Why You Actually Can't Afford a House in Canada
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- Опубліковано 16 жов 2024
- The CPI inflation basket is being manipulated to show lower inflation in the months ahead. Ongoing asset price inflation is the result of an ongoing currency debasement via money printing, fiscal deficit spending, and rampant population growth. Governments are now raising taxes to offset their own creation of these asset bubbles. Houses priced in ounces of gold are getting cheaper.
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A full time minimum wage worker in BC was paid about $16000 = 40 ounces of Gold in 2004
In 2024, 40 ounces of Gold is about $120k.
This means that if you are currently making 120k a year. It is the equivalent of minimum wage of 2004 in terms of purchasing power. There has been massive unreported inflation without wage inflation to balance it
That's the missing component of Steve's theory.
Everything Steve says IS accurate, but wages need to follow to make it sustainable in the long term.
What we are left with in order to reach sustainability is either prices down or wages up, or a combination of both.
Yes, and it aint coming back
Days of being able to buy cheap gold are long gone. Days of able to buy cheap real estate in Vancouver are also long gone.
@@Observer168
Yup.
Vancouver will always be the playground for the wealthy going forward.
It has its own distinct market that isn't tied to local wages
@@Observer168 gold out performed RE, why aren't you holding that asset?
To my own research In Canada, individuals living in cars due to partial homelessness result from a complex interplay of factors. High housing costs relative to income, stagnant wages, and income inequality drive this issue. Job loss, weak social support, medical expenses, evictions, and lack of affordable housing also contribute, while systemic problems and inadequate policies further perpetuate the phenomenon.
Considering the present situation, diversifying by shifting investments from real estate to financial markets or gold is recommended, despite potential future home price drops. Given prevailing mortgage rates and economic uncertainty, this move is prudent, particularly due to stricter mortgage regulations. Seeking advice from a knowledgeable independent financial advisor is advisable for those seeking guidance.
I've remained in touch with a financial analyst since the start of my business. Amid today's dynamic market, the key difficulty is pinpointing the right time to buy or sell when dealing with trending stocks - a seemingly simple task but challenging in reality. My portfolio has grown by more than 5 figures within just a year, and i have entrusted my advisor with the task of determining entry and exit points.
You basically just named off a bunch of symptoms of the macro economic forces at play.
Recently, I've been considering the possibility of speaking with consultants. I need guidance because I'm an adult, but I'm not sure if their services would be all that helpful.
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’ Melissa Terri Swayne” for about five years now, and her performance has been consistently impressive. She’s quite known in her field, look-her up.
most of canadas economy is about real estate and the GIG economy, and not manufacturing or technology advancement. canadas productivity is at an all time low!!!!
Why would anyone want to manufacture in Canada when you can hire 4-5 people for the price of one Canadian in China, India or Mexico?
The days of Canada manufacturing anything is long gone. It’s much cheaper to manufacture somewhere else with lower wages and weak labour laws.
this was happening to a lot of countries in Asia. So sad to see this happening in Canada
@@Observer168 you can thank the overly greedy union workers for that. why should a LCBO warehouse worker be making over 100 grand a year? a monkey can do that job and yet they are allowed to exist. government union jobs are OK but not private manufacturing jobs. there was a time bud, when the NDP did not support all this immigration because it was killing canadian workers, but now they have embraced woke ideology and have become climate cultists!
I agree with everything you've said here. The Austrian School of economic thinking had it right. Unfortunately, most people are easily fooled and vote for governments promising them "free" stuff, and our university system and politicians have been influenced by Neo-Keynesian and "democratic" socialist ideology.
Bingo
Tbh it doesn’t go unnoticed for those paying attention, it goes unnoticed by those either not paying attention or those who still have faith in legacy institutions and the subsidized MSM towing the institutional narrative. Too many people are too ignorant these days. At least podcasts like this that speak some objective truth are growing in popularity, that is a promising trend.
With the above said, capital has had a stranglehold on labour for some time as a consequence of ZIRP. C-suites took on heaps of debt and used it for M&A, buybacks, dividends, etc while their private sector workers got shafted on inflation-neutral pay increases, so we definitely cannot discount the wage inflation lagging financial asset inflation or debarment (whatever your preferred manner of framing it). It’s why the weak th gap has blown out that much, those with assets for the sugar and those without got the hangover that they can’t afford. Governments are now bringing in social programs to offset it but it’ll really just drag more people down the ladder. TL;DR - what an absolute mess we’re in for the asset poor working class and the increasing expansion of government/fiscal debt.
Amen!
"We" didn't bring in 2.8 Million immigrants, Justinder and Jugmeet did.
