Assuming you had that lower interest rate, I just want to illustrate that you may have been fortunate to have purchased at the exact best moment to buy property in North America, as home prices hadn’t yet adjusted to the new purchasing power consumers had (in the form of lower interest rates).
Also, unemployment was pretty high at the time, so while the job might seem meagre compared to today, you likely had a significant advantage vs. your underemployed peers in the region.
Source: https://www.superbrokers.ca/tools/mortgage-rate-history
I remember the frenzy of the '89 housing bubble & early 90's bust especially in Toronto when mortgage interest rates were in the low teens and everybody and their dog was flipping property. The subsequent crash was painful but also allowed new families to get into a more affordable market.
I stand by my comment that it's still possible to buy something for a new family even if it's smaller than what they grew up with. The driver for the reduced affordability is, as you eloquently noted, because of our very liberal immigration policy that allows for continued regional growth coupled with low interest rates.
If you're a homeowner, you want the value of your property to continue to rise. But then this crowds out a younger demographic looking to purchase their first starter properties (condos or houses). We can't have it both ways.
I understand your frustrations over immigration policy, and it's certainly not racist to wish for Canadians to enjoy the fruits of Canada. I just want to gently bring up the historical context that you've left out, but of which you are likely aware. ~5% of Canadians are indigenous, and most humans in Canada descend from recent immigrants who came to pursue a higher standard of living. Barring other humans, born in a slightly different time and place, from that same pursuit: doesn't that seem to be in tension with history?
Population growth is too high to meet demand for proper housing. Therefor, the solution is you cut back immigration, within a couple years demand for housing will fall dramatically. But no, you don't want to see prices fall, or you have something to gain with the immigration rate being high.
When did your family come to Canada? Why do you think you should be the abetter of when it’s full? It’s been growing for 200 years and and at any point people could point to a Canadian city and say it’s full because that’s completely subjective in a country that could easily fit the world’s population.
You’re also completely missing the mark on what I’m saying a increasing density. I’m not talking about shoving people in tiny condos, I’m saying the housing that’s zoned for single detached houses should be zoned to be five story walk ups with beautiful courtyards like London, Paris, or the city I live in now, Amsterdam. These aren’t small condos, they’re large flats that families can live in, it’s not uncommon for families to have multiple floors. You know what people and kids do that don’t have back yards, they walk to a local park and interact with their community, and it make a much healthier and social community. Compared to most European capitals Toronto is a bland shithole, keep your ugly McMansion, keep your ugly car depended suburbs, keep your obesity, and bad food, keep your lame two weeks of vacation where you come to visit European cities you refuse to learn lessons from. Honestly get fucked, I’m over it, people like you are so ignorant it makes me never want to come back to Canada. There, are you happy, Toronto minus one person.
Cities come and go in desirability and some stay very desirable. Some cities undergo a transformation from swaths of single family homes to nothing but condo towers that cost more than homes.
So we have 300k deaths each year, 350k population growth of which 250k is immigrants, for a 1% YoY population increase.
So you'd expect a need to grow housing by 1% and that would flatten prices, but it doesn't, so I feel there's more to it.
> but this is the (as I said) elephant no one wants to discuss publicly
I just did like 30min of googling, and almost all articles discussed immigration as a factor for Toronto high prices. So I'm not sure it's an elephant, it just doesn't seem like the simple explanation people want it to be. It isn't obvious at all that just lowering the number of immigrants the country accepts per year would have a drastic impact on Toronto prices. It seems there's many other factors at play. And you also need to consider all the other impact to the overall economy that lowering the number of migrants would have as well.
I think people just don't really know, it's a hard problem, there's no clear solution, and so no one can come up with actionable remediations.
One thing that I saw which might be a bigger elephant is the fact that old people don't downgrade, they stay occupying the single family residence they've owned for their entire retirement and end of life. Making no room for others. When they most likely no longer take advantage of the city or the extra space afforded by their home, and that limits the pool of homes dramatically. Especially considering Toronto has issues building more since land is scarce, and taxes are high for construction + zoning. I feel the thought was always that when you retire, you cash out your Toronto home, and downsize somewhere else cheaper, making room for others in Toronto, but this doesn't seem to be happening. And this is compounded with life expectancy growing year over year.
The government also obfuscates the number of foreign buyers of housing because it only takes 6 months to gain permanent residency, and those with permanent residency are not counted as foreign buyers.
Saying "we just don't really know", and "its a hard problem" is troubling to me, its basically saying that we shouldn't bother getting to the root of the issue because you'd rather we didn't. So far with your stats that you googled, the one possible cause you offer is that elderly people might be holding onto their homes. Really?? Not, for example, speculators who can capitalize on the fact that we have guaranteed, consistent, artificial, foreign population growth since the 1980's? And why was this done? The conservative party ramped up immigration to gain favor of the immigrant voting block, and all other parties adopted the same approach.
