Canada's 'housing bubble' deemed close to bursting

[rofina]

Originally Posted by Nouvellecosse

Something being clear in terms of you being persuaded of it =/= something being clear in terms of the research supporting it. Economies are complicated and are affected by a wide variety of factors so it's easy to isolate certain factors one wishes to focus on because it supports one's preferred policy prescriptions, while establishing an empirical basis for such analysis is much trickier.

I think you are on your own here.

More labor drives labor costs down.

I don't really care if its immigrants or not.

To say other wise is to doubt the entire idea of supply/demand, and I'm certainly not willing to do that.

[rofina]

As long as we continue to accept housing as a financial tool first and shelter second, none of the solutions we talk about in this thread matter. Were trying to fix a feature, looking at it as a bug. Expensive is the feature, not a bug or side effect.
This is why housing will never get fixed, in Canada or elsewhere in the world.

• Video Link

[FarmerHaight]

Originally Posted by rofina

More labor drives labor costs down.

You can't discuss just the supply side of labour, without acknowledging that labour also increases demand.

Immigrants may fill jobs at fast food restaurants, grocery stores, or gas stations, but they are also customers.

Immigrants may take jobs in our professional services firms, but they also start medical practices that pay an account to file their income taxes.

Immigrants may take jobs on construction crews, but they also purchase and rent homes.

Correlation does no equal causation. The WSJ wrote about where the U.S. workers have gone and found:

• People went back to school
• People started their own business
• People re-trained during the pandemic and already found work in another field

[rofina]

Originally Posted by FarmerHaight

You can't discuss just the supply side of labour, without acknowledging that labour also increases demand.

You are absolutely correct, but this is jumping ahead in the economic cycle.

We were just starting to hit labor constrains and with that employers were forced to start raising wages to pull people back into the labor pool.

Now we flooded the market with labor again. Incentive for wage increases gone.

Corporate profits have been at records, stock buybacks have been at records. The money for higher wages is there, the incentive to pay more was building, but with added labor we eliminated the incentive.

This is no different than government moving to austerity measures far too soon after 2008. They destroyed the recovery over the fear of inflation, without inflation actually building.

Canada has effectively done the same. It would be beneficial to all Canadians, old and newcomers, to have a labor shortage for a reasonable amount of time to force employers to allocate more profits towards labor.

We have incurred 3 decades of wage stagnation; letting wages inflate for 3 or 4 years would have been a massive net positive to this country.

Immigrants may fill jobs at fast food restaurants, grocery stores, or gas stations, but they are also customers.

Absolutely. Immigration should induce demand, eventually.

Immigrants may take jobs in our professional services firms, but they also start medical practices that pay an account to file their income taxes.

Absolutely, more people require more services, therefore more growth. I'm on board.

Immigrants may take jobs on construction crews, but they also purchase and rent homes.

Sure. Still on board.

Correlation does no equal causation. The WSJ wrote about where the U.S. workers have gone and found:

• People went back to school
• People started their own business
• People re-trained during the pandemic and already found work in another field

We can also add;

- death
- retirement

[lio45]

Originally Posted by rofina

Were trying to fix a feature, looking at it as a bug. Expensive is the feature, not a bug or side effect.
This is why housing will never get fixed, in Canada or elsewhere in the world.

Exactly.

High real estate prices are to Canada what high gas prices are to OPEC countries. It's a sector we've come to rely on, and many (most) of us profit from it.

[lio45]

Originally Posted by MolsonExport

I worked for this dude for 5 years. He is widely known as the stingiest of a group of very stingy owner-operators.

I know, I was just being fatecious

I had good laughs from your descriptions of this Mr Bolanis. He sounds like the most cartoonish boss-capitalist ever.

(Ironically, I'm pretty sure I could get along decently well with him, at least on some things.)

[O-tacular]

Originally Posted by MolsonExport

I worked for this dude for 5 years. He is widely known as the stingiest of a group of very stingy owner-operators. Was known to lose his shit over a 10cent minimum wage increase. At the time, all other McD's offered free food (burger/sandwich + fry + drink + dessert) if you worked at least a four hour shift. Not Baldanus. He made his employees pay half price, even for fountain drinks. I was a manager, so I got free "food"

I don't recall any food being free when I worked at A&W. Funny enough I was at the food court in Southcentre mall the other day and recognized Ming (the owner) though he had a mask on walking by. He didn't have any "Time to lean. Time to clean!" sayings, but I distinctly recall him using the words "Golden brown" about a million times when he trained me once. He would also call me every fucking Saturday morning to cover for some hungover idiot scheduled for opening shift. If I had more backbone then I would have said no.

