Canada Is The World’s Greatest Manufacturer Of… HOUSING BUBBLES…
Yes, it’s official — Canada leads among all the G7 nations in… manufacturing HOUSING BUBBLES. But don’t expect the rousing applause from the young families across the country — unable to secure inexpensive accommodations.
Not only we are number one, but according to the excellent reports from betterdwelling.com… we, literally, OWN THE PODIUM. Just read the: “Canada’s Real Estate Bubble Grew Faster Than Any G7 Country In The Past 30 Years”.
Now, I wrote about my opinions on the above before. In fact, I wrote about it quite frequently. If you read any of my 11,000 tweets or 150+ LinkedIn articles — you can’t miss it.
More than 5 years ago, I wrote: “The Canadian Housing Bubble — And How To Fix It At One Fell Swoop”. My search for answers brought me to the December 2014 document prepared by DBRS: “Home Price Indices: A Fifty City Comparison — The Best and Worst Housing Markets Over The Past Decade”.
The DBRS study reviewed 50 major housing markets across Australia, Canada, the UK, and the US over the past decade. The most STRIKING finding to me was the fact the first US city, Portland, was ranked as the 21st worst performer. The highest CAGR spots were all taken by Canadian, Australian, and UK cities.
So, I wanted to further investigate what is so unique about the housing bubble in Canada, Australia, and the UK? Lo and behold, it became clear to me, that in all three countries, the real estate market is TAXED the same way:
- Mortgage interest payments are NOT TAX DEDUCTABLE
- Capital gains on a prime residence are NOT TAXED
The taxation in the US is exactly the opposite: mortgage interest payments are tax-deductible and when you sell your home, you will pay taxes on capital gains.
More recently, just before the last Federal elections, I wrote: Elections & The Canadian Housing Bubble. My message to all the politicians was quite blunt: as long as the STRUCTURAL problems of a housing bubble are not properly addressed — we are not going to solve the root causes! And once more, I recommended the following:
· Eliminating Real Estate Capital Gains Exemptions — at the time of property sale
· Mortgage Interest Payments Deductibility — to increase homeownership affordability by deducting mortgage payments from the taxable income of young Canadian families.
Therefore, it is hardly a big surprise that when UBS published this month its “Global Real Estate Bubble Index 2021” — I looked at the biggest offenders. Finding Toronto (№2 on the list), or Vancouver (№6) — was… expected.
But since Frankfurt was a clear “winner” — I quickly checked what kind of policies on mortgage payments deductibility or capital gains taxation during the sale of a prime residence are used in Germany…
You guessed it — these are similar policies to what we have in Canada, UK, or Australia. So, I rest my case… And once more, the first US city, Miami, Florida — was only a №12 on this list…
However, as any data scientist or even a casual data observer will tell you, it’s not the accuracy & abundance of information that matters. Rather, it’s how such information is being interpreted…
And it’s time to remind our politicians that embracing good advice is a sign of strength, not weakness. Data gives us the facts; Facts give us the information; Information gives us the Knowledge; Knowledge turns into Wisdom, and Wisdom offers ultimate Advice leading to a better decision…
One may still subscribe to the “wisdom” expressed in the “Nowadays” lyrics from Chicago, The Musical: “You can like the life you’re livin’; You can live the life you like”… But at some point, the music stops — and there will be political consequences for inaction…
Building more houses without the legislative changes will only have the opposite effect. It is like pouring gasoline on fire… As recently quoted by NASDAQ, George Soros likes “market bubbles” and he recently said: “When I see a bubble forming, I rush to buy, adding fuel to the fire”.
So, it seems to me that many housing speculators, foreign and domestic, are blessed with a 20/20 vision and can see the housing bubbles as good as George Soros does… Once more, just read some of the recent posts at betterdwelling.com such as:
· Canadian Real Estate Prices Are Overvalued By Up To 91%: Moody’s
· Canada’s 1.3 Million Vacant Homes, And Investors Bought 25% Of Real Estate In Ontario
· The World Has Millions Of Vacant Homes, And 1.3 Million Are In Canada: OECD
Hence, my message to Canadian politicians is as follows: not knowing how to fight the housing bubble is regrettable. Knowing and not doing anything constructive about it — is unforgivable…
Perhaps, the elections are over for a year, or two. However, the lack of strong leadership committed to ending the Canadian housing bubble — is not going to remain unnoticed. And who knows, conceivably, the not-so-welcoming banners at the next political conventions may say: Welcome Idiots!
It’s Halloween night tomorrow. Taking into account that Canadian households owe an average of $1.71 for every dollar of disposable income (as recently reported by Statistics Canada) — the housing bubble couldn’t look any spookier for such an occasion…
For More Information…
For more information, please see my posts on LinkedIn, Twitter, Medium, and CGE’s website.
AI Boogeyman
You can also find additional info in my book on amazon: “AI Boogeyman — Dispelling Fake News About Job Losses”, and on our YouTube Studio channel… Thank you.
“BODs Serve Investors, Advisory Boards Are CEOs’ Best Friends”
- Imitation works best in karaoke bars, not in business. To escape the competition, businesses need to constantly reinvent. So, I join Advisory Boards and “unlock” Radical Innovation.
- Good advisors help increase REVENUES and reduce COSTS. Great ones, turn COST into PROFIT centers. And my BusinessAI™ guidance delivers the right KEEs (Knowledge, Experience, and Expertise) to do so.
- Warren Buffett once said: “predicting rain doesn’t count; building arks, does”. Yet successful ark builders also work with the best lumber salesmen, and more.
- Helping the CEOs to escape the competitive floods — is what I do. If product descriptions qualified as IP, Business Development (BD) would have been easy. The problem is that all the competitors can use the same narratives.
- No amount of branding, marketing, and wordsmithery is going to suffice w/o utilizing BusinessAI™ — the strategies I specifically designed to achieve BD excellence.
- As a 30-yr BusinessAI™ veteran, I offer unmatched BD investment advice to VCs, PEs, and their portfolio companies. In many cases, I also Propose, Design, Structure, Finance, and Deploy state-of-the-art Joint Ventures to bring RAPID REVENUES — just as I did w/ Verizon already 20-yrs ago…
- As a founder of Canada Green ESCO Inc. (CGE), I used BusinessAI™ strategies in CleanTech and focused on fighting Climate Change and Environmental Risks — dealing with stranded assets at the largest utilities. In total, CGE raised $1B+ in project finance linked to solar (utility-scale and distributed), wind, geothermal, Waste-To-Energy (WTE), energy efficiency, and more.
- Now, I help maximize returns also in Healthcare, Fintech, Transportation, and Construction industries. And I apply the same structured finance expertise I acquired through financing Cleantech projects. It involves equity, non-recourse debt, balance sheet financing, and tax equity.
- My pattern recognition abilities allow me to see what is still missing & how to maximize business offerings & profitability. And as a coach & mentor, I bring unparalleled business savvy to separate the wheat from the chaff…
- What I learned over the years is that it is not just technology innovation that makes all the difference. Business Model Innovation is as disruptive as Technology Innovation and yet I see too many companies focused on pushing their product out the door — while losing ~70% of untapped revenue streams.
- You can call me: “The Midas of Business Development (BD) Innovation™”. My advice is worth its weight in gold…
