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In this wall I will be covering the topic Housing Marketing - Understanding the Financial Crises, which was one of my favorites topics in this course so far.
On this wall you will find resources that discuss the Canadian Housing Crisis from different perspectives and will give you some insight on what we can expect to happen in the coming years.

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This video discuss the recently released Oxford Economics forecast for the Canadian Real Estate and the increase on housing prices that we have been experiencing all over Canada.
What I liked the most about this video is the fact that it uses the National Price Map to demonstrate the housing prices increase per Canadian Marketing, which gives people a better understanding of the crisis and how it is worse on GTA and Vancouver areas. It is also worth pointing out that the author of this video do not believe that we will see a decrease of 24% on housing prices as indicated by the Oxford forecast.

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This video is an interview with the MPs of the Standing Committee on Finance, conducted earlier this year on CTV News where they were asked about what is causing the Housing Marketing Crisis and what are the Government's plan to tackle it.
I thought it was important to add this video to my wall
because it discusses some of the initiatives that the Government must adopt to
make housing more affordable. This video also discusses some of the root issues
causing this crisis that many people may not be aware of, such as the fact that
the Government’s has been printing money and injecting it on the financial market
leading to wealthy investors being able to loan money for very low rates and
heavily invest on real state causing prices to rise.

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'We are in serious trouble': MPs debate Canada's housing crisis

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The third video discusses the Canadian Housing Crisis from the perspective of those renting a place to live. The video shows how it is becoming harder and harder to find afford a place to live in Canada and how high rents are impacting families budgets.
What I liked about this video is the fact that it shows the effects of rent increases on people in different stages of live living in different areas in Canada. Another interesting thing about this video is that it also includes the perspective of landlords into the discussion.

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Canada's rental crisis: Why we’re losing affordable housing - The Fifth Estate

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The last video discuss the current situation of Canadian Housing Market from the perspective of an investor and make some predictions about what we can expect to happen in the coming years.
I added this video to my wall because I think it is important to look at the housing crisis from different angles and hear different opinions. The author of this video believes that the predictions of Oxford forecast are correct and that we will see house prices dropping and potentially crash in the coming years. An interesting point of this video worthy mentioning is that the video talks about the economic moment we are living and how eventually things may get better in terms of housing prices and lower inflation.

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Will The Canadian Real Estate Market Crash in 2022? | How To Survive

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While some people may still say that we are not experiencing a housing crisis in Canada, this article from The Globe and Mail says otherwise pointing five reasons why in fact we can say that the housing prices are just crazy right now.
One of the most interesting things about this article is that it makes a comparison between house prices in Canada and in US. According to the article a house in Chicago costs the equivalent to a house in Barrie, Ontario.
The articles also mentions how people do not want to sell their houses right now due to the sky-rocking price rises that we have seen in the last two years.

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For more than a decade, the most pointless exercise in personal finance has been questioning the rise of house prices. In that time, we've had a global financial crisis and two years of a pandemic. Housing ate it all up.

We began 2022 with a new all-time high for average resale house prices that was built on double-digit increases from year-earlier levels. Does this extreme growth make sense? Here are five signs the housing market is out of control:

(Lots) more million-dollar cities

Move over, Toronto and Vancouver. The latest real estate numbers show that there are at least seven more cities or regions in the country where the average resale house price is more than $1-million: Oakville, Orangeville, Hamilton, Mississauga, and York and Durham regions (all in Ontario), plus the Fraser Valley in British Columbia.

Now, check out the U.S. housing market. Realtor.com reports median selling prices of around US$1.3-million for San Francisco, San Jose and Manhattan, and between $900,000 and $950,000 for Los Angeles and Bethesda, Md. A sampling of other big U.S. cities: Seattle at $720,000, Boston at $699,000, Phoenix at $423,000, Atlanta at $375,000 and Chicago at $315,000.

Convert to Canadian dollars and you have Boston on par with Chilliwack, B.C., and Seattle in the same zone as Guelph, Ont. Chicago priced in Canadian dollars is less than half the price of Barrie, Ont.

U.S. house prices are hot right now and there's talk that seems quaint by Canadian standards about affordability slipping away. But demand to own homes here is on a different level. It's sufficient to turn small cities, which were once quiet, into real estate hot spots.

Prices up by almost half in just two years

The average resale price in January, 2020, arguably the last month of the pre-COVID era, was $504,350. January, 2022, gave us an average price of $748,439 - an increase of 48.4 per cent in 24 months.

