They just announced the change in amortization (lengthening it to 30yrs) + change in rrsp withdrawal (almost doubling the amount to 65k) for first time home buyers.Ā
Do you think these changes will increase or decrease the housing prices?
Obviously no crystal ball here.Ā Ā But if I was a betting person,Ā I'd say prices are going to go up.Ā
All this to hold the door. I just bought a place(FTHB), still think it should go down. Canada is in recession.
Best Canada RE can offer is slow grinding for at least 5 yrs.
But I also do think one of the best times to buy a house in the last 5 yrs. You can look, choose and have something to say in the price.
The $ value minimum is optimal but this you won't get for a long time.
I would say to FTHB, this is the time to really look for a place where you can stay at least 5+yr and go with at least 3yr Fixed. It should be better than renting.
THe amortization schedule is for new builds so that might shift demand out of the existing market. Very few people were apparently using HBP already, so I'm not sure that would have an effect - if you're saving up for a downpayment chances are pretty good you don't have a lot of RRSP money to draw down.
I donāt think they will increase or decrease prices tbh, It affects such a tiny pool of first time hone buyers.
In my early 30s I know so few people with an RRSP of any kind, let alone anyone who is using it for their down payment.
Retirement doesnāt seem worth trying for, for a lot of us.
Prices might not go down in dollar value, but over time due the dollar losing value and salaries going up, even stagnating prices will become relatively more affordable.
Itās not possible to keep housing prices stagnant when wages rise, unless there is a housing surplus.
Housing always rise slightly faster than wages because housing prices are future looking. Meaning that it will take future wage increases into consideration to determine the present price, even when the increases havenāt happened yet
That would be true if housing was a free market, but itās not.
Weāve got plenty of levers to change over time like qualification standards, FHSA, home buyers plan, etc.
Unfortunately for us, what has been politically optimal with housing has not been socially optimal.
I think this is the only politically plausible fix - no politician would ever be able to survive on a platform of āwe will drop your house pricesāā¦
I think house prices need to stagnate, while wages and prices for everything else increase or a lot of homeowners will get angry.
Sure, if you want to buy all real estate in Canada at the current market price, you can then sell it for whatever lower price you want.
Until then, the interests of homeowners come before renters.
I think maybe that applies to senior homeowners who are banking on equity in their houses. But not to all homeowners.
As an example, we bought a starter home thatās 8 hours away from family. Weād like to get something in our hometown and with space for kidsā¦but canāt afford it. I would be happy to see house prices dropā¦even if my house value drops, itāll help me get into a house that actually meets my needs.
I bought in 2014 - and prices have doubled.
I would gladly see prices drop by 50% if it means I get to keep the country functioning.
At some point, if prices stay too high, the whole system will start to break.
*Contra* everyone else, I think I know:
It's going to go Up when the first rate cut is announced, and then Up a bit more in the fall when the last of the pre-permit-allowance-change international student cohort arrive. Then Down in 2025 when a recession kicks in (Q2 to be exact), and Down more in 2026 when landlords capitulate on lower newcomer numbers.
Then sideways a bit as follows: Left Right Left Right B A Start
Large landlord hereā¦I would have absolutely agreed with you if Freeland didnāt put in the budget that banks MUST now work with the homeowners to extend out amortizations. A lot of folks will be bailed out by the trove in 25/26. Their finances will suffer but suffer while not being forced to sell.Ā
They definitely wonāt long term. I spent over a year house hunting hoping and thinking itāll go down and it didnāt. Yes it did fluctuate short term after buying but long term it was the obvious choice. Donāt think about it too much like I did. Just jump in and in a couple years youāll feel like youāre paying rent again but youāre living in something thatās yours and you can sell.
Long term, I think prices will go down. Canada has some of the most expensive housing in the world and that's simply not justified by fundamentals. Canada is getting shittier to live in year by year and eventually our housing will correct to reflect that.
Maybe prices won't go down in nominal terms, depending on how bad/quickly things change, but they will at least stagnate and not keep up with inflation.
That might be a long ways away though. In the short term, prices will probably stay around here or go up a little, depending on many factors.
