Why worry about home ownership rates?

Some people have expressed concerns about Canadian home ownership rates hitting the highs that were last reached in the US before their market crashed, while others have said they’ll do what they can to increase home ownership rates in Canada.

So why would anyone worry about high ownership rates anyways?

ILoveCharts posted their take in the previous thread, and that comment is reproduced below:

Why do we need to worry about high home ownership rates?

1) Because when too many people own a home, it reduces the mobility of our workforce. Given the spotty/local nature of our economy, it’s important for our economy for people to be able to move within the country to follow the hot spots. When commodities are hot, people need to move to the west and our dollar is higher so manufacturing in the east suffers. When commodities are doing poorly the dollar drops and people need to move east to escape the barren mines, forests and oil fields of the west. Until we see major investment in diversification at the provincial level (likely will never happen,) this cycle will continue. With high home ownership rates, the teeter totter has tipped but people are nailed to the plank and they are stuck.

2) Because there is a practical maximum and a natural median. There will always be people who can’t practically buy (they are students, in poverty, etc.) When you go through a period of above-average buying, you expand the size of the housing industry (construction, realtors, etc.) in a way that is not sustainable in the long run. Once you hit the maximum, it only has one way to go to get back to the median. In the process, a lot of people lose their jobs. Seeing as 70% of people own homes, they start to run into problems with their mortgage. You can try to move the maximum point a little bit with new lending rules.. but you can only play that game for so long. Are we going to bring back the 40 year mortgage? Shocking to hear that we are going to allow $70k tax free out of the RRSP…

3) Because home ownership provides little to no value to society when it’s more expensive than renting. We want Canadians to be saving their money and investing in Canadian companies through Canadian stocks. We want those vast sums of money to deployed in our markets – creating and growing enterprises. Ownership of dirt doesn’t move our country forward.

The price of land is arbitrary. We have the second lowest population density in the world. It’s an incredible sign of weakness that we have allowed ourselves to get into a situation where we each pay so much for little pieces of it. We need to blame ourselves and our governments. We need to blame ourselves for feeling entitled to increases in the value of our property. Businesses with growing cashflows deserve to increase in value. Dirt does not – at least not at this rate. We need to blame the governments for being so willing to satisfy our demand for their short-term gain.

Now we’re hooped. The NDP wants to bring in massive social housing projects, the Conservatives want to use what is basically a nationalized bank (CMHC) to backstop ever-increasing mortgages for an ever increasing portion of the population and the Liberals just want to legalize weed.

I honestly can’t think of a way out of it.

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Bullwhip, Stop reading the hacks at zerohedge.



Birds of a feather flock together. That is why ethnic ghettos exist in Metro Vancouver.

Racism is a natural response. The more different a stranger you met in your evolutionary past, the more likely he would kill you.



How Vancouver housing developers first began using the ‘racist’ label The “racist” label continues to be used liberally in Metro Vancouver, often to silence debate about the city’s housing affordability crisis. While it’s unwise to dismiss the possibility of racism entirely in Metro or anywhere, it’s also dangerous to exaggerate it, particularly when the epithet is being used by certain real estate developers who find the accusation serves their self interest. One of the first recorded groups in Metro Vancouver to trot out the “racist” label to intimidate slow-growth advocates and other (largely left-wing, community-protecting) opponents was The West Side Builders Association. The developers’ group initially did so in the late 1980s and early 1990s. That’s when Metro Vancouverites were trying to respond to an influx of wealthy newcomers, many from Hong Kong, who were paying builders to tear down… Read more »


@ #38
the biggest players in the energy sector have all made suggestions in recent wks that this downturn will last for many yrs. another BoC rate cut or feeble attempt at targeted stimulus wont amount to a hill of beans. it is time to hunker down, but unfortunately i see many being blinded/frozen by headlights instead.


@ #33
maybe some fake sold stickers though… 😉


“…Canadian home ownership rates hitting the highs that were last reached in the US before their market crashed” uhh, speaking of the 2008 crash… imho, that was the warm up act. from 2009-15 we saw anything and everything attempted to keep patient alive, but world has come to realization that drugs, meds, and even life support measures cant bring a corpse back to life. folks, what we witnessed in 2008 was never fixed or dealt with in any shape or form. now the problems are exponentially worse. the fools that spent the last several yrs leveraging themselves to the hilt (when they should have been doing the opposite) are gonna take a bullet between the eyes in due course. the global debt genie has finally reared its ugly head in a big way. the bankster crooks have been playing the… Read more »


@36 West Coast Woman

“WHERE THE H HAS THE CANADA REVENUE AGENCY BEEN while all this untaxed money has been distorting Vancouver’s property market????”

An excellent question I have been asking for over 25 years, without ever receiving a satisfactory answer. RE-related tax evasion is rife, and obvious even to casual observer. We can’t hope for an answer now, as for the past 5 years, President Steve has ground the civil service into inanition – a good excuse, but just that. Embedded corruption is the obvious suspect…


A little optimistic, no?

“After a tough year in 2015, Alberta’s resale housing market is expected to rebound in 2016, according to a report by RBC Economics.

