The Canadian Housing Crisis Explained

00:00 - Intro
01:51 - The Prelude
04:31 - How Did We Get Here?
10:27 - The Debt
16:10 - Where's The Crash?
19:33 - Closing thoughts

Canada's real estate market hosts some of the most expensive properties in the world - now, things are looking rickety. Let's dive into the problem.

This channel is for education purposes only and does not constitute financial advice - Richard is not responsible for investment actions taken by viewers. Please seek out a registered advisor if you require assistance (while Richard is a registered portfolio manager at WDS Investment Management, he does not provide advice through The Plain Bagel, which is not affiliated with his employer).

[MillennialMoron]

Oh hi 👋 Thanks for the shoutout! I'll try to get more of my analytical videos uploaded here for my fellow nerds when I get a chance.

[TheJackCain-]

Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.

[InvestorCenter]

When people talk about how the US real estate market is overvalued, Canada shows that there is a long way that prices can still rise

[CodeLlama]

I am Canadian and bought a house by myself in 2019 with a fixed rate mortgage, before the pandemic craziness but still in the low rates time. My mortgage is up for renewal next year. The bank called me a year in advance to try to warn me that my mortgage is going to jump (though I was already well aware!). I live in one of the most affordable cities in Canada, and it's still going to jump about $900-1000 per month. I own a tiny 1950s bungalow. My utilities have gone up also $250ish per month, my insurance has jumped $100 per month, my groceries have gone up a ton too. My wage has stagnated, and I can't pick up a second job due to health reasons.

To try to offset that upcoming hike and current costs, I'm doing intermittent fasting to skip dinner to lower food costs, and I'm giving up half my already small house to rent out the basement.

What's scary about all that is that I am THRIVING compared to others, and lucky to have a house at all. I also did everything "right" - I started building my credit score from 18, got a fantastic career, saved for a decade for the down payment, never did anything like an expensive trip, have had the same car for over a decade... and even then I'm hanging on by a thread. It's so messed up. I don't know how people with kids afford anything.

[Codyumm]

9 years ago I entered the workforce and started saving for a home, at the time I would keep an eye on the market and there was homes for 200-250k I could see my self in eventually.
Now that I'm in a better financial position and looking to buy that price is just the down payment.

[seekittycat]

My parents and older relatives are celebrating how the money they have sitting in the bank is going up with that higher interest and is thinking of buying a bigger house closer to the golf course. Meanwhile my company just went on a hiring/pay freeze and I'm worried if by the end of the year my landlord is going to raise my rent again. It's really different worlds.

[KingUnKaged]

An entire generation of wealth, a full decade of nearly interest free debt that could've built infrastructure and provided service that could've been the envy of the world, squandered and left for future Canadians to sweep up

[Eagleable]

I love how I have to educate myself on this through YouTube rather than being taught in secondary curriculum.

[WarchiefPeebs]

I'm in the list of Canadians that COULD afford a home in my home province 2 yrs ago (and still can but it's now closer to buying a dump vs an actual home), but because of housing issues in other provinces, they migrated here.

Meaning the poorest province in Canada is now no longer liveable

I'd also add that this entire situation has absolutely destroyed the rental market, meaning those who aren't in homes are totally screwed.

[kithanakodah]

The "affordability rules" are a joke at this point. The goalposts have moved. Not only is the mortgage ridiculous, but fees/taxes/electricity/etc all have gone up. For a solo earner it's nearly impossible. Two income households it's very difficult. No foresight by our government to house our citizens or the millions of new immigrants. A failure and a betrayal.

[Teyros]

As a Canadian, I feel like I'm screwed when it comes to finding a house. I don't even care about living in Vancouver, but it would be nice to still have a job that brings in good income and allows me to have my own home.

I'm renting, all the houses here are over a million. I don't even know what to do. I'm a first time Buyer in the Housing Market, family can't afford to help me. All I'm doing right now is trying to save whatever I can every month.

Canadians are struggling and suffering.. So many people I know are working two Jobs just to put a roof over their head. I need guidance as well. I just graduated with a Robotics Degree and even finding work feels difficult. Wishing all the best of luck to other Canadians..

[Brennanoliver]

I am trying to avoid making any new buys at this point in other not to get sucked into a bear market trap.It's tough making money in stocks when institutional investors are the driving force behind the selling.. although I read an article of people that grossed profits up to $150k during this crash, what are the best stocks to buy now or put on a watchlist?

[rogaldorn]

In the United States when you take out a mortgage, you take it out with the bank at a set percentage rate and that remains the rate for the duration of the mortgage.

The idea that the interest on a mortgage can change over time after you have already bought the house is madness.

[StCrimson]

I think one of the big things missing from this conversation is just how much of the real estate in Canada is primarily built and sold for profit. Real estate is actually Canada's biggest and more lucrative industry so, when a new apartment building DOES finally get built, it's not designed for low-income affordable housing, it's designed as high-end condos meant for wealthy investors. Hell, Ford literally took a whole swath of affordable housing buildings and turned them INTO condos. And these investors are always shocked when, instead of college students or high-income couples, those condos are bought by families who literally just want a place to raise their children.
The REASON why Doug Ford was so slammed for converting the Greenbelt wasn't just because it was a campaign promise of his to NOT touch it, but also because he DIDN'T actually turn it over to be made into new homes for people, he gave it directly to his developer friends, handing them literally millions of dollars in free real estate which they could then do whatever they wanted with, most likely turning it into more condos that are built cheaply and shoddily and then are sold at ridiculous prices or rents because they can.
Because real estate is Canada's biggest industry, the government has absolutely no incentives to do things like allocate affordable housing or put in rent controls because those wealthy real estate corporations simply shove money into their pockets to NOT do any of those things.
Couple that with the increasing cost of living with things like electricity and food and you've got a recipe for homelessness on a grand scale because, in the end, most people DON'T actually want a house for an investment, they want it so they can NOT BE HOMELESS!

[AHulst]

As a Canadian, the housing and health care crisis have me so disappointed and frustrated with all of our politicians. They do basically nothing, seeing these major problems develop over years. It's ridiculous.

[jordanw]

We sold our house last year after it inflated almost 50% in 5 years. Saw the writing on the wall when the Bank of Canada printed 30% of the entire supply of Canadian dollars in 2020-11 "because covid". What did we expect? We sold, paid off all debt, and moved to another country and bought a house in cash for less than 1/4 of our Canadian house value.

[KimberlyWillowWood]

“You do not need to buy a house just rent ” is popular bad advice. But I’m wondering about the “cost” of no longer having a reliable income and loans to pay then you will become homeless for some time till you can bounce back on your feet. I’m still driving a 2008 Honda CRV with over 210k miles that was paid off over 10 years ago but I have gotten two houses. This is why we all need a good IRA. A Roth IRA is advantageous as it uses after-tax funds and allows tax-free growth. When I retired, I saved $3M million, and I won't be taxed on my withdrawals.

[devilsoffspring]

As a 46 y.o. Canadian, the one thing I absolutely CANNOT get over is that to have a generic, boring, run-of-the-mill life in Canada, you have to be wealthy.
I've felt that way about my stupid country for almost 40 years now.

[jer]

As an American, this is terrifying knowing our housing crisis could get so much worse.

[AlexSmith-wipm]

Loved the video! Urban planner here in Ontario, and can fully agree with the point made on lack of supply. A major contributing factor right now in addition to those mentioned, is the lack of infrastructure. There is insufficent sewer/water capacity in the plants, and insufficent funds being made available to upgrade those facilities. We can't build homes if they can't be serviced.