Why Is Housing So Expensive In Canada Part 3

house just sold signs

Why are houses so expensive in Canada? This article from New Canadian life SAYS, “Houses are so expensive in Canada because there is a higher demand for homes than there is a supply of homes.”

Low interest rates, immigration, and the increase of foreign money coming into the country are reasons for the rise in the prices of homes in Canada. “And that was a quote.”

author with a coronavirus on maskI believe these Real Estate analysts are smoken too many Canadian reefers and downplaying the real problem.

Take for example;

Here is a true story of how high Real Estate is affecting everything and everybody.

As you’re going north to cottage country, you veer to the right off the main highway, through a clearing of tall pine trees, and nestled in this glade is a very well-kept community-living trailer park.

Unlike the strict rules in the southern part of Ontario, a few of these year-round parks are still around for economical and cheap accommodations.

But the high cost of real estate in Canada might eventually change that quiet part of the North Country.

After talking to long-time residents of the trailer park, it was brought to my attention that the real estate boom in the beautiful north is starting to be a real problem. We all know when the economy is good, everybody wants to flee to cottage country, do a little fishing, boating, and camping to get away from the rat race of the big city, even for a short time. Most tourists will dream of living in the fresh air and these beautiful surroundings.

If you are one of the few that can afford a cottage in that area, cheers to you.

But the price of summer cottages is going sky high and in turn, drives up the real-estate-housing market in every small town and community adjoining the cottages. Anything and everything has gone utterly stupid for the folks that live there full time.

There is a fallout on the high cost of real estate.

The season has now come and gone, but this madness funneled down and left a high cost of property in its wake.

But this is where the high cost of real estate affects different things. After people make large dollars on their house in the city, they go up and pay large for a tiny but once-affordable house trailer in a quiet little park.

Comparison; The house trailer they purchased was worth $30,000 plus or minus, brand new. Two years ago, that same trailer was worth $100,000, and as of today, as we speak, a lady, after selling her house in the big city for a significant amount of money, has now paid over $200,000 for an 800 square 60-year-old “trailer.”

“These house trailers are constructed with a 2-inch x 2 inch outside frame wall,” maybe 60 feet long. How can anyone,  in any mindset, possibly believe that it is worth over 200,000 dollars on ….Leased Land…..

But the enormous price of housing trickles down that it even affects a small out-of-the-way community trailer park.

Once all the summer tourists go home, it’s relatively peaceful to the point they have to roll the sidewalks up and unroll them come spring. And I can’t blame anybody that wants to retire in such beautiful and once-affordable surroundings.

Oh, I already said that! But the story is about the high cost of housing and that it affects everyone,  everywhere.

These people in question sold their house at an inflated house price in the big city, and they overinflated the cost of the trailer by 100,000 dollars and not over asking price, but way over “what it’s Worth!”

The sad part was, this lady must have brought the high cost of living with her.

But the irony to this story is, shortly after the buyer took possession of the trailer, there came a new owner to the trailer park. They were from an investment firm in the city, and they too are re-adjusting the rental of the properties to the new “real-estate price standards.”

Welcome to cheap living and the fallout of the high cost of real estate.

Now we all know the driving force of the real estate market is not the builder that puts his sweat into someone’s dream.  A realtor might get his small cut on a new house, but everybody is gouging the market and driving the price to the point of no return. Even big-money conglomerates are driving up the price by buying anything and everything.

What can anybody do about this problem?

Now it sounds like I’m shifting gears here, but I’m not.

A close friend had a financial dilemma that he shared, and it might shed some light on the housing dilemma.  But I wish his problem was mine!

After doing his yearly financial report. His accountant said to him that he had best buy something or pay the Government in significant taxes. What to buy, what to buy, ah, decisions, decisions.

I just didn’t come out of the bush yesterday, so this is not the first time I heard of these legal dealings. But it does bring to mind that our federal and provincial governments could be giving corporations far too many tax credits. And, in the end, set the stage for this very scenario.

In a small way, my bud only had thousands of dollars to get rid of in the form of a new boat for “entertaining” his clients. Corporations could have millions or billions to hide or invest, well let’s say, “Real Estate” for example!

Like this latest story that just broke in the local news. An investment firm is spending two billion dollars on housing in our area and turning them all into rentals. And he says, ” I don’t care what I pay  I’m buying that property.”

How can a first-time buyer or any of the hard-working class compete with that mentality and, that kind of MONEY?

Is this where the high cost of real estate started with the Government’s low, stupid interest rate.  Just to attract more financial investors. Or could it be the 15 millionaires the lotteries produce every week?

Real estate economists I believe are missing the mark in their judgment call.

In one of my first articles on the high cost of real estate, it was the Chinese investing in Canada back in the 80s. Again, I don’t care what I pay.  “BUY IT” They would say this over the phone to a Canadian real estate agent. Hong Kong China is being given back to a Communist country by the British. the investor says I will lose all my money anyway.

So, buy, buy and buy, and I don’t care what I pay.

Does that drive up the cost of Real Estate?

Do you think the Government regulated this kind of transaction then? Slow the movement, or did they turn the other cheek? At that time, I would say they didn’t try to curb anything!

We all know a cold just didn’t happen overnight.  Supply and demand are what one economist said. I don’t believe it.

All this stems back to the Canadian Government closing all these loopholes for investors because I believe, that’s a good start.

The long-time residents I talked to in this economical trailer park, expect the land rental agreement could double after the dust settles. And what he does realize is, that the new lease contract could have stipulations in small print that no trailer older than a particular year could reside in that park. This is so the new owners can sell the residents new trailers. Is that even possible? Half the long-time residents would be out on the street, like the example of the fallout of this HIGH RISE story at this link. “Click Here”

Real Estate Expert says:

Dunning, A Veteran Real Estate Expert known for analyzing the Canadian housing and mortgage markets, highlights the differences in regulatory frameworks. Demographics could inform the differences in housing prices. That part was true, but I don’t think today!

Two professors from the U.S

Ed Glaeser and Joseph Gyourko, two professors in the U.S.,

Restricting the construction of new housing in the presence of increasing demand leads to higher prices. Thus, housing construction must be facilitated to prevent expenses from climbing faster than the increase in incomes or construction costs. I believe that’s somewhat deceiving, directional and old thinking.

Well, you be the judge!

My Conclusion

Could Canada’s fearless government leaders get this high cost of real estate under control? Do they even want to? Tax incentives to the rich have always been a problem.  And I think that’s what’s happening here. The difference is the wealthy investors are taking over territory that is directly affecting the average citizen of Canada.

And that brings us back to the leaders we voted in. If the powers at be don’t get a handle on this ongoing housing problem.  Then Covid-19 will sound like you just went to a family picnic.

Adding insult to injury, these investors possibly use government-financed money with low-interest rates to out-bid you on your new home. Remember (Government financed money is YOUR MONEY.) The rule  every investor lives by is, “Never use your own money.” And that loops us back to “YOUR MONEY.”

There you have it!

In the end, it’s not necessarily the high cost of the housing that affects new first-time buyers. It’s the fallout, the wake it makes with, building material,  and rental. In short, it “affects everyone in Canada!”

“Maybe the high cost of Real Estate in Canada is a simple case of, “just follow the government tax revenue-slash-MONEY”

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PART  One 

PART TWO