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Inflationists need a Rally
The Economist ranks Canada's housing as the second most overvalued in relation to both rents and income. This is not news to the readers of these pages who have seen the various Demographia posts and have lived through the faux appraisals untethered from fundamentals.
Our only remaining question is why do high net worth individuals expose themselves to such great risk by continuing to swap cash for negative returns?
We know why the retail buyer has bought the farm; the government has been subsidizing credit to anyone via CMHC. Ironically that's us taxpayers; we have been blowing up the balloon. Cheap credit has masked the outrageous principal amount before interest that glib marketers tout as affordable. The granite and stainless steel may be fashionable at the moment, but at these prices when you look back from the future, you are buying a hovel.
My case study demonstrates the futility of Vancouver as a port in the storm and now that we have "real" yields breaking out, mortgage lenders are getting ahead of the curve by raising rates to mitigate term risk and not waiting around for the Bank of Canada who is still betting on shorting cash via ZIRP.
History, Charts & Curated Readings
"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense
"History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'