Amazing how our biggest increases in population have happened during a supposed "pandemic" 😂
“We” voted for him twice, with democratic process we all agree to. Haven’t seen millions, who did NOT vote for him, climbing the steps in Ottawa. Canadians are weak whiners. Talk talk talk, click click click, boo hoo. What are you going to do? Nothing, like ALWAYS. People don’t have a clue what is coming. The slate will be cleaned soon. Wait. Canada exists for supply, that’s all. Everyone walks around like they either were just born this morning or just woke from a coma. Wait, useless eater.
they are just puppets - Its the same program in every Western country.
I still rather see rich immigrants than poor immigrants. Rich people would buy things up and fuel the economy but now we are just going sideways with less resources.
Semantics
Thanks, Steve. As a home owner of more than 2 decades and still carying a mortgage, I feel that Vancouver is becoming more and more hostile every year! The struggle of simply holding on to my one and only property, in an environment that offers nothing but fear and uncertainty such as high interest rates, high taxes, the official pro-tenant and anti-landord sentiments, the default penalties that get applied if one forgets to fulfill the requirements for filing for the empty homes tax and the province's vacancy tax, the hoops one has to go through to buy insurance for the property, etc are tolling enough, let alone finding, qualifying, and purchasing a new home!. In Vancouver, both tenants and landlords are victims of poor policies, especially when it comes to population management in recent years! Very depressing....
If anything, all the things you mention should tell you that the govt doesn't want RE prices to stay high.
It's unsustainable on just about every level.
BC should be the best place to live in the world but due to mismanagement and fraud/corruption, it has become the worst place to live. The irony of beauty around us and the stress to put food on the table.
@@Stormshfteryes they want real estate prices to stay high. Tax revenues depend on it
@user-vi8ci2bi6b. Do you live under a rock??? On the contrary, unfortunately, due to poor economic growth planning to generate revenue from other viable and potential industries, the government heavily relies on real estate prices being assessed and staying high because that translates into more revenue for them. Sources such as sales tax, property tax, property transfer tax, capital gains tax, foreign buyer tax, etc. are considered very easy money for the government. The higher the price, the higher the government's share. We are being taxed to death!!! In the early 20th century, this was called communism! In a country where more than 30% of its GDP relies heavily on real estate transactions and related activities, the last thing the government wants is to put downward pressure on prices! There's lots of money out there and these taxes are not a deterant. Unfortunately, it's the working class Canadians who pay the price. Canada is being sold off bit by bit!
@@iamthemusic69
That was before homeless camps buddy.
These camps will become the biggest political nightmare of a generation.
I spend half the year in Mexico and Canada is now worse.
And now, a home equity tax on the horizon. The people who are largely responsible for the problem are the same people in charge of solving it.
your tinfoil hat in on too tight.
@@RainCity3rd How so?
@@kellymae2421because no one is going after anyone's principal "home" equity.
@@RainCity3rdtime will tell😮
@@dwightcarlson7136Are you suggesting any current political party is actually considering applying capital gains tax on principle residences? I really can't imagine they would ever dare to as right or wrong Canadians would lose their minds. How dare the "hard earned" massive gains be taxed lol. Far more value convincing poor people to vote in favor of giving rich people tax breaks.
The BC government has to tax the only industry that still operates, real estate. No fishing industry, no logging lumber industry, no vacation, recreation, holiday destination or retirement industry. No federal government jobs, no military, no corporate head offices, just a few niche businesses like airports, cruise ships, docks and the movie filming industry. And hemmed in by ocean, the American border and mountains what do people expect?
Remove property and development taxes and replace it with land value tax
Still needs to be cheaper than a studio to compete in the market
Currency debasement goes unnoticed? A Subway footlong combo is almost $20 LOL
I believe what he means is the average Joe and Jane doesn't understand that prices going up (inflation) is debasement of the currency.
The last several times I walked into Subway in Vancouver, it was empty. I seldom go there anymore. Five visits, $100. Yikes!
I doubt very many people who eat gross subway have a clue how basic economics work though. we have a stated goal of having a low level inflation which incentivizes buying and investment over just hording cash. Its one of the pillars of modern economics...
@@RainCity3rdso insulting on so many levels
@@kevoreilly6557 truth hurts
Government causes distortions in virtually everything it touches. People that are in government have an inherent desire to be needed by people that cant exist without a daddy figure, but the population as a whole is always better off with less government, not more.
100%
the distortion is to benefit
the entities that brought the politicians to power
in Canada, 3 political parties are pumped and hyped by the media
to get you to vote for one of the 3.
basically you are voting in a represnetative of the corporate-ocracy.
I'm glad you're telling people about this. Canadians are mindlessly allowing government to destroy their standard of living. Printing money out of thin air and borrowing money into existence has killed Canada. I wrote Mulroney about it 34 years ago and it has only gotten continuously worse since then. MASSIVE depression ahead, and deservedly so.
