
SFU Prof: Why Toronto housing is becoming as unaffordable as Vancouver's - kareemm
http://inroadsjournal.ca/housing-price-lunacy-moves-east/
======
vkou
If anyone doubts the premise of this article, and still thinks that lack of
supply is the problem, I encourage them to visit Vancouver.

There is construction everywhere, with 40-story towers springing up like
mushrooms, all across the metro area, creating mini-downtowns. On the edges,
mountainsides are being clear-cut, and replaced with suburbs.

Almost none of the infrastructure to support it is paid for by the people who
are benefiting from the housing crisis. Most provincial funds come from taxing
people who contribute value, by doing useful work, instead of leeching off the
system.

~~~
franzen
It's not supply. It's speculation.

>From 2000 to 2010, the population of New York increased by 2.1 percent while
the US Census reported that the number of occupied housing units increased by
more than twice that amount, 5.3 percent. . . . If we could build our way out
of our affordability crisis, the ratio of housing costs to income should have
gone down during this period. However, average rents and the share of income
spent on rent both increased well above inflation over the same period. [0]

[0] [https://www.jacobinmag.com/2017/02/new-york-housing-
gentrifi...](https://www.jacobinmag.com/2017/02/new-york-housing-
gentrification-affordability-de-blasio/)

------
msie
"With limited data, those who had their eyes open often had to rely on
anecdote. But inconveniently for the real estate lobby, the inferential, and
no longer just anecdotal, case was growing stronger and stronger. The report I
wrote last year on Vancouver, for instance, which made the case that foreign
capital was playing a major role, did not rely on a single anecdote. All the
data it presented were carefully gathered, some of them by Canadian
governments. But the evidence had to be pieced together to get a clearer grasp
of the issue – including by eliminating other alleged, but ultimately
insufficient, causal contributors.

When the B.C. government finally collected data, then, it was no surprise that
the amount of “foreign citizen buying,” about 13 per cent, in Vancouver was
much more than the 3 to 5 per cent estimated by the real estate industry."

"Why did speculative buying and total sales suddenly pick up in 2014–15 after
a few years of stability? The obvious explanation is that capital flight from
China acted as a catalyst."

Josh Gordon: It's all the fault of the foreigners.

Government: But they only make up 13% of the buyers.

Josh Gordon: Ok, foreigners only make 13% of the buyers but they're a
CATALYST.

Um ok, so no one else is to blame?

~~~
Jack000
In 2014 the CAD was nearly at parity with USD, now it's 0.74

The average price of goods has increased accordingly. As far as I can tell the
actual value of a house has stayed about the same, and the purchasing power of
Canadians has gone down.

Foreigners are a convenient scapegoat, but the 15% tax in Vancouver was barely
a speed bump. The chart in this article is pretty misleading as it implies
that the tax worked and deflected the foreign buyers to Toronto, when in fact
prices has rebounded well beyond the previous peak.

~~~
kareemm
> when in fact prices has rebounded well beyond the previous peak.

Feb 2017: "The average resale price in Greater Vancouver was $878,242 in
January, down 18.9 per cent from a year earlier, when it stood at $1.038
million, according to numbers from the Canadian Real Estate Association."

Source: [http://www.huffingtonpost.ca/2017/02/15/vancouver-average-
ho...](http://www.huffingtonpost.ca/2017/02/15/vancouver-average-house-price-
january-2017_n_14775268.html)

~~~
Jack000
The problem with talking about housing prices in Vancouver is that it's a
heavily politicized issue with all sides pushing an agenda.

this article specifically compares jan 2016 to jan 2017 in order to push the
narrative the tax worked, but you could easily find a more recent article that
says the opposite: [http://www.news1130.com/2017/04/18/despite-price-drop-
housin...](http://www.news1130.com/2017/04/18/despite-price-drop-housing-
market-royal-lepage/)

which better matches my anecdotal experience in house shopping in the last
month.

~~~
kareemm
I'm not sure if you've read Gordon's work, but he actually advocates a surtax
based on whether an owner's worldwide income is filed in Canada rather than an
n% tax on foreign owners at purchase.

There are more effective ways to cool the market and he's well aware of them.
I suspect if you sat him down for coffee he'd tell you that the BC Liberals
wanted to be able to point to a measure to say they were doing something to
slow the market, while being fairly confident the market wouldn't slow down
that much at all.

------
mabbo
I bought my condo less than 2 years ago. The same unit, 11 floors lower, is
now for sale for 80% more than I paid. Same condition, just worse view from
the balcony.

Toronto maaaybe has a bubble going on.

(If I can sell for $1m more than my mortgage, I'm going to retire in my 30s
and move somewhere cheaper. So far, that looks like it could actually happen).

~~~
52-6F-62
Good luck with that. It appears hard to know when the getting is good.

I'm stuck in the rental loop. Looking outward and seeing rents have increased
by at least 200-300 dollars a month for similar sized units is disheartening.
It's hard enough to save as it is.

------
manishsharan
There are a couple of issues that this article misses : a) Why is the rent in
Toronto going through the roof ? If people were merely flipping houses, why
would they bother with renters ? In Vancouver, the rents in condos were very
low. In Toronto, the rents are high and increasing . b) The author mentions
Brampton as relatively unaffected due to south asian diaspora concentration.
However, Mississauga has similar concentration of South Asians and the housing
market has seen a similar appreciation in prices.

Is it possible that people find Toronto to be a great city and want to move
here ? I know of several families that moved out of mcmansions in Brampton
because schools in Toronto are so much better ? Ordinary citizens may be
parking their money in Toronto real estate because they may be unsure of the
future value of their stock investments.

~~~
toomuchtodo
Vancouver is taxing foreign (i.e. Chinese) money pouring into real estate
there, so demand shifted to Toronto (which doesn't have the same tax on
foreign purchasers levied yet).

[https://www.bloomberg.com/news/articles/2016-09-22/foreign-b...](https://www.bloomberg.com/news/articles/2016-09-22/foreign-
buying-plummets-in-vancouver-after-new-property-tax)

------
bryanlarsen
The author successfully demolishes a strawman. He's right, the problem was not
caused by supply side limitations, but a demand side surged. But the people
he's demonizing aren't arguing that. They're saying that the problem can be
_solved_ supply side. Build enough housing and prices will stabilize. Easier
said than done, but that's the only true long term solution.

------
mnm1
Vancouver, San Francisco, London, New York, Toronto, Seattle, etc. all have
the same issue with foreign investments in real estate. Maybe they should
consider not selling residential real estate to people who are not permanent
residents and won't reside in it in regions where this is a problem.

------
justforFranz
Let's face facts, housing is a plaything for the ultra-rich.