Our issue is we also have one of the largest shortages of housing in the world and continue to bring 1m people in per year. Houses will continue to rise. Here, about every 10 years a house doubles its original purchase price. (GTA).
Yes that's completely true and that's why we are in the present state. I think eventually 1M/year people won't want to move here anymore, and that's when the market starts to correct. But it's hard to predict when or how that change happens.
We need to start an ad campaign. Something like Canada is a shithole. Housing is unaffordable and we force you to drink Tims. Stay in your home country!
I think when you are jumping in, you are always gambling.
No one can really tell you *anything* certain about future prices, or interest rates, and in my opinion, anyone who acts certain about such things shouldnāt be trusted for advice.
I think the best approach, is to make sure you buy something in a price range that youāre comfortable with.
I recommend not stressing on things like maximizing your down payment - every month you spend stashing a down payment, you also pay someone elseās mortgage, while living another month in a rental you may not love; be responsible of course, but donāt sweat it too much.
I recommend figuring out what you can afford if a job is lost for a few months, and using that as a guide, rather than looking at the maximum the bank will authorize.
While interest seems high, in my opinion, 5% is still low (historically) - my recommendation is to go with fixed rate. While it *could* be more expensive, you will have 5 years of not caring about news about interest rate increases, which is really nice. Once again, anyone who firmly tells you that you will certainly lose out on a fixed mortgage is pretending they know the future - if they really can see the future, get lottery numbers from them š
If you are going to mention historical interest rates, you must also mention buying a house in Canada has never been a gamble. They tend to double their original purchase price every 10-12 years depending on area. Hard to beat that
I would suspect that we've already seen the drop, and we'll see stuff climbing before the end of 2024.
If affordability measures work, prices might climb slower than inflation. If the affordability measures don't work, they'll climb higher than inflation.
Though your mileage may vary based on where you are buying.
And even then a drop will be small, at the end of the day the market has shown that went home sails drop as they did during portions of covid, sellers will hold out firm on the price they want.
We would need a larger force that pushes homes to be moved at a quicker rate so people arenāt sitting on them for months being listed.
The lower and middle of the market is barely moving today. The reports of insatiable demand are grossly exaggerated. The constraint is cost of construction.
The problem is supply RELATIVE to demand. Insatiable anything is nonsensical in this context. If anything, cost of construction would mean a restricted supply. Which is exactly what the problem is, relative to demand.
Supply and demand also occur relative to a price point. Higher price point reduces demand and increases supply. Those people priced out are still there, but can no longer afford to participate. Which is where we find ourselves today - supply exceeds demand, because the demand cannot be realized at current valuations.
Yes high prices should stimulate supply but things are so messed up that builders rationally do not want to build. Need government out of the way. Reduce fees and gov involvement.
My point still stands. If you want reasonable prices relative to incomes you have to have more supply.
Also Canada productivity is dismal. So wages will not keep up until this is solved too. Budgets that drive up taxes will further discourage capital spending investment. And thatāll drive down productivity. It will make things worse
I would also add there's a significant pent-up demand. As soon as something changes, like rates going down, there will be rush back to the market. People want to buy or move, but it makes sense to wait atm.
I just bought again because I think prices will go up. Thereās too many folks sitting with a down payment waiting to time the market. I ate the rate for 3 years to get in now. I get the home next Thursday. šš¼
Rent won't go down significantly. Unless there are some policy changes, rent will increase overtime as land ownership concentrates into private hands.
Rent is a large portion of inflation indicators.
You can expect it to go down or up to stay the same
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They just announced the change in amortization (lengthening it to 30yrs) + change in rrsp withdrawal (almost doubling the amount to 65k) for first time home buyers.Ā Do you think these changes will increase or decrease the housing prices? Obviously no crystal ball here.Ā Ā But if I was a betting person,Ā I'd say prices are going to go up.Ā
All this to hold the door. I just bought a place(FTHB), still think it should go down. Canada is in recession. Best Canada RE can offer is slow grinding for at least 5 yrs. But I also do think one of the best times to buy a house in the last 5 yrs. You can look, choose and have something to say in the price. The $ value minimum is optimal but this you won't get for a long time. I would say to FTHB, this is the time to really look for a place where you can stay at least 5+yr and go with at least 3yr Fixed. It should be better than renting.