Steve that one was absolutely masterful. One of the best pieces I’ve heard you do.should be shown in high schools
100% agree - how dare you work hard and have a second home, you should rent it out --- and you must have those renters stay in your house forever because we can't be assed to build houses for people.
Good stuff Steve. Asset bubbles from currency debasements are a known phenomenon - look no further than Argentina, Turkey etc... BUT -- just to add to your factors to consider - I always ask who's buying?
2020-2021 a lot of BC upgraders and small investors jumping in on super low interest rates.
2022-2023 - climbing interest rates .. Investors and REITs .. jumping in on incompetent immigration policy ... but also .. money launderers ... that group that is totally interest rate insensitive.
2024 -- REIT's and Investors are seeing a weakening of the economy and big backlash from immigration boo boos.. time to pull back. Money launderers ARE feeling the impact of more government scrutiny .. government is now reworking legislation and putting pressure on lawyers.. and also unexplained wealth additions. So ya .. reduce interest rates in Canada .. where are the buyers ? Why is everyone selling .. is it the top of the market ?? Uh .. think so. You may also find it interesting that Australia has been known as the haven of money laundering ..ahead of Canada .. and you'll see almost the exact same super bubble as seen in Canada .. Huge immigration inflows and abundant foreign purchases and money laundering. It's fascinating that Australia's governments over the past 15 years has been asked to get tough on money laundering .. and is only now forced to act -- as Aussies are choked with high prices and they have a massive homeless problem now. I also still can't believe the numerous reports on how easy it used to be to wheel barrel in cash to BC casinos -- govt casinos in the liberal days -- and wash the money. Of course now they use shell companies and unscrupulous lawyers. Anyways .. the heyday of super bubble in BC is over unless the world's millionaires and billionaires decide they prefer BC's 6 months of rain over Monaco's 360 days of sun. Ouch. BTW Steve - most popular - less scrutinized home purchase by launderers is not west van mansions .. but the average home. Hide in the mass part of the market transactions.
I'm hoping there will be a housing crisis so I can buy cheaply when I sell a few houses in 2025. As a backup plan, I've been thinking about purchasing stocks. What advice do you have for choosing the best buying time? On the one hand, I continue to read and see trading earnings of over $500k each week. On the other side, I keep hearing that the market is out of control and experiencing a dead cat bounce. Why does this happen?
Investing in real estate and stocks might be a wise choice, particularly if you have a sound trading plan that can get you through profitable days.
You're not doing anything wrong; you simply lack the expertise necessary to make money in a bad market. In these difficult circumstances, only really skilled experts who witnessed the 2008 financial crisis can expect to generate a large wage.
Recently, I've been considering the possibility of speaking with consultants. I need guidance because I'm an adult, but I'm not sure if their services would be all that helpful.
My CFA, Desiree Ruth Hoffman, is a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Thank you for this tip. I must say, Desiree appears to be quite knowledgeable. After coming across her online page, I thoroughly went through her resume, and I must say, it was quite impressive. I reached out to her, and I have booked a session with her.
Steve you JUST started looking at the demand side of the equation in recent months.
Is that your own chart Steve? Would love to know where to get it.
Don’t get the war on vacation home owners. Those people are at a minimum paying property taxes in a area their kids can’t go to school and funding a municipality where they reside a fraction of the time, but pay as much as someone living there full time. Also the second home areas you can’t make any money there anyway given the low wages. It isn’t like these people are hoarding workforce housing in the Vancouver area.
I love this kind of content Steve. Thank you!
Has more taxes ever made anything cheaper? Seems highly unlikely, but what are the historical statistics?
Would be interesting to know what happens with this tax we are paying. Where are they going. Canadians are paying a lot of tax and we don't know how they are spending it. How much corruption is in the system
Back door bank bailouts
on junk mortgages
that are starting to default by the tens and soon hundreds of billions.
The CBC😂
This rate cutting cycle, if it materializes, will not make homes more affordable. The Bank of Canada will only cut rates as the economy tanks and unemployment rises causing the dollar to fall in value. As wages drop and unemployment rises, home prices will fall and the Bank of Canada can cut rates. But homes still will be unaffordable if you are earning less or are unemployed. Home prices will then have to plummet to make houses affordable again. But foreign buyers that gain purchasing power because of a weak dollar, may actually keep home prices high. These foreign buyers should be discouraged from buying houses in Canada !!!
Your exactly right.
When Canadian RE became a global asset class it began to not follow the rules of the cycle.
Canadian RE needs to ONLY be accessible to Canadians who either plan to live in the unit or long term rent it out.
Like it used to be
Would they really still invest in Canadian RE when it's crashing?
@aaz1992
The rule of thumb is buy low sell high. So buying during a crash is quite lucrative for those with lots of cash.
