Canada's 'housing bubble' deemed close to bursting

[WarrenC12]

Originally Posted by LightingGuy

The layoffs/lower employment in construction/manufacturing/real estate workers is the first domino to fall. They are going to spend less, which means the next domino to fall will be retail. Some of them are going to be unable to afford their mortgages, which means that defaults will go up.

I saw this coming a year ago and have been recession-proofing my business since last summer. A larger array of lower cost, higher value products, and less exposure to the industrial market.

Lots of people were saying this would happen by summer 2022 yet here we are. I suppose a broken clock is right eventually.

[thurmas]

Alex Levesque a trouve une place pour seulement $215 pieces

https://www.facebook.com/alexlevesquee/videos/296830416010634

[LightingGuy]

Originally Posted by WarrenC12

Lots of people were saying this would happen by summer 2022 yet here we are. I suppose a broken clock is right eventually.

These things always take a long time to unfold. Since the beginning people have saying it would take a minimum of 12 months to see the true effect of higher rates. It's impossible to get the exact timing right, but doesn't mean it's not going to happen. A year ago we were still only at 1.5% for the overnight rate. We only reached 4.5% in January - our current rate - 5 months ago.

Literally everything is screaming that there is going to be a recession:
- massive housing bubbles across the world
- affordability crises across the world
- the highest debt levels in modern times at every level (public, corporate and personal)
- high inflation
- the fastest interest rate hikes in our lifetime
- white collar layoffs (tech sector)
- manufacturer layoffs (anecdotally)
- declining building permits (which means there will be mass construction layoffs once current projects are completed)
- bank failures in the US
- anecdotally people have been tightening their belts everywhere
- personal savings are way down
- credit card debt is way up

To top it off, the most historically accurate recession indicator is the inverted yield curve - it has accurately predicted every single recession in our lifetime. The yield curve has been inverted since the second half of last year IIRC. It generally precedes recessions by about 12 months. For those that don't know what this means, an inverted yield curve means that short term treasury rates are higher than longterm rates (i.e. you get a higher return for lending money to the government for 2 years than if you lent it for 10 years), when it should be the opposite.

The fact that the yield curve is inverted, and has never been wrong, only further confirms that we are entering a recession. The question isn't if a recession is going to happen soon. The question is how bad will it be, and how will the government respond.

People don't like hearing bad news, I get it - but I think it is much better to know what's likely coming so you can prepare yourself for it. In my case I started preparing for it a year ago, and continue to do so now, so that when 🞵🞵🞵🞵 hits the fan I'm ready to take it on.

[SpongeG]

'Commercial Real Estate Is Melting Down Fast': Elon Musk Warns Home Prices Will Be The Next To Crash — Yet One Property Type Could Prove Resilient

https://finance.yahoo.com/news/commercia...F2VAbinjgvdM_0uqE36hHOXpIpwaTwtNi7hWhJ9I

The one resilient type is medical office buildings...

[swimmer_spe]

Originally Posted by LightingGuy

These things always take a long time to unfold. Since the beginning people have saying it would take a minimum of 12 months to see the true effect of higher rates. It's impossible to get the exact timing right, but doesn't mean it's not going to happen. A year ago we were still only at 1.5% for the overnight rate. We only reached 4.5% in January - our current rate - 5 months ago.

Literally everything is screaming that there is going to be a recession:
- massive housing bubbles across the world
- affordability crises across the world
- the highest debt levels in modern times at every level (public, corporate and personal)
- high inflation
- the fastest interest rate hikes in our lifetime
- white collar layoffs (tech sector)
- manufacturer layoffs (anecdotally)
- declining building permits (which means there will be mass construction layoffs once current projects are completed)
- bank failures in the US
- anecdotally people have been tightening their belts everywhere
- personal savings are way down
- credit card debt is way up

To top it off, the most historically accurate recession indicator is the inverted yield curve - it has accurately predicted every single recession in our lifetime. The yield curve has been inverted since the second half of last year IIRC. It generally precedes recessions by about 12 months. For those that don't know what this means, an inverted yield curve means that short term treasury rates are higher than longterm rates (i.e. you get a higher return for lending money to the government for 2 years than if you lent it for 10 years), when it should be the opposite.

The fact that the yield curve is inverted, and has never been wrong, only further confirms that we are entering a recession. The question isn't if a recession is going to happen soon. The question is how bad will it be, and how will the government respond.

People don't like hearing bad news, I get it - but I think it is much better to know what's likely coming so you can prepare yourself for it. In my case I started preparing for it a year ago, and continue to do so now, so that when 🞵🞵🞵🞵 hits the fan I'm ready to take it on.

We have one of 3 options: A recession, a depression or nothing.

There is a 4th option - a correction.

Picture this:
An economy shuts down all but essential production for about 2 years. Because of that, companies start stockpiling. After a few years, they have enough to give them a buffer. This causes a ripple effect that sees all companies slowing down. This means companies can lay off some employees. This is kind of like a recession, but, the economy is fine.

