National Economy

[YOWetal]

Originally Posted by Greetingsfromcanada

If they paused immigration, market rate asking rents would decline multiple hundred dollars per month. Same thing happened during covid. If the LPC want to win, the solution is staring them in the face. But they're likely too ideologically driven on immigration to do it

I absolutely think this is the right thing to do. But it's not simple either economically or politically.

Ecoonomically it's easy to see it over shooting. We are in a pretty strong downturn in some of the condo markets and it is the strong rental market keeping a lot of small landlords afloat. We might say too bad for them but if we get into a panic all bets are off and the mild recession we are enterring could become a massive one. These things cascade so unemployed construction workers stop eating out and unemployed waiters stop going to the salon. That can end up destroying a lot of economic output and make us all poorer.

Politically besides the risk above which given how hopeless it is for the Liberals seems like a risk worth taking politically, the drop in rental prices really only helps a small percentage of the population who are renters and who are moving in the next year. Current leases aren't going to fall unless there is a total crash. (I know a few people who negotiated rents down in April 2020 but it was rare) Meanwhile all the suburban boomers worry about their housing piggy bank going down in value and blame the Liberals.

As I said it's not easy. They absolutely should be trying something radical but seem totally oblivious to the cliff they are headed over.

[P'tit Renard]

Originally Posted by YOWetal

I absolutely think this is the right thing to do. But it's not simple either economically or politically.

Ecoonomically it's easy to see it over shooting. We are in a pretty strong downturn in some of the condo markets and it is the strong rental market keeping a lot of small landlords afloat. We might say too bad for them but if we get into a panic all bets are off and the mild recession we are enterring could become a massive one. These things cascade so unemployed construction workers stop eating out and unemployed waiters stop going to the salon. That can end up destroying a lot of economic output and make us all poorer.

Politically besides the risk above which given how hopeless it is for the Liberals seems like a risk worth taking politically, the drop in rental prices really only helps a small percentage of the population who are renters and who are moving in the next year. Current leases aren't going to fall unless there is a total crash. (I know a few people who negotiated rents down in April 2020 but it was rare) Meanwhile all the suburban boomers worry about their housing piggy bank going down in value and blame the Liberals.

As I said it's not easy. They absolutely should be trying something radical but seem totally oblivious to the cliff they are headed over.

So basically you've advocating JT's way of kicking the can down the road and keep the rental and asset bubble going, just to protect housing speculators and slumlords from real market forces, and socialize their losses.

The US housing crash may have caused short term pain, but their economy came out much stronger and resilient 15 years out. On the other hand, JT's Canada seems to be unwilling to let the free market correct itself, and in turn we're just cannibalising our economy and compromising our future even more.

[Loco101]

Originally Posted by P'tit Renard

So basically you've advocating JT's way of kicking the can down the road and keep the rental and asset bubble going, just to protect housing speculators and slumlords from real market forces, and socialize their losses.

The US housing crash may have caused short term pain, but their economy came out much stronger and resilient 15 years out. On the other hand, JT's Canada seems to be unwilling to let the free market correct itself, and in turn we're just cannibalising our economy and compromising our future even more.

Having just spent a few weeks in 5 different states, a couple poor ones and a few wealthy ones, I fail to see the US as being stronger economically. Sure the wealthier people are doing better but I'd say the bottom 2/3 are struggling quite a bit. I also wonder how much of their huge deficit spending is responsible for the good and bad there. Would Canada do better if our federal government went on a big spending spree like the US federal government?

[YOWetal]

Originally Posted by P'tit Renard

So basically you've advocating JT's way of kicking the can down the road and keep the rental and asset bubble going, just to protect housing speculators and slumlords from real market forces, and socialize their losses.

The US housing crash may have caused short term pain, but their economy came out much stronger and resilient 15 years out. On the other hand, JT's Canada seems to be unwilling to let the free market correct itself, and in turn we're just cannibalising our economy and compromising our future even more.

The US housing crash did not help anyone currently strugglying to get into the housing market. We have been spoiled with 20 years of good job markets. Losing your job is much worse than not being able to afford a SFH.

