National home sales fall 14 per cent to lowest level in 5 years
Very short article about lagging sales in the Canadian real estate market. If you’re interested in reading it click the link below:
https://www.ctvnews.ca/business/national-home-sales-fall-14-per-cent-to-lowest-level-in-5-years-1.3929995
As I’ve been saying for years now, the Canadian housing market can’t decline, it can’t remain stagnant, it has to rise otherwise there will be a collapse. The fundamentals of the Canadian housing market are on shaky ground and the only thing keeping it together are the Canadians not defaulting on loans. If it ever becomes a reality that a Canadian real estate investor or home owner is stuck in a mortgage that’s worth a lot more than the house will sell for… Well, that’s a rather depression scenario. All of sudden, recently we learned that there’s a condo boom in Calgary and the basis of this condo boom is based on future demand, which are code words that real estate investors are gobbling up properties either to flip them or to rent them out.
This doesn’t bode well for fundamentals, in Toronto there’s a huge empty condo problem and it’s a huge problem. People want to blame empty condos on foreigners, when in fact most of the people buying these condos are domestic buyers using foreign capital. With all this bad debt, what Canadians aren’t paying attention too is the fact that the Canadian dollar is no longer being looked at as a Petrodollar. This is actually the fault of the Bank of Canada who kept rates lower than the United States, while Justin Trudeau’s Liberals continued to virtue signal and over regulate the small business community, to buy things now, Canadians will be in debt for later.
To make matters worse people forget Trudeau is running a deficit and most of the newly created jobs are government jobs. Basically turning Canada into a service sector economy. I keep having to remind people that Stephen Harper did little to reverse any prior Liberal policy. As soon as Trudeau took power he increased entitlements and has focused his attention on freedom of speech and regulations. All what Trudeau’s done may have not been exposed if say Hillary Clinton were President of the United States, But Donald Trump is the president of the United States and Trump is a business person, he sees the world from a business and marketing standpoint which means that Trump has not only the ability to negotiate from a business standpoint but Trump can also negotiate from a social standpoint as well.
In economic terms, this makes Justin Trudeau’s Liberals look like lightweights from an economic standpoint, because Justin is unable to see what’s happening to the Canadian economy vs. the U.S economy. All of a sudden the Canadian economy is no longer competitive. The Bank of Canada is losing control, Canadian banks now, do not care what the Bank of Canada does, most Canadian banks hoard U.S dollars anyway. What this means is the Canadian dollar is in free fall. I can say with absolute certainty, that I have no idea what’s keeping the Canadian dollar so high right now. It should be hovering around 68 cents U.S fluctuating between 65 – 70 cents U.S to purchase $1 Canadian dollar.
Although on the surface, Trudeau appears to be pro Alberta pipelines, it appears he’s just staying true to campaign promises. I don’t think these new age Liberals understand the age they’re living in. The internet is here and if what these Liberals are trying to do is have complete control over their economy similar to China well they better find a way to get Canadians working in sweatshops soon, because a service sector Canadian economy along with marxism is going to lead to a hyperinflation scenario as the free market tries to value the Canadian dollar next to something tangible.
Having the relationship between the Canadian dollar and the oil severed is not a good thing, especially when your next best industry is banking. I want to end this post by saying this, mark my words, the Canadian housing market can not remain stagnant for an extended period of time, it can’t be losing value with otherwise it will collapse.
Yes, around 50% of Canadians own their homes outright, but those values are based around what other people were willing to pay for homes in and around their area, if those people stop making mortgages payments, start walking away and there becomes a massive exit, what will happen is a collapse. The government made the barrier to enter into the housing market so high, that crash can quickly turn into a collapse as the smaller banks, the subprime banks exit the Canadian mortgage market altogether. People forget that it’s the fact that it’s because the mortgage pool in Canada is so vast why prices are able to get so high. If those lenders disappear or find that the Canadian market is uncompetitive or shaky, well… this is how economic collapses happen.
Interesting times ahead.