There seem to be many variables whose correlations and effects are not well understood. You claim you've figured it out, that the only effect of increased housing price in the Toronto metro is simply due to migrants, foreign students and foreign investors. Okay, well I'm not against that explanation, but you got to back it up with something. Otherwise it's as good as any other, such as what I pointed too, the large number of single family unit being held by the retired or soon to be retired boomer generation.
My personal opinion, neither are the whole equation, the market of housing is complex, and I think we're far from understanding it, which is why there are simply no cities with landlocked and high populations that have figured out how to slow prices and make housing affordable yet.
But I'm totally willing to hear out anyone whose done some deep analysis and got some good thesis around it.
Personally, I wish politics allowed for testing policies and let people experiment with them a little more loosely without worry of saying ok this failed we're rolling it back and trying something else. If that was the case, I think it be curious to try something like stop taking migrants for a year and measure impact. Honestly the migrant argument is always being brought up, so if anything, it would confirm or deny more clearly that variable, and we could hopefully move on.
Also, you did get me curious into the data, but to be honest, the stats are hard to fully get clarity on what they include and do not. Like there are 600k foreign students, but that's the absolute total it seems, not a year over year increase. And students stay for a while, so it's not like each year there are 600k new students, it's often the same returning students. So we'd need to look at the year over year increase.
Finally, with these type of things, the flip side must also be considered. Based here: https://www.international.gc.ca/education/report-rapport/imp.... foreign students create 80k jobs in Ontario and provide substantial income to the local government. So that would need to be accounted as well if say we decided to restrict their numbers further.
From my perspective, your rationale is a logical fallacy of the single cause.
If you're not familiar with it, I recommend reading:
* http://believingscience.blogspot.com/2016/08/todays-logical-...
* https://medium.com/@edeubanks/argumentum-ad-simplicitate-9f5...
Now what happens with this fallacy isn't that you're for sure wrong, but that you have determined for sure that you are right, yet there are multiple probable cause at play here, but you single one out and attribute that one as a sufficient cause without justification.
And personally, even if it was the single simple cause of high house prices in the Toronto metro, you still haven't addressed the opportunity cost. We don't have immigration out of generosity, most migrants are selected through a thorough application process, and we pull in people with labor skill that we need, or with wealth that we want them to bring over. This is true of foreign investors and students as well. There are reasons why we do so, because most analyst see it as a net positive for our economy. I'm with you where I would like our economy to sustain itself without any external investment, but what I would like and reality are two different things. Right now it doesn't seem like it would. So what are we going to do about that? If you cut out foreign investment, immigration and students you need a strategy for that or we'll just take a huge hit financially.
Also, keep in mind we have a decreasing workforce. Based on this article https://thoughtleadership.rbc.com/from-a-baby-boom-to-a-reti... the foreign workforce we're taking in isn't enough to fill the workforce gap we have due to an aging population. We're losing workers, this isn't steady state. That's why we ramped up immigration:
> For Canada as a whole, the challenge is to become more competitive even as we lose these established workers. Immigration is helping to grow our talent pool. We welcomed more than 300,000 new immigrants last year, about 60% of whom are skilled workers. The immigration minister has described this as “the new normal.” Yet it still doesn’t cover the annual retirement rate, so we’re going to have to get more creative.
It's going to be hard to manage without immigration, we just didn't have enough kids, and we didn't educate, teach and train our kids properly to be able to replace our workforce in a steady state. That's the other side of the problem. We take a few refugees as a feel good pat on the back, but the truth is, most immigration we take in is so that we can sustain our workforce, keep our businesses competitive and prevent our economy from crashing down. At least, that's the reason why we do so. Now maybe that's also a wrong conclusion, maybe there is another way, maybe people overblow the impact of not taking immigrants would have to our economy, but economics is hard, figuring out what is best for the economy isn't simple, in my opinion at least.
That this contributes slightly to the the high prices of some specific neighborhoods in Toronto sounds reasonable to me. But that it is the single cause of prices in the entire Toronto metro, or that without it the prices would halve themselves accross the board, I just don't feel convinced of. The data doesn't add up. There's clearly a lot more at play here.
Which concludes:
> Research in Canada has shown that the overall impact of immigration on housing markets is modest at best in most cases. The effect could be substantial in the case of wealthier immigrants destined to select neighbourhoods. The more important realization is that an absence of immigration would result in a declining population and ageing of the workforce, which could have a much larger negative impact on Canadian housing markets.
I'm not saying that this conclusion is the right one, but I just feel it's actually a much more difficult ECON problem, and cause/effect and figuring out what is best overall is non trivial, and I don't know if wealthy immigrants and high-paid worker immigrants are the simple straightforward explanation we'd all want it to be.
