The Illusion of Affordable Housing in Canada

To ensure you continue to receive ALL my posts, Click on the NOTIFICATION BELL below my profile picture.

Source Article: Canada's CMHC Internal Messages Show Housing Supply Narrative Is BS, Better Dwelling

It Starts with Gold

Gold is the foundation of a well-diversified investment portfolio that includes income-producing private alternative assets like private equity and private real estate. These investments can help fortify and de-risk your portfolio against financial institution risk, economic threats, inflation, and higher taxes. Gold has long been considered a safe haven in times of economic uncertainty. Its stable value makes it a reliable hedge against inflation and market volatility. Gold represents security and confidence, serving as a foundation for wealth preservation and acting as portfolio insurance. Contact New World Precious Metals to discuss your purchase options.

The Fallacy of More Supply and Lower Rates

The common belief that more supply and lower rates will make housing affordable in Canada is flawed. Despite statements from some authorities, recent internal messages from the Canada Mortgage and Housing Corporation (CMHC) reveal that more supply won’t necessarily bring down home prices, and lower rates won’t make them more affordable. Instead, higher prices are what make more supply feasible, and lower rates help boost those prices (CMHC) (Canada Mortgage and Housing Corporation).

Housing Market Realities

The public often hears that housing is expensive because of a shortage, summed up as “simple supply and demand.” However, the reality is more complex. Internal communications among CMHC staff indicate that an increase in supply is only viable with higher home prices. This is due to the financial incentives in a highly financialized housing market, where development is a capital-intensive and high-risk venture. Past project failures in places like Greater Toronto have shown that sufficient profit margins are crucial for developers to proceed with building (Canada Mortgage and Housing Corporation) (CMHC).

***IMPORTANT NOTICE TO READER: If you enjoyed this article, please share, write something in the comment section, press like on LinkedIn and sign up for my LinkedIn Newsletter, Lasting Financial Security?.***

Interest Rates and Housing Affordability

Understanding how interest rates work provides further context. The Bank of Canada (BoC) uses interest rates to manage inflation. When inflation is low, interest rates are cut to stimulate borrowing, allowing consumers to make purchases using more of their future income. This intentionally stimulates demand faster than supply, driving price growth. Excessively low rates can lead to excess demand, driving prices higher, compounded by the influence on key inputs like labour, land, and materials (CMHC) (Canada Mortgage and Housing Corporation).

The Role of Cheap Mortgages

Higher prices are often blamed on population growth. However, in 2021, Canada had the lowest annual population growth since the 1970s, yet home prices surged. This contradiction highlights the role of low mortgage rates in driving up prices. Internal chats at CMHC acknowledged that low mortgage rates lead to higher prices, contradicting the public narrative that lower rates improve affordability. This perspective aligns with studies by the US Federal Reserve and the Bank of Canada, which indicate that low rates have historically increased home prices rather than improving affordability (CMHC) (CMHC).

A Complex Issue with No Easy Solutions

Canada needs more housing, especially with its rapid population growth. However, not everyone can afford homes at current prices, and state-backed subsidies have not effectively increased supply. In regions like Greater Toronto, home and rental prices have stalled as interest rates have climbed. If buyers can’t afford homes, no amount of supply will resolve the affordability crisis without addressing the underlying credit issues (Canada Mortgage and Housing Corporation) (CMHC).

Investing in Rental Properties

One strategic response to this complex housing market is for investors to sell their homes, rent, and invest in purpose-built multifamily rental apartments through private real estate investment trusts (REITs). With mortgage rates expected to reset from 1.95% to over 6% in the next two years, many overstretched homeowners will face increased financial pressure. Conversely, rental apartments are poised to benefit from a massive influx of immigrants and a severe shortage of rental units, making them an attractive investment option (CMHC).

For full details, read the source article that inspired this article: Canada's CMHC Internal Messages Show Housing Supply Narrative Is BS, Better Dwelling.

