Archive for category Economy
It’s been no surprise that Canada has long been in a housing bubble. Foreign investors from China have been buying up property in Canadian cities for years, and reselling them to Canadians for way more than the property is worth. China seems to be intentionally creating a housing bubble in Canada. What Chinese investors are doing is buying up property, and immediately reselling the property to the highest bidder even before the closing date of the first sale. This cycle can repeat as much as 3 or 4 times prior to the closing date of the first buyer, artificially driving up the costs of real estate property. There are signs that the artificially created housing bubble is about to burst.
Last month the Office of the Superintendent of Financial Institutions (Canada’s financial watchdog) stated that Canadian banks need to be stress tested against a 30% drop in housing prices, echoing concerns from the Bank of Canada in June. Last week Chinese media has been warning investors in that country to pull out of the Canadian real estate market, and is expecting a housing crash one that could rival or even be worse than the US housing market crash of 2008.
In 2010 the director of CSIS Richard Fadden warned Canadians in an interview with the CBC that the biggest risk to Canadian security wasn’t from terror groups but from foreign powers that are infiltrating Canadian politics and influencing public servants, fueling a growing concern about economic espionage. Little was done to correct the housing bubble by the Conservatives when they were in power. Little has been done by the Liberals either since they have taken control of the House of Commons last year. Vancouver recently passed laws to increase taxes on foreign real estate investors to help curb the growing concern regarding this artificially created bubble, however there are a lot of doubts whether or not it will work.
Why hasn’t anything been done to completely correct this bubble and warn off concerns of economic espionage? Governments of all levels seem to be cashing in on the taxes of these sales, that’s one reason. The other is because any major correction in the housing market could see that bubble burst with fears of major economic instability. This leaves Canada’s economic future purely in the hands of China, in which it seems they are now moving to burst this bubble intentionally by warning off that country’s investors.
Canada shed 31,200 full time jobs last month. While our prime minister is running around the country shirtless, there has been no word on what our federal government is doing to curb the current housing crisis it inherited from the Conservatives. As result of the current series of warnings and years of inaction, we could be in for a very rough ride ahead. Ontario will be hit particularity hard. A large segment of our population, and many businesses here in Ontario can’t even afford to keep the lights on. Gas rates set to rise as well. There also has been absolutely no word from the Ontario government on what they plan on doing to also head this expected downfall in housing prices, and economic instability as a result.