Canadian Real Estate Update - Downloadable PDF
Level 2- Value Investor
Welcome Avatar! We’re tracking the Canadian real estate market via contacts in the jungle largely for research purposes. We’re not able to predict what corrupt politicians will do: 1) rent control, 2) immigration changes, 3) zoning laws, 4) tax laws on rentals vs. primary residency and 5) all the rules related to insurance
Instead of trying to do that, one of the interesting case studies is Canada. The country is well known for having a large housing boom (major chunk due to immigration). In fact, ~45% of wealth is in real estate!
Compare this to the USA which tracks at just under 30%. Keeping it simple this means Canadians have 50% more of their wealth tied up in their home. As a simple example this would mean a millionaire would have $300K in a house and $700K in other investable assets. In Canada that would be $450K in a house and $550K in other investable assets. Substantial.
Quick Take: If the USA follows this idea of bringing in rich foreigners via investment, it means that this could end up being a good proxy for the USA. Homes become status/luxury signals and represent much higher percentages of wealth over the next several years.
If it *doesn’t* go in this direction, then just assume the asset value remains at roughly a third for a back of the envelope calculation.
Update from BowTied FullStack
This is a comprehensive overview of the Canadian market. As usual, you’re free to ignore the opinion part since nothing is financial advice and simply focus on the history and what drove a lot of the change in Canada.
It’s a real possibility that the USA adopts similar policies and can serve as a guide post for the future.
Before moving on, our general take on RE is that there is basically no chance primary residence gets hit with massive taxes even if the governments get desperate. There are too many low hanging items (evil land lords, raising corporate taxes, changing capital gains taxes etc.) before they would change the policies on primary homes. If you’re staying in any place for 10 years you’re going to be fine (even if you "buy the top” in your luxury market area). The key is being able to hold onto the asset.
Canadian RE Overview - by BowTied Full Stack
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Thanks for this Stack & Bull. Would love to see something similar on the Australian housing market too.
l can confirm that every single word of this article is, sadly, true (currently living in Calgary, Canada). Canada now is an embodiment of socialist state and I know what socialist looks like as I came from back then Soviet Union.
I came to Canada 19 years ago through legal immigration. My parents had to grind for 4 years just to get the permanent resident status (both ate engineers). Then, I myself had to grind to get where I am now (finance on a buy side now).
Immigration system in Canada is a joke. Over 7% of population are non-permanent residents. Like wtf. These fake immigrants get more subsidies than Canadian citizens including indigenous people and senior citizens.
7% unemployment and 14% youth and we need temporary foreign workers? Lol.
I can confirm the quality of Tim Hortons sandwiches went down considerably, they can't even wrap the breakfast wrap properly. Not the best and brightest.
Anyways, better move to Dubai, Texas or even Msocow.