness to buy at X price sense).
Good question! And we have a massive shortage of skilled trades people who construct houses, electrical, plumbing and HVAC. Have to get more people in the trades.
Great point, Sean. There was a huge push a while about for kids to "Learn how to code." There were summer camps that taught coding. By the time those kids are adults, AI will be doing all the programming and immigrants will be doing all the trades.
Predictions are hard, especially about the future but at the time I didn't think the focus on learning how to code made sense.
yah, please don't sell your house(s) in Toronto and come buy up the stock out west. That might help an individual maximize their personal equity, but it won't help those of us who live here. In my tourist town this is currently a big problem. There's nowhere for the middle class to live.
On the housing side given that political leaders are elected and financed by people with a vested interest in maintaining the value of their housing stock high by restricting supply, don’t expect any policies leading to building supply surges any time soon. And as the current boomer demographic surge dies off they will be replaced by their heirs. So the gap between the housed and unhoused will continue. A perfect recipe for social unrest. Hence the need for an expanded military. Supported by most Canadians except Quebec as usual.
In Canada the Quebec French have had whatever belligerence and courage and personal initiative they had in the 1700s ground down by centuries of Anglo and Catholic Church domination. So as long as that segment of the population continues to have political influence far exceeding their population relative to the rest of Canada, do not expect the current support for the military to continue. Unless of course a protracted armed conflict with First Nations arises. Oka II anyone?
Canada's so called "wartime" effort to build housing is aiming to build housing that is worse than what was built 70-80 years ago. Should we really be proud to be a country that needs a major program to build rental apartments, multi-plexes, and sheds in the new landed gentry's backyard? We need a little more ambition, even if it means boomers don't get to use their homes as a piggy bank.
It was a little disappointing that the single biggest driver of rising prices was not mentioned: inflated land costs caused by preventing cities from growing out as their populations grow. In some regions (for example Waterloo region) a lot now costs more than the house, and it's not due to physical land scarcity. It's less a problem of whether we can build enough housing than whether we can build enough housing while not giving up constraints that make it deliberately scarce and expensive. Builders already have many of the economies of scale that were kind of a novel invention when we were getting tracts of strawberry box houses, they just don't have the permission.
Even in literal wartime, we recognized decent homes matter for family life are are not solely boxes to warehouse workers. Post-war, there was a heaven and earth effort to build housing that (while modest) was an improvement in standard of living compared to what most had grown up with. Now, we seem to have a "wartime" effort towards managed decline, and are trying to squeak by with the bare minimum to warehouse people and to prevent riots from those locked out. Hard to muster up energy for that.
Great interview with Mike Moffatt but I am now very confused. I hear all the time about the housing crisis in Canada, which I take to mean a housing shortage. We need to build more houses! I can understand that.
But in this interview, Mike talked about the decline in demand for houses. Housing starts are down (and I know what that means now) and housing sales are down.
How can there be a shortage of housing (i.e. a rising demand) and decline in supply (i.e. a falling demand).
Or am I just missing something obvious?
Demand in the way economists use it is more like "how many houses are people willing to buy at X price" rather than demand in the more usual sense of the number of people who need homes. The first is majorly affected by credit availability, even if there are people in unsuitable housing or doubled up. If prices fall to the point enough of those people can afford it (or if what they can pay increases), they will start to shoot up again if supply is limited.
What he's getting at is that ordinarily high resale prices (and despite the drop they are still high) drive new construction, which eventually lowers the prices of resale homes as people on the margin opt for the new stuff. The problem is that if the cost to build is too much higher than resale prices, despite those resale prices being unaffordable to people, nothing gets built. (This might be normal if the people left renting just don't have good enough incomes compared to hard building costs, but the argument here seems to be that there are barriers making new supply *unnecessarily* expensive.) So the demographic aspect of "supply shortages" doesn't really improve, and prices might spike again if credit availability or sentiment change demand (in the willingness to buy at X price sense).
Good question! And we have a massive shortage of skilled trades people who construct houses, electrical, plumbing and HVAC. Have to get more people in the trades.
Great point, Sean. There was a huge push a while about for kids to "Learn how to code." There were summer camps that taught coding. By the time those kids are adults, AI will be doing all the programming and immigrants will be doing all the trades.
Predictions are hard, especially about the future but at the time I didn't think the focus on learning how to code made sense.
Plot twist: "learn how to code" was actually code for "make sure the utilities are up to code".
Or maybe it was my bad hearing and people were saying "learn the [building] code."
Apprentice four years, pass your exam and red seal. No student debt and you're making more than $40/hour.
As both my nephew and his brother-in-law have done. They are electricians not coders. Their jobs will not be outsourced to AI or China.
Could be a lot of demand from people who just can't afford these insane prices. If they can't afford it and actually make a bid they won't be counted.
yah, please don't sell your house(s) in Toronto and come buy up the stock out west. That might help an individual maximize their personal equity, but it won't help those of us who live here. In my tourist town this is currently a big problem. There's nowhere for the middle class to live.
On the housing side given that political leaders are elected and financed by people with a vested interest in maintaining the value of their housing stock high by restricting supply, don’t expect any policies leading to building supply surges any time soon. And as the current boomer demographic surge dies off they will be replaced by their heirs. So the gap between the housed and unhoused will continue. A perfect recipe for social unrest. Hence the need for an expanded military. Supported by most Canadians except Quebec as usual.
In Canada the Quebec French have had whatever belligerence and courage and personal initiative they had in the 1700s ground down by centuries of Anglo and Catholic Church domination. So as long as that segment of the population continues to have political influence far exceeding their population relative to the rest of Canada, do not expect the current support for the military to continue. Unless of course a protracted armed conflict with First Nations arises. Oka II anyone?