The average annual growth rate in resale home prices from 2011 to 2021 was 6.6 per cent, data from the Canadian Real Estate Association show. And that was big-time growth, given the average inflation rate of 1.6 per cent in those years.
Mortgage shopping? Why the best advice might not come from a traditional mortgage broker For those about to buy a house, we salute you
Recent price growth in house prices has been helped by the special factors of low interest rates and pandemic lockdowns that, first, triggered a desire to move to bigger homes and, second, helped people stockpile the cash they needed for down payments.

But price growth today seems out of whack compared with not only historical trends, but also what's happening elsewhere in the country. We seem to be making progress in getting through the latest COVID wave, but there are big economic challenges ahead and political divisions are widening. Immigration is on the rise, but how many newcomers can afford to buy a house at today's prices?

Income growth has been left in the dust

The pandemic has created a lot of job churn, which means people leaving jobs and finding new ones. Employers find they have to pay more to lure or keep employees, and this is starting to put some upward pressure on wages.

The December jobs report from Statistics Canada said average hourly wages increased 2.7 per cent on a year-over-year basis, but some sectors are seeing higher growth than that. Late last year, Statistics Canada reported that wage growth that exceeded the inflation rate, then at 4.3 per cent, in 41 per cent of the 355 occupations it tracks.

House prices have long risen at higher rates than income. What's noteworthy today is that wages are showing unusually high growth in some areas, yet housing is pulling further ahead than ever. There is zero linkage between growth in house prices today and the ability of the Canadian population to afford them.

Inflation and the interest rate outlook are worsening

Inflation clocked in at a new 30-year high of 5.1 per cent in January compared to a year earlier, and there's no sign yet of relief ahead. You can still lock in a pretty good mortgage rate right now, and you absolutely should do so if you intend to buy this spring. But the cost of other things, notably food and gasoline, is rising in a way that undermines the affordability of owning a home.

The intensity of rising inflation has economists wondering if interest rates will rise faster and further than previously anticipated. If this happens, people renewing mortgages in the years ahead may find their payments rise in a way that derails household budgets.

The inflation and rate outlook argue for caution in home buying, but that's not how people are reacting. Growth in house prices scares people into thinking that if they don't get into the market now, they'll never own a home. Pending rate hikes are seen as a reason to buy now, whatever the cost.

No one wants to sell

The monthly reports on home sales from CREA keep hammering on the theme of historically low numbers of homes for sale at a time of massive demand.

Why should people sell if prices will be higher in a month? And, where do you go if you sell? Unless you move to a cheaper location, you'll be buying a home that has appreciated similarly to your own.
Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

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Five signs Canada's housing market is completely bonkers

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For more than a decade, the most pointless exercise in personal finance has been questioning the rise of house prices. In that time, we've had a global financial crisis and two years of a pandemic. Housing ate it all up.

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This article discuss the recently published Oxford Economic Forecast that Canadian Real Estate prices are expected to decrease 24% between now and mid-2024 due to higher interest rates and anti-speculation policies.
What is interesting about Oxford's predictions is that  they estimate that if the measures being adopt to reduce house prices do not have the expected effect we may see a crash of 40% on housing market and a financial crisis as well.
The article also highlights that even if house prices drop 24% it would still be around 15% higher than what we have seen in pre-2020 before the Coronavirus pandemic.

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If the forecast of Oxford Economics holds true, home prices in Canada could fall significantly over the next two years, essentially erasing much of the skyrocketing gains made throughout the pandemic to date.

A recent analysis by the UK-based international research group states home prices could drop by 24% between Fall 2022 and Summer 2024.

The accumulated gains made over the last few years - the years leading up to the pandemic, and especially during the pandemic - have not been sustainable and have essentially created bubble-like conditions, but these are still dissimilar to the harsh conditions that led to the crash in the US housing market in the late 2000s.

As of the end of 2021, Canadian home prices were 19% above the borrowing capacity of median-income households in Canada. And so far in 2022, this upward unsustainable trend has continued, with home prices by Summer 2022 expected to reach a level that is 38% higher than what most borrowers can afford.

Last month's national housing market update by the Canadian Real Estate Association (CREA) showed the country's average home price was up by 21% year-over-year, hitting a new record of $748,450.

"We believe this will cause the housing market to reach a breaking point, and crash under the weight of its own success before year end," reads the report.

Other factors that are driving Oxford Economics' forecast of a home price downturn include the continued expectation that the Bank of Canada (BOC) will raise interest rates. This began early in March 2022, when the BOC raised its key interest rate from 0.25% to 0.5%, the first time the bank has increased its rate since 2018.

Oxford believes the key interest rate will be increased three more times within the remainder of 2022, followed by more incremental increases through 2024 that will bring the rate to 2% by Summer 2024. Fixed-rate, five-year mortgage rates are forecast to go up by about one percentage point to 4.25% by the end of 2020 and eventually reach a ceiling of up to 5% by 2023.