We probably need to risk all that to reset ourselves but ideally can avoid a crash. As we bring down immigration to zero we should provide temporary supports to get young people to buy some of these investment properties so prices don't crash too far.

[P'tit Renard]

Originally Posted by YOWetal

The US housing crash did not help anyone currently strugglying to get into the housing market. We have been spoiled with 20 years of good job markets. Losing your job is much worse than not being able to afford a SFH.

What kind of fantasy world are you living in? A big part of why there's many relatively affordable metros with vibrant job markets for Americans to choose from, is precisely because they had a hard reset in property prices during the 2008 GFC in many markets. If they did not have the property correction, prices across America would be as unaffordable as Canada today and they would probably be stuck in the same low-growth malaise that this country is mired in.

The US has also had a much better job market than Canada for a while now, and it just proves that an economy overly reliant on an unproductive industry such as real estate will only drag down the country's wealth and real per capita GDP.

We probably need to risk all that to reset ourselves but ideally can avoid a crash. As we bring down immigration to zero we should provide temporary supports to get young people to buy some of these investment properties so prices don't crash too far.

The government is already exposed to hundreds of billions of exposure by guaranteeing MBS bonds, and can't even afford the basics like funding the military properly. It would be utterly insane for the government to double down in subsidies to the residential real estate sector, but with JT still at the helm I suspect he'll do precisely what you want and keep juicing the RE market like a drug addict high on fentanyl and crack.

[lio45]

Your last sentence is exactly the problem: the Canadian economy is an addict now, and quitting would bring a lot of new issues, let alone trying to quit cold turkey. I believe PP will have to continue the Scheme to a large degree. As I said earlier, I had to give this some thought, and in the end, I’m betting that PP won’t be able to change course too much; too many bad side effects to doing so. (YOWetal mentions a bunch and I agree.)

You’re correct about US real estate: anyone could afford it in the late 2000s/early 2010s. I know for a fact, as I have a sizeable portfolio there now because I saw (and took) a fantastic opportunity in the early 2010s there. Meanwhile at that time buying more real estate in my Canadian city was a lot less appealing, so for about a decade, I almost didn’t expand in Canada. Vacancies rate were high and it was a renter’s market in the 2010s. At least in my Canadian hometown.

[YOWetal]

Originally Posted by P'tit Renard

What kind of fantasy world are you living in? A big part of why there's many relatively affordable metros with vibrant job markets for Americans to choose from, is precisely because they had a hard reset in property prices during the 2008 GFC in many markets. If they did not have the property correction, prices across America would be as unaffordable as Canada today and they would probably be stuck in the same low-growth malaise that this country is mired in.

The US has also had a much better job market than Canada for a while now, and it just proves that an economy overly reliant on an unproductive industry such as real estate will only drag down the country's wealth and real per capita GDP.

The government is already exposed to hundreds of billions of exposure by guaranteeing MBS bonds, and can't even afford the basics like funding the military properly. It would be utterly insane for the government to double down in subsidies to the residential real estate sector, but with JT still at the helm I suspect he'll do precisely what you want and keep juicing the RE market like a drug addict high on fentanyl and crack.

There is no evidence the property price crash ushered in a period of high growth. Places that avoided the crash have affordable real estate and saw growth. Texas for example. Now maybe when things get so out of whack a crash is the only way to reset things but there are serious harms when it happens. See below

Originally Posted by lio45

Your last sentence is exactly the problem: the Canadian economy is an addict now, and quitting would bring a lot of new issues, let alone trying to quit cold turkey. I believe PP will have to continue the Scheme to a large degree. As I said earlier, I had to give this some thought, and in the end, I’m betting that PP won’t be able to change course too much; too many bad side effects to doing so. (YOWetal mentions a bunch and I agree.)

You’re correct about US real estate: anyone could afford it in the late 2000s/early 2010s. I know for a fact, as I have a sizeable portfolio there now because I saw (and took) a fantastic opportunity in the early 2010s there. Meanwhile at that time buying more real estate in my Canadian city was a lot less appealing, so for about a decade, I almost didn’t expand in Canada. Vacancies rate were high and it was a renter’s market in the 2010s. At least in my Canadian hometown.

