Vancouver Housing ‘In The Dumps’ As Sales Hit 18-Year Low – August 2, 2018,

Well, the main problem with real estate in both Toronto and Vancouver are the types of condos that were and still are being built. The real question to ask is this. Is Canada a family friendly country? The answer to this question is yes Canada is Monaco although so will argue that Canada has become a tax haven, the truth is it’s not. Canada is a country filled with loopholes created by Leftist leadership that spans back to the political days of Paul Martin and Jean Chrétien.

The first thing that happened in Canada that created loopholes was the removal of Canada’s version of the Glass Steagall act which is why derivative based financial products in Canada have created a problem that can only lead to hyper-inflation. Currently, Canada is living in a glass house. I’ve been writing what about this since around March 2018. I have no idea why the Canadian dollar is as high as it is now. If you look at the fundamentals of the Canadian economy our middle class is screwed, really screwed.

Canada has a lot of unfunded liabilities approaching that unless drastic change is implemented soon will force the Bank of Canada to raise interest very high. If the BoC doesn’t raise interest rates well the Canadian dollar is going to slide severely. The market hasn’t really priced this into the Canadian market yet and I think there are 2 reasons for this. The first reason being that if you’re a smart investor you can make a ton of money during a suckers rally if you sell your investments at the right time.

Secondly because of Canadian regulations which they used to replace Canada’s version of the Glass Steagall act it’s not hard to know when the Canadian economy is in trouble. Worsening the problem is the that Canadians, for the most part, are brainwashed into believing that their government and banks are efficiently run. I mean let’s be honest here the Canadian economy hasn’t crashed since the late 1980’s. If I put little emphasis on economics and the economy in my day to day life, why would I question any of the nonsense being spewed by the Canadian mainstream media?

Well, the problem with the Canadian economy is that our Leftist policies have left us top heavy. It’s not to say that a person can’t start or run a successful small business in Canada, but expanding your small business in Canada, that’s very difficult because of our ever-expanding tax code and regulatory business environment. Real estate differs because banks up to now have been more willing to lend money to it. The reason for this is that Canadian taxpayers are on the hook if the real estate market crashes.

How Canadian taxpayers are on the hook hasn’t been discussed in detail yet, but obviously, the fix will be for the government to print more money which is going to depreciate the Loonie. Now, depreciation of the loonie in real terms shouldn’t affect people that are not in debt, but the real issue will be how will the government repay the debt caused by the coming crash because interest rates might have to stay up. This is why I’ve often talked about 100-year amortizations. Which as far as real estate goes equates to stagflation. Canadians have been talking about getting more trading partners, well that’s a nice thought but Canada has a very extensive regulatory business environment.

Canada, for the most part, has been taking advantage of America for so long that it’s actually priced itself out of a lot of other markets. The price of dwindling Canadian labor is extremely high, which in my world should be matched with a stronger Loonie, but Canadians have taken the approach of having a weaker loonie as it gives more incentives for U.S businesses to bring their business to Canada. Well, if Canada were to do business with other countries this type of practice isn’t allowed as much and they’ll charge Canadian products a tariff of their own.

Donald Trump did business internationally, it’s part of the reason the American president is so comfortable using the tariff tax to make other countries come to the negotiating table. Almost every country on the globe charges a tariff however the U.S has the most open business markets. Which is why you can find goods in America that you usually can’t find in Canada. How this relates to Vancouver real estate comes from the condominiums being built that weren’t built based on consumer demand.

Building a house that no family want’s to live in is one thing, building a condo that nobody family wants to get into extreme levels of debt for is something else. Because that’s how a city repels upper-middle-class people. Let’s say I’m a doctor and I don’t want to pay $2-million-dollars for a detached home. My thinking would be well if I’m going to buy a condo, then that condo should be a 3-5 bedroom large condo that my family can enjoy. Well those types of condos are in short supply and often only the Uber rich can afford to buy those condos and the maintenance fees alone on those types of condos are a mortgage all on their own.

Now think of a doctor with a family with that type of problem and then think about maybe a construction worker with 2 kids and a spouse to take care of? Where do they get $2-million-dollars from? If they do, how much time can they spend with their family? Plus if the value of their house doesn’t go up then what? To compound, the problem are the real estate speculators who are the competition of the domestic population. All of these government-created problems were designed in the late 1990’s when nobody dreamed that interest rates would go below 1% and stay there for an extended period of time.

Well now interest rates are starting to go up and well, we’ll see how this all ends. Consider reading the Huffington Post article below:

Interesting times ahead

Vancouver Housing ‘In The Dumps’ As Sales Hit 18-Year Low