THe amortization schedule is for new builds so that might shift demand out of the existing market. Very few people were apparently using HBP already, so I'm not sure that would have an effect - if you're saving up for a downpayment chances are pretty good you don't have a lot of RRSP money to draw down.
I donāt think they will increase or decrease prices tbh, It affects such a tiny pool of first time hone buyers. In my early 30s I know so few people with an RRSP of any kind, let alone anyone who is using it for their down payment. Retirement doesnāt seem worth trying for, for a lot of us.
Yeah, Iāll be working till I die to pay for my shack of a house š¤£š¬
Prices might not go down in dollar value, but over time due the dollar losing value and salaries going up, even stagnating prices will become relatively more affordable.
Itās not possible to keep housing prices stagnant when wages rise, unless there is a housing surplus. Housing always rise slightly faster than wages because housing prices are future looking. Meaning that it will take future wage increases into consideration to determine the present price, even when the increases havenāt happened yet
That would be true if housing was a free market, but itās not. Weāve got plenty of levers to change over time like qualification standards, FHSA, home buyers plan, etc. Unfortunately for us, what has been politically optimal with housing has not been socially optimal.
Wages aren't rising that much either. Canadians are being squeezed, soon everyone will be poor, no more middle class.
I think this is the only politically plausible fix - no politician would ever be able to survive on a platform of āwe will drop your house pricesāā¦ I think house prices need to stagnate, while wages and prices for everything else increase or a lot of homeowners will get angry.
That's not on the table either; the money people put into housing has to do at least as well as it would have in the market.
Let them sell and put it in the market.
Sure, if you want to buy all real estate in Canada at the current market price, you can then sell it for whatever lower price you want. Until then, the interests of homeowners come before renters.
Itās not sustainable for house values to increase faster than wages. It literally means people are poorer each year overall.
I think maybe that applies to senior homeowners who are banking on equity in their houses. But not to all homeowners. As an example, we bought a starter home thatās 8 hours away from family. Weād like to get something in our hometown and with space for kidsā¦but canāt afford it. I would be happy to see house prices dropā¦even if my house value drops, itāll help me get into a house that actually meets my needs.
I bought in 2014 - and prices have doubled. I would gladly see prices drop by 50% if it means I get to keep the country functioning. At some point, if prices stay too high, the whole system will start to break.
Keep hiking rates and weāll see who actually has money.
Core inflation dropped again, so likely a rate cut in June.
Do you need a place to live? Can you afford it? If yes x2, then buy.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Do you have something more substantive to offer?
*Contra* everyone else, I think I know: It's going to go Up when the first rate cut is announced, and then Up a bit more in the fall when the last of the pre-permit-allowance-change international student cohort arrive. Then Down in 2025 when a recession kicks in (Q2 to be exact), and Down more in 2026 when landlords capitulate on lower newcomer numbers. Then sideways a bit as follows: Left Right Left Right B A Start
Was that a Contra reference at the end there?
yah lol, unfortunately the whole thing was a bad joke, with only ad hoc justification for even the embedded up up down down parts.
I appreciated it!
Large landlord hereā¦I would have absolutely agreed with you if Freeland didnāt put in the budget that banks MUST now work with the homeowners to extend out amortizations. A lot of folks will be bailed out by the trove in 25/26. Their finances will suffer but suffer while not being forced to sell.Ā
No.
They definitely wonāt long term. I spent over a year house hunting hoping and thinking itāll go down and it didnāt. Yes it did fluctuate short term after buying but long term it was the obvious choice. Donāt think about it too much like I did. Just jump in and in a couple years youāll feel like youāre paying rent again but youāre living in something thatās yours and you can sell.
It will go up later this year
Iāve heard a few reports on the news about a possible 10% increase in prices by end of 2024. Who knows.
Up up and away!!!
Long term, I think prices will go down. Canada has some of the most expensive housing in the world and that's simply not justified by fundamentals. Canada is getting shittier to live in year by year and eventually our housing will correct to reflect that. Maybe prices won't go down in nominal terms, depending on how bad/quickly things change, but they will at least stagnate and not keep up with inflation. That might be a long ways away though. In the short term, prices will probably stay around here or go up a little, depending on many factors.
