Over the summer, a friend had mentioned that he was looking at prices for cottages and boats. He wasn’t firm on making a purchase, but he’s been doing okay financially for a while, and with the kids getting a bit older, he’s starting to think about the next phase of his life. Some friends and family had been pushing him in the direction of getting a place on a lake or maybe just a nice boat that he could putter around in on weekends and dock for the winter. He’s not sold. He’s frankly a bit skeptical. But he had heard that it was a good time to buy.
And I went, huh. Is it?
Turns out, it is! During the pandemic, many people in the big cities (and there is no bigger city than Toronto in this country!) sought an escape from urban lockdowns by buying property in the cottage-country areas that ring the GTA. There was a huge price boom. Cottages — and the things that go with cottages, like boats — surged dramatically in price. But that’s over now. We won’t get data for a bit longer, since the annual selling-off period comes after Thanksgiving, as people like to squeeze as much use from their assets as they can and get one more summer in. But I did poke around a little and spoke with people who sell boats and cottage-country real estate. They all agreed that it was a buyer’s market. Some people who imagined themselves enjoying fun lives up north simply didn’t take to it as much as they thought they would. Others couldn’t afford it once interest rates spiked. Others have been ordered back to the office at least part-time and must be closer to the city. Others have simply decided that the catastrophe that is rural health care in this province is something they or their loved ones can’t chance.
There are lots of explanations for it, but, yeah. It checks out. Full-season country residences and large boats, especially ones you can live on, are now starting to sell off at prices that would have been shocking only a few years ago. People are trying to get out what value they can. It’s a huge opportunity for some and a huge loss for others, but, in any case, it’s interesting.
In a weird way, all of this came to mind when I read John Michael McGrath’s recent column at TVO Today. He asked where there’s actually such a thing as good economic news in a housing crisis. It was a thoughtful column and a persuasive one; John notes that things that would normally be good for the economy (more jobs, higher wages) make a housing crisis worse and that people who might normally benefit from good economic news can’t now, because the cost of shelter has wiped out their potential gains.
I confess that this is a bit afield of what John was writing about, but, as I read his column, I thought about those who tried country living and didn’t like it. Is there any good news for them? Probably not, really. But some might at least get away with “not terrible” news. Which ones? The ones whose pandemic-era venture away from city life didn’t require them to sell their residence in Toronto. They’ll be the ones who’ll make out okay. If they never sold their homes in the GTA, they can simply return to them (perhaps displacing a tenant along the way, mind you), and hopefully they’ll at least break even when they sell the northern home and toys.
But for those who sold it all — can they ever get back to Toronto or any other large city? Or has the cost of real estate simply changed too much for them to ever get back in?
I talked about some of this with John when he joined me for a chat about Ontario policy and politics on the radio show I host on SiriusXM. I mentioned to him a young couple I know that are starting to think about where to settle down and start a family and dig in on their careers — all the usual life milestones. They aren’t wedded to staying in Toronto out of any personal or emotional attachment to it, but they’re reluctant to leave it, because they worry that, if they do, they’re gone forever. They could absolutely live a better life (in terms of standard of living) elsewhere, and they could definitely have a bigger, nicer home outside the GTA. But their careers might force them one day to return to Toronto. They’d never be able to make enough money to get back onto the ladder of Toronto real estate. John countered with the story of a couple he knows whose marriage has effectively ended but are stuck in limbo trying to figure out how they can afford to live apart in the city.
As John and I were talking, a phrase popped into my head: hostages of the housing crisis. Take young couples afraid to ever move out, older couples trying to find a way to rebuild their lives separately in Toronto, older couples hoping to return after a few years up north and finding out that it’s no longer possible since their old neighbourhood is now out of reach. Particularly in our major cities, the housing shortage is shaping the decisions people make for their personal lives and their families. In some cases, it is quite literally forcing people to make choices other than the ones they want to make — and the choices they could have made if housing prices were a little less bonkers here in the Centre of the Universe.
So, yeah, that’s something I’m going to be mulling over for a while. John asked whether it’s possible to have good economic news in a housing crisis. I’m starting to wonder whether, for a growing number of Canadians, it’s possible to have any kind of good news at all.
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