[O-tacular]

Originally Posted by lio45

I know, I was just being fatecious

I had good laughs from your descriptions of this Mr Bolanis. He sounds like the most cartoonish boss-capitalist ever.

Go to the 7:50 mark.

• Video Link

(Ironically, I'm pretty sure I could get along decently well with him, at least on some things.)

Of course.

[biguc]

Originally Posted by MolsonExport

Yep.

"10 cents for minimum wage? How fucking dare they. We have to pay Ponctuation a couple grand to tell breathless lies about our unabashed bonhomie!"

[esquire]

Originally Posted by biguc

"10 cents for minimum wage? How fucking dare they. We have to pay Ponctuation a couple grand to tell breathless lies about our unabashed bonhomie!"

No one minds paying extra if it's directly benefits them somehow. A 10 cent minimum wage increase is unconscionable, but if the price of the options package you wanted for your cabin cruiser goes up by $14,000, well whatever, that's life.

[lio45]

Originally Posted by O-tacular

Of course.

Maybe MolsonEx could introduce us

[ssiguy]

Originally Posted by lio45

Exactly.

High real estate prices are to Canada what high gas prices are to OPEC countries. It's a sector we've come to rely on, and many (most) of us profit from it.

That's the problem..........it's not at all a productive use of labour, resources, or finance. All those key elements to the economy are being directed towards real estate but not productivity.

This is one of the reasons why Canada continues to slide against it's peer countries in per-capita productivity which is scary because our standard of living depends upon productivity and not how many houses we can build. Look at BC........after years of having real estate as it's key sector and all the instant millionaires has created, it's wages are still below the national average.

Real estate also greatly increase socio-economic stratification as one's future financial health increasingly is dependent upon M & D's real equity as opposed to one's education and entrepreneurship.

[lio45]

True and I'm a real-life example of this: many of my friends are in high-tech fields, and over the years, I've had opportunities to invest in startups, but in most cases, passed, because I couldn't justify the risk when compared to the real estate that I'm used to.

On the other hand, if all the real estate markets on the planet were like Japan (stagnant population / no reason for appreciation beyond inflation), people like me would have to find interesting things to invest in.

[Gresto]

Originally Posted by O-tacular

I don't recall any food being free when I worked at A&W. Funny enough I was at the food court in Southcentre mall the other day and recognized Ming (the owner) though he had a mask on walking by. He didn't have any "Time to lean. Time to clean!" sayings, but I distinctly recall him using the words "Golden brown" about a million times when he trained me once. He would also call me every fucking Saturday morning to cover for some hungover idiot scheduled for opening shift. If I had more backbone then I would have said no.

"Time to lean; time to clean." Sounds about right. At McShitters, we mere vassals got a "generous" 50% off vittles. Because they were literally worth less than a penny, all drinks (soda, coffee, the watery hot chocolate) except the shakes were free. I don't know about the managers, but I assume they were all entitled to free grub, and I didn't begrudge them that picayune perquisite. However, most of the managers were easygoing and often just allowed us free meals. It was at their discretion.

[FarmerHaight]

Originally Posted by rofina

Canada has effectively done the same. It would be beneficial to all Canadians, old and newcomers, to have a labor shortage for a reasonable amount of time to force employers to allocate more profits towards labor.

We have incurred 3 decades of wage stagnation; letting wages inflate for 3 or 4 years would have been a massive net positive to this country.

Inflation doesn't just impact wages, businesses just pass those costs along to the customer.

The WSJ had an article last week about how many companies view clogged supply chains and inflation as presenting a once in a decade chance to raise prices. It would be great if companies were willing to let their profit margins shrink in order to pay their employees more, but this would disappoint shareholders and result in a lower share price, which is a no-go for most public companies.

[O-tacular]

Originally Posted by Gresto

"Time to lean; time to clean." Sounds about right. At McShitters, we mere vassals got a "generous" 50% off vittles. Because they were literally worth less than a penny, all drinks (soda, coffee, the watery hot chocolate) except the shakes were free. I don't know about the managers, but I assume they were all entitled to free grub, and I didn't begrudge them that picayune perquisite. However, most of the managers were easygoing and often just allowed us free meals. It was at their discretion.

