For the first time in history, four generations—Boomers, Gen X, Millennials, and Gen Z—could witness a 🇨🇦 housing crash together.
Boomers remember the turmoil of the late ‘80s and early ‘90s.
Now, the stage is set for a collapse that could echo for decades.
— Shazi (@ShaziGoalie) December 9, 2024
1/ November saw a 23.9% increase in the number of unemployed (+73.2k in ONE month). That’s the largest spike since the first three months of the pandemic. The unemployment rate is now at 9.2%, the highest since mid-2021.
— Shazi (@ShaziGoalie) December 10, 2024
3/ For context, Toronto’s jobless population (380k) now rivals the entire population of cities like Halifax or Victoria. This is an unprecedented burden on Canada's largest economic region.
— Shazi (@ShaziGoalie) December 10, 2024
6/ Real estate prices are climbing, even as unemployment rises. With fewer jobs but higher housing costs, the affordability crisis deepens. How long can this disconnect last?
— Shazi (@ShaziGoalie) December 10, 2024
📢 Utter decimation in Brampton 💔
📍Brampton, ON 🇨🇦
Horrific losses in Brampton as homeowners exit the market 🏠💸.
Interest rate cuts are providing no relief as homeowners take savage loss after loss 😔.
Both of these properties were bought in mid-2022, while the market was… pic.twitter.com/6mXjfLKnO7
— Shazi (@ShaziGoalie) December 10, 2024
The housing market in Canada has been on a precarious path for some time. The high levels of household debt, combined with rising interest rates, have made homeownership increasingly unaffordable. In 2024, the average home price in Toronto has decreased by 10% compared to the previous year, signaling the beginning of a potential market correction. However, for many, this decline in home prices is too little too late, as they struggle to keep up with mortgage payments amidst rising costs of living and stagnant wages.
One of the most shocking details is the rate at which properties are being foreclosed. In 2024, there has been a 30% increase in foreclosures compared to 2023. This surge is reminiscent of the early 1990s when a similar economic downturn led to widespread financial hardship and housing market instability. The difference now is that multiple generations are feeling the impact simultaneously, with Millennials and Gen Z facing unprecedented challenges in achieving homeownership, while Boomers and Gen X are grappling with maintaining their financial security in retirement.
The historical context of the late ’80s and early ’90s housing market crash serves as a cautionary tale. During that period, high-interest rates and economic recession led to a dramatic decline in property values and a surge in foreclosures. The recovery took years, and many families experienced significant financial loss. Today’s potential housing crash could have even more severe consequences due to the interconnectedness of the global economy and the higher levels of debt carried by households.
Connecting all the points, it is clear that the current economic conditions are creating a perfect storm for a housing market collapse. The combination of high unemployment, rising interest rates, and substantial household debt is putting immense pressure on the housing market. As more properties fall into foreclosure and home prices continue to decline, the financial stability of Canadian families is at significant risk.
The coming months will be crucial in determining whether this potential housing crash can be mitigated or if it will indeed echo through generations, much like the economic downturns of the past. Policymakers and financial institutions must act swiftly to provide support and prevent a full-blown crisis.
Sources:
https://www.theglobeandmail.com/real-estate/toronto/article-canada-housing-market-outlook-2024/
https://financialpost.com/real-estate/toronto-housing-market-crisis-2024
https://www.cbc.ca/news/canada/toronto-unemployment-crisis-deepens-2024-1.6185199
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