It seems inevitable now.
What was propping up Canadian housing prices even through the worst of housing market crashes elsewhere were banking rules forcing Canadian banks to keep 100% coverage and investors fleeing into Canadian housing when all else was failing.
The latter however now is ready to give. Canadian banks will likely be fine due to well-enforced banking rules, but the housing investors are done for. They've driven up prices so high in Vancouver and other Canadian cities that once the homes begin losing value, that'll be that. Value will sink like a stone into water and trillions of dollars will vanish overnight. Three quarters of the economy, at least.
And that's probably the conservative estimate. There is exposure everywhere by a great many players of this financial game. All interconnected with a great many of these companies playing at being investment companies the same way Mom and Pop investors play at the game: without clue and context that they're the mark for many of the old school investors. But they're all intertwined now, without a clear getaway for most of them.
When the housing units begin losing value, they'll have to be picked up for auction, but there'll be so many on the market for pennies on the dollar that the housing market will be cooked for at least twenty years if not more.
And without a manufacturing base to prop up the economy when times are rough, there's going to be sustained losses. Only the building of new housing units was keeping Canadians employed and decently paid, but when the housing units lose value, the value in building new units will also plummet, and much will simply go unbuilt. We'll be seeing half-built and unfinished projects everywhere for years throughout Canada but that won't matter because the number of empty units right now will continue sinking prices on new builds.
When housing goes, so to will the lumber market. With lumber goes forestry.
What's especially remarkable is wages were rising through the early part of the (still ongoing) Covid pandemic, but the professional management class put a hard stop to that due to reasons. Perhaps they didn't like that workers were keeping up with inflation to a degree. But because the PMC clamped down as much as they did on wage increases, that left the one path left to keeping the housing market going closed down. Workers still need to live somewhere but they lost the financial means to home ownership. Workers are the only people right now who want to own homes. Investors have slowed and some have even stopped investing. What this means is sooner or later —probably sooner now— is housing prices will sink down to what workers are willing to pay, which is 1/4 of what they earn monthly for fifteen years. But because wage increases have been stagnant to low since about 2020, those wages will probably cap housing prices to the median yearly wage of 2020. So housing will probably crater to an average cost of $160 thousand (if not even lower due to over supply right now). Which is down from an average of $660 thousand per unit right now.
That's half a trillion dollar loss of value in Canada alone just in housing. Wiped out. Gone, without a trace.
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