Real Estate Predictions – 2018

At hindsight – a phrase we all use to condescend people, sound superior, or really just a lack of excuse for their stupid decisions at the time.

Therefore, I would like to list out my predictions so that there ain’t such thing as, at hindsight.

2018 highlights – Real estate prices (Warning: I am quite biased here)

So far, prices have been flatline with transactions volume dropping month over month. TREB and all those turkeys are saying its just a stablizing phase or a slight correction. Com’on, I can read you guys like a book. Nice soothing words to avoid a country wide panic.

The real estate market is at a fairly delicate situation at this moment and will tip over when the facts below strike true:

Tipping point facts:

  1. Bank of Canada is increasing rates BUT is doing it a very slow pace. Unlike US which rose rates almost consecutively, Canada has only risen rates once or twice. What does this mean? It means that the economy is stale. It means that there are many people with debt level over their nose and any more rate increase will cause a knife to fall real hard.
  2. US real estate market took almost a decade to recover. I know its not an apple to apple comparison….but a decade…DECADE! Canada’s real estate dropped…and it won’t recover in a mere 4 months.
  3. Trade war impending. With a trade war at full blown, we, neighbor to US will get hit real hard. Although Canada is not having any tariffs with China, the influence is there. Plus, when cost is too high for corporations, would you not think that Canadian companies would close local plants and move to 3rd world countries to drive cost down and maintain profits? And what does that mean? Loosing local jobs! Canada will be next to have that rust belt issue in US.
  4. So what if a trade war doesn’t happen? Is that good news to Canada? No. US will continue to increase interest rates, and Canada will continue to have a devaluing dollar. Canada will have to respond via increasing interest rates too! And what happens then? Ballooning debt level and pop!
  5. Canada is far from a tax haven. It really bothers me why so many ultra rich wanna park their money in Canada. For safety? For the fact that Canada don’t wage war? For the fact that Canada is a pussy? Or is it for the blue sky, clean air, and democracy? Canada is literally a service country. All Canada really has is oil and….nothing much really….timber and wood? Snow? Don’t get me wrong, service industry is important too but their’s no growth when we are just inbreeding amongst ourselves, rolling that green pot once, twice, thrice over. Therefore, we need immigrants!
    1. The immigrants we bring in have 2 problems.
      1. They come here for a better life. For equality and higher pay. They ain’t gonna build your subway for subpar wage. They wanna join the union. Which by all means very deserving. I am all about human rights. However, that won’t save our economy.
      2. The ultra rich. These people will only pay tax twice. Land Transfer Tax and perhaps property tax, but they will get that all back with the tax free benefits because their income would be $nil every year. Once they are settled, they will not contribute to Canada any more. They would grow their wealth in where ever they are from and just park a few $ millions in Canada, which the government cannot touch anyways.
      3. And when Canada’s economy hit the shit fan, the ultra rich will withdraw their money out and park them elsewhere.
      4. When Canada start taxing their world income, they will just sell their home, declare non-residency or even just revoke their PR.
  6. CRA is hungry for money. They are hungry for taxes. The real estate’s real tipping point will be in June. Would you not think that after 2 years of heated house market that the CRA would not go double down on speculators and investors? When those audit letters start flying and home prices have dropped, what will happen? Sell to pay those taxes of course!
    1. Here’s what CRA will do to you. Tax you on the basis of adventurism. This means 100% taxation. Not that 50% capital gains tax. If you go buy yourself a house and sell it in one year time or less, good luck trying to convince the CRA that its an investment and not a business.
    2. With all those audits and such, homes will jump out in the market in doves and it will be a frenzy. TREB can suck my balls then.
    3. Too many people walk into a trade without considering taxation and its consequences. Again, Canada is not a tax haven! Its a tax heavy country!
    4. CRA are gonna bang every single door and tax you on empty house and they gonna look you up in their records to tax you on foreign investment. Those ultra rich can either pay it or sell it.
    5. Unlike BC’s market, where there are alot of very rich people that can weather the storm and not sell at a loss, it ain’t the same with GTA. There are many speculators that want to hit a jackpot and those speculators are borrowed to their noses. A light breeze and these debt heavy people will sell even at a loss in order to lessen the damage. If you got cash, nice, weather it out but if you don’t then sell sell sell!
  7. Technology has come so advanced that your information is being shared all over the world already. Just because you think you can hide under the nose of the Canadian government, you won’t be able to hide in your own country. China and Russia have you on taps since the day you are born. Their technology for the sole purpose of violating human rights are probably the most advanced in the world. Worse, you don’t even know about it because there ain’t a Freedom of Information Act!
    1. This means the ultra rich will be jailed for tax evasion in their home country, or just renounce/sell whatever you have in Canada.

Conclusion:

Call me fear mongering but even if you do take them with a grain of salt, all it takes is one of my facts above to hit true to cause a domino effect.

Happy taxing all,

The Competent Team Against Incompetent CRA

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