Toronto’s Condo Market Problem That Nobody Is Talking About, The Problem Toronto has If Condo Prices Don’t Go Up – January 27, 2021,
Even pre-pandemic, the Toronto Condo market was in serious problems, well, it was in serious problems if prices ever stopped rising. I don’t like to include the Toronto Condo market with the overall housing market, because a detached house in Toronto as an example can be torn down, renovated or even in some instances, I’ve seen three GTA homes trend into a lot of 40 condo townhomes.
The problem in Toronto are the high-rise condominium buildings, which have been in a bubble for years, and the beneficiaries of zero percent interest rates. Most people who care to know already know this, but the mainstream media is finally being forced to report on it because condos are being rented in record numbers.
Now by record numbers, the numbers in the article below point to 12,584 condos being rented in the last quarter, up by about 86 per cent from the 6,756 rentals in the same period last year. You have to remember that a lot of people with Condos probably have benefited in some way shape or form from the mortgage deferrals.
2021 Marked End of Mortgage Deferrals which in my opinion equates to the count down for most condo flippers underwater. Surprise surprise, Government workers have been the most solvent mortgage payers but people operating in the Private Sector are having the most problems, now by problems, I do not mean that they’re not paying their mortgage, if I owned a condo I’d do whatever I could to make sure those mortgage payments were made, what I mean is that many indebted condo borrowers are borrowing from other methods to pay for the mortgage, Strata
fees and whatever other costs necessary to keep their condo.
Q4 2020 Bank Earnings – The End of Mortgage Deferrals | canadianmortgagetrends.com
The coming condo crisis however is if these Condos can’t be flipped for a profit, ‘ve been saying for years, that although in some areas of the condo, people aren’t seeing price inflation, the reality is that housing prices all over Canada are inflated, most people point to immigration as their reasoning behind the guaranteed price inflation, but the truth still remains that most of the demand leans towards detached houses, people tend to settle for Condos and one thing the Pandemic has proved is that living downtown, could actually become a liability.
Now, I’m of the belief that the Condo Market has to rebound, but I’m not sure when that will happen, because the problem Canada as a whole faces, based on my numbers is a CASH FLOW problem. By Cash Flow problem I mean the cost of living is going to become unbearable for people closed to the poverty line.
Once this cash flow problem is evident retail debt is going to become extremely problematic, even with interest rates near zero percent. The percentage ALL Canadians spend on housing is already too high, but as I like to point out the government workforce hasn’t been feeling the pinch, it’s been the middle class in the private sector that’s been nearing the poverty line.
Why this matters is that the middle-class private sector workforce pays the vast majority of taxes, I like to remind people that public sector workers do not pay taxes, public sector workers re the beneficiaries of private sector taxes, in which the public sector uses and has income taxed taken from them, however, the public sector workforce wouldn’t have incomes without the private sector.
Because we’re no longer on a Gold Standard, people believe that we’ve solved the austerity measures problem, but now, austerity measures have now been replaced with a GUARANTEED increase in the cost of living. Where this becomes a problem is when wages in the private sector can no longer manage to pay the bills of the public sector.
In Capitalism, the problem is and will always be DEFLATION, in a socialist system which I argue Canada has right now, the problem will always be inflation, I personally call the era Canada is moving into LATE-STAGE-SOCIALISM which is derived from Karl Marx who created the term Late-Stage-Capitalism.
The problem Kal Marx pointed out about Capitalism was wage deflation, which screwed over the worker, well even Karl Marx never imagined that people would figure out a way to grow the public sector to the point that the public sector became the Bourgeoisie class long before Late-Stage-Capitalism would need to be imposed.
Socialism historically has ended up in hyperinflation but in the case of Canada, my belief is that this will be a slow march to hyperinflation, with affordable housing as the center of the problem. A lot of Condos in Toronto were built where rental housing should be and I personally believe one way or the other, there’s going to be a day of reckoning when that day of reckoning will occur, I can’t tell you, but you’re starting to see it form now.
Toronto condo renters, buyers landed negotiating power as Q4 prices dropped: TRREB | yahoo.com
Interesting times ahead