What caused this housing bubble is people defying that rule and buying at the top. They will get scorched big time !
Sure except the majority of Canadians are invested in RE doing well. Any government which caused RE prices to drop the 40-50% or more to get to some level of affordability would never be elected again. The wealthiest generation would immediately stop spending even though they would still be well up on their houses. The more recent generations would be well underwater, completely wiped out. Renters and younger people are generally in jobs who are going to be more likely to be lost when the economy stops overnight.
Uhhh not only are they discouraged, they’re banned. However foreign buyers aren’t the problem…
Why would exchange rates affect the price of product that is produced and consumed locally? Do you think that people in Argentina pay a billion dollars for a roof over their head because their currency is even more debased?
The metals in Canada have been debased long ago. Debased means Base metals. Where is The silver and nickel in our current currency.? There's a difference between debasement inflation and purchasing power
Digital fiat is even cheaper to create than physical
Thanks for this explanation Steve. Canada is starting to look more like the US in terms of economy and RE. It used to look like we were about 10 years behind the US in terms of economic issues, but it's more like we are about even and being squeezed and lied to as well...
Thanks for this great video…the list of taxes is shocking… we don’t often realize how much the government has its hands out while nothing economically gets better. Thanks for creating such good content.
In the 70s and 80s Nobel Laureate economist Milton Friedman preached that inflation is caused only by one thing....excess money supply (printing). That's why it is so laughable that BOC recently declared that there was no evidence that the pandemic QE caused the run-up in inflation but rather it was caused by supply chain issues. Tell that to Mr. Friedman, Tiff😆
Tiff claimed rates would remain low for a long time
and companies and individuals should go ahead and get into debt for the long term.
One year later, rates had jumped 500%.
The guy should be selling shoes for living.
As with everyone else in positions of power, they did not get there on ethical, competence/merit grounds.
Milton is wrong IMO. The supply chain is a component. Shipping containers for moving stuff across the ocean basically 4x'd and prices went up as a result. It wasn't just straight-up currency debasement.
@@amiller2121
you got it backwards.
price of shipping and all else went up due to money printing.
@mth469 Sorry, I respectively disagree. Shipping containers got more expensive because there was a shortage of people, and I think a shortage of the containers themselves. I don't think money printing works fast enough to make have that fast an effect on the container prices.
Awesome explanation, Steve! Can you please call Paul Kershaw of Generation Squeeze and explain this to him.
An old school friend told me that one of his cousins who was selling Real Estate in Vancouver during the 80's somehow got a phone call frim a woman in Hong Kong wanting to look at some real estate and accommodations were made. She spent a month looking at 28 houses in Vancouver and then went back home. He never heard from her for a month and was he surprised - She bought 27 of the 28 houses she looked at. My friends cousin ended up with $500,000 in commissions as apparently retired. My friends wife verified this and I was satisfied
You were satisfied by your friend's wife? 😊
@@kqh123 Wife's verification
This would be right after Expo 86. I knew several people who had to move out of their rentals because of foreign buyers.
@@kqh123hahahhaa good one
This is a well known way for Chinese to launder their dirty money by moving them overseas. Among the Chinese commuinty, we are quite aware of the various methods of moving dirty money out of communist China.
Steve, most people didn't buy a second home because they worked harder; me st people bought a second home by leveraging their first home.
If you ask the vast majority of Canadians, they will say they work hard... I know I do...
Not discounting the rest of what you've said, which is all very true.
It's really telling that he does not mention this.
I did. Millenial nurse, no family money. Bought by saving for my 2nd property ( 3plex) . I did however leverage my personal home to get my 6 unit. It can still be done. Maybe not in Toronto or Vancouver though.
Astounding
@paulmcewen7384 my only point is that it can be done. People do still work hard to achieve things. It's not all inheritance or luck. Don't you think people should be rewarded for hard work and sacrifice? I don't think Canadians should just give up hope on home ownership. There is a big country outside Vancouver and Toronto with opportunities.
@@mdi6792 Take yourself to the bakery and get one extra large hero cookie.
Very few people who buy gold buy with leverage. Same goes with stocks. However, the vast majority of home owners buy their home with leverage (a lending system that is backstopped by our government).
The point I’m making is that the taxation system is broken because leverage has enabled home equity holders to appreciate 20x in the last 20 years, while paying no tax (exemption on primary residence). Even if I got paid in gold or stocks, over the same period I would have gained 5-6x and then paid capital gains. The outcome, housing would be more expensive because home owners would plow tax free money into houses outcompeting everyone.
I’m very much against adding more taxes. But I believe that the taxation system needs to be corrected to prevent these sorts of incentives. My view: either drastically decrease income tax and business tax, or introduce capital gains on primary residences.
I say this as a multi-home owner who has benefitted from these silly policies.
