My Claims Regarding The Canadian Federal Government Artificially Created CONDO MARKET Boom Finally Exposed: More Canadian condo investors are hitting the sell button – December 25, 2022,
a Vancouver realtor named Steve Saretsky, in the article, I point to below, talks about the Condo market and people selling. I disagree with Steve Saretsky regarding where he imagines the condo market is headed, but I do appreciate his input. My position regarding the Canadian condo market is that if it survives, it’s likely because the Canadian dollar has been debased
Regarding foreign homebuyers in the Canadian housing market, I speak to people on the financial side of this, and typically foreign homebuyers use a conduit to make their purchase for them. Meaning imagine I live in Hong Kong, and I use a family or a contact in Canada to purchase the house or condo for me; this is why I often write about the Canada Mortgage and Housing Corporation’s (CMHC) complicity in this because this exists primarily because of low money down mortgages.
When you have a federally mandated policy that allows people to put the minimum down to purchase a home, that’s exactly what they’re going to do, meaning that the risk now falls on the Federal Government to save thousands of people from default in the event of an economic downturn. This is why I personally believe the Canadian dollar is headed for a STEEP debasement; I’ve actually so far been impressed with Tiff Macklem for raising interesting rates.
Will Tiff Macklem, Canada’s current central banker, actually fight inflation? By that, I mean inflation is still running above 6.8% every month, and currently, central bank interest rates are currently 4.25%, so the Bank of Canada hasn’t actually been fighting interest rates; it’s been raising interest rates in hopes that CONSUMER PRICE inflation will ease.
My position on consumer price inflation is that it can’t ease because we’re on a PETRODOLLAR fiat monetary system in which the current regulatory environment that regulates oil and other fossil fuels makes it EXTREMELY costly for stigmatized energy producers to bring products to market. These additional costs domestically have to be passed onto consumers, and this also allows OPEC+ more CENTRALIZED control over global energy prices.
Because, as an example, the Canadian carbon tax is a FIXED cost on energy usage, the effects of this tax actually fall on Canadian businesses, and if said Canadian business is being hit with carbon taxes and the consumers or buyers of said Canadian businesses don’t want to pay the higher costs, either the Canadian business has to go out of business or they have to change their business model, which could include job cuts or SHORTAGES of items that don’t sell well.
Shortages of things made domestically equate to more dependence on IMPORTS, which gives you a glimpse of what COULD happen to investments in Canada. Why this is important regarding the Condo market is that I argue that the current supply of condos in Canada are not reflective of what the demand would be had CMHC not had mortgage insurance and these low downpayment requirements for buyers.
Even with the rent controls, I think developers would have likely still built purpose rental housing had the CMHC not been so involved in the municipal and provincial housing markets. Whenever I see a mayor or a Premier of a Canadian province claiming they will do something about housing affordability, I can’t help but laugh because no matter what the Provincial and municipal leaders do, the Federal government is offering a much sweeter deal to real estate developers, that real estate INVESTORS are taking advantage of.
With that said, as interest rates rise and potentially remain elevated, I wonder how some people pay for their mortgages. I also argue that unless austerity measures are implemented, all of these higher FIXED costs to pay for the government are going to make paying down the debt more expensive.
These ridiculous carbon tax and climate alarmism economic policies are being led by current Prime Minister Justin Trudeau and Jagmeet Singh, but even if Prime Ministerial hopeful Pierre Poilievre manages to beat Justin Trudeau in a snap election in 2023, the likely outcome will be a union between Justin Trudeau and Jagmeet Singh to BLOCK everything Pierre Poilievre attempts to do.
This gridlock, with an expensive-to-manage government, will likely lead to a worsening Canadian economy potentially for three years unless Pierre Poilievre calls another snap election in hopes of gaining a huge enough majority to rid himself of the Left-wing party’s influence in Canada.
One of the problems Canada has is all of the government-dependent monopolies in the Canadian economy. As we’ve seen in the U.K., which currently has a Conservative government, a lot of people are FOR phasing out fossil fuels, and a lot of people are also for PRESERVING the Welfare State.
It’s for these reasons that I see debasement of the currency in the future; most Conservatives are not really conservatives; they just want to have their cake and eat it too, and if the Left doesn’t know how to make it happen, they’ll look to Conservatives to make it happen. This is, ofcourse, the problem with Democracy and it’s why people like me write about Swiss Democracy all the time.
We have a very archaic form of democracy in Canada and in most Western nations, and when the economic collapse inevitably arrives, I hope people are smart enough to address these democratic problems.
One of the reasons I believe in secession movements is to rid Canada and other developed nations of a Big Federal Government. In Switzerland, little emphasis is made on the Federal Government. Now, the Swiss democratic system is NOT perfect, but I think it should be studied more thoroughly because the Swiss have managed to stay out of foreign entanglements for a long time.
In Canada and America, Joe Biden or Justin Trudeau can get on the bully pulpit and say this war or these economic policies are best for Canada and the United States, and now whatever they decree is the law of the land with provinces and States having ZERO ability to shield themselves from Federal Government stupidity.
Furthermore, don’t for a second imagine that Conservatives in a federal government aren’t stupid or tyrannical either; one of the talking points of Pierre Poilievre is to attack Tiff Macklem, which in my opinion, is stupid because if you ask me, former Bank of Canada central banker, Stephen Poloz was far worse than Tiff Macklem.
However, people don’t like to count asset price inflation as consumer price inflation, which I find to be very weird. What I expect to happen if Pierre Poilievre becomes prime minister is for him to FIRE Tiff Macklem and potentially seek to make a spectacle of it.
Well, unfortunately, firing Tiff Macklem and potentially replacing Tiff with a dovish central banker will likely make this problem far worse because, again, I consider the inflation problem Canada is experiencing to be a PETRODOLLAR problem, and currently, a lot of western nations’ LIBERAL and Conservative all over the world have declared war on fossil fuels.
So not only will Pierre Poilievre have to shrink the government, which means FIRING a lot of government workers, but he will also have to resell fossil fuels to other countries. There will be a lag before positive changes are felt, and it wouldn’t surprise me in the least if this lag doesn’t result in a wave of bankruptcies or BAILOUTS, which will only ADD to the debt and recession that is already here but hasn’t been declared yet.
Because I don’t see any real demand for condos, I see it potentially crashing; what I don’t know is when it crashes if there will be bailouts or fire sales. I lean more toward bailouts. But either way, I’m curious to see what happens because if the condo market is bailed out, the Federal Government’s balance sheet expands while the cost for servicing debts is up, and fossil fuel demonization still exists.
More condo investors are hitting the sell button | financialpost.com
Watch: Steve Saretsky, a Vancouver realtor, talks about the outlook for the real estate market in 2023
Interesting times ahead@