Quote:
Originally Posted by blankall
If you look at the graphs, prices have already been stagnant for 5 years now, with the 2022 adjustment erasing the big run up that began in 2019. Based on previous patterns, we'd be looking at another 5-9 years or so of stagnancy and then another run up.
The X factor here is housing supply. During those long periods of stagnancy, there was excess housing. Now there's a major shortage.
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I don't think there's a lot of evidence that there was any significant level of excess housing in those periods. Housing starts plummeted during those times and vacancy rates were totally normal (low, if anything). The average vacancy rate in Canadian Census Metropolitan Areas during the low points of Real Property prices:
1982-86: 2.0%
1995-2001: 2.8%
Vs. the last 10 years: 2.8%
If there was a ton of excess housing, you'd expect vacancy rates to be higher than the 50-year average of 2.7%, but they weren't. Which makes sense, because property development is largely a feedback loop. Once the economic conditions don't support higher housing prices and speculation starts to subside, housing construction slows to compensate. And we're seeing this now, with housing starts dropping significantly in the last 6 months or so. If the people who invest in construction believed that there was a structural shortage of housing that was going to keep driving prices upwards, why would they slow their investment so much?