Thank goodness for stock images, eh?
When you need a photo of a hipster drinking a coffee and reading the newspaper, you can always count on Freepik and Unsplash, right?
What’s he so happy about though?
Is he reading the stock quotes in the newspaper after short-selling Shopify shares?
Oh, of course not!
Stock quotes aren’t in the newspaper anymore…..but raise your hand if you remember a time when that’s where you got your ticker quotes from.
Every week, I routinely flag a dozen or more newspaper articles, often to read over the weekend, or sometimes to follow up with on TRB.
This past week, I found a lot of articles which, dare I say, led me to the same conclusion.
What conclusion, you ask?
Well, where’s the fun in me telling you?
How about we read some excerpts from the articles, and you tell me?
Have a look…
“Mortgage Industry Urges Ottawa To Tackle Housing Affordability, Takes Aim At Homebuyer Incentive”
March 21, 2022
From the article:
A group representing Canada’s mortgage industry said Monday that the federal government has failed to address Canada’s housing affordability problem and urged policy-makers to consider a series of recommendations that would help first-time home buyers in particular.
Mortgage Professionals Canada, which represents mortgage brokers, lenders, insurers and service providers, called on Ottawa to implement the Liberal party’s campaign pledge to increase the cut-off for insurable mortgages to $1.25 million from $1 million, and to tie that level to inflation to keep up with rising prices. The move would mean more mortgages qualify for insurance and would not require a full 20 per cent down payment.
The group also wants first-time homebuyers to have access to mortgage terms of up to 30 years for insured mortgages and recommended making mortgage qualification stress tests consistent for both insured and uninsured mortgages, setting the stress test level to two percentage points above the contract rate.
“To our first point, increasing the mortgage insurance cap to $1.25 million and including it on an ongoing basis was sensible enough to be an election promise made by both the current government and the Opposition last year,” MPC chair Joe Pinheiro said during a news conference.
“As most Canadians know, valuations have only increased since the average townhouse in the very urban centres in Canada are well over a million dollars today.… For a young growing family — especially ones trying to do it themselves — to amass $200,000 or $250,000 to qualify for the space they need is a huge task.”
The organization also criticized the First-Time Home Buyers Incentive program, a shared-equity program launched in September 2019 that offers five per cent toward the down payment for a first-time buyer’s purchase of an existing resale home, or 10 per cent for a newly constructed home.
“GTA’s Housing Crisis Threatens Ontario’s Profitable Construction Sector, Industry Report Warns”
March 24, 2022
From the article:
The housing crisis in the Greater Toronto Area is at risk of threatening one of the provinces’ most profitable sectors: construction, according to a new report by an industry group calling on local governments to make it easier to plan and approve new housing projects.
In partnership with Altus Group, the Building Industry and Land Development Association (BILD) released a report Thursday that outlines the importance of the construction sector to the economic vitality of Ontario and the Greater Toronto Area (GTA). This industry — which supports over half a million workers, accounts for billions of dollars in investments, and generates significant tax revenue — is threatened by the GTA’s housing crisis which is slowing construction, driving prices up, and pushing families out of the area.
“We’re very concerned that, given the contribution that the construction industry has to the health of the economy, if we don’t fix the housing issue there’ll be consequences for our entire economy and society,” said David Wilkes, BILD President and CEO.
From the article:
The price of a newly built house or condo hit a historic high last month, in what the homebuilders’ association says is the latest sign of how a housing supply crisis could ultimately hinder the Toronto region’s competitiveness.
The benchmark price of new construction detached, semi-detached or townhouse hit $1.86 million in February, a 35 per cent year-over-year jump. Condo prices also rose 13 per cent annually to a $1.18-million benchmark, according to the Building Industry and Land Development Association (BILD).
“We have too much demand chasing too little supply,” said BILD CEO David Wilkes on Wednesday.
“Without a fundamental rebalancing of the market we’ll continue to see upward (price) pressures,” he said.
Wilkes said he is increasingly worried about how the high cost of housing could hit the region’s economic prospects.
“What does the future of our region look like where price points are resulting in people moving beyond the GTA or price points affect the ability to attract workers or price points affect the ability of an industry that is so important to our economy to continue working,” he said.
“If there is any more evidence that we need that revolution to fix this by creating more supply, I’m not sure what it is.”
“Building More Won’t Solve The Housing Problem, B.C. Municipalities Say”
Globe & Mail
March 23, 2022
From the article:
B.C. cities are diligently approving enough housing construction to keep up with population growth, so the provincial Housing Minister should stop blaming them for housing problems, says a new report from the association representing B.C. municipalities.
Attorney-General David Eby, who is also Housing Minister, has said he is considering provincial legislative options to override municipalities that refuse to approve social housing or housing near transit. That prompted the Union of BC Municipalities to respond Wednesday with a report concluding that’s not a reasonable option when looking at everything cities have done.
