Canadian Real Estate Sales Crashed in 2018
For the longest time in the developed world, housing has been considered an investment and an asset, not a liability, or even just a home, where ya know, people live. It is only in a massive bubble of speculation like the early 2000s where anyone can think that buying and “flipping” houses is a type of sustainable harbinger of economic growth.
In reality, it is more speculation that is profitable to people who got into the market first, and must sell out and cash out before the “greater fool” smartens up, i.e. those flippers coming in late to the game, so that they are not stuck with massive inventory to liquidate when the banks stop giving out easy loans to unqualified home buyers once the monthly mortgage bills start becoming beverage napkins on the coffee tables of the economically distressed.
Indeed, this is the nightmare many real estate and house flippers woke up to in 2007. And it’s happening again. The problem with viewing housing as an asset or even an investment, is that it forgets the fact that wage growth has been on the decline since 1971 ever since President Richard Nixon took the dollar off the gold standard. I’m sure it’s just a pure coincidence though (sarcasm).
Right now Vancouver home sales have dropped 42.5% total on the year, because there are simply not enough buyers who can afford the inflated prices that pervade the current housing market. In addition to this, the most expensive houses have had major price cuts, foreign buyers have dwindled, and the overall sales volume of home sales has also dried up.
It’s Not Just Canada that is Seeing a Housing Crash
London, England in the UK and Seattle, Washington in the United States have also seen massive price drops in housing, along with other international prestige cities like Sydney, Perth, and Brisbane in Australia. The simple fact is the newer generations don’t make enough money to match the current inventory of housing and to keep the prices on an upward trajectory.
In fact, a shockingly large number of millennials still live at home with their parents. There are simply not enough high-paying jobs available to sustain the current housing bubble. Many people have seen rises in their basic costs of living from rent to food, to buying basic goods and even higher ticket items, as retail stores close in records numbers and malls go empty.
How to Protect Yourself from the Housing Crash
Harry Dent, economics analyst and demographic trends forecaster, is recommending that people sell all existing housing and get out of the market while they still can. Dent says the demographics simply aren’t there any more, as older generations age and go past the pinnacle of their peak-earning years, now readying for retirement, as is in the case with Japan, where the government is now literally giving abandoned houses in the countryside away for free or next to nothing.
With the younger generations lacking the purchasing power to step in and fill the void, existing houses will remain unsold, the building boom for housing will also slow leading to large Dow Jones companies like Caterpillar and big banks seeing losses on their balance sheets as well, and no real need for new houses, the current price of housing still has a long way to go further downward.
Consider selling off any extra homes you may have. Invest in a Gold IRA rollover and protect a significant percentage of your investing and retiring power with a time-tested asset that historically rises during times of worldwide economic instability, recession, or even depression.