The reality, this won’t ever be fixed. Government will continue to tax and spend. Job prospects will continue to erode in Canada. Housing will continue to rise because the entire economy is built on this bubble. And eventually the country will be a nothing burger
Thanks Steve!
I always look forward to your insights & analysis.
Keep up the great work!
2:20 bro did you really just say cutting rates will put further downward pressure on inflation?? so wrong.
think he meant upward pressure
Steve, can you and the guys expand on how the govt changes the basket of goods to measure inflation. I have been hearing a lot of people talk about that.
You do understand that home affordability has been an issue for nearly a decade. It has just reached an extreme recently but in Vancouver affordability has been an issue for almost 20 years.
A couple of points, there are countries that are "debasing" (ie deficit spending) well beyond Canada and have a better pricing situation. Further there are countries that debase less (ie I am using deficit spending as the proxy for debasement) and they have a worse situation. And yes I dot think debasement is part of the issue but it is not the complete story.
Another point that struck me is how current home and real estate owners forget how government tax breaks, credits and policies have allowed people to purchase a home previously We all agree that all levels of government screws things however there are a lot of people, myself included who have a home and don't appreciate or understand the luck and help we received. Of course, we like to think it was ALL are hard work and sacrifice and skill and that is part of it. But there are plenty of places where the government "helped" us - through low rates, through incentives, tax breaks etc.
Like in 1972 a cap gain tax was first introduced AND due to lobbying homes were excluded. Also during the 70s, there were multiple programs like the Multiple Unit
Residential Building (MURB) tax incentive, the Registered Home Ownership Savings Plan (RHOSP), the Assisted Home Ownership Program (AHOP), and the Assisted Rental
Program (ARP). In the 80s, we saw the Canada Home Ownership Stimulation Program and the Canada Mortgage Renewal Plan) and for investors in the higher end of the private rental sector (the Canada Rental Supply Program). All these policies benefited people to purchase home. This continued in the 90s when in 1992 the home buyers plan was introduced. And I could add rental control policies being added and removed etc but this should make the point that there are a lot of incentives that made home buying easier for us that we dont recognize and accept as table stakes.
The point is policy and taxes is what government does. And sometimes it works (or works for a segment of home buyers) and often there are unintended consequences. I think the housing affordability has been decades in the making rather then last few year.
There was a time in our past when to buy a home you needed to save up the entire amount to purchase a home before debt based mortgages (supported by government policy) was introduced. How much of the homes value is wrapped in mortgage interest payment rather the value of the land, the materials and labour? Debt based consumption is the system we have but to me that is closer to problem. And to "spur" on growth we feed the ponzi by more debt (and not just government debt, personal and corporate debt) and increase immigration and so on. To me I think the debt problem occurs among individuals and the government when debt the debt taken on does not improve productivity and at best for individuals is speculative.
We also have 3 branches of government that have incentives to make housing expensive. I have done day labour for house construction, it is not that difficult, it is that the politic will to make enough housing is not there. I agree a lot of it is downstream from currency printing, but the housing prices should go up, is an insane statement. Our cars do not gain value after 5 years of use, nor do factories, computers, or any other physical asset. But for the most important investment most people make, that going up year over is seen as normal. Housing is a depreciating assets. We will never stop needing to make houses.
Just buy gold istead of house. What say? Will this work for retirement🤔 the system needs a reset though...
hard to live inside gold
@@paulmcewen7384 yea its been getting difficult.
Love learning from you.
Definitely showing that govt isn’t going to save us.
In 1989 I bought a new Toyota Corolla (no air-cond, no air bags, no power anything)- $14000 all in, in 2010 I bought a new one $21,000 all in (with power windows, Air, and many more safety options), I just priced a new one 2025- $30,000 all in. The world is deflationary against gold, but devaluation of the fiat currency creates asset bubbles just as Steve has laid out with housing.
I hope you understand the goal is to have a small level of inflation to incentivize spending/investment rather than hording cash. Its on the the pillars of modern economics...
Toyota Canada- 2024 Corolla xsv- $34k starting, all in probably around $37k plus taxes and fees...
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Yeah, it had nothing to do with idiots bidding prices up because they thought a bigger idiot would pay more 6 months later.
Access to credit enabled it. So goes back to the money supply and monetary policy
Exactly. The bidding was only a minor part of it. Inflation is primarily driven by government spending with numerous other smaller factors playing a role, usually regionally. An industry in an area, marketing scarcity and ever increasing values, foreign investment all drive prices up but the biggest driver of prices has been government spending and policy.
According to imf the canadian housong marletong is massively over valied..according to the imf tbeir model shows the valise at an estomate 28.9% lowering ...meaning the marlet is bein artificial inflated...this over valuation does directly affect our economy and does contribute to slowing growth...
