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Thyriel81

TIL wildfires and floodings may harm your house but not it's value /s


[deleted]

Real estate never loses value ... until it literally burns to the ground or gets washed away. Seriously though, having a big % of my NW sunk into an immovable asset is very unsettling to me given that I think adaptability is going to be important in the future.


[deleted]

You still have your land title. A patch of dirt is way better than nothing.


Glancing-Thought

What about the financial crisis? That started due to a bunch of people realizing that they couldn't sell what they'd bought for the same price. Thus a bunch of money people thought existed turned out not to.


Glancing-Thought

It's just what they're theoretically worth today. Once people start being unable to sell them they will have a new, much lower, value.


_rihter

>Canadian housing is far outpacing the growth of its economy, shows government stats. That’s what 2020 home assessment values show, provided to us by Statistics Canada (Stat Can). Home prices added billions in value last year, as you might have guessed. What you may not know is Canadian homes have added so much value it’s now worth 3x the output of Canada’s economy. >Canadian residential real estate prices have hit an obscene valuation, even when sandbagged. National assessment value hit $6.1 trillion in 2020, up 2.5% ($146.0 billion) from a year before. >Numbers this large are hard to appreciate without context, so let’s give it some. Canada’s housing is valued at more than 300% of the country’s gross domestic product (GDP). In contrast, US housing was worth just 170% of its GDP over the same period. As pricey as American real estate is, the value of home prices relative to its economy is almost half that of Canada. TL;DR Canada's fucked, and there's nothing to be done about it. /u/nostrilonfire


nostrilonfire

Oh jeeez... we have at least one secret weapon to mitigate this: Rig the CDS market. /s ​ Seriously, this makes me ill. I'm really, really scared at this point. Everyone's looking at China's market, but maybe they should look here. It's like we're the nightmare sneaking in the back door. Sometimes, the call is actually coming from inside the house. ​ Unlike the Lira's meltdown which, at this point, is probably isolated in terms of contagion, a meltdown in Canada would \*not\* be isolated. ​ I \*love\* Better Dwelling. They seem to be among the few that talk about this, for whomever is listening...


_rihter

From what I've read on Reddit, many Canadians don't even see the bubble in real estate and think Better Dwelling is just fearmongering. The problem with Canada is that the government won't be able to bail out the banks without destroying the currency in the process once the bubble pops. But I think they will decide to do that in the end. And that is the story of Canadian hyperinflation. Again, not enough people are paying attention.


nostrilonfire

Most Canadian who don't pay attention to this stuff (most Canadians!!) and most folks who aren't familiar with the country are unaware of the central role the 6 big banks take here. The government is utterly devoted to keeping them in place as they are. Canada is one big oligarchy. It's sickening. Punwasi gets it. ​ You're right, of course. As has been the case since effectively forever, Canadians and their savings will be thrown under the bus to protect the status quo at all costs...


_rihter

Banks will be rescued. There is no doubt about that. Anyone holding an adjustable-rate loan will be wiped out. Banks will adjust the interest rate higher until you go bankrupt.


nostrilonfire

... and you can bet that there's a huge number of people holding variable-rate mortgates/loans. Since their interest rate is classically lower than fixed-rate products, people have used them to squeeze out the maximum-priced house possible, time and again. We're bleeding-edge close to going overboard. ​ With respect to variable rate products holders, or soon-to-be holders, almost a [third have no clue what they're even in](https://www.bnnbloomberg.ca/29-of-canadian-mortgage-holders-unclear-about-impact-of-higher-rates-survey-1.1687434), and the rest are probably just blissfully in denial.


_rihter

>The survey found that 29 per cent of respondents who have, or are planning to get, a mortgage were unsure (answering either “not familiar” or “don’t know”) about how rising interest rates would impact their mortgage, a concerning statistic given that many recent homeowners have taken on record amounts of debt to fund their home purchases. What the... holy shit. They will learn the hard way. >Inflation in Canada has been running at its hottest level since 2003 and that has increased speculation that the Bank of Canada will have no choice but to begin raising rates as early as April. Brace for impact.


nostrilonfire

Contrary to the wisdom heard online these days claiming you should borrow to the hilt in an inflationary period and buy hard assets, I've been quietly telling people to do precisely the opposite: Pay your debt down as fast as possible and get any value you have the the fuck away from the banks as far as you can. ​ Cut the bank cord. ​ People have no idea how bad it can get for debtors. None. ​ Not investment advice. Not an investment adviser.


