Canadians 'drowning in debt': 47% will borrow to cover costs, survey says

[peter12]

Originally Posted by burn_this_city

Central bankers know they can't raise rates without unwinding the inflated asset values. It would be a catastrophe for markets like Toronto and Vancouver. Many people have the majority of their net worth tied up in their homes.

Many Boomers.

[blankall]

Originally Posted by peter12

Good post, but I personally don't think we will ever see mortgage rates start to go back up. Everyone has too much invested in the housing market to see it cooled to any degree. Even marginal changes like the BC Spec/Foreign Buyer Tax cooled the market to such a degree that it halved the province's annual economic growth.

So the young family should just throw caution to the wind and take on a half million dollar debt that they can't possibly afford to maintain unless the interest rates stay the way they are? And they won't go back to historical norms....ever? This basically strips the BoC of their power to regulate the economy.

The fact that our economy is dependent on out of control housing prices, foreign investment, free borrowing, etc... is ridiculous. What a mess.

The whole system also horribly favors high income earners and children of the rich. Perhaps the median family in Calgary can afford the median house, but the wag gap is growing substantially. What about the social worker earning $20/hr? What do they afford?

[peter12]

Originally Posted by blankall

So the young family should just throw caution to the wind and take on a half million dollar debt that they can't possibly afford to maintain unless the interest rates stay the way they are? And they won't go back to historical norms....ever? This basically strips the BoC of their power to regulate the economy.

The fact that our economy is dependent on out of control housing prices, foreign investment, free borrowing, etc... is ridiculous. What a mess.

The whole system also horribly favors high income earners and children of the rich. Perhaps the median family in Calgary can afford the median house, but the wag gap is growing substantially. What about the social worker earning $20/hr? What do they afford?

Heck, no. We are in an extremely complex and dangerous mess caused by greedy banks, careless regulators, gutless politicians, and selfish Boomer homeowners. For those reasons, I am arguing that fundamental change will only come with great political will and probably after some type of catastrophe in the housing market.

[TheIronMaiden]

@DoubleF, you make some very valid points, especially about Albertans and their expectations for homes. I don't know what it is about this province, but people are in love with the idea of living in the suburbs. The expansion of urban sprawl to accommodate the appetite for 4 bedroom houses with attached garages is symptomatic of the conclusion that people need to live in big houses to be happy. The Alberta dream is the suburban dream, and it is unsustainable.

[burn_this_city]

Originally Posted by blankall

So the young family should just throw caution to the wind and take on a half million dollar debt that they can't possibly afford to maintain unless the interest rates stay the way they are? And they won't go back to historical norms....ever? This basically strips the BoC of their power to regulate the economy.

The fact that our economy is dependent on out of control housing prices, foreign investment, free borrowing, etc... is ridiculous. What a mess.

The whole system also horribly favors high income earners and children of the rich. Perhaps the median family in Calgary can afford the median house, but the wag gap is growing substantially. What about the social worker earning $20/hr? What do they afford?

This is where we are at. The BoC really can't raise rates beyond 3-5% without causing a huge drag on consumer spending. Best they can hope for is flat home prices for a decade so wages and real incomes catch up. Anyone in the bottom 40% is going to be hard pressed to afford a home in a major metro area country wide.

[nik-]

Are we pretending now that Gen-X wasn't a major component of the explosion of housing prices and the last housing market implosion?

I mean lets be realistic here. Look at the demographics. Boomers have caused problems, but stop being lazy with this argument.

[peter12]

Originally Posted by burn_this_city

This is where we are at. The BoC really can't raise rates beyond 3-5% without causing a huge drag on consumer spending. Best they can hope for is flat home prices for a decade so wages and real incomes catch up. Anyone in the bottom 40% is going to be hard pressed to afford a home in a major metro area country wide.

The solution is pretty simple. We can build our way out this crisis and basically have the private sector do most of the work. All municipalities have to do is lift density restrictions in the inner core, ban public hearings, and look at sustainable transportation.

Japan did it all within about 20 years.

https://www.theguardian.com/cities/2...ing-revolution

https://www.ft.com/content/023562e2-...d-2fc0c26b3c60

[peter12]

Originally Posted by nik-

Are we pretending now that Gen-X wasn't a major component of the explosion of housing prices and the last housing market implosion?

I mean lets be realistic here. Look at the demographics. Boomers have caused problems, but stop being lazy with this argument.

Maybe my perception is coloured by living in Vancouver, but what we have here is a Boomer generation who bought cheap in the 1970s and 1980s, have seen their home values inflate wildly out of proportion to anything that could have been predicted, and then using political mechanisms to prevent any economic reform that may impact their property values.

