“In the long-term, the bubble will burst when interest rates rise and the economy debtonates.”
In a somewhat-rational economy connected to reality, Canada’s housing market would have gone down last year.
After all, GDP fell dramatically, tens of thousands of small businesses were shuttered, and hundreds of thousands of jobs were lost.
There is no logical way in which all of that happening would result in the housing market going up.
But these aren’t logical times.
With governments and central banks pumping up the money supply and incentivizing debt accumulation, we are seeing the housing bubble continue to grow.
And, as history shows, the bigger the bubble gets the harsher things get when it bursts.
Few politicians are willing to talk about it, either because their policies encourage it, or because they hope the bubble will last long enough for them to win a few elections.
However, an exception to that is Conservative jobs & industry critic Pierre Poilievre who has been warning about the housing bubble and damaging government policies:
“We have more places in Canada where there is no one than places where there is anyone. With so much land & so few people, why is our real estate among the world’s priciest?”
We have more places in Canada where there is no one than places where there is anyone. With so much land & so few people, why is our real estate among the world’s priciest? https://t.co/RfPvJ2Np9u
— Pierre Poilievre (@PierrePoilievre) March 15, 2021
“Answer: local governments block supply. Federal gov subsidizes demand.”
Answer: local governments block supply. Federal gov subsidizes demand.
— pierrepoilievre (@PierrePoilievre) March 15, 2021
“In the short-term, we get massive wealth inequality as mansion-dwellers get price gains, while renters pay more & can never afford to own.”
In the short-term, we get massive wealth inequality as mansion-dwellers get price gains, while renters pay more & can never afford to own.
— pierrepoilievre (@PierrePoilievre) March 15, 2021
“In the long-term, the bubble will burst when interest rates rise and the economy debtonates.”
In the long-term, the bubble will burst when interest rates rise and the economy debtonates.
— pierrepoilievre (@PierrePoilievre) March 15, 2021
The fact is, the era of easy-money and an unhinged housing market can’t last forever, no matter how much many politicians may want to avoid that reality.
Will more join Poilievre in discussing this problem, or will they keep sticking to their magical thinking on the economy?
Spencer Fernando
Photo – YouTube