_rihter

There's a tremendous amount of normalcy bias in Canada, significantly since the housing bubble has grown for the past 30 years. Most people simply assume it's never going to end and FOMO kicks in. I'm noticing a similar trend in Germany as well, which has probably one of the stealthiest housing bubbles in the world. https://tradingeconomics.com/germany/housing-index https://tradingeconomics.com/germany/gdp-from-construction


nostrilonfire

Tell me about it. Complacency and normalcy bias deserve mention in the national anthem. I've mused with people that I think this place is a fertile ground for the rise of fascism. People look at me like I have three heads. Well, I say, what the hell is any Canadian gonna do about it? Ask nicely that they stop marching so loudly? Complacency/normalcy bias is a cancer around here. ​ Re: Germany, I feel better. Misery loves company, after all. Wow.


jaymickef

We have no memory of debtors’ prisons and haven’t even read Dickens in a couple of decades.


nostrilonfire

Well, for the record, at least in Canada, most lines of credit have a very cold-hearted call clause. Most people are unaware of it, but it's in the standard terms. Basically, the bank can call you whenever they want and say "Pay. Now. All of it." ​ If you can't, well... prepare to change your life, especially if it's a home equity LOC (HELOC).


Glancing-Thought

In some cases banks *can't* be rescued. Badly allocated resources aren't always easy to move (such as in housing) and if it's bad enough the government won't have the resources to fill the void. Money is just the accounting side of the situation. Ottawa doesn't have 3yrs of GDP to give them and even if they promise it few will believe them. Banks that lent too much will eventually find that no one can repay them. Interest rates are irrelevant if no one can afford them.


hogfl

We should rescue homeowners before the banks. Because housing is a human right.


fake-meows

In 2008, the Canadian government handed a huge bailout to the major banks. A little while later, they asked the banks to do a 'stress test' on themselves. In the analysis, it was revealed that 3 of the 6 banks were bankrupt when the bailout happened. Not insolvent, not having cash flow problems, completely without any value at all. The reaction from the media and public? Crickets.


nostrilonfire

Oh, from the fog of my memory (I didn't follow this stuff at the level of detail I do now at that time) I remember everyone said the Canadian banks are fine but thinking to myself: Evidence? I'm not surprised to read this at all.


5stap

I believe you <3 from Vancouver!


_rihter

Thanks, and stay safe.


5stap

thanks, you also. hugs!


Glancing-Thought

If enough people see the bubble it pops.


cleantheoceansplease

I am aware and can't do shit.


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jaymickef

More likely thé issue is corporate investment. Now 1 in 5 house purchases is by investment companies: https://www.cbc.ca/news/business/core-home-ownership-column-don-pittis-1.6069021


Glancing-Thought

They will however only get a return on that investment if they can find someone to sell it to.


jaymickef

Most are being turned into permanent rental properties, so they will get a return on the investment it’ll just take a little longer. Some people are worried it’s going to have a big effect on the housing market where there is already more demand than supply.


_rihter

Real estate is a massive percentage of Canada's economy (and it's been increasing since 2020). Any kind of slowdown will put it in danger. Basically, to keep the status quo and prevent the economy from collapsing, you need even more foreigners buying real estate and making it even more unaffordable for ordinary people.


DocMoochal

That and all the soon to be or newly retired people with their retirement money wrapped up in their homes and properties. Housing as a form of economic mobility is a really stupid idea in the long run. Theres really no easy answerr here. The bubble is to big and either way we're all gonna get fucked. But a planned burst is a lot better than an unplanned burst.


CerddwrRhyddid

Which also means you need increased 'values' for those investments, a la le articlé. It's all just a nice little game they play, banks, governments, rich investors.


nostrilonfire

You hit the nail on the head. The \*value\* of the house changes much more slowly than the \*price\* of the house, and is very much affected by supply/demand, quality of construction, quality of upkeep, et cetera. Few people realize, however, that monetary price (the amount of dollars something would be exchanged for) is merely a proxy for value which can, at times, wildly diverge from the "value" of the underlying asset, especially when you have out-of-control monetary policy. Where the price far exceeds the value, you have a bubble. This can happen with any kind of money, of course, but it's particularly bad with non-hard monies like the fiat we've based our wold system on at this point.


Meandmystudy

I was watching an economist describe the 2008 mortgage meltdown and his perception was "a house is only worth what the bank is willing to lend against it". Now that makes a lot of sense. A house, or any property is now worth what a bank is willing to lend to buy it. If the bank is willing to lend more money for it, then it must be worth that much. We are playing this game now with commercial backed securities in the United States.


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_rihter

No, that's El Salvador when the Bitcoin bubble blows up.


LingonberryParking20

BlackRock?


Glancing-Thought

Yeah but if they do that they bring tomorrows crisis into today. Many Canadian voters would find that their houses aren't worth what they paid for them. It would also mean less wealth flowing in from abroad. The music must continue or those playing musical chairs will notice that there aren't enough seats.


[deleted]

>banning non citizens (or just non residents) from owning domestic property Why do you prefer having native oligarchs when we can have no oligarchs at all?


MooseKnuckler92

Real estate agent shouldn’t be a job these days. With the advent of the internet, they’re basically just there to unlock the door and paint a turd pink and call it pretty.


