Saying Canadians are confident in the real estate market is a bit of an undersell, according to a big bank. RBC shared the results of its Spring Housing Poll this week. The findings were… nothing short of exuberant. The survey found most Canadians only see home prices rising soon. Most households now only believe a minority of the population will be able to buy going forward.
Most Canadians Think Home Prices Only Go Up
Canadian real estate prices only go up — at least that’s what the vast majority of Canadians think. The survey found 61% of Canadians agree home values will only go up in the immediate future. In BC and Ontario, that expectation was even higher at 72% and 70% of respondents, respectively.
Young Canadians Giving Up On Homeownership
More than a third of Canadians under 40 have given up on homeownership, according to the survey. RBC found 36% of respondents agree they’ve given up on ownership. In Western Canada, including BC, this number jumps to 41% of survey respondents. Ontario wasn’t far behind, with 39% of people
Canadians Think The Majority of Households Will Be Priced Out of The Market
Most Canadians think the majority of households will be priced out of the market for the next decade. RBC found 62% of households across the country agreed the majority of people are priced out. The number was higher in BC and Ontario, where 71% of people agree.
Over A Third Think Canadian Home Prices Will Fall
While the vast majority think prices will rise, over a third see home prices falling soon. RBC found 41% of people agree that waiting until next year for prices to fall makes sense. In BC and Ontario, the rates were 45% and 42%, respectively. Yes, that’s more than 100% of people that think prices only go up and will fall over the next year. That means some people are simultaneously holding onto contrary beliefs.
The survey results tell us a lot about the emotional state of buyers, but it applies mostly to sales. Canada Mortgage Pros’ recently found their own survey linked only buying intention to reality. When buyer sentiment is high, higher home sales typically follow. This makes sense, since you need to know you’re going to want to buy a home. Price growth however, did not have a link. In many cases home price sentiment was most positive, right before price growth dropped. This also makes sense, since price expectation is often backward-looking.
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Was this survey before or after Vaughan’s rant? lol
The majority also believed the Earth was flat at some point.
Canada has become a third-world corrupt country and home prices is all that canada and canadians have. It aint going to be good in a few years. Stagnant wages for 20 years and residential home price increase of %300 to %1500 and %500 to %1000 increase household debt. Oh yea real PH.D economics needed to figure how this is going to end for Canadians and the mickey mouse Canadian economy.
The joker from federal govt. confirmed the same on TVO that house prices will only go up and govt. will make sure they don’t drop.
Banks are worried that if people are getting priced out, how will banks show growth and protect their share prices. Capital lending has been negative, growth area for banks has been residential mortgage aka Canada’s golden goose.
‘Home Prices *Only* Go Up.’
No – *everything* except Canadian wages are going up. Our money is relatively worthless. I recall a recent economy that saw its people weaving decorative objects from its local currency. That’s where we are headed.
Or they try to hyper inflate. Everything goes up, but the real value goes down. I think that’s what they’re going to experiment with, and no country has ever not been burnt doing this.
That’s not how hyperinflation works. It’s usually due to a feedback loop:
-govt has more debt then they can repay, so they print money to help,
-inflation starts to rise higher then what they want,
-interest rates rise to tame inflation,
-this causes the govt to own even more money, which they cannot afford, so they print more money
-loops back to the top.
If / when rates rise, that will impact housing (along with many other things). It’s a risky gamble for a government to experiment with something like this.
Ayer,
That might be the case as they seem to be selling inflation as a positive thing which to me for growth, does not make sense.
I’m not sure if this is a bubble, but when everyone thinks prices go up, the government thinks 40% pries increases need to be preserved to no end… it’s hard to argue otherwise.
Canada doesn’t even need universities anymore. BCREA should just run high schools, and everyone should have to pick if they’re going to be a mortgage broker, or real estate agents when they graduate.
https://globalnews.ca/news/7753875/laurentian-university-program-cuts/
Agreed Ayer, studying and preparing yourself for a better career is foolishness in Canada.
Minister of Housing should talk to the Minister of Education to make Real Estate mandatory part of the school curriculum from Grade 1, essentially that’s what we would want our kids to excel at – how to buy and sell houses to each other. BTW real estate education costs $7k and doesn’t require any skillset other than lying and manipulation.
I don’t see any good reason to raise a family in Canada.
Well put, Ayer!!!
Most interesting thing about Vaughan’s rant was that the whole interview was a fund raiser plead to those who benefit from this most outrageous market distortion.
Most disturbing about Vaughan’s rant was the way he kept calm during the deceptive snow job, this is worrisome because it is telling of the lack or remorse, and to what degree his conscience is impaired.
