Here is an interesting analysis in Maclean’s magazine discussing the Canadian housing situation with respect to the continual call for a bubble-namely that housing prices will drop precipitously at some point or another. The problem with all these analyses There is, however, a problem with many of these analyses. Case in point that there are some institutional […]
A recent report in the Globe & Mail highlights the lending practices with respect to foreign buyers of Canadian real estate. Reading this article is very disturbing. It claims that there is an unwritten bias towards high net worth foreigners who can qualify for mortgages that Canadians would not qualify for. The underwriting guidelines are […]
After much posturing, the Bank of Canada has finally acknowledged that we are coming into an era of slower growth. If there is anything surprising about this it’s the fact that it has taken the BofC so long to acknowledge what everyone on the street already knows, that Candian economic growth is no longer a […]
I was riding the subway in Toronto today. There were two guys standing around talking about the Toronto and Vancouver real estate markets, and about how easy it is to make money in real estate. I have learned one thing over the years when people are standing around talking about how easy it is to make money in real estate, the game is over.
John Kenneth Galbraith was a well-known economist in the 70s and 80s and wrote a large number of books in his chosen field of Economics. One of his relatively short books is the one mentioned above.
The book is well worth reading as it is a concise discussion of financial euphoria. The concluding paragraph of the book is well worth repeating:
No one concluding an essay such as this can expect to escape the questions: When will come the next great speculative episode, and on what venue will it recur – real estate, securities markets, art, antique automobiles? To these there are no answers; no one knows, and anyone who presumes to answer does not know what he doesn’t know. But one thing is certain: there will be another of these episodes and yet more beyond. Fools, as it has long been said, are indeed separated, soon or eventually, from their money. So, alas, are those who, responding to a mood of optimism, are captured by a sense of their own financial acumen. Thus it has been for centuries; thus in the long future it will also be.
And so it goes in the current market euphoria. This time, it’s different, the market will continue to defy gravity and keep on going up.
It’s very interesting. This article that appeared in the Globe & Mail summarizes the current economic situation in Canada: Canada’s a real estate nation, just waiting for a crash. Canada has moved from being a somewhat industrialized nation to a nation that is now more than somewhat dependent on real estate for its economic well-being. […]
Here is an interview with an analyst at National Bank Financial. The interesting thing about this interview is how the analyst, Peter Routledge, manages to add little to the discussion. If you listen to him you’ll see. Housing prices will drop if they drop and housing prices will go up if they go up. This is […]
Taiwan’s, and in particular, Taipei’s housing prices have increased at rates which made Toronto and Vancouver’s price increases seem anemic. The government introduced a luxury tax of 15% a few years ago (sound familiar?). The luxury tax had unintended consequences on the Taipei real estate market and created distortions in housing prices. Here is an article […]