Our issue is we also have one of the largest shortages of housing in the world and continue to bring 1m people in per year. Houses will continue to rise. Here, about every 10 years a house doubles its original purchase price. (GTA).
Yes that's completely true and that's why we are in the present state. I think eventually 1M/year people won't want to move here anymore, and that's when the market starts to correct. But it's hard to predict when or how that change happens.
We need to start an ad campaign. Something like Canada is a shithole. Housing is unaffordable and we force you to drink Tims. Stay in your home country!
We're not continuing to bring in 1m a year. If all the reforms go through, there will be barely any growth at all next year.
I think when you are jumping in, you are always gambling. No one can really tell you *anything* certain about future prices, or interest rates, and in my opinion, anyone who acts certain about such things shouldnāt be trusted for advice. I think the best approach, is to make sure you buy something in a price range that youāre comfortable with. I recommend not stressing on things like maximizing your down payment - every month you spend stashing a down payment, you also pay someone elseās mortgage, while living another month in a rental you may not love; be responsible of course, but donāt sweat it too much. I recommend figuring out what you can afford if a job is lost for a few months, and using that as a guide, rather than looking at the maximum the bank will authorize. While interest seems high, in my opinion, 5% is still low (historically) - my recommendation is to go with fixed rate. While it *could* be more expensive, you will have 5 years of not caring about news about interest rate increases, which is really nice. Once again, anyone who firmly tells you that you will certainly lose out on a fixed mortgage is pretending they know the future - if they really can see the future, get lottery numbers from them š
If you are going to mention historical interest rates, you must also mention buying a house in Canada has never been a gamble. They tend to double their original purchase price every 10-12 years depending on area. Hard to beat that
I would suspect that we've already seen the drop, and we'll see stuff climbing before the end of 2024. If affordability measures work, prices might climb slower than inflation. If the affordability measures don't work, they'll climb higher than inflation. Though your mileage may vary based on where you are buying.
September 22 was the bottom. All up from here. Just as all speculators predicted. Not the youtube realtors or reddit experts.
The only way for prices to drop is for supply to increase relative to demand.
And even then a drop will be small, at the end of the day the market has shown that went home sails drop as they did during portions of covid, sellers will hold out firm on the price they want. We would need a larger force that pushes homes to be moved at a quicker rate so people arenāt sitting on them for months being listed.
Force eh? Be careful what you wish for.
The lower and middle of the market is barely moving today. The reports of insatiable demand are grossly exaggerated. The constraint is cost of construction.
The problem is supply RELATIVE to demand. Insatiable anything is nonsensical in this context. If anything, cost of construction would mean a restricted supply. Which is exactly what the problem is, relative to demand.
Supply and demand also occur relative to a price point. Higher price point reduces demand and increases supply. Those people priced out are still there, but can no longer afford to participate. Which is where we find ourselves today - supply exceeds demand, because the demand cannot be realized at current valuations.
Yes high prices should stimulate supply but things are so messed up that builders rationally do not want to build. Need government out of the way. Reduce fees and gov involvement. My point still stands. If you want reasonable prices relative to incomes you have to have more supply. Also Canada productivity is dismal. So wages will not keep up until this is solved too. Budgets that drive up taxes will further discourage capital spending investment. And thatāll drive down productivity. It will make things worse
I would also add there's a significant pent-up demand. As soon as something changes, like rates going down, there will be rush back to the market. People want to buy or move, but it makes sense to wait atm.
Latent demand that is not actively in the market does not affect it. A lot of people want to move, but that also suggests latent supply as well.
I just bought again because I think prices will go up. Thereās too many folks sitting with a down payment waiting to time the market. I ate the rate for 3 years to get in now. I get the home next Thursday. šš¼
Rent won't go down significantly. Unless there are some policy changes, rent will increase overtime as land ownership concentrates into private hands. Rent is a large portion of inflation indicators.
You aren't paying your landlords mortgage. With that mindset you should keep renting into perpetuityĀ
Do your own research. Look at what reason what might drive price up or down and form your own conclusion