Dissecting Canada’s Inventory Problem: Why Canadian Housing Inventory Doesn’t Match Demand – April 1, 2022,

Does Canada have a housing inventory problem? Yes, and No! Yes in the sense that a lot of the housing built, was built for speculators, and no in that fact that a lot of the condos that were built would be better suited for rental purpose housing. Because Canada’s FEDERAL government intervened in the housing market via the Canada Mortgage and Housing Corporation(CMHC) and the Bank of Canada(BoC) has kept interest rates low to prevent the federal deficit from going out of control, there has been a lot of MALINVESTMENT in the Canadian housing market.

As an example, most Canadians do not want Shoebox Condos, but they’re being built everywhere, why? Because speculators want them and Canada’s protective measures of the housing market, equate to speculators seeing little to no risk speculating on the housing market in Canada appreciating. Once you understand this, you’ll understand why there’s an “inventory” problem.

You see it’s not that there’s an inventory problem it’s that housing doesn’t match demand because Canada built a speculators market. How does this end? I don’t know, but I have this feeling BANKRUPTCIES are coming and if Bankruptcies are coming, there is the potential for negative interest rates. Yes, Negative interest rates!

The consumer price inflation genie is out of the bottle, and unless the Bank of Canada is willing to fight it, and the Canadian government is willing to shrink or cut spending, Canada is headed for all sorts of financial WIZARDRY! Canada has a long way to fall, this is what people don’t understand, there are so many government redistribution schemes activated right now and rising prices equate to INDIVIDUALS being forced to cut back on luxuries!

This lowering the standard of living has recession written all over it, and how do you stop recession when you hate free-market capitalism? You engage in more government intervention. Maybe the government sends you a check in the mail for whatever reason they make up, but then their deficit goes up, right? Well, what do you think the mood of the country is going to be once interest rates start rising and consumer price inflation doesn’t stop?

If you ask me, what will happen will be negative interest rates! “People are hurting” and the government needs to do something about it, “these temporary emergency measures are to make sure Canadians can stay in their homes”. I see something like that coming. What happens to inflation when that happens? It explodes, this is why I don’t think we’ve seen ANYTHING yet!

Until I see Canada is ready for austerity measures, I see negative interest rates coming. Recently Justin Trudeau gave his government a pay increase, you know to keep up with inflation, it’s not like the Federal government was making minimum wages, they were already making above-market wages. The media barely mentioned this and most Canadians based on what I’m reading are looking for the easy answer, not the painful one.

Negative interest rates will be the easy answer, once it’s understood that the Bank of Canada has no GENUINE desire to raise rates. It sounds ridiculous now, but the bond market is already anticipating rate hikes, and based on the math, the system can’t handle it. Sure some people will hold on for as long as possible, but I see bankruptcies and once the bankruptcies start to mount, the easy answer will be to lower interest rates!

Interesting times ahead!