Yeah arriving with Candian cash where we didn't see total job losses and people lose nearly a decade of their life and in many cases never getting back the career track they lost. People committed suicide. Families were broken. A major recession is worse, far worse than being priced out of your dream house.

[P'tit Renard]

Originally Posted by lio45

Your last sentence is exactly the problem: the Canadian economy is an addict now, and quitting would bring a lot of new issues, let alone trying to quit cold turkey. I believe PP will have to continue the Scheme to a large degree. As I said earlier, I had to give this some thought, and in the end, I’m betting that PP won’t be able to change course too much; too many bad side effects to doing so. (YOWetal mentions a bunch and I agree.)

At the same time the Canadian economy is a pretty advanced drug addict by now, and pretty much has built up so much tolerance that it doesn't react much to new real estate stimulus juicing from the government. The bad side effects is hitting Canada regardless of the artificial price supports and immigration ponzi Schemes.

Unemployment is ticking up relentlessly especially in the Greater Toronto area, so we've already passed our national limit in taking in fake students from Punjab. Unless socially we're willing to have millions of unemployed and destitute NPRs roaming the streets who can't even afford rent.

I do think though that Quebec is in a much better position and suffers much less from the excesses of JT's regime, hence why I always feel a bit of a relief when I'm up in Montreal these days.

[P'tit Renard]

Originally Posted by YOWetal

There is no evidence the property price crash ushered in a period of high growth. Places that avoided the crash have affordable real estate and saw growth. Texas for example. Now maybe when things get so out of whack a crash is the only way to reset things but there are serious harms when it happens. See below

Yes at the end of the day it's about affordability. English Canada doesn't have any cities that have both vibrant job markets and affordable homes. So that's a clear signal we need a reset north of the border since things are so out of whack at this point.

At this point many young highly-talented Canadians would rather move south of the border than join this real estate hysteria, hence why the brain drain down to the US keeps accelerating in the last 5 years.

[casper]

Originally Posted by P'tit Renard

Yes at the end of the day it's about affordability. English Canada doesn't have any cities that have both vibrant job markets and affordable homes. So that's a clear signal we need a reset north of the border since things are so out of whack at this point.

At this point many young highly-talented Canadians would rather move south of the border than join this real estate hysteria, hence why the brain drain down to the US keeps accelerating in the last 5 years.

English Canada has a few markets that are land constrained. Where prices are high. Due to the limited supply of land.

English Canada has some cities (in places like Alberta, Saskatchewan, and Manitoba) where developing new land is relatively cheap and we can accommodate growth.

Then we have some places where demand is low and housing sell for less than replacement cost.

We have been talking about a brain drain for decades. Ever since NAFTA 1. That will continue. Canadians that want to work for big US tech and to stay in Canada have the choice of a few Canadian cities where most of those companies have also set up shop.

A housing crash send a clear message. We have over supply and the market needs to stop building. I don't think that is remotely correct.

[P'tit Renard]

Originally Posted by casper

English Canada has some cities (in places like Alberta, Saskatchewan, and Manitoba) where developing new land is relatively cheap and we can accommodate growth.

They don't have vibrant employment markets though, hence why Calgary now has the dubious honour of having the highest unemployment rate in the country at 8.5%.

Originally Posted by casper

We have been talking about a brain drain for decades. Ever since NAFTA 1. That will continue. Canadians that want to work for big US tech and to stay in Canada have the choice of a few Canadian cities where most of those companies have also set up shop.

Given the ever increasing size of the brain drain, tech workers make up at most a small portion of Canadians moving south.

A housing crash send a clear message. We have over supply and the market needs to stop building. I don't think that is remotely correct.

Current unaffordability has also killed the construction market. Most of the pre-construction condos in Toronto are now placed in cold ice, despite prices remaining close to post-COVID highs. You can only override market forces for so long before it comes back with a vengeance.

The more you distort the markets to keep prices high (whether via zoning, juicing up financing support, government guarantees, redirecting retirement funds to housing etc), the more unstable the construction market gets.

In a place like Japan, with permissive zoning, no foreseeable RE bubble nor any immigration ponzi schemes, they actually see comparable per capita housing starts to Canada's, which is not what you'd expect in a tiny country with a declining population and severe land restraints.

