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Why is Real Estate So Expensive in Canada?
I am 100% uneducated on this subject, but I find it interesting. In my mind I see a country with a vast amount of land, but a relatively small population. Are there rules or factors involved that make building extremely expensive or difficult? Is it much harder or easierto obtain loans or financing? Are people in Canada just that much wealthier overall than in the US?
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I believe that there is an enormous amount of investment speculation in the Canadian markets especially the GTA market. Alot of people are taking advantage of their home line of credit to buy multiple investment condos. They are essentially utilizing the rising equity in their homes to double/triple down on the housing market. I've seen this strategy encouraged at real estate meetups. That is one of the reasons Canadians now have a higher debt to income ratio than the US had pre-bust.
3 things I've heard in sales pitches/real estate seminars for Toronto condos. Toronto is going to be the next New York City, immigration will help support the housing market and our banks are smart and didn't do NINJA(no income no job or assets) loans or sub-prime.
ARRRRGHHHHH!!!!! I hate when people compare Toronto to New York City. NYC is about 4 times more populated than Toronto and at least twice as dense. NYC Metro Area is about the population of all of Canada. You can't compare them period, not even close. So much money is produced in NYC, it's annual GDP almost matches the GDP of all of Canada.
If immigration is going to save/support the Canadian or Greater Toronto Area market than why didn't immigration save the US housing bubble. Just over 1 million people legally immigrate to the US a year and that did nothing to stop the downturn nor has it been a huge factor in the upturn.
I won't get into the whole bank thing but our banks are not as risk averse as they seem to be. I've known a few people that were able to get mortgages with sporadic job history. In general banks seem just as eager to add fuel to the housing bubble by doling out as many mortgages/hloc to as many people as they can.
Sorry just had to get this off my chest. I'm not calling for a Canadian Housing Market Armageddon but this market is definitely in need of a correction. How will people react when they see house prices fall following +15 years of annual appreciation? I'd rather be the person sitting on the sideline prepared to take advantage of the correction. As a famous Stark once said "Winter is coming."