All of this has the effect of shrinking the borrowing capacity of households, which would put a downward pressure on demand.

Other factors considered by the analysis include the federal government's forthcoming new interventionist policies on housing demand, specifically the tax on house flipping, a ban on foreign home ownership, and a tax on vacant homes owned by non-residents.

But even with a 24% drop, home prices in Canada would still be about 15% higher than before the pandemic, and it would lead to healthier market conditions that pair home prices closer to the reality of what Canadians can afford. Currently, this kind of drop is not expected to lead to a recession.

But the analysis also outlines a possible worst-case scenario of a 40% home price drop over the same period, resulting in a crash similar to what the US housing market experienced in 2008. They emphasize that while this scenario is a possibility that would generate conditions for a potential financial crisis, it is highly unlikely.

"The fallout from a housing crash would look a lot like the US housing meltdown during the global financial crisis, despite a minimal role for subprime lending in Canada," reads the report.

The forecast currently expects home prices to be in better alignment with the borrowing capacity of households by 2028, but the impact is likely to be uneven across the country. It should also be noted that Canada's ambitious immigration targets - welcoming over 1.2 million immigrants over three years - are beginning to contribute to the country's tight housing market, especially in the major urban centres of Vancouver and Toronto.

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Bubble burst risk: Canadian home prices predicted to fall by 24% | Urbanized

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If the forecast of Oxford Economics holds true, home prices in Canada could fall significantly over the next two years, essentially erasing much of the skyrocketing gains made throughout the pandemic to date. A recent analysis by the UK-based international research group states home prices could drop by 24% between Fall 2022 and Summer 2024.

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This article from Financial Post also discusses Oxford Economics predictions of a drop of 24% on housing prices within the next two years.
The most interesting thing about this article is that it explains that even though 24% seems like a lot, it is unlikely that such decrease on housing prices would negatively affect the economy leading to a financial crisis, because it would still leave house prices 15% above pre-pandemic rates.
The article also mentions the recently increase of borrowing rates by The Bank of Canada and the impact that this measure will have on mortgage rates by the end of this year and in the coming years.

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Good Morning!

Most agree that Canada's housing boom during the pandemic has been unprecedented.

Low interest rates, pandemic shifts in homebuyers' preferences, excess household savings, ever higher price expectations and speculators and investors piling in have worked together to send home prices 50% above pre-pandemic levels as of February.

Now Oxford Economics argues that the aftermath of this boom will be unparalleled too.

In a report that goes beyond other forecasts of a cooling market, Tony Stillo, director of Canada Economics at Oxford, predicts that a housing correction beginning this autumn will see home prices decline 24% by mid-2024.

Oxford sees three triggers for the correction. First, and perhaps foremost, is the market itself. By late 2021, home prices were 19% beyond the borrowing capacity of median-income households in Canada, the report says, and the gains since then have just made it worse. Oxford expects by mid-year home prices will be an unprecedented 38% above what the average household can afford.

"We believe this will cause the housing market to reach a breaking point and crash under the weight of its own success before year end," Stillo said in the report.

Second is higher borrowing rates. The Bank of Canada began its hiking cycle with a 25 basis-point increase earlier this month. Oxford expects a cautious path with three more hikes this year, a pause to assess the economy, and then gradual increases that will lift the rate to 2% by mid-2024.

Fixed-rate five-year mortgage rates are expected to rise to 4.25% by the end of this year and then climb gradually to 5% later in the decade.

The third trigger is new government housing policies. Some of the proposed national initiatives in the pipeline include a house-flipping tax, temporary ban on foreign ownership and a tax on non-resident-owned vacant homes.

A 24% drop in home prices sounds scary, and in normal times it would be.

But it would still leave prices 15% higher than before the pandemic, and lead to a healthier market, argues Oxford.

Home builders should have enough incentive to keep building and with a new government focus on increasing the housing supply, 2.35 million new units could be constructed this decade, outpacing the projected 1.9 million new households in Canada by 2030.

If that happens, Oxford forecasts home price growth would slow to about 0.7% a year between 2025 and 2030, less than inflation and income gains, gradually bringing homes back to a price Canadians can afford.

There are risks. While a 24% fall in home prices will knock near-term economic growth, it is unlikely to cause a recession or stress the financial system, said Oxford, though it adds that can't be entirely ruled out.

However, if home prices continue to rise at the pace they have been there is a growing risk that prices won't just correct, they will crash, the economists said.

"Although unlikely, a crash could see home prices plummet by 40% or more, with dire consequences for the broader economy and financial system," Stillo wrote.