(Immigrants are a positive demand shock because they increase your customer base.)
So immigration is actively encouraged, which is perhaps unique among developed nations (depending only on our definition of 'actively encouraged' I suppose) which is probably 'correct' and could be massive for GDP, but.. shouldn't there also be deliberate attempts to build new cities? My outsider's limited perspective is that it seems to be mostly left to natural progress, which means.. immigrants gravitate towards Vancouver & Toronto, and everywhere that exists just gets slightly bigger and much more expensive.
Why isn't there massive intentional city building to go along with it?
Several decades ago, north of Steeles was prairies and farmlands. The IBM headquarters was moved to that area in the 80s. CGI headquartered in Markham as well. Nowadays there are condos going up all over the place along the 407 and hwy 7.
If more companies did this instead of coveting to be as near union Station as possible, I believe the metropolitan area could still expand horizontally a great deal more before ever coming anywhere near permafrost.
It doesn't even take that much willpower either. Milton, for example, could easily attract companies by offering tax breaks. A lot of talent already commutes from there.
Perhaps decades ago I'd be content with commuting out to the middle of nowhere by car to work for a large company as a lifelong employee. Perhaps those circumstances still exist, but there is a comparatively large number of people living downtown that won't touch transit-poor suburb offices with a 10-pole stick. If you're setting up shop in the suburbs, you will get a pick of only suburb residents.
On the other hand, if you're setting up shop in downtown, you get a pick of both downtown and suburb dwellers. The latter will drive anyway, so it matters comparatively little whether you drive from Mississauga to Milton or from Mississauga to Toronto. Plus a lot of people can find a GO station somewhere and get downtown that way. Good luck commuting to a Milton campus by train from Markham.
Furthermore, with Toronto in the centre of the population bell curve, it's not even just downtown employees vs. suburb employees. It's also that by building on one edge of the municipal area, you will have a harder time to attract people from the other edge. Mississauga to Milton isn't too bad, Ajax to Milton is twice the distance vs. to downtown Toronto.
So in the end, it all goes back to making a choice between locations with relatively broad appeal and a lot of competition, or niche locations that work great for a considerably lower potential selection of employees. Large international companies are finding that they are competitive enough to win employees in the downtown job market while still benefiting from the broad base of talent available there. You'd have to give them unprofitably high tax breaks to make them give up their talent pool.
Smaller shops may try out the niche strategy in the suburbs and may find it to work well for their purposes. But I guess those were not the target of your call for suburban HQs. They're also not at a size at which Milton would consider giving out tax breaks.
There can always be exceptions, although as a general tendency the house is stacked against suburb HQs. Maybe with a drawn-out WFH trend this could change, but for now I still don't see it happening.
What's interesting is that the two companies I mentioned are both very large (offices in multiple cities) and don't have butts-in-seat cultures (people already worked from home a lot even pre-pandemic).
The point about Ajax to Milton being a very long commute is quite valid though Ajax could also try to attract companies of its own. The go train point is fair, but not critical IMHO. People can and do move. And for better or for worse, these municipalities do have very strong car cultures as of today. Living in Scarborough to commute to Markham is a pain in the neck by public transit, but trivial by car (and consider that downtown traffic and parking story isn't great compared to free parking virtually everywhere in Markham, so there's some amount of mutual exclusion there). Also IMHO, the infrastructure follows demand. Some stretches of Hwy 7 have public transit lines now; there's clearly a desire to build out a local scene that isn't centered around downtown Toronto.
I think defending the idea of cramming downtown more and more is more based on status quo, and ultimately it's not going to be sustainable. Downtown Toronto has already grown upwards quite a bit; at the pace condos are going up, it's eventually going to run out of parking lots to convert to vertical space. I think developing new talent-attracting centers is going to be important regardless; better to get the ball going before it becomes an unavoidable necessity. </two-cents>
1.01^25 = 1.282 or 28.2% growth. Sounds like a good bet to try to grow economic activity in the region if the immigrants are typically educated and are net-positive contributors.
Canada's total fertility rate (TFR) is 1.47[1] which is well below the natural replacement rate of 2.1. I'm not blindly advocating that we grow at any cost, but it's important to note that as bad as the job situation seems to be across the country today, it feels like it would be much worse if our population continues to shrink indefinitely.
Japan's stagnation over the past couple of decades seems to be one possible path that would have awaited us if Canada hadn't take steps to increase the population.
[1] https://www150.statcan.gc.ca/n1/daily-quotidien/200929/dq200...
Population growth (at a much lower more sustainable rate) can be incentivized by literally paying people more money to have Children. And did it occur to you that perhaps our low birthrate has something to do with the increasing lack of opportunity to improve in this country?