Wow. Thanks for listing all of those damaging gov policies. I had almost forgotten
There is housing affordability in remote areas but people don’t want to live there. So more people will live in condos close to jobs and amenities like in Singapore or Moscow
Not a lot of jobs in remote areas
@@kqh123 there are low skilled jobs paid like in Vancouver but you can buy a house for 300k
@@vitaliebruma5886 sure if you dont have in demand skills needed to make good money in the big city why would ya stay, more likely your skills make a similar amount in a smaller town where you are can maybe buy. With the change in office jobs to more remote, more people can move to smaller towns and collect big city incomes which drive the prices up in smaller towns for the people starting out there though. Extreme example is Whistler.
The reason the basket weight changes is to reflect updated consumer spending habits. If the growth rate of interest payments outpaces the growth rate of the overall CPI baskets, then that basket weight will increase.
"Following a decline in basket share last year, the relative weight for shelter rose by 0.35 percentage points to
28.57%. This increase was largely due to mortgage interest cost, which increased from a 3.46% basket share in
2022 to 5.20% in 2023 amid a higher interest rate environment."
This makes sense because interest rates were increased, so consumers are forced to spend more on mortgage.
Personally, I think most of those tax measures are great except for the capital gains inclusion rate. If you're not a foreigner, investor w/ multiple homes, satellite family, airbnb operator, flipper, etc, you got nothing to worry about. I think they're good measures. I also think there should be more education on this space in high school. Central bankers should be in the MSM much more and allow people to know what is happening. I learned a lot more from watch the Loonie Hour on how the markets work than in school.
Wouldn't tightening credit be part of the answer? Banks no longer take on high levels of risk. Banks may be forced to if unemployment rises or Fed govt as part of bank bailouts force banks to have a 50% LTV on secondary homes. Primary homes 20% LTV.
Selling oil and gas to the US at half price probably has no effect on Canada's standard of living
Increase property taxes on home owners rather than development charges, also need capital gain taxes on principal residence.
Everything is taxed in Canada, except the gains in your home . Benefits house flippers. Strange isn't it.
Tax is theft! We need less tax.
Increasing taxes will not solve housing affordability. We need a reduction of taxes. Isn't something like more than 30% of the cost associated with building a new home is all taxes and government fees?
There are several components to the issue. Firstly, CPI is an average. Some things go up faster, some go up slower. For the past 50 years, the cost of land and building has risen much more quickly than the CPI. Secondly, earnings have not kept up to the CPI for the past 50 years. The only thing that made it possible for most people to survive financially was borrowing at low interest rates, which have been in effect for about 30 years. This led to our current situation where families are over burdened with debt, higher interest rates are taking a bigger bite out of their monthly budget. At the same time, there are so many newcomers competing thus increasing rents so saving for a down payment is impossible and therefore buying a home is now an impossible dream for many people who will end up on the rental treadmill for life. Any guess at the root cause of homelessness in Canada?
Eh... no. We have trade surplus countries, and trade deficit countries. The surplus countries can either spend in their own economies domestically (or if that is unpalatable for whatever reason), then they may export that spending, sometimes productively.. but otherwise bidding up assets abroad. This can be in equities, bonds, real estate (and not limited to the consumer side). The issue is that we permit keynesian beauty contest behavior with our real estate in Canada; which has been mostly dimly enabled by realtors, real estate lawyers, and banks. Our real estate is little more than casino chips for many.
Hey Steve I’m seeing that weight change for the mortgage interest component was made in 2023, would you mind citing your source?
Thanks for the video Steve, some very good points about tax. Your view on mortgage interest however is incorrect. As they increase the percent of mortgage interest inclusion, it increase inflation even in a rate declining environment. This is because every mortgage that renews in the next 18 months or so will likely have a much higher rate than the previous mortgage. This is the most important thing for Canadians finances in the short to medium term.
It goes unnoticed by those living on subsidies. Here in USA government section eight housing pays for your rent and is subject to increases that government will pay yearly!! No you the government. Same with healthcare sane with food stamps which is no longer pay but works like a credit card. Then there are local subsidies from food banks and for gas. People living off the government feel nothing
Sorry Steve, love everything u said excpet most ppl didnt work hard to get rich in real estate in BC.in the past 20.yrs...
Our loonie or "Petro loonie" took us up to near par with USD for some time and it has been dropping ever since. Our currency dropping back to historical norms well below USD is also heavily contributing to inflation in the non asset categories I think.
Between the feds and BOC printing high inflation for importer has been a long time coming.
That's some of my amateur 2¢
Don’t ascribe to malice what could otherwise be ascribed to stupidity, but don’t forget malice.
