Interest rates do little to discourage home construction, the limitations are from transportation and zoning issues. Ie: The worse the transportation system the fewer areas are viable to build housing, and the more important existing housing and zoning restrictions in those areas are.
That seems unlikely. Investors are, if anything, the most rate-sensitive, both in terms of borrowing costs and opportunity costs (they will move their cash out of housing and into bonds, if the bond yield is higher than what they'll earn on rent and price appreciation). Ordinary residents will buy even at the peak, risking loss, because they need a place to live, but investors don't buy housing because they need it. They can't rely on other investors being the bigger fool, and so in a rising-rate environment they either buy if they can raise rents high enough, or else they will put their cash elsewhere.
Sure, but we've already done this several times in our major cities, and it hasn't killed demand.
> Interest rates do little to discourage home construction
https://financialpost.com/real-estate/cmhc-housing-starts-dr...
“With interest rates remaining high, it continues to be challenging for developers and homebuilders to get projects started,” he said in a press release.
That article is from April and housing starts dropped further.
In the 1970's Canada had a lot of purpose built rental stock subsidized by the government. You could find a place to live anywhere. I think there has to be some of that, plus some top-down work on zoning (which is happening in some provinces, overriding municipalities) and then we need to just build and build.
Not over an afternoon. Housing prices haven’t grown in a vacuum, massive increases in productivity and population over time feed back into peoples ability to pay for things. Beachfront vacation homes have also become vastly more expensive for related reasons, but that obviously gets less press than peoples primary residences.
Most things are priced based on what it costs to create them, other stuff is based on how much people can afford. Urban housing has entered the second category and it’s going to take a lot more than minor interest rate changes to reverse this trend.
We already have the "must own a car" requirement for most of Canada, but even that's becoming not enough thanks to the fact our roadways are under-developed and the price of gas (and owning a vehicle) is rising rapidly.
Those are some pretty massive road blocks in the way of home ownership for an average person, I can't imagine developers are keen to keep adding to the problem.
The average Vancouver house dweller makes 44k which is way lower than people in any other home type. People are buying houses with wealth, not income. It doesn’t matter what jobs pay.
Renters are different because they regularly sign a new lease and so very much do care about changes to the prices. Renters leave cities for many reasons, but high rent is a common one especially at retirement.