I just think there are such bigger changes afoot. The 'correction' we can probably expect is slow price growth for the next 5-10 years then we'll see prices we would have seen eventually, it'll just take much longer to get there. It doesn't make any sense as price declines are discounts for investors and there are buckets of buyers on the sidelines with gigantic savings, along with the rise of investment funds seeking profit here. When people talk about a crash it's like prices will fall and then they can afford a home. There's no end to the changes that can happen to *what* you're buying. Airbnb'ing your basement will be mandatory. We will see laneway/backyard housing in more suburbs, which will give SFH owners a chance for additional revenue. You subdivide a single family home or take on a basement tenant. But they can rise higher because quality collapses in response. People think a correction is inevitable because prices are ridiculous and couldn't possible rise higher. They accomplished this without inflation because of wealth hoarding and the cost was rising inequality, which they don't measure and don't care about. But in a very real way central banks removed risk from markets by discovering they could prevent the worst damage from a recession by propping up the economy with limitless spending. Partly that's because it's like big banking decisions that are hard to see or even understand (even among experts).

I think people don't really see how much things have changed. If it becomes 100 people wanting 150 houses, then prices will significantly fall for sure, but how likely is that? That 100 people wanting 10 houses turns into 100 people wanting 50 houses, lowering prices naturally to the level that the top 50 can afford vs the top 10.

The only real case for better AFFORDABILITY is where the supply increase out paces demand. Right now there are far more people in wait and see mode vs earlier this year. The time to buy is when everyone is worried there might be a crash, since that might mean some of the top 10 go into 'wait and see' vs buy, and then people below them get a shot at getting in. The 10 people MIGHT be different, since a few in the bottom 90 may have more cash available so they'll need less debt, but I'd guess 9 times out of 10 it would be the same people. If interest rates go up a lot, prices will fall most likely, but it's still 10 people who get them and 90 that don't. If you have 100 people wanting a house, and 10 houses, then the top 10 earners/savers will be able to get the house assuming they are willing. This is why silicon valley became so expensive originally (albeit, the 50% pay bump was only for a subset of people who lived there, and not universal). Even if you gave everyone a 50% pay bump, the same number of of houses are available, so the same number of people will be without since the prices would just jump 50%. When you have a fixed number of assets with a growing demand, prices go up. Yes it's extremely possible, if supply does not move up with demand. Hiking up interest rates may also help a bit.

So based on this theory, the prime solution would be to introduce/enforce a heavy foreign buyers tax and vacancy tax. This might explain why CMHC data indicates a healthy mortgage lending market but the actual housing market is not healthy. My theory (not backed by data yet) would be that huge inflows of foreign money are driving up prices (parking assets overseas), causing existing homeowners to be able to leverage their existing property for more as their current homes increase in value, while pricing out non-homeowners from the market. So this data from CMHC would indicate that the current crisis is not even remotely similar to 2008 as it isn't subprime mortgage and wild speculation from your normal joe. Delinquencies are down (maybe because of easy credit), the % of mortgage loans held by people with 700+ FICO scores are up, and mortgage owners risk of bankruptcy (Based on bankruptcy navigation index - BNI) is decreasing.

The thing that I can't understand fully is that based on CMHC data (linked below), it seems like the quality of mortgage borrowers is actually increasing.

Are we in a housing bubble 2021 reddit