I would not normally quote the following source as
"news"; however, it did outline clearly the significance of what is
still coming to Toronto in an over zealous Canadian real estate market. While two new skyscrapers are planned to be
taller than that ivory tower of commerce, finance and a Bay Street mecca –
First Canadian Place. Think about that!
Although the benefits are
seeing areas like Gerrard/Yonge with a facelift (yes, where you used to buy
your "Big Slice"), it shows that despite Canadian buyers trying to
purchase in Canadian dollars is a mug's game as we are in direct competition
with billions of other real estate purchasers world wide who think and manage their wealth
in US$ (which will continue to strengthen versus our Canadian dollar thanks to,
oh say, i) Liberal deficits that are multiples of what they were forecast to
be, ii) no plan to pay these deficits down within decades, iii) unemployment at
7% and iv) GDP hovering at or below 2.0%). They are trying to move large sums of funds (millions), they are motivated purchasers, and are willing to outbid for that. In summary, such purchasers salivate when
they see the development continuing in cities such as Vancouver and Toronto due
to the “discount” as the Canadian dollar is approximately 75% of a US$, the
rule of law in Canada and the fact that Federal, Provincial or Municipal governments
will NEVER react in a direct, firm and fair way for Canadians otherwise facing
that term WITH NO CONSEQUENCES ATTACHED (whether right or wrong) by its
constituents AND the media… the “R” word (“racist”).
In other words, CANADA AND CANADIANS HAVE IMPORTED THEIR OWN REAL
ESTATE INFLATION, and now there is no stopping it until: i) interest rates
increase (LOL, sometimes I crack myself
up – see reasons above), or ii) there is a better place for
foreigners/potential permanent residents to purchase. Neither
of which are happening.
In Australia, there are restrictions to combat such
circumstances. This requires foreign
purchasers to buy “new” construction, not a resale, thus fostering jobs in the
construction industry, and yes more supply which according to Economics 101
takes care of real estate pricing shocks as theoretically there should be no
shortage .
Although Canada is part of the
FinTRAC system (from the government web site, "The Financial
Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s
financial intelligence unit (FIU). The Centre assists in the detection,
prevention and deterrence of money laundering and the financing of terrorist
activities. FINTRAC's financial
intelligence and compliance functions are a unique contribution to the safety
of Canadians and the protection of the integrity of Canada's financial system.), this system has very little
restrictions in stopping the movement of capital into Canada nevermind
enforcement. In the meantime, as
Canadians we just have to accept that every dollar (Canadian$ or US$) is
legitimate and well-earned, and only used for purposes of real estate as a
place to live or to earn a capital gain in already over-heated market (that is,
fuel to a fire). And that every real
estate agent dealing with a foreign buyer is screening them appropriately, and
the banks are doing their due diligence…as per the law as well as the codes and
integrity of their industries.
No wonder the real estate agents and the real estate industry
wants to keep this foreign data to themselves, and the significance of it. What if a different truth was known and (naïve)
Canadians actually woke up one day to what is happening behind the scenes
(Exhibit A, around this time last year, the Globe and Mail blew the doors open
on a story involving the Vancouver real estate market where real estate agents
were assigning purchase and sale contracts, picking up tens of thousands in
fees along the way, resulting in an unknown buyer showing up at the closing of
the unsuspecting seller).
On another note, CIBC has announced
it will move into two brand new office towers, the first move for one of the
big banks that have been residing in their respective office towers on Bay
Street for decades. Despite this
refreshing move, when commercial towers are constructed and the doors open,
usually that happens just in time for a….you guessed it, a market crash.
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