The Bubble Has Burst Where to Next

 After years of crazy, dangerously speculative real estate, the bubble has burst, and what, over the past three decades, was a facade of greed and tax sheltering is ending abruptly. The banks are now holding the bag on a fiscal disaster they helped to create. Now the spiral begins in earnest, and if we are not careful, the Canadian taxpayer will be on the hook for billions of dollars in another bank bailout to save the banks, when the Government should be

bailing out the borrowers.

Of Course, just as in the 1980s downturn, condos are taking the first hit, but looking at real estate sales nationwide, it is also hitting the regular housing market. Nowhere is this pain more visible than in Toronto’s far overpriced market, and condos which were designed first and foremost as offshore investment tax vehicles are not only not selling, no big investors are coming on board, so developments like the one at Cloverdale Mall are falling like houses of cards without the shovels even digging the ground.

If there were any quality and realistic prices for these developments, one might be able to sell; however,I doubt it. I took a tour of a two-bedroom the last time I was there, and the square footage was only 500 square feet. the fixtures looked like they came off a 1.49-day rack. Our one-bedroom apartment at the Wellington Apartments at 437 Jarvis Street was larger than the 2-bedroom condo they had so proudly shown me around. 

Consumer debt, combined with high youth unemployment, has delivered the death blow to a sham that should never have taken place. These condos are not designed to be lived in; they are intended to be written off and sit empty.

If people can’t afford rent, then they are left knowing that the concept of purchasing is far removed from the realities they see in front of them, and continuous polling reflects that sentiment in each poll taken; most have given up on home ownership.

So what happens next, because the developers can’t sell, they don’t want to be left holding the bag, so it came as no surprise to me that right smack dab in the middle of the Santa Claus Parade in Toronto was a float for the rental towers the developers were building.

It’s almost subliminal to think that these developers, now in the luxury rentals business, could step into a world of ridiculousness and sheer idiotic sophistry. If people cannot afford a couple of thousand dollars in rent for a one-bedroom, what would make anyone think that they would move out of their comfort zone any further?

The new Government is promising housing and housing projects, but for some reason, not a shovel has hit the ground. What both Carney and Poilievre fail to see is that we live in an economy that, since the 1980s,has been built from the top down. Now the bottom has failed, and those who have totally benefitted from the perpetual squeezing of consumers down the line are beginning to tread water, looking for ways to have the Government keep them liquid while those who watch them struggle even harder to survive.

I know it sounds cruel, but no one learned from 1929, or it was long since forgotten in a blaze of materialism and corruption, but things need to change. That won’t happen with the mentality of today’s political institutions, so if everything goes upside down again, it might change things for the better and redistribute the world’s wealth far more equitably.