“The notion … that there is a crisis in the supply of housing relative to population growth is not supported by evidence,” says the report, which includes graphs showing how housing production has been at its highest level in recent years in B.C.
“Given that local governments have also approved record amounts of new homes over the past several years, it is evident that the data does not support a mandate for wholesale change to the development approval process, but instead continued streamlining.”
Mr. Eby and various housing experts pushed back against the report Wednesday, continuing the long-running B.C. debate as to whether a lack of supply or out-of-control and predatory demand by investors and speculators is at the root of the province’s problems.
Mr. Eby said the province has done a lot of work to control the demand side, introducing a speculation tax, a foreign-buyer tax and possible limits on vacation-rental activity. But it’s clear to him that building more is an important part of the solution as a massive wave of newcomers from other provinces and abroad is hitting, along with another wave of new tech workers.
“I don’t understand how this report could be so disconnected from lived reality. We are at a peak of in-migration that we haven’t seen in 30 years,” said the minister, who has been a renter himself his whole life until this month.
“Ontario To Boost Penalties On Developers Who Breach Ethics Rules”
March 24, 2022
From the article:
The Doug Ford government is poised to crack down on developers who unjustifiably cancel or jack up the price of pre-construction sales agreements, CBC News had learned.
The province has revealed its plans to boost the fines on house and condominium developers who breach Ontario’s rules for the sector, and open the door to suspending the licences of offenders for up to two years.
The move comes in the wake of reporting by CBC News about an Ontario developer that cancelled dozens of sales contracts for condo units that were already under construction, unless the buyers agreed to pay more.
The company defended its actions as legal, saying the costs of building materials had risen. But Ford reacted to that case last November by calling it unacceptable and unfair.
“Nothing burns me up more than that — some developer just trying to make extra money off the backs of hard-working people,” Ford said at the time, pledging to put an end to the practice.
The proposed changes were revealed Thursday but the government gave CBC News information in advance of the launch. The province is launching consultations immediately, with a July 1 target date for putting the new rules in force.
“Liberal-NDP Power Pact Promises To Tackle Housing Costs, Targets REIT’s, Bank Profits”
March 23, 2022
From the article:
Prime Minister Justin Trudeau’s power-sharing deal with an opposition party promises to tackle the soaring cost of housing in Canada and may target real estate investment trusts that own homes.
The agreement between Trudeau’s governing Liberals and the New Democratic Party says the government will act on the “financialization of the housing market by the end of 2023.” No details were given, but in last year’s election the Liberal platform pledged to review the tax treatment of large corporate owners of residential properties such as real estate investment trusts to “curb excessive profits.”
Such a move, if implemented, has the potential to impact publicly-listed real estate firms including Canadian Apartment Properties REIT, Minto Apartment REIT, InterRent REIT and Boardwalk REIT.
The Liberal-NDP deal also promises to move ahead with a Homebuyer’s Bill of Rights that bans blind bidding for homes, establishes a legal right to a home inspection and requires real estate agents to disclose if they’re involved on both sides of a transaction.
Other measures include a Housing Accelerator Fund to increase the housing supply and extending by an additional year a program for new homes for vulnerable groups.
Alright, any ideas?
What’s the take-away here? What’s the conclusion, what’s the theme?
Well, I’ll give you a hint: it’s not going to make you feel good in any way.
No, in fact, much of this is bad news masquerading as good news. If you tell somebody something inherently negative, but with a smile on your face, can it be construed as good news?
Here are my takeaways, and please don’t shoot the messenger here:
1) Nobody has a real plan for the housing market.
2) Everybody has their hand out.
3) Politicians are politicking.
Start from the top down, if you so choose.
We have both the mortgage industry and the construction industry complaining and holding their hands out, and don’t get me wrong, the real estate industry is no different. Every person, company, and industry affected by fiscal and monetary policy changes, or new legislation, or a changing economy, are going to speak up about how it affects them. Any changes to the real estate industry would have OREA and TRREB lobbying hard the very next day.
The mortgage industry is making their voice heard about how to “help” buyers, which in turn, helps themselves.
The construction industry is making veiled threats about all the jobs and economic output that would be affected if we slowed down construction, which of course, is in their best interest.
But then we have a report out of B.C. that tells us the complete opposite of what we think here in Ontario: that creating supply in the market place won’t cure what ails the housing market.
Then how about a few sound bytes from the provincial government about “cracking down” on condo developers, which, of course, comes right before an election? Don’t get me wrong, I support this party and they have my vote, but this seems highly opportunistic.
And last, but not least, we have the federal Liberals in power until 2025, which didn’t surprise me because I truly believe the Liberals will be in power forever and that Prime Minister Freeland shall succeed Prime Minister Trudeau, and so on, and so forth.