Sounds about right. Most of the profit seems to come from beverages it seems. Funny enough I went and got my son chicken strips at A&W last night in the mall food court and Ming served us. We were both masked and there's no way he would remember me from 22 years ago so I never said anything. He was actually really nice and offered my son a free lollipop. Strange having your former employer from when you were a teenager serve you decades later when your life has changed so drastically and theirs seems the same. I wonder if Baldanus would remember Molson. I bet he would charge for the lollipop.

[rofina]

Originally Posted by FarmerHaight

Inflation doesn't just impact wages, businesses just pass those costs along to the customer.

The WSJ had an article last week about how many companies view clogged supply chains and inflation as presenting a once in a decade chance to raise prices. It would be great if companies were willing to let their profit margins shrink in order to pay their employees more, but this would disappoint shareholders and result in a lower share price, which is a no-go for most public companies.

I hear you.

I understand the mechanics - which is why this was such a unique opportunity to have labor gain leverage. This was country level policy that could not have been maneuvered out of by corporations.

We don't have to deal with hypotheticals in economics for once; we are watching this unfold in the US. Labor shortage is indisputably leading to wage gains, especially on the ground floor.

Canada on the other hand, is not experiencing the same wage pressures.

The obvious tradeoff is the level of employment, the US is behind on the job number recovery, but I also view this as bullish for labor because it indicates to me people are sitting out on the sidelines until they are sufficiently enticed (or desperate) enough to re enter.

[whatnext]

If the Feds won't act, apparently Doug will:

Ontario to hike foreign homebuyers tax if feds don't act: Source
Michelle Zadikian, BNN Bloomberg

The Ontario government will take matters into its own hands by raising its tax on non-resident homebuyers if the federal government doesn’t make good on a campaign promise to clamp down on foreign buying activity, BNN Bloomberg has learned.

“Ontario is prepared to raise the Non-Resident Speculation Tax (NRST) to 20 per cent and expand its catchment area beyond the Greater Golden Horseshoe,” said a senior Ontario government source, who later added the tax could eventually rise to more than 20 per cent.

“By expanding the catchment area to include the entire province and raising the tax, we will discourage foreign speculation and make sure our limited housing supply is going to those who need it the most.”

The province’s foreign homebuyers tax currently stands at 15 per cent and was implemented on Apr. 21, 2017.

The Greater Golden Horseshoe encompasses regions as far north as Barrie, as far south as Niagara, and stretches from Waterloo to Peterborough on a west-east basis.

On the campaign trail, the federal Liberals promised to ban foreign home purchases in Canada for a period of two years but no further details have been released since they were re-elected in September.....

https://www.bnnbloomberg.ca/ontario-to-h...s-tax-if-feds-don-t-act-source-1.1695342

[Innsertnamehere]

Originally Posted by whatnext

If the Feds won't act, apparently Doug will:

Ontario to hike foreign homebuyers tax if feds don't act: Source
Michelle Zadikian, BNN Bloomberg

The Ontario government will take matters into its own hands by raising its tax on non-resident homebuyers if the federal government doesn’t make good on a campaign promise to clamp down on foreign buying activity, BNN Bloomberg has learned.

“Ontario is prepared to raise the Non-Resident Speculation Tax (NRST) to 20 per cent and expand its catchment area beyond the Greater Golden Horseshoe,” said a senior Ontario government source, who later added the tax could eventually rise to more than 20 per cent.

“By expanding the catchment area to include the entire province and raising the tax, we will discourage foreign speculation and make sure our limited housing supply is going to those who need it the most.”

The province’s foreign homebuyers tax currently stands at 15 per cent and was implemented on Apr. 21, 2017.

The Greater Golden Horseshoe encompasses regions as far north as Barrie, as far south as Niagara, and stretches from Waterloo to Peterborough on a west-east basis.

On the campaign trail, the federal Liberals promised to ban foreign home purchases in Canada for a period of two years but no further details have been released since they were re-elected in September.....

https://www.bnnbloomberg.ca/ontario-to-h...s-tax-if-feds-don-t-act-source-1.1695342

It didn't work before, but surely it will work this time!

[ssiguy]

^^^ It's certainly not an answer to our housing affordability and availability crisis but God knows it can't hurt.

That said I hope QP DOESN'T have to implement such a plan but rather forces Trudeau to actually live up to his campaign promise of banning all non-resident purchases outright.