I don't think the main reason are mad is because you can afford a house and they can't. It's you could have bought a house in 2016/17. Maybe make enough for a downpayment on a second home in 2019, depending on where you live. Then that plus maybe 10-15 years of labour after your education you can safely retire if you are alright with moving to Costa Rica or somewhere like that. How does it make sense that you should be able to afford to fully retire in 15 years of total employment. From your first job to the mid-level or starting senior good paying position you end in.
how can I get that chart of Van RE vs Gold.....that's 'gold'....lol....but seriously, where can I get it????
I still don't understand. Why would they want inflation to look higher? They want to keep rates high?
Why do we put up with a script currency? Our economy is total dependent on the USA most of the big companies are US ,as is our market.
Uh you can EASILY afford a house in Canada except for maybe five urban areas. We're by the fastest growing city in canada which is in the maritimes, we're fifteen minutes from downtown, a house by us just sold for 250 grand. Thats pretty affordable.
Housing inflation in canada, what they call a bubble, has been a thing for over TWO decades.
Should show the btc/home prices chart too haha
Most of the BTC in the world is in the hands of a few whales. It won’t solve the equality issue
More taxes delay production. More Taxes lower the living Standard. I am now just buying one once gold wafers
I could see Steve becoming an Electrician.
The property I live in (GTA),
Good area, not a 4 mil house at all, is down 15%…so can’t say it didn’t go down.
Not to say it is affordable of course
Low interest rates began 20 years ago and it was easy to see that policy would eventually back us in a corner. Free money is worth nothing. Now millennials grew up only knowing low rates and don't understand the benefit of keeping things real.
Best thing to do is sell canadian assets and move it abroad.
nah
I'm waiting until the next election to see if we put in another Globalist or not. Not looking good.
@@truthteller6743Canada only elects globalists, doesn't matter what flavor, con or lib, all globalists.
No man
Our ancestors did the same.
The tax to bring price down is direct increase the percentage of property tax.
not property tax. it is capital gain tax which can stop people flipping the property to make money. in Calgary , a lot of condo are vacant, the owners are waiting for interest rate cut to sale
BITCOIN OR GO DOWN WITH THE SHIP
Gold and silver too
One reason why Vancouver is so expensive,is because was done by design by keeping homes so expensive the city collect more taxes , in building permites , licences , keeping prices so high make Vancouver the playground for the richest citizens,affluent investor that buy homes and them rent, One way to keep they money safe from others , the value of each home is where is situated
value is in the land, in most cases is 80%
taxes dont go up because houses go up... the mill rate goes down. Governments however have become addicted to the other areas of real estate, new building permits, land transfer taxes and all the corporate and personal taxes which have increased to be a much larger portion of the GDP.
Imagine if housing was left alone. How high values would be without govt interference
Inflation is value relative to something else. And relatively RE has inflated faster than everything else on an prder of multiples in most cases. Thats how we know its a bubble.
How about the truth? Realtors knocked on peoples doors telling them they could get buckets of money for their homes. Greedy home owners jumped at the bait and now homes are investments and no longer Homes! They knocked on my door numerous times and I told them to piss off! The only people who can afford houses now are foreign buyers and you guys are now quite happy selling to them. The consequence is now a generation can't afford a house unless their parents give them the money to do so! Renters can't afford a roof over their heads because greedy investors and home owners don't give a shit for their neighbours as long as they are making money.
It'a the CP Lie. Without fiscal responsibility we won't see a change. Debt is a drug.
The United Nations policy on migration influences leftist policy. Free movement of people (pushed by specific policy initiatives) leads to the mass movement of some people.
I know that home prices in Vancouver always have been higher than the rest of BC and most of Canada, just a given. When I left Vancouver in 98 and moved to the N. Okanagan there was no shortage of homes of any description including rentals. I bought a condo in summer of 99 and monitored condo sales for years. Everything was normal/basically flat prices for about 5 years then sale priced started climbing steadily up for years again basically normal all things considered. Then the Pandemic hit and sale prices shot through the roof and are basically still holding. Something that I can't figure out is when the shortage of rentals started and why. I did notice that in 2016 there was a housing shortage for rentals as people were being reported to be couch hopping for 1-2 years. This would very likely be true for mush of Canada also. What happened to cause this and when did it actually start? I don't believe it has anything to do with the US financial meltdown of ?? 08/09. I will post another comment
Government debt at all three levels and interest payments on that debt squeeze government's ability to support public programs. Now they need to find new taxes to continue funding their programs and thereby stay in power. The inflation comes from continual mismanagement of tax dollars and overspending on programs and interest on the ever growing debt.
And the staggering bloat in civil service size and scope. Completely out of control.
Thank You again.
when the first casino was built in coquitlam in the late 90s ?????, thats when housing started to inflate.
If you have kept immigration at level of 2015 all these taxes would have made the difference. But if you increase immigration level 10-20 times non of the medicine will work.