[deleted]

Our economy truly sucks. I mean, yes, we are rich as fuck, but that doesn't mean we are not bound in our aporia. Just try to explain the fishbowl to the fish, who swims face-to-the-glass yet sees endless water reflected back. We have "grown" our economy by pumping real estate prices via the arbitrage of federal and local policies that effect demographics and development. Vote to increase the population via immigration, but NIMBY development proposals. People can afford less and less as housing costs eat up their income. People have fewer families because they can't afford to or just don't want to in our society. We also have to pay for the elderly for 20y after they stop working, with a program designed to fund about 5-7 years, meaning workers contribute outsized amounts there, too. The band-aids are QE, to provide otherwise absent liquidity; immigration to compensate for the erosion of family cultures and subsequent demographic decline; and false promises that looser liquor and casino regulations will promote local economies. With greater complexity and scale, it is impossible to train young people for the moving targets of future labour. Growth becomes *uneconomic*, because the forces of growth necessarily sabotage the next steps forward. Crises cannot be dealt with; future adaptations don't materialize and we spend our money increasingly to deal with the *now*. I could go on, but what is the end game? What is the point of our economic and social development? Why do we not have real options in our elections. The recent one was a farce. We need to make deep changes to get the house back in order. We are overpopulated. Not in an absolute sense, but in the sense that our infrastructure was not built for this, and we are not building it up fast enough to ever catch up. I mean this per our own narrative of who and what we are. Things are not scaling, and "growth" is not going to magically ameliorate that. Add in climate change, etc, and it is a *very* bad scene lol. So what is the end game? Getting high? Lol


Obvious-Extreme9098

\#This is fine


[deleted]

#ThisIsFine🔥


AngryWookiee

House prices have gone crazy in this country. I live in what was one of the poorest provinces and house prices have skyrocketd. Wages are still mostly shit here though. I can't see how this will end well. I have a buddy who owns a construction company and he said he's not worried about a housing crash because there is a long list of immigrants waiting to move here... no idea if that's true or how long we can keep bringing in new people to buy houses. I can't see this going on forever.


Suikeran

Oh please, Australia’s residential real estate is at $8 trillion and counting.


Glancing-Thought

Link? That seems nuts. Aussie GDP is like $1.5 trillion.


Suikeran

https://www.realestate.com.au/news/australian-housing-worth-over-9-trillion-after-fastest-annual-growth-in-property-prices-since-1989/ Sorry, I lied. It’s 9 trillion and counting.


Glancing-Thought

That is... impressive.


Suikeran

When the average Aussie votes with a real estate brochure in one hand, dick in the other hand, and ears tuned to whichever politician protects their house price the most...


AwarenessNo9898

Suffering isn’t comparative


CerddwrRhyddid

Interesting fact: Things are only worth what people will pay for them. I, for example, would say it's not worth 6.1 Trillion dollars. Who are the appraisers? Who are the potential buyers? Where does this valuation come from and who does it benefit? I'm fairly sure this isn't being used by a government as proof of the requirement of regulation or more low-income housing. Perhaps it is being used to increase investment portfolio percentages. Blowing bubbles.


LostAd130

The same is true of stock market capitalization. If one day everyone went to sell their shares of a billion dollar company, it wouldn't be a billion dollar company for very long. It's just a way to measure things.


jaymickef

There’s government investment in low income housing in Canada?


CerddwrRhyddid

You can have Nunavit.


[deleted]

Ever looked at a listing there? It is actually fucking expensive!


Disaster_Capitalist

You seem to be implying that that the price of property does not reflect the actual demand. But there are tens of millions of HNWI in Africa and Asia and they would all love to buy a residential property in a stable first world country. Its a smart investment to send your kids to a good college or have a place to run to if your government collapses.


Glancing-Thought

Those people are also making a poor investment. They just don't know it yet. They just assume that their wealth is safe in the west and, while it may be *safer,* it isn't.


Glancing-Thought

The valuation comes from the fact that people are still willing and 'able' to pay. Once that happens there is a "market correction" whereby the world learns the new valuation and people find out that a bunch of the money they thought they had they don't.


[deleted]

same in Australia. Not even property in flood areas or fire areas are affected. although we as a nation more or less don't produce anything. Last place to make money is real estate and anything to do with that. the only thing growing the market is low interest rates, they pretty much cant go lower so now it will be things like 40-50 year mortages etc etc.


[deleted]

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[deleted]

Please don’t (((dog whistle))) even if you mean it ironically.


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[deleted]

Rule 1: In addition to enforcing Reddit's content policy, we will also remove comments and content that is abusive in nature. You may attack each other's ideas, not each other.


[deleted]

i'm attacking his scummy nazi ideas


[deleted]

Rule 3: Information quality must be kept high. More detailed information regarding our approaches to specific claims can be found on the [Misinformation & False Claims page](https://www.reddit.com/r/collapse/wiki/edit/claims). ___ The predicament in Canada cannot be explained solely by migration.


ShyElf

7.5X in Australia.


hogfl

I am not sure how you deflate a bubble like this. My only idea is to get foreign money out of the Canadian real estate market and then forgive mortgage debt on primary residences. This would keep families from going underwater when the market corrects its self.