Garth Turner - Real Estate in Canada

[Gamecock-YT]

3 hours ago, longlake95 said:

I think it’s more like 25% of home owners are mortgage free, and the other 75% have mortgages. 

 

This is a bit dated but when I was going down the rabbit hole yesterday was as relevant as I could get:

 

 

 

Edited April 18, 2023 by Gamecock-YT

[longlake95]

Okay if you include the renters….I get the jist. 

[Peregrine]

The GTA probably has a population that's around 8 million now, on par with New York City. I remember 20 years ago when they had less than 5 million. I think it's surely the fastest growing developed city in the world. Combine this with housing NIMBYism and a public transport system that hasn't budged and it's really unsurprising why housing prices are what they are.

 

The Tier 1 cities in China have the same problem with housing prices and they don't have the NIMBY problem because the state owns all the underlying land.

[SharperDingaan]

17 hours ago, Jaygo said:

can you elaborate please. Does this playing out negatively affect some reits?

 

The price of a REIT share is the PV of the net cashflow, discounted at market rate; divided by the number of shares in the REIT. The higher the vacancy rate the lower the net cashflow (facilities still have to run even if floors are empty), and the less ancillary revenue from the office tower food court and rental space. WFH drastically reduces both space requirements and foot traffic; the longer it continues, the more the need to maintain efficiencies by consolidating dispersed clients in fewer buildings (via incentive discounts) - and repurposing those now empty buildings.

 

Reduce the vacancy rate (via condo conversion), you also raise foot traffic, and the free cash flow going to the REIT. Do the WE thing (long base let, multiple short re-lets) as condos for the masses, and you dramatically increase free cash flow. And as lease costs also fall significantly, as soon as land purchase and demolishment/rebuild costs are avoided; high vacancy rates going forward are unlikely to reoccur.      

 

If those long lets are with crown agencies, the future cashflow is easily securitized, and proceeds can be used to pay off debt. REIT financial ratios improve, and they trade at higher multiples. 

 

SD

Edited April 18, 2023 by SharperDingaan

[mcliu]

9 hours ago, Peregrine said:

The GTA probably has a population that's around 8 million now, on par with New York City. I remember 20 years ago when they had less than 5 million. I think it's surely the fastest growing developed city in the world. Combine this with housing NIMBYism and a public transport system that hasn't budged and it's really unsurprising why housing prices are what they are.

 

The Tier 1 cities in China have the same problem with housing prices and they don't have the NIMBY problem because the state owns all the underlying land.

Population 20 years ago ~5m today ~7m. ~1.5% CAGR

 

Hard to compare NYC and GTA cause GTA is made of several cities. The size of GTA is probably around 10x of NYC.

 

[Peregrine]

15 minutes ago, mcliu said:

Population 20 years ago ~5m today ~7m. ~1.5% CAGR

 

Hard to compare NYC and GTA cause GTA is made of several cities. The size of GTA is probably around 10x of NYC.

 

 

That number's from 2019. The 2021 census had the GTA at 7.3 million. With over 1 million new immigrants in Canada last year alone I have to imagine that the 2023 census is close to 8 million or above that. Not to mention that with urban sprawl what qualifies as GTA should be broader encompassing than the official definition.

[maplevalue]

https://www.ctvnews.ca/politics/canadian-government-won-t-rule-out-changing-immigration-targets-to-address-housing-challenges-fraser-says-1.6555446

 

Quote

“When we look to the future of immigration levels planning, we want to maintain ambition and immigration, but we want to better align our immigration policies with the absorptive capacity of communities that includes housing, that includes health care, that includes infrastructure," Sean Fraser said in an interview on CTV’s Question Period with Vassy Kapelos on Sunday.

 

...

 

“If we were going to shift the way that we operate, to set a target or to align the numbers with the housing capacity, it's a monumental change in the way that Canada does immigration,” Fraser said.

“That doesn't mean we shouldn't do it. But it does mean if we're seeking to make a permanent change to the way that Canada's immigration laws operate, we have to do it right.”

[whatstheofficerproblem]

 

This could be fake, but since it's making rounds on social media here it is. Big if true. Very bad symptoms, you won't be missed. I wonder how this will play out on the broader economy down the line. Also would love to see the supply chain implications, franchising growth & real estate movements.

