Sun columnist Doug Todd, who has been writing insightfully about the housing market for years, reported this comment from a Toronto researcher:

 “There’s only so long they can hold on,” he says, before being forced to sell.

All it would take to create a sudden oversupply of housing would be for two per cent more owners in a particular market to list their dwellings for sale, Scilipoti says. “This will take time to play out,” he says, but the downward process is in motion.

Just 2 percent.  And I doubt it will take much time.  Ex-AirBnB listings back into the rental supply might be enough on its own in our downtown market – snowballs to start an avalanche.

Almost all solutions to unaffordability in our housing market seem to assume a massive amount of new or repurposed housing will be required, in turn involving major investments, rezonings, interventions, or some form of decisive change.  Well, we got a virus that seems to have done the latter, and it may mean we shouldn’t do much more until we see how the impact.

Those who want to change the fundamental economics of housing, and the social order that goes with it, are reluctant to acknowledge that small changes or interventions can make a substantial difference – like a rental incentive, a non-market housing program measured in the hundreds of units, a seemingly minor shift in the market, immigration statistics or interest rates.  When you want a revolution, a 2 percent adjustment doesn’t seem to cut it.  When rents seem out of reach, 2 percent doesn’t seem a sufficient stretch.

And yet that, in its way, will seem revolutionary.

 

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  1. Indeed we will see some short term price reductions and higher vacancies as AirBnB owners list their properties or people are forced to sell due to these draconian lockdowns, higher unemployment and small biz failures esp restaurants and retailers.

    However, given high and continued in-migration and reduced new housing supply this will be shortlived, maybe to 2022 likely not even that long.

    Rental demand will increase as banks tighten their lending requirements and as people opt to rent rather than buy. Do not expect significant rent reductions.

  2. No argument there. The man has tertiary-degree hatred for the Chinese and expends most of his intellect calmly advocating their banishment, as if it were the most obvious thing in the world. He’d make a great White House immigration adviser.

    But he’s not a total dummy and it is good to see him occasionally steer his focus towards something that’s actually real. In this case he’s not wrong. There is a lot of supply out there that’s been intentionally kept off the market. I don’t know what the tipping point is, but even if a vaccine is available tomorrow this slump isn’t going anywhere for a while. Making investment units available to renters is eventually going to make more sense than holding out hope for a payday three years from now.

    That said, this will still be a correction, not the “Real Estate Armageddon” the Sun will breathlessly report. If rents and property values fell by 40%, we’d still be back where we were in 2014. That’s helpful for everyone who does not currently own, but for pundits hoping for a return to the time of the $45,000 Kerrisdale bungalo, it’d be more realistic to build a time machine.

    1. Neither rents nor property values will fall 40% from late 2019 price points in Vancouver, unless immigration is halted.

      2Q 2020 will be bad ie weak sales but only somewhat lower prices. 3Q heavy sales bonanza (assuming Covid panic over but masks everywhere) but weaker prices. Not terrible. Weak.

      Of course there will be the odd distressed seller. Distressed AirBnB operators and some condo owners will sell, thus reducing rental supply.

      Indeed plenty of inventory coming as shown in the UDI presentation from last week. Skip the first 2 minutes as empty .. https://www.youtube.com/watch?v=tqeT6GtlpqU

      1. I don’t think so either. There is still a lot of legitimate demand and lack of parity with supply, despite some being freed up in the next 24 months. Forty percent was a wild, worst-case scenario.

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