boomers were told their entire professional lives to invest in housing. it's their retirement plan. when they get to a certain age (75, 80), or perhaps when their partners pass, they will sell their house and move into an apartment or a retirement home. they will then live on what they make on the sale, combined with whatever pensions they're entitled to.
and, had wages kept up with inflation it would have worked out just fine. but, as it is, their houses have been rising at 10% (inflation adjusted) while wages have been broadly stagnant. this is a useful graph:
it claims the gap is debt. in young people, it is. in older people, it threatens to be the difference between their retirement assets on paper and their retirement assets in truth - if the bubble bursts, and if they make it long enough to see it.
the first chunk of the boomers will likely be shielded from this. but, ten years from now, the first of the boomers are going to start hitting their life expectancies. as they die by the thousands, thousands of properties will appear on the market. this sudden increase in supply is going to burst the bubble, as their children seek to wipe their hands of the assets and sell them off to the people that are currently being priced out. and, i might note that this will likely slow down construction, and possibly lead to a recession. we should be building things right now, but housing is maybe not the most forward-thinking construction plan.
there's a lot of cliches about the boomers, how they remade society and etc. i think it's less clear how much of what they changed is going to survive them. and, their run through time may be better imagined as a bulge on a graph that slowly recedes over time. on the other side of this population and wealth imbalance, things may start to balance themselves out a little bit better.
so, yes - it's a bubble. and, the government has done a lot to stop it bursting, and will continue to do so (those mass purchases of toxic assets will continue). but the one thing they can't stop is a massive increase in supply created by a mass generational die-off.
www.huffingtonpost.ca/samantha-brookes/federal-election-housing_b_8119138.html
it's often stated that gen x is the first generation that has done poorer than it's parents.
another way to look at it is that the boomers were the first to place their children in debt to themselves.
we're paying interest on their savings.
Cornell Hessing
The only bubble that will burst is the one surrounding your alternate reality. Of all the factors that impact the housing market in the GTA (or Vancouver), the only one that will change is the interest rate. They wont be creating new land...foreign investors will continue to have access (even if protectionist measures are employed, savy investors will easily navigate them)...etc..etc.
Also, it's worth noting that the moment prices start to decline, supply will tighten.
Seriously, talk to someone...if you're wait for the market to crash to capitalize, you're doing your future self a HUGE disservice. Get in the market...start small if you have to, but get in! People that bought $400k townhomes 2 years ago have already seen more than $150k in equity growth.
Jessica Amber Murray
i'm not waiting for anything to crash. if i had advice, it would be to tell boomers to sell sooner than later. but, housing is not like the stock market. that's the error you're making, here, and it's rather ironic given your language - you're conflating what is called real wealth with what is called paper wealth. paper wealth is not tied to any kind of physical reality - it exists in the realm of our imagination. so, we can inflate something like the dot com bubble just about as far as we will allow ourselves to because it's just all make believe, anyways. but real wealth has to conform to the reality on the ground. and the reality on the ground is that housing cannot deviate nearly as far from incomes as it has been without eventually coming crashing down. at some point, people will simply be unable to buy property at the price it's listed at because they are not able to generate the wealth that is required to do so. banks are not likely to ease lending requirements. so, these properties will either sit on the market unsold or they will need to come down in price. that is, housing prices will need to be corrected to better align with incomes.
as mentioned, the cmhc has tools that it can use to offset reality somewhat, but the truth is that it's been abusing this power for the last decade or so and this is not a good thing. it's been trying to convert real propertied assets into imaginary paper assets, and created a lot of delusional people with delusional investments in the process. cash in while you can, because that cannot last.
it can continue the fantasy for quite some time, but what it will not be able to fight is a sudden increase in supply. this is where the demographics are leading us to. at that point, market principles overpower state intervention. and, let's be clear: the reason housing prices are high is due to state intervention, not some conspiracy theory about foreigners buying up property.