Actual Housing Demand and The Central Banks, Why Housing Prices Will Depend on The Property For Sale, Will Fraud Demand Finally Be Exposed – Calgary Alberta home prices are trending up – January 16, 2023,
Canada’s modern economy, in many ways, is centrally planned and has reached a point in which a lot of COMMERCIAL property has turned into condominiums. Many of these condos are UNOCCUPIED, most owned by individuals who bought to flip or hoard for a later date. I’ve long argued that there are a lot of EMPTY condos where purpose rental housing should be.
Alberta is a Canadian province that hasn’t gone full commie when it comes to rent-controls; you would think the lone province without rent controls would have the most expensive rents in the country, but that’s not true; Alberta fairs well in terms of rent prices. In Canada Montreal, Quebec has the lowest rent in Canada, but that’s mostly because of Canada’s transfer payment scheme that finances Quebec’s many price control schemes.
Nobody in Canada that understands what’s going on takes anything “Quebec” seriously, as their entire standard of living, in many ways, is financed via transfer payments of some sort. So when you see Calgary, Alberta, as one of the cheapest places to rent in Canada, considering it’s freer market housing policy, one has to think to themselves, why is the Calgary housing market still posting gains while interest rates are rising while most Canadian provinces are positing losses in real estate?
Well, this all plays into my theory of how wrong the FEDERAL central planners got it when CMHC, a State Owned FEDERAL Crown Corporation, began ensuring mortgages. In the 1990s, it was damn near impossible to get a condo built in most parts of Canada because people had to put at least 20% down. Putting 20% down on Condo SUCKS unless the condo is worth it.
If you look at the average condo today, they look like tiny apartments, nothing impressive about them, yet, in some instances, there are BIDING WARS for these condos. These bidding wars exist primarily because of mortgage insurance and home equities and lines of credit that allow people to put deposits down on properties they otherwise couldn’t afford.
Now, as you’ll learn, not all condos are bought with mortgage insurance. Still, you see if you have equity or “free money” because the values of your real estate properties keep rising, allowing you to use them like ATM machines, you might quickly find yourself with a giant real estate portfolio in a few short years.
All is well and good until the market becomes stagnant; when the market becomes stagnant, market participants start flocking to QUALITY. Now, when it comes to immigration, I don’t consider all immigrants’ quality; most immigrants will be RELIANT on government welfare. Their ENTIRE lives in Canada, and many will not to rent and will never be able to afford to own.
Now, if you’re a condo owner, you might think to yourself well, this guarantees that I’ll have tenants, right? Well, yes and no, you see, because in most parts of Canada, the rental markets and the housing markets are out of whack, a lot o condo owners feel like rents should be higher to reflect the price they’re paying for their mortgages, but these condos and homeowners often forget that the housing market is in a BUBBLE.
Without these 5% and ZERO down mortgages, many people can’t even get into the housing market; making matters worse, the government is even allowing DOWN PAYMENT LOANS because so few people are QUALIFYING for mortgages, as consumer price inflation is eating away at any potential savings they might have or be able to accumulate.
With that said, why then, at least for now, is Calgary posting gains where other provinces are positing losses? Well, the answer to that question is that the average Albertan makes about $78,100 per year. Compare that to Ontario, where the average resident makes $55,322, or Quebec, where the average resident makes $46,126.
So in Alberta, rent prices are cheaper in major cities, and the average resident makes almost double what is made in Quebec. Quebec, by the way, also pays a lot more taxes than the average Albertan, meaning that Quebec’s productive class is PUNISHED for being productive. Now, with that said it’s not to say that Albertans are enjoying a better quality of life than Quebecers because, you see, that’s the problem with TRANSFER payments.
Transfer payments give the illusion of Quebec appearing to be SOLVENT when in fact, it’s not. Because of Quebec’s price control mechanism, parts of Quebec are now facing HOUSING SHORTAGES.
When it comes to housing, most people ASSUME it’s as simple as getting housing built, but the building is not the problem; the problem is the cost of MAINTENANCE. The government of Quebec knew this day would come, and one should ask why wouldn’t they prepare for it. Well, the truth is EXISTING housing in Quebec is bankrupting the province.
On of the reasons Quebec is a “HAVE NOT” province is because of it’s policies around housing that, in many ways, Western Canada has been financing for DECADES. You have to remember that transfer payments that come from Western Canada’s PRIVATE sector are funneled into Quebec’s PUBLIC sector, which by the way, includes what many call VOTE BUYING.
If you’ve ever heard politics in Quebec, their politics REVOLVE entirely around vote buying. Canada’s communist supply management system revolves around Quebec, and even the FEDERAL Conservative Party of Canada has to make sure that it supports supply management if it wants its candidate to become the next Prime Minister.
Now, all of this is well and good when asset price inflation is the only inflation problem, but once consumer price inflation becomes problematic, now you have a whole new set of problems. Quebec and other left-wingers in Canada have decided to wage war on fossil fuels, and because fossil fuels are needed in every single part of the supply chain, consumer prices are up.
Higher consumer prices are not up because of the private sector or the market, consumer prices are up because the federal government of Canada, wants to phase out or modernize the supply chain without considering the actual price tag to do it. Now, if, let’s say, people were not in debt, maybe the pain wouldn’t be felt, but most people are deeply in debt for their house and heavily dependent on the price of their home going up.
But as money get’s harder to hoard, investors are going to flock to quality, and this is where things, in my opinion, get very interesting. Because now, the money people of a certain region make annually becomes extremely important. In Ontario and Quebec, the numbers suggest that the average citizen can’t afford to buy a BACHELOR condo, so what does that do to the condo market? if the interest rates remain as they are now for a couple of years?
I don’t know the answer to that question, but what I do know is that on paper, Alberta looks like it should fair better than most provinces in Canada when it comes to real estate.
With low supply and high demand, Calgary home prices are trending up | calgaryherald.com
Calgary’s housing market is expected to stay strong this year due to growing demand from high rates of immigration to the city and less than two months worth of stock
Interesting times ahead!