 

Edited July 7, 2024 by whatstheofficerproblem

[Viking]

The housing market in Canada bottomed out in 2000 (from a price perspective). For the next 22 years it went higher - much higher. It reached its blow off top in Feb/March of 2022. For the past 3.5 years prices have been coming down. As much as 35% (in real terms) in parts of Toronto (suburbs) and about 20% in Vancouver. Much of Canada has more resilient (down a little?). 
 

Of course, there is no ‘housing market’ in Canada. Rather, there are many regions. And many different segments (single family, duplex, townhouse and condo/apartment). Each region/segment has its own thing going on. 
 

In very general terms, it appears Canada is getting its much needed housing correction. In some segments, like condo’s in Toronto, we might see a crash of sorts. A slowing economy and a steady increase in the number of listings is fighting with lower mortgage rates. A slowing economy/rising inventory levels appears to be winning.

 

The following video is a great summary of where Canada’s housing market is at. With some interesting comments on where it might be going.
 

Personally, I rent today. And I am a very happy renter (have been for the past 4.5 years). But if prices keep coming down where I live that might change. So I am interested to see where the real estate market goes from here. 
 

 

Edited October 7, 2025 by Viking

[73 Reds]

8 hours ago, Viking said:

The housing market in Canada bottomed out in 2000 (from a price perspective). For the next 22 years it went higher - much higher. It reached its blow off top in Feb/March of 2022. For the past 3.5 years prices have been coming down. As much as 35% (in real terms) in parts of Toronto (suburbs) and about 20% in Vancouver. Much of Canada has more resilient (down a little?). 
 

Of course, there is no ‘housing market’ in Canada. Rather, there are many regions. And many different segments (single family, duplex, townhouse and condo/apartment). Each region/segment has its own thing going on. 
 

In very general terms, it appears Canada is getting its much needed housing correction. In some segments, like condo’s in Toronto, we might see a crash of sorts. A slowing economy and a steady increase in the number of listings is fighting with lower mortgage rates. A slowing economy/rising inventory levels appears to be winning.

 

The following video is a great summary of where Canada’s housing market is at. With some interesting comments on where it might be going.
 

Personally, I rent today. And I am a very happy renter (have been for the past 4.5 years). But if prices keep coming down where I live that might change. So I am interested to see where the real estate market goes from here. 
 

 

<<Of course there is no housing market in Canada>>. So true, not only in Canada but also in the US.  The strength of any local housing market is a function of the strength, desirability, and employment opportunities available in the local community.  Home prices are also self-correcting; a direct function of supply and demand.  In some parts of the Country, mortgage rates are relatively insignificant as many people pay cash and don't need or want financing.  And just like the stock market, even when overall prices get expensive, there are always bargains and special situations out there.  Investors are finding plenty of good deals; the hard money business has never been better.   

[Junior R]

9 hours ago, Viking said:

The housing market in Canada bottomed out in 2000 (from a price perspective). For the next 22 years it went higher - much higher. It reached its blow off top in Feb/March of 2022. For the past 3.5 years prices have been coming down. As much as 35% (in real terms) in parts of Toronto (suburbs) and about 20% in Vancouver. Much of Canada has more resilient (down a little?). 
 

Of course, there is no ‘housing market’ in Canada. Rather, there are many regions. And many different segments (single family, duplex, townhouse and condo/apartment). Each region/segment has its own thing going on. 
 

In very general terms, it appears Canada is getting its much needed housing correction. In some segments, like condo’s in Toronto, we might see a crash of sorts. A slowing economy and a steady increase in the number of listings is fighting with lower mortgage rates. A slowing economy/rising inventory levels appears to be winning.

 

The following video is a great summary of where Canada’s housing market is at. With some interesting comments on where it might be going.
 

Personally, I rent today. And I am a very happy renter (have been for the past 4.5 years). But if prices keep coming down where I live that might change. So I am interested to see where the real estate market goes from here. 
 

 

funny thing in Vancouver and Toronto those who have house fully paid off are better off selling and buying investments with a yield 2% and that it self would cover rent + some thing else after taxes...

[Viking]

3 hours ago, Junior R said:

funny thing in Vancouver and Toronto those who have house fully paid off are better off selling and buying investments with a yield 2% and that it self would cover rent + some thing else after taxes...