But this “deal” comes at a cost to Canadians, even if they don’t know it.
The cost is simply ignorance of economics and continued spending.
I think back to Justin’s line during the pandemic; something to the effect of, “The government is going to take on the debt so Canadians don’t have to.”
Oh man, that must play so well with the uninformed, right? Because how many plebes from coast-to-coast think “the government” is a building that prints money, not a representation of and for the people who collectively pool their resources, via tax dollars? The suggestion that the government is taking on the debt for Canadians, when the debt is actually on the backs of Canadians, is insulting.
I’ll try to avoid going off on that tangent, but it’s sort of hard not to when you read the articles above.
The problem here folks is that the public refuses to accept the concept of a zero-sum game.
Simply put: we can’t have it all!
We want lower real estate prices, but we don’t want owners underwater, or to default. We can’t let the CMHC go under.
We want relief for first-time buyers, but we want tax revenue to spend on just about anything and everything – especially after the NDP/Liberal agreement. So any reduction in taxes or help with premiums for first-time buyers will have to be offset by increases elsewhere.
The construction industry wants to continue building, the mortgage industry wants to keep writing mortgages, everybody wants!
Everybody wants a house. And the government is probably, eventually, going to give them all one.
But can they?
How about this: everybody gets free stuff, but HST rises to 23%?
Don’t like it?
The problem with refusing to accept the reality of a zero-sum game was on display last month when the Ontario government scrapped the vehicle license plate renewal fees.
“Doug Ford To Give Back $1 Billion To Taxpayers,” the headlines read!
But he’s not. Because he can’t.
You can’t take away $1 Billion in revenue unless you’re going to cut $1 Billion in spending.
But you can’t cut $1 Billion in spending because the public wants free stuff.
So what do you do? Well, you make that lost revenue up elsewhere!
You should have heard the callers on talk radio and their suggestions. “The government needs to find money,” one caller said. Others talked about “efficiencies” and “eliminating redundancies” like there was a $1 Billion savings somewhere at Queen’s Park.
Ford’s tax cut was simply more voter candy in an election year and nothing different from what got the Liberals re-elected federally.
But many Canadians are failing to understand that age-old prophecy that was inscribed on a rock some place when dinosaurs still roamed the earth “SHIT AIN’T FREE.”
Every one of those articles above contains some sort of whining about Toronto real estate.
Every person who speaks in every article, at some level, is lamenting current legislation, future legislation, proposed changes, high prices, low prices, new taxes, scrapped taxes, and just about anything and everything that can’t be changed without recourse and consequences.
Take from Peter to give to Paul.
Then take from Paul to give back to Peter.
Economist Frank Clayton had a great line in last week’s Globe & Mail article, “Three Ontario Initiatives Aim To Tackle Soaring Housing Costs”:
The idea sounds enticing: If a developer builds a 300-unit condo building, set aside, say, 20% of the units for reduced rent or low purchase prices. But the developer then raises prices of market ones.
So my conclusion, while seemingly negative, is anything but dishonest and insincere: nothing is going to change.
Nothing significant, mind you.
Do you want to talk about the federal government’s “Homebuyers’ Bill of Rights?” Eliminating blind bidding and implementing mandatory home inspections; that’s a great way to “help” people in the housing market, right?
The truth is, we’ve been slowly selling off the country, bit by bit, to anybody on the planet who wants in.
There’s talk about eliminating the “financialization” and “commoditization” of real estate, but that’s been around for decades.
Who do you think built this city?
Investors. Foreign buyers. Institutional money. Old money. Sharp money.
And for a long time, nobody was complaining. The government at all three levels was raking in tax revenue like there was no tomorrow, and only now, in 2022, are they attempting to “do something about it.”
Too little, too late, folks.
All they can do is posture. And while it’s so nice to listen and hope, or have faith, or try to will your way to believe it, I think we’re all being naive if we think there’s a solution for everything and everybody.
This isn’t a defeatist attitude. It’s just a mature one.
I take Toronto real estate for what it is, what it’s been, and what we all know it’s going to be. I dream, like most people, but not in vain. And I fear that’s what so many people out there are doing right now.
Well, can I end on a more positive note? I mean, just in case honesty wasn’t what you chose on the menu this morning?
We’re almost through the month of March and as happens every year, I’m expecting inventory to increase next month and then significantly thereafter. I do see prices leveling soon, just as I see buyers having far more choice in the marketplace as we move into spring.
By summer, I believe the market will be as close to balanced as we’ve seen it in some time. I think everybody, and their mother (even mine!) are going to get out of dodge this summer and that will make for a sleepy Toronto market.
I could be wrong. But as my wife tells me, “I never am.”
Oh, wait, I have that backwards. My wife says she’s never wrong. So I was wrong about that…