"The fallout from a housing crash would look a lot like the U.S. housing meltdown during the global financial crisis, despite a minimal role for subprime lending in Canada."

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Posthaste: Canada's housing boom has been unprecedented; the fallout will be too, say these economists

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Good Morning! Most agree that Canada's housing boom during the pandemic has been unprecedented. Low interest rates, pandemic shifts in homebuyers' preferences, excess household savings, ever higher price expectations and speculators and investors piling in have worked together to send home prices 50% above pre-pandemic levels as of February.

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The fourth and last article is from a couple of days ago and discuss Doug Ford recently announced government's housing plan called "More Homes For Everyone". According to the CBC article the plan seems to lack immediate actions to tackle the housing crisis and it is dividing opinions even among Ford's supporters.
One of the most interesting things about this article is that it mentions how the plan was particularly criticized by a group called More Neighbours Toronto which is mainly made up of people in their 20s and 30s that have been very vocal about the increasing on housing prices which makes sense given that younger people seems to be the most impacted by the ongoing crisis.

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What the Doug Ford government’s housing plan means for Ontario home prices | CBC News

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The headline on the news release from Premier Doug Ford’s government about its new housing plan declares that Ontario is “making it easier to buy a home.”

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Canadian Home Prices Expected to Fall 24% by 2024

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The image below shows the average price of a home in Canada over the years. As we can see, according to Oxford predictions housing prices will reach its peak in 2022 and then will start to drop.

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This tiny house in Toronto was listed for $1 Million and was sold over asking for $1.8 Million. According to Narcity people were willing to pay so much for this house because it is situated in a nice neighborhood.. just mind blowing!

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The predictions were right. Toronto's tiny $1 million house just sold for much over the asking price. In fact, it has been taken off the market for almost double.

Back in July, this tiny property at 300 Euclid Ave. made headlines when it was listed for $999,999.

From the outside, it looks more like a tool shed than a house, with only one floor and limited surface area compared to the multi-level properties that surround it.
Editor's Choice: This Giant 3-Bedroom House On An Island Near Toronto Is Only $189K (VIDEO)
Despite this, the tiny home has been sold for $800,000 over the asking price at $1,808,000, CTV reports.

In a phone call with Narcity before it sold, Realtor Alan Ng said he was confident that his listing would go for over a million.

"If you know real estate, you know it's not an expensive price," Ng reasoned. "I'm confident it will likely sell for more."

According to CTV News, the home sold within seven days of being on the market and had 14 interested bidders.

Location is a major factor, as the miniature looking home is situated in the vibrant Little Italy neighbourhood.

[rebelmouse-image 25992882 photo_credit=" Alan Ng | Envoy Capitol Realty" expand=1 original_size="623x603"]Alan Ng | Envoy Capitol Realty

In fact, most interested buyers were in it for the location, Ng confirmed.

They were more interested in purchasing the lot than they were in living in the house.

Some buyers didn't even go indoors during the viewing, Ng told Narcity.

"Prospective buyers looking to purchase lots to use for other reasons are often interested in properties such as this one," he said.

Toronto real estate agent Desmond Brown reiterated this in an interview with CTV.

"So, just ignore the fact that a bungalow is on there on the property and concentrate on the fact that this is land value," he explained.

Despite looking unspectacular, there is definitely loads of potential to be seen in the neighbourhood. In fact, real estate has been picking up.

According to a recent study, July broke records for home sales across Canada.

Sales rose by a whopping 49.5% in the Greater Toronto Area that month, according to the Canadian Real Estate Association.

Other bizarre Toronto house listings have seen houses on the market for just $1.

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Toronto's Tiny $1 Million House Just Sold For Nearly Double The Asking Price

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The predictions were right. Toronto's tiny $1 million house just sold for much over the asking price. In fact, it has been taken off the market for almost double. Back in July, this tiny property at 300 Euclid Ave. made headlines when it was listed for $999,999.

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1- I was surprised to learn about Oxford Economics predictions of a potential decrease in housing prices starting later this years.

2- I chose this topic because my husband and I really would like to buy a house some day and we have been doing a lot of research about the costs involved in owing a house, and mortgage prices versus renting a house, so the research I did for this activity was very relevant to me personally.

3-  Under the current circumstances my advice in terms of housing market would be to exercise caution and not buying a house right now. Prices are way to high, mortgages rates are expected to increase in the course of this year and there is a lot of pressure on the government to adopt tougher measures to prevent this crisis from aggravating, so I think right now if you have the money for a down payment on a house it may be a better idea to invest it and wait for the housing market to cool down.