Finally, I am actually against the concept that the country must have constant population growth. Population growth comes in natural waves where some decades it will be high, and in others it will be low. The drop in birthrates many believe will cause a "sky to fall" scenario, which simply isn't true. It is parasitic to expect and demand constant population growth, especially at the cost of people's standard of living.
Some countries tried this approach with mixed results.[1] Given that we're both worried about the debt-to-GDP (i.e. profligate deficit spending by the federal and some provincial governments) I think the budgets are better spent attracting immigrants with skills, education and in many cases capital assets they bring to the country rather than baby bonuses.
Quebec still pays a baby bonus[2] but a Stats Canada study[3] showed their fertility rate over four decades was only 1.59 vs. Ontario's 1.46 -- still well below a steady-state no-growth replacement rate of 2.1.
>>And did it occur to you that perhaps our low birthrate has something to do with the increasing lack of opportunity to improve in this country?
This plays a role, but a lot of economic thinking (rightly or wrongly) finds a strong correlation between how developed a country is and declining TFRs even when there is a boom period of economic growth and opportunity.[4][5][6]
[1] https://www.prb.org/low-fertility-countries-tfr/
[2] https://www.rrq.gouv.qc.ca/en/programmes/soutien_enfants/pai...
[3] https://www150.statcan.gc.ca/n1/pub/75-006-x/2018001/article...
[4] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4255510/
[5] https://www.un.org/en/development/desa/population/events/pdf...
In 1985 our population was 25 million, and today it is now 38 million. Most of that population growth can be attributed to mass immigration. But we have no new cities or towns. We are simply crowding ourselves out of the minimal amount of cities and arable land along a southern strip that we can inhabit.
Also I don't think Japan is a negative example of population decline. They are an example of a country being able to maintain its standard of living, productivity, and its economy despite a stagnant population.
I strongly believe that if population growth through mass immigration continues (and mostly likely will), standards will continue to worsen across most of the country.
Perhaps to put a more human perspective, I graduated with a STEM degree during a recession and it was horrible. Many classmates had their careers set back by many years.
If I have to choose again between prosperity and economic growth that seems to be strongly correlated with a growing and educated population via immigration vs. affordable housing coupled with few economics opportunities, I'll choose the first option almost every time.
There's no point being able to afford housing if there are no economic opportunities in the area. Detroit at its peak in the 1950s had a population of 1.8M and was the 5th largest city in America, but is now a shadow of its former glory due to various factors and it's population only 680K (37% of its peak). Incidentally, nearby Windsor seems to have experienced very gradual population growth (less than Toronto) but its economic prospects still look pretty bleak.
It seems like you believe something like that could never happen to Toronto because the Golden Horseshoe is one of the few habitable places to live in Canada, in which case we'll just have to agree to disagree on this counterfactual.
This lacks the history on what people used to be able to purchase, not just in Toronto but in all of Southern Ontario, and now even as far away as the Maritimes.
The purchasing power for the average Canadian to afford things that actually mater (like housing), is dropping like crazy.
Allow me to give you my own anecdote. 12 years ago, I purchased a "starter home" in Waterloo for $249,000 in the neighborhood I grew up in. Detached with a single car garage, on my "new community college grad" salary of 47k/year with 25k of savings that I had.
Today, with say a 60k/year salary, a new grad in my city could afford to live in a small "starter condo", a huge downgrade to ones expectations who wants to raise a family. The standard of living and affordability has objectively dropped for young people today.
Last week a house on my street that is actually smaller than mine just sold for $780,000. I wonder what their mortgage is like?
But according to some people, hey you can still get into the market! Just buy a condo!
Now lets get to the meat of the issue. Why is this happening (and in many Western countries)?. Economic crashes are literally a built in guaranteed feature of our money system, but our government has found a way to kick the can down the road through mass immigration. As long as they can bring in half a million people in every year willing to take on debt, they think they can avoid a market correction, and they aren't wrong, they have avoided a correction for 12 years now thanks to the people they bring in on a daily basis in Canada. But this was not without a great cost, even if they can continue this nonsense for another 10 years, they have destroyed the purchasing power of your average Canadian to afford things that actually matter, like housing.
I would argue that they found a way to avoid a crash by substituting that with a gradual decline of our standard of living. They stole from the young to pay for their pensions and nest eggs to avoid facing the music.
Unfortunately, in many forums you can't bring up the elephant in the room if you are against mass immigration for its many downsides (including wage stagnation), you get denounced as a racist, or you get attacked by people who want this ponzy scheme to continue because after all, the economy now depends on it! They would rather you blamed the city for not building more condos (that noone wants to live in), and NIMBY's. But don't you dare bring up mass immigration.