Here we have the CMHC housing market data from 1948 until present. This includes starts, completions and units under construction. As you can see we are in completely unprecedented territory for the number of units under construction. Local builders really have no idea how much of a supply glut they are creating right now. This will be unfortunate for them but fortunate for me because I'd like to buy a new home at a steep discount. Bring on the supply!
As you can see from this second chart, population growth hasn't been the driver for this new construction and if we had more recent population data we would also see this trend continuing of a low ratio of starts to new persons. This will inevitably cause a supply glut and prices will fall. Builders are continuing to build because people are still buying the units they are putting onto the market.
The problem is that many of these people are either:
1) Speculators who plan to flip for profit - good luck with that
2) Wanna-be landlords who are going to bleed a tremendous amount of cash to hold on to their 'investment' and who will eventually sell because they can't afford to subsidize their renters, like me, for very long.
You can easily see that this is an unsustainable situation. Eventually the carrying costs of an average property must be equal to or less than the income from rent.
Thanks VHB. You give energy to this tired blogger.