All these political clowns are going off about handing out more free money and the creation of a livable wage. I need to point out that a wage is something you receive for work rendered. If an apartment costs a million dollars and if the rent on that apartment is over $2,000 a month, then there is no such thing as a livable wage. It doesn't matter how much free money you print up and hand out, the whole system will crash.
The US Federal Reserve states that "Canadian real estate is still in bubble territory but excitement is fading fast. As higher rates approach, the index is showing a rapid collapse of sentiment. Central bank researchers generally believe markets that show persistent exuberance will correct. When is more of a mystery." Kinda like the Vancouver earthquake. Not if but when.
Wolf Street is reporting that "It’s curing a housing crisis where middle-class households are priced out of a market, inflated by rampant international speculation and large-scale money laundering, says BC’s Finance Minister." There seems to be two problems. People who don't live here buying up land as an investment and money laundering through real estate.
When I was in high school interest rates rose to 20%. As a result, the housing market crashed. Interest rates have never risen that high since then so we have seen an artificial extension of the bubble. Interest rates may never rise that high again but if they don't rise, no one will be able to afford a house. Perhaps that's part of their plan.
We all hear the term supply and demand. Well all good things must come to an end. I can't afford to live here any more. Soon it will be time for me to leave. If people leave, then housing will drop. That's the only solution I see. I guess it makes sense. If they top the laundering money at BC casinos, they'll launder the money in real estate wherein we all suffer.
The Canadian Housing Crisis Is Reaching Epic Proportions
Bubble burst risk: Canadian home prices predicted to fall by 24%
The Daily Hive is reporting that "A recent analysis by the UK-based international research group states home prices could drop by 24% between Fall 2022 and Summer 2024."
Investments in Canadian assets by authoritarian states should trigger national security review
I love the current value of my house but I want the bubble to pop big time so my children and others will be able to afford homes.
ReplyDeleteExactly. That's the main topic at work. What are our kids going to do?
DeleteYes ... in theory - you'd think the housing market would crash anytime now ... however, when you consider the first thing that Trudeau did after covid initially hit to boost the economy was to increase new immigration numbers to over 400,000 per year - that means an extra/new 100,000 to 200,000 people per year coming into either the greater Vancouver or the greater Toronto regions ... so in other words; they are using new immigrants to float both the housing market and the economy ... and when you look at the hard communist left the CCP has taken recently - there will be no lack of demand for people looking to get out out China asap.
ReplyDeleteYes that is another factor. However, even with this guaranteed income for refugees, that's not enough to buy a house in the current market. I think the biggest problem is foreign investment and money laundering.
Delete"I think the biggest problem is foreign investment and money laundering."
ReplyDeleteI think you are correct. This has been the case for almost 2 decades of, ultimately, outlier appreciation. Sam Cooper has proven it - - - even naming names. And Marc Cohodes has broken down the scam for years as well, through the prism of his acumen as a prominent equities trader. Only a fool believes the Canadian real estate bubble is organic.
Correct ... the local real estate bubble isn't organic ... pin meet cushion ....
Deletehttps://www.zerohedge.com/markets/canada-set-announce-2-year-ban-foreign-purchases-residential-real-estate
A two year ban is a good start but it's just a start. That bogus money laundering inquiry could actually do something by confronting the real estate money laundering that's going on now instead of just rehashing past history in the casinos.
DeleteAnother reason the two year ban on foreign investment is a scam is because it's part of the problem, reaction, solution paradigm. The government bans foreign investment for two years and raises interest rates causing a housing crash. Then when everyone loses their home they bring back foreign investment to buy the houses we lost at fire sale prices to save the economy. It's just another ploy to remove home ownership.
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