One reason I’ve stayed out of real estate for a long time is because I keep thinking it’s overvalued.
But, take a look at how much real estate is part of our GDP in Canada. Source: Statista.
It’s a huge portion. It’s the biggest portion of our GDP.
Manipulation by Groups of People
And then look at this headline article about all the indicators of money laundering going on here in Canada from the real estate industry.
It’s crazy. Note the headline is only talking about the GTA! It doesn’t even include Vancouver, or the rest of Canada.
How about this headline:
Look at this headline:
There is so much illegal money laundering entering Canada’s real estate market coming from Chinese students, it’s crazy.
Government and Political Manipulation
But, we know from the way Canada handled the Meng Wangzhou case, Canada won’t do anything to China.
Look at how when the virus first was spreading worldwide out of China. Did we block anyone from there coming into Canada? No, the government encouraged us to continue attending Chinese events and not being afraid otherwise we would be racist. We were also told that masks were ineffective. We had no protection, no vaccines, and we knew almost nothing about the virus.
When Omicron came out, within hours we blocked South Africa and African nations. No arguments or hesitation even though we’re almost 90% fully vaccinated! The cases were not severe, doctors there were saying it’s mild. We were also more aware of how to handle ourselves with washing hands, physical distancing, and wearing masks as we have been living with it for well over a year now.
Canada is a Haven for Criminals
I remember reading a headline a long time ago by Eddie Greenspan, one of Canada’s most famous lawyers and he was responding to someone about commiting a crime between Canada and the US. And he said, “If I was going to commit a crime, I would do it in Canada.”
We’re a haven for criminals because we won’t and don’t do anything about it. And we have a crazy legal process that gives criminals so much power. And probably the politicians are in on it too. I’ve heard from people in the industry who have said they know politicians directly involved in the manipulation.
So, if you keep waiting, I don’t think it’s a good idea. Land is limited. Prices are just going to keep going up. And if you’re waiting for a crackdown by our government – there’s no way. There are too many powerful people running the show and it’s not just the government.
And why would criminals be afraid of a crackdown by our government? It’s not like we’re in China. Nothing will happen to you if you get caught. Only in Canada will you get crazily penalized if you own up to your mistakes. But, if you get caught, we won’t punish you too much because that would be undue hardship on you. The government doesn’t really care if you’re one of the thousands of young people sapped of your dreams from owning a home. They don’t want to hurt the criminals.
Finally, the most important point to remember is that the government wants to stay in power. Just remember that, their first priority is to stay in power. Cracking down on real estate will just upset powerful people. So, they won’t do it.
Watch this video about government manipulation which Mike Burton on YouTube explains nicely.
Date: Aug. 18, 2021
Title: Canada’s Housing Market Crisis. Who is really pulling the strings?
Excessive Mortgage Debt of Canadians
The other thing to look at is how much mortgage debt Canadians have piled on. Canadians have leveraged themselves to the hilt. The government isn’t going to raise interest rates and cause a panic with homebuyers even though they took on excessive risk. I can see them raising rates a bit to slow things down now and then, but, back to 5%, 8%, 10% or more, no way.
What is happening is that the savers and prudent investors are left behind because they may have waited to get a bigger down payment, while people taking on riskier loans get to move ahead.
Now, that sounds normal in the stock market because often if you don’t take risk, you can’t make huge rewards. But, in the stock market, when you take big risks, you also have the potential of losing a lot of money too. That is what risk is about. You can take on big risks, but, you have to accept gains OR losses. Hence the term, RISKY.
That’s not the case with the mortgage market in Canada. The government is supporting risky behaviour by manipulating the interest rates and keeping it low. The consumer doesn’t have to worry about high interest rates and making prudent decisions and saving because they know the government won’t raise rates much.
So, in effect, you are able to take on risk while getting backed by the government. It’s supporting the risky behaviour and penalizing savers and prudent potential home buyers who waited to make sure they could afford a home if rates increased. But, that’s Canada: Help people who make bad decisions because no one makes bad decisions and screw all the savers who were trying to be responsible.
So, I don’t think it’s of much use waiting for a good time to buy. I can’t forsee what would cause the housing market to crash, other than high interest rates. And as I said, I don’t forsee the government letting that happen.
It could pause, like in the “Great Financial Crash” of 2008. But, crash, I don’t think so. After seeing how housing practically didn’t budge against the backdrop of a financial disaster in 2008, I don’t see the housing market crashing. Too many powerful people and the government needs it to keep it going up. It’s not like the stock market where you can make money when stocks go down. Housing prices need to go up to make money.
Finally, there is also real estate agents involved in manipulating the market to keep it going up.
Date: Oct 14, 2022
Title: Mortgage fraud caught on camera: Undercover investigation (Marketplace)
Date: Oct 15, 2021
Title: Real estate agents caught breaking the law on hidden camera (Marketplace)
And this was investigated 5 years ago with another similar outcome.
Date: Nov. 4, 2016
Title: Real estate agents breaking the rules: Hidden camera investigation (CBC Marketplace)
Here is something about price manipulation.
Date: Sep 28, 2021
Title: Would an end to blind bidding help Canadian home buyers?
In summary, you’ve got individuals and certain groups, government and politicians, and our own industry involved in manipulation of our housing market. We’re a global first class haven for illegal money and activity that helps criminals bring money into our real estate and pump up our prices. Add to that a government that supports this, a devaluing currency and I don’t think there is any specific good time to buy like in the stock market. Anytime is a good time to buy real estate in my opinion.
Cedric Liem says
“So, I don’t think it’s of much use waiting for a good time to buy. I can’t forsee what would cause the housing market to crash, other than high interest rates. And as I said, I don’t forsee the government letting that happen.”
Lesson learned: Rampant inflation will make the government raise rates!