Could Montreal’s Rental Evictions on the rise trigger a Real Estate Crash in Canada? – January 25, 2020,
Socialism or it’s better I say socialist policies have a way of creeping up on you. When there’s a free market capitalist society, the actual problem is not that people are making too much money, the reality of a capitalist system are the boom and bust cycles and some people’s reactions to them. If you’re on the losing end of a capitalist boom and bust cycle, you might turn to the government to change things and create some form of economic stability.
This is of course why a lot of people embrace Keynesian economics and moderate socialist policies, now, this history as to why some people embrace socialism is often ignored not only by Leftists but from people who consider themselves Conservatives and this is why historically, economic crashes caused by socialism have far worse consequences than the frequent economic deflations in a Capitalist cycle. Understand in free-market capitalism all a crash really is, is a LIQUIDATION SALE. So you understand where I’m going with this post, try to remember that Free enterprise capitalism economic crash is nothing more than a liquidation sale. Meaning something that used to sell for $10 now might sell for $1.
Now if you’re saying to yourself, that’s not a big deal why don’t more people embrace capitalism? Well, my dear reader, if it’s your store that is having the liquidation sale and there’s an option for you to use a politician to save your business, don’t assume that most business people or their employees won’t turn to the government to save their business from having a liquidation sale and possibly going bankrupt for not catering to the demands of it’s consumers.
Economic inflexibility
Nowadays people throw around the words “livable wage” as if it’s something a government should be forced to make as a mandate, but the reality of the situation is that wages are only ideal for particular repetitive jobs and wages should in actually be based on the market, not by the government. a Minimum wage is a form of price control, similar to a Rental Control. Now, in Canada, the CMHC prior to being a Government-backed insurer of PRIVATE mortgage insurance used to be primarily used for the building of rental housing. In Ontario where I’m from there is a municipal housing project known as Regent Park, well, CMHC helped to finance it.
But you see, that was government housing, for Canadians, now the problem with government housing has always been maintenance-related costs. This is why some Lib-Cons came up with the concept of the CMHC granting mortgage insurance to the private sector on a massive scale. No, big deal some would think, only that in many Canadian cities something called Government “Rent Controls” exists. So it’s important to remember that the people or entities with the money get to decide what type of housing gets built.
Being that CMHC no finances private sector projects for housing by providing mortgage insurance to individuals who qualify, more housing is being built for people and businesses who don’t want the property to rent, but instead people who want people to buy. Because remember, as an investment an EMPTY Condo can be a storer of wealth, an empty rental building space is purely a liability.
Now, as the Canadian population grows and the new Canadians migrate to the larger cities, supply for rentals isn’t keeping up with demand and this is fantastic news for owners of rental units, because consumers have fewer options, existing rental units can charge higher prices.
What can the Quebec Government do to Stop rising rental prices?
Being that Quebec embraces socialism, in my opinion, if this rental shortage in Quebec becomes a major problem, the Quebec government will take drastic measures to remedy it. The problem this time, however, is that the Federal Government is in record debt and part of Trudeau’s mandate is to fight climate change, which equates to Western Canadian provinces having fewer dollars to contribute to the Federal purse which is the money Quebec and eastern Canad use to pay for their public sector spending.
This is all manifesting itself in a period in which Canadian individuals are in record levels of debt and the high income low skilled manufacturing jobs that used to exist in Canada are disappearing and being replaced with lower-paying service sector jobs at an alarming rate. Worst still is the reality that a lot of Canadians are reliant on credit to survive! SO in the event lenders become more reluctant to lend money, Canadians are in a world of trouble, but even worse than that is the reality that lowering interest rates are even loosening financial policies won’t have that big of an effect on allowing Canadian consumers to have more access to credit.
I say this because in the event the Quebec government takes steps to remedy a housing problem that might get worse they could easily trigger the housing crash. I’ve listened to both the Liberals, the Conservatives, and the Quebecois leaderships and they either don’t have a clue as to what is happening or they’re being forced to pander to their supporters. The problem with the Canadian economy is that once the meltdown begins only austerity measures will fix it!
Hitler and Mussolini rose to power primarily because no politician wanted to be honest to be the people that the big EXPENSIVE Government was the problem. Public Sector workers don’t work for free and most of the public servants and the companies that require government monopolies to survive, in the event the reality that is facing Argentina, slaps Canada in the face that only Austerity measures can solve the problem, it’s unlikely that Quebec, Eastern Canada or Canada as a whole will embrace Libertarianism, the likely scenario is that Canadian socialists will double down and make the economic problem worse.
I’ve always thought Quebec would be the trigger to an economic collapse in Canada, but I was shocked to read that Quebec housing market was showing signs of being a bubble, the province of Quebec is known for having very low rental prices, yet below it appears there are loopholes to government monopolies and well, all I can say is this is a story I’ll be watching carefully because, with all the government subsidies and privileges afforded to Quebec, the market could easily interpret any simple financial or regulatory change in Quebec as a potential economic housing meltdown in Canada.
Quebec is the worst place to do business in Canada and they’re perpetual have-not province in Canada. In the event Quebec let’s say adds another layer of government to their housing and the market interprets this new housing board as communistic, and because Quebec’s government is already broke, they request the rest of Canada, namely “Western Canada” pay for it. I’m not sure under a Justin Trudeau led economy how the markets will react to it.
Investment is fleeing Canada, the investment not leaving Canada is real estate-related investments. I don’t think Canadians realize that the value of the Canadian dollar is becoming less relevant, the truth is the cost of living is becoming unbearable for the poor in Canada. Not everyone has access to credit and because those higher-paying ENTRY-LEVEL manufacturing jobs are leaving Canada via Carbon taxes and their higher costs levied by multiple layers of government, the slightest economic downturn, while the Federal Government reached record levels of Federal debt is an economic disaster Canadians have never experienced before.
Anyway, I don’t want to sound all doom and gloom, I’m sure thing will work out fine!
Evictions on the rise as Montreal’s vacancy rate hits 15-year low – Matt D’Amours | CBC
Interesting times ahead!