There are 2 problems associated with the above that will hurt the Canadian economy:
1 – there is no incentive to invest in anything outside of real estate, as it will out-perform every other asset class and, as declared by the government, is risk free. Is see these comments from my family who are now all buying condos as negative cap rates, because Toronto real estate only goes up.
2 – the psychological impact of asset appreciation. With almost 70% of Canadian owning homes (and up to 20% owning multiple homes) the vast majority of people are feeling “rich”. This allows us to furnish your house, buy a new car, buy another property. The minute prices start sliding, even people that do not intend to sell feel worse off and it psychologically impacts consumption.
If real estate collapses, you realize risk in point 1 and you feel pain in point 2 and you move into a downward spiral. This would be harder to come out of, as human behavior is more risk adverse than reward seeking. The free market needs to be brought back into play and the market balances itself. Otherwise we have created a market that is a birthday lottery.
It already is a birthday lottery and I can’t suggest that human behaviour is risk adverse when I watch the debt and housing bubble. I would think natural selection would keep us from diving head first into dark water but your average investor does not correlate between financial risk and mortality risk. It’s the actual definition of a bubble. What’s happening is more like a Buffalo jump.
As for a crash we all know what will happen if it takes place. So many recorded instances over the course of history… doesn’t really need elaboration.
They are risk averse with respect to losses and risk seeking with respect to gains. They are influenced more against the prospect of losses. It squares with the current observations in the market, in my opinion. We just haven’t seen much of the loss risk aversion yet.
Excellent summation of recency bias. https://en.wikipedia.org/wiki/Recency_bias
Can I just laugh, hahahah.
If the Bank of Canada can keep the housing market galloping at 10-40% yoy increases forever, then it goes without saying that the Fed will be able to keep the stock market rising forever. And since the Fed is the safer bet, it stands to reason that investing in US financial markets is even safer than Canadian real estate.
This is true. If the conditions that allow for the equity markets in the US to thrive are stable, then taking that bet is better than the Canadian bet for now.
Unless Canadian real estate is heavily insulated from those same forces? Hard to imagine but I won’t rule it out completely. Though, I do think you’d need to have prolonged declines for it to impact the market here.
I think I’ll take the US Equity bet easily for now. It has its own problems but so does this bubble here.
If I’m sitting behind a computer in country far far away, I’m just seeing this constant rise in prices in Canada and telling my guy/girl to go spend my money ASAP!!! Why not????
How much scrutiny are EITs performing when things are on fire!!
Build more housing infrastructure in Canada for heaven’s sake! Us folks on the other side of the world are running out of investment potential!!!
The Canadian education system needs major reform to adapt to the new economy. High schools must make learning Mandarin and Cantonese mandatory. Along with that, there should be 5 ‘career paths’ a student can follow (and is limited to):
a) Mortgage broker
b) Real estate agent
c) Insurance broker
d) Real estate lawyer
and lastly;
e) Skilled trades
Based on elementary grades, the student will be designated to the most appropriate profession training, based on the following criteria;
Options a, b, and c will be available to those whom are able to learn Cantonese/Mandarin AND earned a grade average of at least 80 percent. Those whom learn said languages AND earned a grade average of at least 90 percent are available to peruse option ‘d’ (based on demand in the private sector, if available at said time); and lastly option ‘e’ will be strictly available to those whom earned less than a 80 percent grade average AND/OR are unable or unwilling to learn said languages. Of course there is flexibility for the requirements of option ‘e’ such as to maintain gender, race and ethic diversity.
This is how we can make the Canadian economy sustainable and ensure its cycle continues. We will train and educate our youth how to buy, sell, and build real estate. This will allow Canada to continue market itself as a save haven for those looking to flee communism. These are also well paid careers that will allow our youth to afford their own real estate, which will itself keep the economy sustainable.
All canada has is real estate real estate debt third rate imported hardwood and granite countertops from china, mediocre lumber and overpriced and underskilled and under performing trades workers and more real estate, there is nothing else going on. It is the biggest joke economy on earth. The homes in Canada are some of the cheapest crap I have seen from traveling, and building my own homes in other countries, all over the world. West Van, West side, currey, North York, Rosedale and Forest Hills included! But most Canadians will never be able to afford to travel to see how effed they are getting, given their perpetual and eternal monthly death, I mean debt obligations! Have fun wasting your life for the govt and banksterrats like a nice obedient good Canadian…LOL
Your forgetting about our worthless heavy crude or crud as I like to call it. Home sales and oil represent 20% of Canaduh’ GDP. As soon as rates go up everything will crash. People with cash, precious metals and the right type of crypto’s will make it, that’s about less than 10% of the population. People that have paid off their mortgage will be alright. It’s mortgagees and renters that will get the shaft.
What about my freedom and speech and human rights and democracy that the ratinfested lying mainstream media and Trudeau keep running their trap about and demonizing other so called third world countries for!
Ay