I agree. Looking at it strictly from an investment perspective, a person in Vancouver or Toronto is likely better off renting (than owning).
 

Residential real estate strictly from an investment perspective has been messed up in Vancouver/Toronto for at least a decade. It has been cash flow negative. It was all about capital appreciation. Which technically makes it a speculation and not an investment. Regardless, fortunes were made in the boom years (2010 to 2022).

 

Today we have falling house/condo prices. To make matters worse we also have falling rents. And rising costs: property taxes, condo fees and insurance. Mortgage rates have also normalized at a higher level (compared to rates available pre-2022). When you are already cash flow negative, lower revenue and rising expenses = even more cash flow negative. 
 

And markets like Vancouver have rent controls - with the maximum allowable rent increase tied to inflation. The maximum allowable increase in 2026 is 2.3%. 
 

Canada has also reversed (for now) policies on immigration, foreign workers and international students. I think it just saw its population decline (for the first time ever?).  No population growth is not good for landlords - vacancy rates are rising.
 

Many ‘investors’ are bleeding cash. And watching the value of their property drop - with no sign of a turnaround. Not a great combination. As a result, many investors are selling their investment properties. That is a big reason listings (inventory) is so high today. 
 

Yes, this will all reverse. And probably quicker than most think today.

Edited October 7, 2025 by Viking

[73 Reds]

1 hour ago, Viking said:

I agree. Looking at it strictly from an investment perspective, a person in Vancouver or Toronto is likely better off renting (than owning).
 

Residential real estate strictly from an investment perspective has been messed up in Vancouver/Toronto for at least a decade. It has been cash flow negative. It was all about capital appreciation. Which technically makes it a speculation and not an investment. Regardless, fortunes were made in the boom years (2010 to 2022).

 

Today we have falling house/condo prices. To make matters worse we also have falling rents. And rising costs: property taxes, condo fees and insurance. Mortgage rates have also normalized at a higher level (compared to rates available pre-2022). When you are already cash flow negative, lower revenue and rising expenses = even more cash flow negative. 
 

And markets like Vancouver have rent controls - with the maximum allowable rent increase tied to inflation. The maximum allowable increase in 2026 is 2.3%. 
 

Canada has also reversed (for now) policies on immigration, foreign workers and international students. I think it just saw its population decline (for the first time ever?).  No population growth is not good for landlords - vacancy rates are rising.
 

Many ‘investors’ are bleeding cash. And watching the value of their property drop - with no sign of a turnaround. Not a great combination. As a result, many investors are selling their investment properties. That is a big reason listings (inventory) is so high today. 
 

Yes, this will all reverse. And probably quicker than most think today.

@Viking, I'm not familiar with Vancouver RE but who would choose to own rental properties subject to rent control (unless rents are also controlled on the way down)?  Just from a rudimentary standpoint, you know that when cash flows don't justify a RE investment its only a matter of time before you have issues.

[Junior R]

54 minutes ago, 73 Reds said:

@Viking, I'm not familiar with Vancouver RE but who would choose to own rental properties subject to rent control (unless rents are also controlled on the way down)?  Just from a rudimentary standpoint, you know that when cash flows don't justify a RE investment its only a matter of time before you have issues.

In Canada houses prices went up from 2010 to 2022 so people where just in it for appreciation ...mom and pop investors leveraged to the max to buy pre-con or multiple properties and now are facing issues...what you are saying makes sense but many thought its going to moon...Now you are seeing foreclousres pick up

[SharperDingaan]

The reality is that a lot of the 600-800 ft 'investor' condo's were bought with family help. Were little Johnnie/Suzy to sell they would be wiped out, along with their families ability to help them; and will very likely never be able to return to the market at some future date. 

 

So Johnnie/Suzy stay put, and the whole family ponies up the monthly cash flow shortfall every month. They continue to have a place to live, work second jobs, and over time family inheritances/gifts help pay down the mortgage. It takes time, but they eventually recover, and there is no sale.

 

No different to the value investor who makes a material investment in X, and refuses to sell when it drops 40% the next day and stays there forever; preferring to 'double down' and 'wait it out', versus take the loss and move on. However, unlike a stock, this is an investment that you can actually live in.  

