Karma

After two months of being a Big Smoke urban dude, ripping up downtown Toronto on my e-scooter, I flew back to NS, where everyone’s a Lib.

Well, not any more. “Had enough of that guy,” my taxi driver said on the highway to Lunenburg. “Trudeau called a useless election after spending all that money. How can the other guy be any worse?” Heard that a lot this long weekend.

My theory proved again. Canadians do not vote for people. They vote against people. Thus, the ballot call of 2021 could go down as one of the biggest political misjudgments in Canadian history. Second only, maybe, to the Kim Campbell episode of 1993 (from a majority to smoky hole after merely 132 days of power).

Mr. Socks needs another Atlantic sweep and big numbers in Ontario to stay alive. But the winds are against him. In six years Canada has doubled its debt, houses cost 70% more, renters are squished, inflation is romping, Covid is divisive, Canada Day was canceled, Kabul was a disgrace and people are tired of hearing we should be ashamed of our country, our past, our heritage, our tribe and ourselves.

That probably explains this…

Source: 338Canada

It’s a pivotal week. Leaders’ debates. Vaxports being rolled out. Schools reopening. Delta spreading. Voters digesting party plans for the economy, housing and health. Character matters, too. In NS voters tossed out the Lib premier and installed Tories largely because he tried to cover up an old DUI charge. Federally, T2 is about to face the fallout from Jody W-R’s book, while voters are reminded his wife and mom were paid huge sums of money by the creepy WE brothers who were then given a taxpayer-funded billion-dollar pandemic contract. One rule for us. Another for them.

Well, two weeks is a long time in politics. Everything could change. Polls could be utterly wrong (happened with Trump). O’Toole could blow up. Jag could surge as the alt choice. Or this could be Mr. Trudeau’s ‘Kim’ moment, wherein arrogance fades to nothingness.

Meanwhile, let’s acknowledge that the country has some serious ills. Millions of people have embraced risk during the Trudeau years and indebted their families in an epic way in order to achieve home ownership. Covid accentuated that as mortgage rates fell again and WFH led to a level of house lust never before seen. Much of this was not the federal government’s fault. But someone has to answer for it.

Did you see the latest Equifax numbers?

Over 410,000 new mortgages were arranged in the last three months. The most ever, and up 60% year/year. Those home loans were bigger, too. The average borrowing is up 20% since last year. We owe $2.15 trillion, most of it to buy real estate, and this giant influx of debt has helped push prices higher. Everywhere.

In Guelph, 100 km from downtown Toronto, a high-end house that sold for $1.5 million two years ago is now listed for $2.5 million. In sleepy, bucolic Lunenburg (pop. 2100) prices are 48% higher in a year. Most buyers are Ontario refugees and most sales are online. In Squamish (non-commutable to YVR) the average list price of a detached is now $1.7 million. The entire country is messed up.

As mentioned here last week, listings in places like the GTA or the LM have plunged, largely because high prices have frozen the market. Houses cost too much for newbie buyers to get in. The same valuations make owners fear selling since they can’t afford to repurchase. Even out in Bunnypatch or Armpit. And even after collecting their windfall, non-taxed real estate profits.

Jane wrote me this weekend, seeking guidance. Her 80-something parents rent and want to move in with her and hubs in Toronto. The wrinklies are willing to hand over $500,000 to do so. “My close friend thinks we are insane to turn down such a generous offer from my parents,” she says. “This “sandwich generation” is no joke. Not sure what to do here.”

She owns a small home now with $1 million in equity, a mortgage, and scant personal savings. To move up will require buying a $2.5+ million place – that’s what they cost – so even with a half million-dollar gift the increase in debt would be massive. “When I crunched the numbers and factor in Toronto’s double land transfer tax, realtor fees, lawyers, etc… That feels like a lot of equity out the door for us. Also, our mortgage would be higher, property taxes, hydro, everything higher. Our current house would likely fetch 1.5 or even a bit more but to find a suitable multi-generational home in the area I’m seeing costs of $2.5M+. Factor in an inevitable interest rate increase and that puts a big dent in our own family’s financial planning.”

Jane and her spouse (two kids, one disabled) earn $270,000. They can be gifted $500,000. And they worry about money. How is any of this normal, or acceptable?

No party or leader has a good answer about how to fix things. But the guy currently in charge will wear it. Uneasy lies the head that wears the crown.

About the picture: “Allow me to introduce you to one of my best friends. Maui, world traveler,” writes Rob. “He absolutely loves jumping into the surf after a tennis ball. Here he is enjoying yet another Mexican sunset. He can do that ’cause his buddy reads your blog and has prospered because of it. Keep up the good work. You help more than you will ever know…”