Hard to fathom, but not everyone who comes here loves me. Less than 1% of daily visitors leave a comment, and nine out of ten are worthy of publishing. But some people are plain nuts. Especially when they want to toss the Chinese.
Because of people like you I am starting to hate this country u giant bearded DELETED.
You would rather let your tiny marbles get entangled in yer beard and set on fire then admit your favorite new chinese boss with stolen money screwing up buying up our RE from under cash poor Canadians…….DELETED
That’s a sample. Not the worst. But the volume of posts from xenophobes and whackjobs is growing. I archive the comments so the RCMP has something to do after a drone, or a Prius, takes me out. For 2011 the single-spaced Word document ran to 137 pages. Last year it was 208 pages. So far this year (and it’s still November), it’s 226.
What irritates people the most about my magnetic personality and laser-like thoughts? Lately it’s been my refusal to believe anybody other than the deluded masses who live in this country is actually responsible for houses people can’t afford. Foreigners influence every market in varying ways, but there are no stats to prove Canada’s more unique than the US, or Vancouver more impacted by offshore money than Seattle or San Francisco.
In fact, the vast preponderance of sales in Toronto, Calgary, Montreal and Vancouver are made by locals to locals. When they stop buying houses with vast amounts of borrowed money, whatever the price, or quit believing past gains are a guarantee of future ones, values will decline. It has nothing to do with how many Asian people you see on the way to the beer store. Mostly, as I started delineating days ago, it’s about the economy and jobs.
If you feel like worrying, then worry about this.
Commodity prices are weak, and likely to stay that way. Bad news for a nation where resource sales are so key. Fracking and other techniques have increased US oil production to eight million barrels a day and started that country on the fast track to energy independence. Meanwhile last week’s nuke deal with Iran and its sweet little foreign minister have folks expecting a new flood of oil coming from there soon. So, crude at 93 bucks a barrel sure looks like it’ll be worth less. Hope you didn’t just win a bidding war for an OSB McMansion in Calgary.
Canada’s job creation machine is running dry. In fact, in the past five years I’ve never known as many 50-something, middle-management guys who have been sent home. Most will never work again.
Our manufacturing sector is shrinking monthly. We lost 30% of our fabricated exports during the financial crisis, and they haven’t come back. More people are building condos than working on factory floors – and we all know that will soon end.
In 2008 Canada has a big current account surplus – we sold more stuff to the world than we imported, building up national equity. Today it’s a deficit four times larger than the profit used to be, sitting at 3% of the GDP. Without big gains in resource sales – which will only follow a surge in global growth – no reason for improvement. And that, say economists, means the dollar is at risk.
BMO, Nesbitt, Goldman, Scotia, National Bank – they’re all warning in various degrees about a toppling of the loonie. Bay Street says 93 cents is probable. Goldman is calling for 88 cents. A weak economy, they argue, will certainly be reflected in a weak currency.
Despite four years of dirt-cheap loans, a real estate gasbag and consumer debt overshoot, there’s basically no inflation. Prices rose at an annualized rate of just 0.7% last month, far below the Bank of Canada’s target range. No inflation means no real economic growth, no upward pressure on prices and no real wage gains.
This is nightmare stuff for policy-makers: they made money cheap so people would consume goods, spur demand and create jobs. Instead folks gorged on loans to buy houses which soared in value, creating more even debt and a nation so mortgaged that people sit at home with no savings, investments or disposable income. Then, employees at Sears and Best Buy get whacked.
Two years ago I suggested you buy America and sell Canada. It was evident we were on the wrong path, while the US entered recovery. Those who followed this advice have seen their Phoenix houses jump 40% in value and their US equity ETFs flower 25% in eleven months. As things enter a worse phase here, it’s hard to imagine a more at-risk asset class than residential real estate.
Well, it wasn’t the Chinese who forced us to borrow so much. Or made tacky Vancouver bungalows average $1.1 million. It wasn’t immigrants who choked off oil demand. People from away were not responsible for creating a country of condo-builders where exporters once stood. They didn’t turn us into speculators, when we used to be savers. The Chinese (or Russians, or Iranians) are just surrogates for our own malevolent wants.
You want cheaper houses? Just keep at it, Canada.