[burn_this_city]

Originally Posted by peter12

The solution is pretty simple. We can build our way out this crisis and basically have the private sector do most of the work. All municipalities have to do is lift density restrictions in the inner core, ban public hearings, and look at sustainable transportation.

Japan did it all within about 20 years.

https://www.theguardian.com/cities/2...ing-revolution

https://www.ft.com/content/023562e2-...d-2fc0c26b3c60

This is NIMBY country friend. No way you'll find politicians with the guts to fight against elderly boomers clinging to their low density neighborhoods.

[nik-]

Originally Posted by peter12

Maybe my perception is coloured by living in Vancouver, but what we have here is a Boomer generation who bought cheap in the 1970s and 1980s, have seen their home values inflate wildly out of proportion to anything that could have been predicted, and then using political mechanisms to prevent any economic reform that may impact their property values.

There's no maybe.

[peter12]

Originally Posted by burn_this_city

This is NIMBY country friend. No way you'll find politicians with the guts to fight against elderly boomers clinging to their low density neighborhoods.

That's why the provinces have to use their constitutional authority and set land use plans within their jurisdictions. The cities don't have a leg to stand on.

[peter12]

Originally Posted by nik-

There's no maybe.

You should realize that there are more cities than Calgary in this country, and that rising house prices are not a uniquely Canadian phenomenon.

[CroFlames]

Originally Posted by peter12

The solution is pretty simple. We can build our way out this crisis and basically have the private sector do most of the work. All municipalities have to do is lift density restrictions in the inner core, ban public hearings, and look at sustainable transportation.

Japan did it all within about 20 years.

https://www.theguardian.com/cities/2...ing-revolution

https://www.ft.com/content/023562e2-...d-2fc0c26b3c60

Japan also had the Meiji Restoration. That culture is the gold standard for commitment and follow through on a decision.

Canadians are not willing to sacrifice one iota of personal comfort for the greater good.

[nik-]

Originally Posted by peter12

You should realize that there are more cities than Calgary in this country, and that rising house prices are not a uniquely Canadian phenomenon.

There's rising house prices and then there's using Vancouver as your central model for comparison.

It's broken.

I'm not even saying that housing prices are fine, just that it's dumb to be "HURR, BOOMER!" because it's such a simple minded meme at this point. Do you honestly it's Boomers getting into the market now and maxing out their mortgages, buying way more than what they need because the bank will approve them and subsequently inflating the market? There's a lot more at play here than some communities not wanting high density construction. Which is also not just a boomer thing.

[peter12]

Originally Posted by CroFlames

Japan also had the Meiji Restoration. That culture is the gold standard for commitment and follow through on a decision.

Canadians are not willing to sacrifice one iota of personal comfort for the greater good.

It's funny but in the time that I have spent in Asia, and especially Japan, I have found their way of living far more comfortable than anything you could find in Canada.

[peter12]

Originally Posted by nik-

There's rising house prices and then there's using Vancouver as your central model for comparison.

It's broken.

London, Washington DC, San Francisco, Paris, Hong Kong? I agree that all are broken, but they are just extreme examples of the same structural issues faced in Calgary.

[nik-]

Originally Posted by peter12

London, Washington DC, San Francisco, Paris, Hong Kong? I agree that all are broken, but they are just extreme examples of the same structural issues faced in Calgary.

The elite cities of the world. You're really not doing any better with that as your argument. Sorry.

Two examples of highly constrained land, two examples of known money hiding locations (along with Vancouver), one the center of power of the western world.

Maybe aim a little lower.

[peter12]

Originally Posted by nik-

The elite cities of the world. You're really not doing any better with that as your argument. Sorry.

Demand issues and poor supply response. I'm kind of baffled you don't see the basic logic here.

What you are saying with Calgary is that there is a lot of space and not a ton of demand for existing housing stock, right?

That follows the logic of my argument. So Calgary isn't a big issue because you can always build farther out?

[nik-]

Originally Posted by peter12

Demand issues and poor supply response. I'm kind of baffled you don't see the basic logic here.

What you are saying with Calgary is that there is a lot of space and not a ton of demand for existing housing stock, right?

That follows the logic of my argument. So Calgary isn't a big issue because you can always build farther out?

I'm suggesting you're trying to use extreme examples as a brush to apply to everywhere and it's ridiculous.

[peter12]

Originally Posted by nik-

There's rising house prices and then there's using Vancouver as your central model for comparison.

It's broken.

I'm not even saying that housing prices are fine, just that it's dumb to be "HURR, BOOMER!" because it's such a simple minded meme at this point. Do you honestly it's Boomers getting into the market now and maxing out their mortgages, buying way more than what they need because the bank will approve them and subsequently inflating the market? There's a lot more at play here than some communities not wanting high density construction. Which is also not just a boomer thing.

You're purposely missing the point of the argument. Anyway, excited to hear what you think is the real problem.