 

Of course, GTA condo prices are going to fall quite a bit, but sadly not as much as might have been hoped; the 35% drop from peak versus the 50% drop, and only in condo towers where sales are infrequent.

 

SD

Edited October 7, 2025 by SharperDingaan

[cwericb]

Wow, can't believe this thread is still active. Here we are still waiting for Turner's imminent collapse of housing prices 13 years later.

 

I can remember arguing about 10 years ago with posters who were adamant that renting was the way to go as prices would certainly crash and then they would jump in to buy. I was insisting that if they rented and didn't buy a house then, they might never afford to buy a house as I felt confident that prices would continue to increase. When I look around at prices today and compare them to prices 10 years ago, the increase is pretty amazing.

 

Since then with mortgage rates running in the 3-5% range and since Turner wrote the article average home prices have increased something like 140% (or more in some places).   

[Viking]

32 minutes ago, cwericb said:

Wow, can't believe this thread is still active. Here we are still waiting for Turner's imminent collapse of housing prices 13 years later.

 

I can remember arguing about 10 years ago with posters who were adamant that renting was the way to go as prices would certainly crash and then they would jump in to buy. I was insisting that if they rented and didn't buy a house then, they might never afford to buy a house as I felt confident that prices would continue to increase. When I look around at prices today and compare them to prices 10 years ago, the increase is pretty amazing.

 

Since then with mortgage rates running in the 3-5% range and since Turner wrote the article average home prices have increased something like 140% (or more in some places).   

@cwericb, I think we can say with certainty that Canada just experienced the greatest housing bubble in history (from 2000 to 2022, but especially 2015 to 2022). Of course anyone who owned real estate won the proverbial lottery. Fortunately, I was one of them. But personally I look at my oversized real estate winnings as blind luck. And i will gladly take the win. 
 

My view is it is possible to see bubbles as they are blowing. But I also think it is impossible to call when a bubble will finally meet its end (and how it ends… with a pop or if the air comes out slowly). 

[cwericb]

10 hours ago, Viking said:

@cwericb, I think we can say with certainty that Canada just experienced the greatest housing bubble in history (from 2000 to 2022, but especially 2015 to 2022). Of course anyone who owned real estate won the proverbial lottery. Fortunately, I was one of them. But personally I look at my oversized real estate winnings as blind luck. And i will gladly take the win. 
 

My view is it is possible to see bubbles as they are blowing. But I also think it is impossible to call when a bubble will finally meet its end (and how it ends… with a pop or if the air comes out slowly). 

 

Well as the saying goes, "I would rather be lucky than good"  

 

Real estate is still steady in the Maritimes and they can't build houses and apartments fast enough to accommodate the influx of people we have moved here over the past few years.

 

Prices on the Island are up around 4% so far this year and housing is way behind immigration (a good number of our immigrants are from other provinces) and as the most densely populated province housing is a problem.  Then add an ever increasing 2,000,000 tourists and summer residents that come primarily in the space of two or three summer months and housing demand gets stretched to the limit. The law of supply and demand is certainly working in favour of property owners in the foreseeable future. But you never really know.

[maplevalue]

News from the UK. I will not be surprised if this comes over to Canada at some point. Likely the threshold is initially set to not catch too many homes, but then is not inflation adjusted leading to more homes getting caught by it.

 

https://www.ft.com/content/5b07c36c-926d-4f39-a8d8-97ff92dcfe47

 

Quote

Chancellor Rachel Reeves is set to apply a “mansion tax” to homes worth more than £2mn in a move which is expected to hit more than 100,000 properties and could further dampen prices at the top end of the London market. Reeves had looked at applying an annual council tax “surcharge” to homes worth more than £1.5mn, but has been forced to scale back the scope after a backlash from Labour MPs representing wealthy parts of the capital.

...

The annual surcharge on council tax bills for properties affected will be applied on a sliding scale depending on the value of a property above the £2mn threshold, but is expected to average about £4,000 a year.

 

[RichardGibbons]

We've had this in British Columbia since 2019, again deliberately not inflation-adjusted so that it will eventually hit everyone.

 

We had the same sort of inflation thing in 1987, where they added a property transfer tax on the insanely wealthy people who could afford to buy expensive, $200,000 houses. Today, as a result of inflation every transaction is charged that tax.