Canadian governmemt answer to ANYTHING and EVERYTHING is "more tax". I dont think anyone thinks that will help, it is simply an excuse to increase govn tax income. Any tax increase wrapped in a " fairness" label is a joke, they only want to address "unfairness" where the "solution" is some tax increase... All those taxes: just a revenue grab . if they help the problem, thats a nice side effect
Can someone reverse engineer the CPI manipulation to show the real number?
Buy physical silver. Canada needs it and it’s the patriotic thing to do.
Because of people like you...
The value of money always goes down especially when the money supply skyrocketed after Covid. Low interest rates allowed people to buy homes but it was the $2000 a month government checks that caused the real inflation of goods.
People were loading their carts with goods like everything was free. House hold savings is still at record highs. We got tons of people sitting on the sidelines with tons of cash but don’t make enough to beat the stress test.
Tons of people sitting on the sidelines just refusing to buy RE at these crazy prices given the headwinds against the gains we have seen in the past. Why would i buy a piece of crap house at 2 million and worry it goes down let alone just doesn't go up vs. vastly better investments on the 700k to 1 million cash? opportunity cost at these crazy prices, and risks of rates not going down fast or enough, prices stagnating... which is probably the best we can hope for as far as RE prices anyways as a crash to some actual level of affordability would be rather problematic for the economy and most working age Canadians.
I can afford a condo. I don't need a detached house. Not everyone needs that, bro.
This inflationary process started way back in 2002. House prices in Toronto have been increasing almost 10% every yr since then. If not more.
There was no population explosion back then. The gov'ts completely changed the mortgage rules dropping down payment requirements and extending mortgage durations to 40 yrs. Monthly payments dropped drastically as a result... add in HELOCS and everybody become an investor.
The gov'ts then added to the problem by hanging their tax hat on this crazy market by charging huge development fees and land transfers taxes etc. 5% land transfer tax and 5% agent fees? And real estate people pretending this is normal? LOL
Nobody stepped in and stopped this. Blocking airBnBs did nothing because those investors just switched over to long term rentals. Blocking Chinese buyers only impacted high end homes.
We saw a flood of people buying 2nd and 3rd properties and the gov't cheered. And when 2008 came around, the gov't actually introduced a bunch of measures to save their precious real estate industry. Ultra low borrow rates was the nail in the coffin.
Not until much later did the gov't step in and say hey why don't we invite an exponential number of new immigrants in to keep supporting the real estate industry and fake GDP growth.
Wages were left in the dust well over a decade ago and for some crazy reason, the gov't doesn't think there should be a natural correction ever again.
Well maybe we are there now. The bubble has gotten so perverse maybe people have woken up. Maybe we've hit the wall.
Now the gov't needs to stop charging land transfers taxes and stupid development fees to lower prices. Replace these regressive taxes with a commercial tax on these "landlords" who have been hoarding properties for 2 decades. And we need a bunch of investors take a big haircut. Losing 200-600k in your investments wakes people up. Risk needs to come back into the market.
We shouldnt be emulating the last 50 years of the argentinian economy. The bigger and bigger government didnt work there, its not going to work here
Go tell that to Freeland and Tiff!
Up is still up y'all just can't get it dis inflation isn't deflation. We need prices to drop not go up slower 1.6 up 2.9% inflation what's the difference anymore the numbers are Bogus
People aren't fooled about your tax point. They: a. don't know the fine details of how it works. b. human psychology doesn't follow the rational actor model. They will take you out with the bathwater for no good reason.
Don't throw me in the basket with everyone else. I believe you are not going back far enough. Try 30 - 40 years. GST? Property transfer tax? Local building regulations? If the gov really wants new property development then drop these taxes (and others) that raise the price of the finished product with out adding any thing of value.
It is very much noticed lol
Brother these taxes on the rich arent the isssue after 74 we dergulated our monotary system
There are plenty of lower paid workers who work hard and deserve affordable housing. I would like to see how a transient society globally, high divorce rates, younger people living as singles longer or making the permanent choice to remain single and older persons living in their home longer affects the cost and available of housing.
Government spending and policy is the largest driver of inflation over the past decade. Many cities in Canada only allow multiplex development now and primarily rentals. "Housing" also includes rooms in seniors residences. A semi private room in a newly built seniors residence with 2 people in the room counts as 2 "homes" now. The only way to really improve the situation is to immediately cut all federal budgets by 50 percent, eliminate federal income tax and regulation, and then get through several painful years until people get things in order. The current governments have very clear plans to increase home prices , reduce availability, reduce affordability until most people are forced to rent. That is what all three main parties have planned. Enjoy.
ofc that is a factor. Smaller household size relative to total population size increases the need for individual units. This is why I'm dubious on calls to restrict 1 bed condo construction in Vancouver and other big metros.
There's a reason for everything