As the elites brag about unsustainable debt-fueled growth, yet another warning has been issued about the Canadian housing sector.
The latest warning centres around how dependent our economy is on the fees from real estate.
According to a recent report, the combination of real estate commissions, legal costs and fees for home inspection and surveying, and land transfer taxes, account for nearly 2% of Canada’s GDP.
In fact, business reported Jacqueline Hansen says “Our economy actually relies more on the fees associated with buying and selling houses than it does on agriculture, fishing, forestry and hunting combined.”
Not good. In fact, Hansen calls it an “addiction” for Canada’s economy, and notes the comments of analyst David Doyle who says this is even worse than in the United States before the crisis.
“Doyle points out that the U.S. was relying big time on home ownership transfer fees in 2005, when its real estate market peaked. But even then, those fees made up only about 1.5 per cent of U.S. GDP. Now, years after the U.S. housing market crash, transfer fees make up less than one per cent.”
Ominously, Doyle says “The drag on the economy that’s going to flow from [higher rates], I think, will prove to be much more severe than it’s been in the past.”
In the same report, economist David Madani pointed to the broader impact of the expected housing decline.
“When prices are going up, people will invest in their new kitchen and bathrooms, because a home is an investment, right? The value is going up, right? Once it starts going down a bit, I think you’ll see people cool off on a lot of that stuff,” Madani said.
Then other businesses such as furniture and home improvement retailers could also suffer.
Doyle warns that eventually the entire economy could feel a drag from falling home sales and falling real estate fees.
“The economy is just that much more reliant on housing and in particular on these ownership transfer costs,” Doyle said. “It’s not something that, as an economy, you would look at as a position we want to be in.”
This latest warning shows the result of policies that have enriched government and restricted manufacturing and the energy industry. The tangible economy has been weakened, more of our money is taken by the state, and people are losing confidence in Canada as a place for business investment.
The elites in Canada and around the world – who are doing better than ever financially – have refused to let the economy naturally re-balance itself.
For example, the big banks should have been allowed to implode in 2008, which would have sent a clear message about the consequences of elitist greed and deception. Instead, they were bailed out. Here in Canada – after years of getting back to balance after the crisis – the new government has gone on a spending and regulation spree.
Now, rather than building things or producing tangible products, our economy is increasingly based on moving debt around and desperately trying to put off the consequences of over-regulation, the weakening of the middle class, and the severe damage done to the prospects of working class Canadians.
Clearly, the housing market is only the symptom of our deep economic sickness, not the cause.
As long as we continue to have a bloated centralized bureaucracy picking economic winners and losers, running up debt, and regulating everything in sight – while skewing policy towards their fellow elites – the more fragile and vulnerable our economy will become.
The elites want to hide their many failures behind political correctness, deception, and manipulation. We need to push back and spread the truth.
That’s why I write.
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