The bank’s senior economist, Robert Hogue, is forecasting sales in the province to dip by 17.8 per cent this year from 2014 to 59,000 transactions — the largest drop in the country.

But Alberta is then expected to see the biggest year-over-year hike in sales in 2016 of 7.1 per cent to 63,200 units.

Despite the drop in sales this year due to a slumping economy and continued depressed oil prices, the average sale price in Alberta is forecast to climb by 0.7 per cent to $378,500 and grow by another 2.1 per cent next year to $386,600.”



New Listings 172
Price Changes 44
Sold Listings 239


West Coast Woman

Ian Young at the SCMP has a very interesting article today citing research about taxable income and costs of housing for households in Vancouver’s bizarre housing market:


The color coded map demonstrates that there are west side areas where some very “poor” people are somehow living in very expensive housing.

In my view, based on my personal observations and confirmed by the color coded map, this is because offshore income and money made by flipping properties is not being declared by the “non-resident for tax purposes” owners.

What I’d like to know is – WHERE THE H HAS THE CANADA REVENUE AGENCY BEEN while all this untaxed money has been distorting Vancouver’s property market????


And here’s another of WSRs great insights from four years ago, before he pretended to be a realtor:

Romeo Jordan Says:
July 11th, 2011 at 12:57 pm 46

Expect a decline for the lower mainland (from April/May peak prices) of 5-7% by year end.

This will smack a lot of the local bulls upside da head. And it will just be the start of the bear party.

ps. Prices will fall this month, data continues to weaken – you heard it HERE!


Thanks, WSR! We all know you’ve got your finger on the pulse!

Westside Realtor Says:
September 29th, 2014 at 6:08 am
Horribly weak market on the west side sfh mkt, price and price expectations declining.

Can’t see how this does not spill over to other parts of town.

Red ink

With all this demand for red ink with worldwide indices crashing. ..you will see a lot less red sold stickers on realestate signs. Fact

Westside Realtor

Slowdown in SFH sales?

You bet.

Elements of fear trickling in? Maybe.

I’d be shit scared and would hit the bid.

But that’s just me.

To each his own.



@25: From the comments:

I think you’be missed here. Our policy makers have not been sitting idly by. They have fueled the fire of rising house prices, any way they can, to keep them rising. Both major parties are guilty.

Let’s list a few.
First home buyers grant (which has zero +ve impact for the buyer when 2 first home buyers are competing for the same property).
50% Capital Gains tax discount on property.
Relaxed foreign investment rules allowing overseas investors to guy Australian Residential property.
Negative Gearing rules which allow loses made on property to be written off against other sources of income.

Hey, just like Canada!


@29: “What the banks want are as many CMHC-insured mortgages as they can get their hands on.”

That’s right. A given bank is going to take the same losses on uninsured lending whether or not they do any insured lending, so they’re going make as many insured loans as they can.


@22 patriotz “The banks do not want inflated RE prices.”

What the banks want are as many CMHC-insured mortgages as they can get their hands on. An inflating RE market does provide those in abundance. By 2015, excessive abundance, as the banks well know. Is there a parable of a golden goose laying too many eggs, such that the nest is imperiled and might give way? If there isn’t, there should be!

Son of Ponzi

What does it mean when the shoe-shiner tells you to buy dividend-growing stocks?
It means you should buy.

Bull! Bull! Bull!

oil continues to tank. another BOC rate cut coming?

Shut It Down Already

What does it mean when the shoe-shiner tells you to buy dividend-growing stocks?


UK’s The Guardian on Australia’s housing bubble;

“Banks have treated our housing market like a Ponzi scheme, and it’s about to bust”


“Australia’s housing market is looking a lot like the US, Ireland and Spain before the global financial crisis. Why aren’t politicians more concerned?”

“Lending an exponentially increasing stock of credit to the public creates a distorted asset market by artificially driving up demand needlessly. In Australia’s case, the target for this debt splurge is the housing market, easily one of the most overvalued and unaffordable in the western world.”


Same article as in Maclean’s picked up by Canadian Business magazine

“Why Canada’s political leaders won’t talk about the housing bubble”




The banks do not want inflated RE prices. Their high ratio mortgages may be insured, but they know in the event of an RE bust they will take losses on loans to developers and consumers.

Also an RE bust would inevitably result in increased anti-bank sentiment, as it did in the US.

You have read some of the statements the banks have made that prices are too high. Whatever is said publicly represents a lot more apprehension privately.


@3 patriotz

Barbara Jaffe: “A third problem with the Conservative plan is that, at least for now, it all but ignores the pachyderm in the living room — foreign buyers.”

Foreign buyers are mostly first-time buyers, and there’s no dispute that first-time buyers are the engine of housing markets. Foreign first-timers often have a few more million as a down-payment, tho’. In some areas of Vancouver, virtually all first-timer buyers are foreign, but that’s another story…

“Harper, just like Christy, wants ever-increasing RE prices and will pull out all the stops to try to get them.” Big 5, Grosvenor & Guinness families all told them to do it!


@BBB: Here’s a clue: if you don’t know why you’re investing in something, you’re not investing, you’re speculating.

Speculating is even more stupid than gambling. At least when gambling you know the odds.