[swimmer_spe]

Originally Posted by SpongeG

'Commercial Real Estate Is Melting Down Fast': Elon Musk Warns Home Prices Will Be The Next To Crash — Yet One Property Type Could Prove Resilient

https://finance.yahoo.com/news/commercia...F2VAbinjgvdM_0uqE36hHOXpIpwaTwtNi7hWhJ9I

The one resilient type is medical office buildings...

In Canada, for the most part, a medical office building is not anything special.

[Xelebes]

Originally Posted by swimmer_spe

In Canada, for the most part, a medical office building is not anything special.

This is also true in the United States.

[swimmer_spe]

Originally Posted by Xelebes

This is also true in the United States.

So, why is it resilient, especially since most buildings don't just have one type of tenant.

[casper]

Originally Posted by swimmer_spe

So, why is it resilient, especially since most buildings don't just have one type of tenant.

Article says it is becasue work from home and virtual exames are not a major factor yet. As well as aging population.

I don't know. I am more likely to see my doctor virtually than in person. Maybe it is a US thing.

[theman23]

Its in the article. Medical practice is less conducive to working from home.

[swimmer_spe]

Originally Posted by casper

Article says it is becasue work from home and virtual exames are not a major factor yet. As well as aging population.

I don't know. I am more likely to see my doctor virtually than in person. Maybe it is a US thing.

I am guessing they have not heard of tele health. It and other virtual services are going to become the future.

[theman23]

You still need a physical office to accommodate patients that need exams, lab tests, imaging, procedures, etc. It's right there in the article that medical office vacancy rates are significantly lower than other office types, but I think this is going to turn into another of those things where you ignore all the evidence put in front of you because you've got an idea in your head.

[swimmer_spe]

Originally Posted by theman23

You still need a physical office to accommodate patients that need exams, lab tests, imaging, procedures, etc. It's right there in the article that medical office vacancy rates are significantly lower than other office types, but I think this is going to turn into another of those things where you ignore all the evidence put in front of you because you've got an idea in your head.

I am not saying that they don't. I am saying that if we look pre, during and post pandemic and how the typical doctor's office worked, many of them went fully virtual with some having some sort of hybrid now. So, that may mean less need for as much office space going forward. I don't see a day that there will ever be fully virtual for anything not in a hospital.

[casper]

Originally Posted by swimmer_spe

I am not saying that they don't. I am saying that if we look pre, during and post pandemic and how the typical doctor's office worked, many of them went fully virtual with some having some sort of hybrid now. So, that may mean less need for as much office space going forward. I don't see a day that there will ever be fully virtual for anything not in a hospital.

Not certain if it was different with other doctors. My family doctor never went fully virtual during COVID. He was still doing in office exams but they were extremely rare and only when a virtual option would not work for the specific issue.

I agree I don't think doctor offices will disappear completely. Most in BC work in multi-doctor clinics. If the number of in person examples remains low they may just start to reduce the number of exam rooms and office space. More hot desking.

[swimmer_spe]

Originally Posted by casper

Not certain if it was different with other doctors. My family doctor never went fully virtual during COVID. He was still doing in office exams but they were extremely rare and only when a virtual option would not work for the specific issue.

I agree I don't think doctor offices will disappear completely. Most in BC work in multi-doctor clinics. If the number of in person examples remains low they may just start to reduce the number of exam rooms and office space. More hot desking.

That was my experience here in ON too. What you expect is the same for me, so medical buildings are not more of a sure thing.

[whatnext]

Originally Posted by theman23

You still need a physical office to accommodate patients that need exams, lab tests, imaging, procedures, etc. It's right there in the article that medical office vacancy rates are significantly lower than other office types, but I think this is going to turn into another of those things where you ignore all the evidence put in front of you because you've got an idea in your head.

Sure but if there’s a meltdown in office space medical uses can move into those. There’s plenty of commercial buildings already divided into the smaller spaces rather than big open floorplates.

[thurmas]

Bank of Canada has raised interest rates by 0.25 percent. Highest interest rates since 2001.

[Truenorth00]

Originally Posted by thurmas

Bank of Canada has raised interest rates by 0.25 percent. Highest interest rates since 2001.

Hope to see even more.....

[swimmer_spe]

Originally Posted by thurmas

Bank of Canada has raised interest rates by 0.25 percent. Highest interest rates since 2001.

If a recession is a deflation, not inflation, and the BoC is raising interest rates, does that mean the fear of a recession is misguided?

[WarrenC12]

Originally Posted by whatnext

Sure but if there’s a meltdown in office space medical uses can move into those. There’s plenty of commercial buildings already divided into the smaller spaces rather than big open floorplates.

Medical offices usually cluster in zones around hospitals. They won't just go anywhere.

Which means when St. Paul's moves, there will be a massive movement of associated private offices out of that area and into the area surrounding the new hospital.