More nonsense

Looking at the press on the “tweaking” of the mortgage rules you have once again the Canadian spin on the world. Everything will be fine. Don’t worry. Be happy. Years ago a friend of mine told me that Canada is a plantation with kind masters taking care of the people that need taking care of. How true it is.

“If you’re worried that housing prices are too high, the single rate that the Bank of Canada targets is too blunt an instrument,” says University of British Columbia economist Tom Davidoff.

Great to see this commentary from Professor Davidoff. This is commonly referred to as a meaningless statement. Interest rates have historically been used to adjust the economic temperature. There is nothing new here and it has now become a blunt instrument. These guys prefer the incessant tweaking that has gotten the Canadian economy absolutely nowhere.

The Canadian government has gotten us into this conundrum. The economy stubbornly refuses to grow. And the Bank of Canada has a great talent for finding excuses for it. Whether it’s the fires in Northern Alberta, Donald Trump and whatever excuse they can create. Where is the Prime Minister on all this? Nowhere to be seen.

Of course, Poloz was speaking before last night’s presidential debate, but in his Monetary Policy Report, the bank governor drew a dotted line from poorer-than-expected Canadian exports to low business investment in the U.S. to uncertainty over American politics.

Wow. Can Poloz never take responsibility for anything? Dump it on the Americans, dump it on Trump. Meanwhile, the US stock markets are stable and from time to time bumping into new high, Canada languishes.

These guys are great at passing the buck.

As to real estate, it is overpriced. It is too expensive, it is out of control because of the wrong-headed policies of the Government of Canada.

When will they ever learn, when will they ever learn. Sounds like an old song.

Good luck to us Canadians, we are going to need it with this lame government and even lamer central bank.

New cooling measures for the real estate market

Finally, the Government of Canada has stepped in to try and cool the Canadian real estate market. As usual, the real estate agents either claim that these moves will damage the market while others say that it will have no effect. Pick the way that you think it’s going to go.

What are my thoughts?

It’s quite remarkable to see the spin that the government has put on this. These changes were easy to implement so one has to wonder why the government dragged their heals for so long. But that’s politics.

The guys that are going to get hurt are the last ones in (as usual) if the measures take hold. The change in qualifying for a mortgage using the five-year posted rate rather than the promotional rate is something that I have mentioned before. It should squeeze out the buyers that just squeak by.

Finally taking a hard line on the principal residence exemption was an easy fix that should have been done years ago. By the way, it’s not closing a loophole as some have written. It’s always been there as a provision that was poorly enforced by the Canada Revenue Agency. It’s not a loophole, it’s tax evasion. It’s about time.

The risk sharing with lenders will definitely put a lid on things as it will eliminate the shoddy underwriting standards of lenders who sloughed the risk off on the government.

Let’s wait and see, but it’s not good news for GTA and Vancouver real estate agents and mortgage lenders. But they will undoubtedly look for new games to play.

Should we tax foreign real estate buyers?

Should we tax foreign real estate buyers? Benjamin Tal’s writing on this issue comes to a number of unsubstantiated conclusions. One of them is that the main motivation foreign investors in Canadian real estate is not the flipping of the property, but merely to look for a safe haven for their money. Unfortunately, this has little to do with the issue.

Their motivation is one part of the equation. Vacant real estate in markets that are short of supply exacerbates the problem for locals. The prices are driven up by buyers who seem to have virtually unlimited resources. In addition, what should government policy be? To support Canadians in buying homes or foreigners?

In my opinion, writers and “talking heads” such as Mr. Tal have the wrong end of the hockey stick. Canada is a country first and foremost for Canadians. If governments do not protect Canadians what purpose does government serve?

A recent class action lawsuit in BC is a prime example of this. They are taking the position that the rights of foreigners need to be protected. What about the rights of Canadians? Middle-class Canadians are being crowded out of their own housing markets by double standards on mortgage underwriting and competing with foreigners who have more financial resources available to them than the majority of middle-class Canadians. I would love to hear the “talking heads” speak up for Canadians rather than always looking at the so called damage being done to foreigners.