[Loco101]

While there are many people talking badly about Canada's economy I really wonder how much worse things are elsewhere and why. This article is from the Financial Post (part of the National Post), definitely not a left-leaning newspaper.

Canada set to be fastest growing economy in G7 in 2025, IMF forecasts

https://financialpost.com/news/imf-f...conomy-g7-2025

[YOWetal]

Originally Posted by Loco101

While there are many people talking badly about Canada's economy I really wonder how much worse things are elsewhere and why. This article is from the Financial Post (part of the National Post), definitely not a left-leaning newspaper.

Canada set to be fastest growing economy in G7 in 2025, IMF forecasts

Yes but our per capita perfromance is much less impressive. We are at the bottom of the table there over past few years and will catch up a bit but not be leading the way by any means.

[Loco101]

Originally Posted by YOWetal

Yes but our per capita perfromance is much less impressive. We are at the bottom of the table there over past few years and will catch up a bit but not be leading the way by any means.

But what is/are the reason(s) for Canada leading in growth? What are other countries doing wrong?

[lio45]

Originally Posted by Loco101

But what is/are the reason(s) for Canada leading in growth? What are other countries doing wrong?

You don’t understand what per capita means? The only thing “other countries are doing wrong” is not importing millions of new suckers with a pulse to boost total GDP while reducing GDP/capita.

“What is Switzerland doing wrong, to be poorer than India like it currently is?” ignores that wealth is much better looked at on a per capita basis. Yes, there is more total wealth in India than in Switzerland, but when we discuss wealth, it’s usually implied that it’s averaged by population.

[YOWetal]

Originally Posted by Loco101

But what is/are the reason(s) for Canada leading in growth? What are other countries doing wrong?

Not bringing in millions of fake students is doing it wrong?

[MonkeyRonin]

Originally Posted by Loco101

While there are many people talking badly about Canada's economy I really wonder how much worse things are elsewhere and why. This article is from the Financial Post (part of the National Post), definitely not a left-leaning newspaper.

Canada set to be fastest growing economy in G7 in 2025, IMF forecasts

https://financialpost.com/news/imf-f...conomy-g7-2025

On the surface, 2.4% GDP growth looks impressive; but context is important. For comparison, the population growth rate in 2023 was 3.2% - and 2024 is on track to be even higher. In other words, population growth is still exceeding economic growth; thus, we're getting poorer (ie. GDP per capita is declining).

[casper]

Originally Posted by MonkeyRonin

On the surface, 2.4% GDP growth looks impressive; but context is important. For comparison, the population growth rate in 2023 was 3.2% - and 2024 is on track to be even higher. In other words, population growth is still exceeding economic growth; thus, we're getting poorer (ie. GDP per capita is declining).

Canada has an aging population as a higher percentage of our population enter retirement. We do need population growth.

Where I think we are out of alignment with the US economy roadmap and need to focus more is manufacturing. There is a massive shift in the US (driven by both Republican and Democratic positions) to bring manufacturing back from Asia to North America. We should be trying to capture our share of that. We are not. A good first step would be to put limits on export of raw materials to require some level of processing in Canada prior to export. For example we should be banning raw log exports from Canada. While exporting LNG is fine, we should be more interested in exporting chemicals produced from natural gas instead. That should be driven by an national industralisation plan.

Immigration should then be focused on bringing in the right people to fill that gap. When the current government has done on batteries is a good positive step. But we need to do more of it.

I am disappointed the Liberals have not done it. I have zero confidence the Conservatives even comprehend what is happening in the world as the US shifts away from its dependence on China.

Originally Posted by MonkeyRonin

On the surface, 2.4% GDP growth looks impressive; but context is important. For comparison, the population growth rate in 2023 was 3.2% - and 2024 is on track to be even higher. In other words, population growth is still exceeding economic growth; thus, we're getting poorer (ie. GDP per capita is declining).

Comparing us to the UK is questionable. The UK has been following a failed conservative economic policy for a good decade. We can and should do better. Even the UK recognised they were on the wrong track and have shifted direction.