There’s a widely held belief that real estate prices will, inevitably, only rise higher and higher. There are, however, long periods when that maxim is decidedly not the case.
Toronto is a prime example. After a surge in the 1980s, the Toronto market peaked in 1989 and didn’t regain that high until 2002 – more than a decade later. A 1995 peak in Vancouver was the high-water mark until eight years later. In the United States, it took a decade after the 2006 peak before that level was seen again.
Each example is different yet each shares central elements, from burst bubbles after manias to the gyration of interest rates and economic woes. What’s clear is real estate can go sideways for a long time, even if everyone believes the natural direction is up.
As Canada works to build a path to housing affordability, the most important thing is new supply – a lot of new homes. But just as important is changing the culture, the mindset that prices are destined to escalate.
Housing has long been expensive but the situation is now extreme. Five years ago, about 60 per cent of households could afford a condo. Last year, it was less than half. And that’s for a condo.
After many years of dizzying gains in the price to buy or rent a home, it’s become widely clear that higher and higher isn’t ideal and comes with many costs.
How to restore some semblance of affordability has shot to the centre of the political debate. This week, Canada Mortgage and Housing Corp., which has called for millions of new homes, held a conference on the question in Ottawa. The Globe on Wednesday illuminated how we got here in a series of charts, from record-low rental vacancies to the way-too-long time it takes to get new housing approved and built.
Many new homes are needed, yes. As this space showed last week, a burst of construction in booming Austin, Tex., has helped reduce the price to rent.
The shift in entrenched philosophy is also necessary. We need to rein in the housing market mindset that up is good, so pervasive in North America.
The mentality leads to speculation, starting with many families betting on the ever-rising value of their home as a pot of retirement savings. Generation Squeeze, an advocacy group for younger Canadians, puts it this way: “break the addiction to high home values.”
The celebration of higher home prices is deeply ingrained. Ownership in Canada peaked in 2011 at almost seven out of 10 households. Almost all political leaders own their homes and many are landlords. That’s the reason that as things started spinning out of control in the 2010s, blame was first cast on factors such as foreigners or investor speculation without grappling with the real problem: not enough housing.
In each example of real estate markets going sideways for a long time, Toronto, Vancouver, the U.S., it was always considered bad news. The Wall Street Journal lamented Austin’s shift from “America’s hottest housing market” to “running in reverse.”
The bigger goal is to rein in prices, bring them closer to people’s incomes.
The Teranet-National Bank house price index shows the price of housing rose 4.2 per cent annually from 2000 to this year, excluding inflation. Household incomes, according to Statistics Canada, rose by far less, about 1.2 per cent a year from 2000 through 2021.
The goal of a steady surge of new supply would be to establish a lasting buyer’s market. Critics of new supply will often say it won’t ease prices but big housing investors specifically warn shareholders that “competition for residents” and an “oversupply” of homes will affect the prices they charge.
Instead of hoping and cheering prices will someday soon recoup and exceed previous highs, the target has to shift to an extended, and welcome, period of nominal gains. If home prices this century had risen at only the rate of inflation, they would be less than half of what they are – and at levels last seen in 2006. Beyond a return to affordability, a market that offered such nominal returns is what would undercut and eventually end housing speculation.
Decades of culture and policy got us here. It will take time to restore affordability. It will take time to change the culture. But as Canada sets the initial foundations to allow for many more new homes, it is starting on the path to affordability.
GeologicAI has developed “robot geologists” for the mining sector.
Calgary-based GeologicAI is acquiring Resource Modeling Solutions for an undisclosed amount, a move aimed to accelerate the company’s advancements in the mining sector.
GeologicAI said the deal will expand its product and service offerings while combining teams and respective tech.
“We are focused on continuing to expand our capabilities by integrating new and emerging technologies.”
Grant Sanden, GeologicAI
“This integration strengthens our position in the industry and enhances our ability to deliver groundbreaking end-to-end technology solutions to our clients,” GeologicAI founder and CEO Grant Sanden said in a press release.
“We are focused on continuing to expand our capabilities by integrating new and emerging technologies.”
In 2022, mining companies were leading the way in adoption of advanced technologies compared to other sectors, according to a Vancouver Economic Commission report published late last year.
The report, which used data from Statistics Canada, found that nearly a third of surveyed businesses in mining, quarrying, and oil and gas extraction used artificial intelligence (AI) technologies.
“Commonly cited reasons were to develop new or improved processes or operations as well as for process flexibility and cost reduction,” the report stated.
Founded in 2013, GeologicAI uses artificial intelligence and robots to help geologists capture data in rock and core samples in a quicker fashion than manual core logging processes.
The company uses high-resolution imaging, XRF, and hyperspectral data to analyze rock samples and identify resources below the Earth’s surface, with the goal of helping clients make better decisions about where to explore and how to design and operate mines.
Resource Modeling Solutions, another Calgary-based firm, was founded in 2018 as a consultancy for “geostatistics and geometallurgy challenges,” according to its LinkedIn, and offers expert technical work, custom software, and training solutions for mining, environmental, and petroleum companies.
Last year, GeologicAI closed a Series A funding round of $30 million USD, backed by Bill Gates’s Breakthrough Energy Ventures and Export Development Canada. It claims its tech is already being used by “some of the world’s leading mining and exploration companies,” and in countries like Finland, Brazil, Chile, and Australia.
Feature image courtesy GeologicAI.