Average Incomes Are NOT Good Enough To Buy A House In Ontario & BC

Uh, Mr. Butler, uh, so witnesses have

testified that Canadians are paying

their debts by refinancing, stretching

them out over a longer period of time,

uh, by, um, exhausting their savings and

by skimping on other purchases,

including basic necessities. Uh, is this

a sustainable way to deal with

increasing indebtedness?

>> It is not sustainable. It it constantly

proves to be unsustainable. We have

observed in the last 18 months a

somewhat alarming growth in power of

sale transactions. Bank ordered sale

transactions. Mortgage default rates

have continued to increase. We

anticipate mortgage default rates will

also increase this year throughout the

year and potentially into next year.

There is just not enough not any good

way to handle extremely large mortgages

which people took on in 2020 2021 2022

first quarter. Um as soon as the rate

goes up unless incomes have soared

there's no easy way to manage that.

>> Okay. So, so really the only way out of

the debt scenario we had have which I

would say also extends to to the the

federal and even provincial deficits is

a more productive economy with higher

wages, more economic growth, more

economic activities. So that and until

people's wages and salaries can grow

into servicing these debts, it's just a

spiral. You know, the biggest change of

the 30 years I've been in the mortgage

business is that much more normal

salaried people could buy houses 30

years ago. The the difference is

striking. Um it was quite normal for the

produce manager uh at a grocery store

and a uh part-time nurse to be able to

easily find get 5% together and buy a

home and comfortably manage it uh quite

successfully. Uh those days are gone. Uh

the people we see buying houses today

are almost consistently in Ontario

anyway and certainly British Columbia,

they're almost consistently in the top

10 or 15% of earners in the country.

Those are people buying houses or there

are people getting massive assistance

from their parents who are using some of

the accumulated equity in their homes to

assist their kids in buying a home. So

that you know I don't mean to sound

nostalgic but I far preferred the old

way where old ordinary people making

ordinary wages could go out and buy a

home. So obviously there's been some

stagnation in wages,

>> right? Uh how long would it take a a you

know a normal person such as you've

described a person with a with a good

solid full-time job. How long would it

take them to save up the minimum down

payment on a home in Toronto? Well, in

if you look at just the GTA,

particularly Toronto, um the reality is

they never could. That's the reality

today. Even with falling prices, even

with prices have fallen like 26% in the

GTA, they still couldn't. If you're

running about $110 $115,000 income, you

have to pay rent, you have to eat, you

have to you have to live, um you pay

taxes, you could not possibly accumulate

a satisfactory down payment for a price

house price that's still like a sort of

just under a million dollars.

>> Even if you could, would you be able to

qualify for the mortgage?

>> You would not.

>> Okay. So, a normal person with a normal

job cannot save up the down payment or

qualify for the mortgage. So, we're back

to now mom and dad

>> in in Ontario. They are absent from our

practice. Yes.

>> Absent from your practice. How about

British Columbia?

>> They were absent sooner in British

Columbia.

>> Some of the other larger cities,

Calgary, Edmonton, that are not in in uh

>> Well, well, Calgary may have caught the

Toronto virus. So, we'll see what

happens.

>> Okay.

>> Uh it's really impossible to talk about

the debt crisis without talking about

real estate in Canada. uh what what's uh

what's what's happening right now in in

in the real estate market? What's the

the health of the real estate market in

Canada right now?

>> Well, the health of the real estate

market uh is that in Quebec, it's

probably just starting to slow down. It

there's a very buoyant market. Atlant

Atlantic Canada is experiencing uh

considerable run-ups in prices uh which

may turn out to be against their own

interests. Um the PE because it's

Atlantic Canada has never been a hot bed

of massive uh incomes. Uh but there

again this sort of virus that comes from

these big cities has gone across the

country. I I can only suspect that there

will be more price reduction in Ontario

and British Columbia this year. Uh again

a slowdown in in price appreciation in

Quebec and there will be more power of

sales. There will be more people

struggling to make their mortgage

payments. There will be we reached a

landmark in the GTA last quarter. there

were absolutely no condominium starts of

any description in the GG.

>> So if you can continue there, so because

we've continually heard that that there

will be housing supply and that uh steps

the government have taken will lead to

housing supply. Uh we've argued that

that no for years we we've said it's

it's going to get worse before it uh

before there's any sign of it getting

better. So, the current health of and

and situation of housing starts u in in

I guess the market you're most familiar

with in Toronto

>> in all of Ontario. Uh with the minor

exception of Ottawa, um the the housing

starts, even low-rise housing, not just

uh high-rise housing, have fallen off a

cliff. That's reality. They are so low

as to be dangerous to the health of the

construction industry in this in the

province Ontario. All right.