this post was submitted on 20 May 2024
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We're actually at the lowest since the dotcom crash, and it's been dropping steadily.
What's true, and scary, is that while 60% of Canadians own homes, almost half are Boomers and more than half are Boomers and elder Xers, and they're looking to cash out because the death of the defined-benefit pension (and frankly, pensions in general) combined with low interest rates on bonds, shrinking dividends in favour or stock price growth and repeated recessions that sapped their investment holding means that house equity is the only way these people can afford to retire.
I work at a company that sells to LTC and private healthcare, and let me tell you, the executives that run those businesses are looking to make huge amounts of money by soaking old Boomers for every red cent.
When enough of them cash out, and with younger Xers, millenials and zoomers priced out, expect the market to crater.
The best time for the governments of this country to do something about this was twenty years ago when things started to get overheated in the GTA and GVA. But the money was too good, so they let the tumour progress a bit, and now they risk killing the patient.
"lowest" 69 -> 66.5%
It was 60% in the 90s, when houses were last affordable (3x household income)
I disagree that the market will crater(though that depends on your definition of crater); even Japan which went through this same situation decades ago never even saw prices drop in half from their crazy high peak in the 90s. They're only down about 25%, but they did get as low as around 45%. While those may seem like very good numbers, it wouldn't even come close to making things affordable (3x household income)
Between population growth, and many of those boomers dying and leaving the properties to their kids, there just isn't a way for the whole thing to crater. It may drop a bit, but most likely it's just going to level off and stay unaffordable.