Why Gold Should Be the Foundation of Your Portfolio

The Stability and Reliability of Gold

Gold's stability and reliability make it an essential cornerstone for a well-diversified portfolio. Its value remains consistent even during economic turbulence, offering protection against inflation and financial uncertainty. Unlike paper assets, Gold is a tangible asset that maintains its worth over time, making it a safe haven during financial crises. In light of potential vulnerabilities in the financial system, particularly those related to securities entitlements, owning a secure and tangible asset like Gold is crucial.

Portfolio Insurance

Gold serves as portfolio insurance, providing a safety net against market fluctuations and economic downturns. When traditional investments such as stocks and bonds falter, Gold often retains or even increases its value, offsetting losses in other areas of your portfolio. This characteristic makes Gold an invaluable asset for anyone looking to protect their wealth from market volatility and economic instability.

Enhancing Portfolio Diversification with Private Real Estate

Combining Gold with investments in private real estate, such as multifamily rental apartments, can further enhance portfolio diversification. This approach not only safeguards wealth but also taps into the growing demand for rental properties driven by immigration and demographic changes. Private real estate investments provide a steady income stream and the potential for capital appreciation, offering a complementary asset class to Gold's stability.

A Partnership for Holistic Wealth Management

As a dedicated advocate for de-risking business, family and multi-generational wealth, I am partnered with one of Canada's leading independent private wealth management firms. My team serves high-net-worth clients nationwide. We provide professional investment management and comprehensive wealth planning solutions from a fiducially focused, client-first perspective. We provide access to sophisticated tax-advantaged strategies and solutions traditionally reserved for the ultra-affluent.

Capital Preservation First

We are driven by a "capital preservation first" philosophy. Our team generates consistent, tax-efficient returns uncorrelated to public markets. By leveraging our expertise, you are granted access to key industry professionals, gaining exclusive entrance into alternative investments such as private equity, private real estate, precious metals, commodities, government-sanctioned flow-through tax-efficient structures, and tax-minimizing corporate insurance solutions offered through mutual life companies. All are designed to fortify, secure and de-risk your family, business and estate assets against financial risk, economic threats, inflation and higher taxes.

To receive a complimentary digital copy of "Who's Investing Your Money?," email me at [email protected] or book a complementary portfolio evaluation with me through my Calendly Link.

Complimentary Portfolio Evaluation

As a valued reader, I am offering a complimentary portfolio evaluation to discuss how investing in alternative assets such as private equity, private real estate, precious metals, commodities, government-sanctioned flow-through tax-efficient structures, and tax-minimizing corporate insurance solutions can help to fortify and de-risk your portfolio against financial institution risk, economic threats, inflation, and higher taxes.

To book your consultation, email me at [email protected] or use my Calendly Link. Alternatively, you can contact New World Precious Metals to discuss purchasing options for physical precious metals.

In these turbulent times, it's crucial to ensure that your portfolio is well-positioned to withstand potential economic challenges and market fluctuations. By considering the incorporation of Gold, you may be able to fortify your investments and better navigate the complexities of the current financial landscape.

The Custodial Model: An Additional Layer of Protection

In light of the revelations in David Rogers Webb's book The Great Taking, to further safeguard wealth, the firms I work with employ a custodial model, where client assets are held securely by an independent third-party custodian rather than commingled with the firm's assets. This crucial segregation of assets provides an additional layer of protection, reducing the risk of seizure or misappropriation in a financial crisis or institutional insolvency. The custodial model offers investors a safeguarded solution to help secure their wealth separately from the investment management firm.

Watch The Great Taking Documentary

Additional Resources:

• The Great Taking PDF
• The Great Taking - Documentary
• The Great Taking Download
• The Great Taking (Audio Book) by David Webb

Exploring the U.S. for Wealth Security

Amid economic uncertainty and high taxes in Canada, many affluent Canadians are considering relocating their wealth to the United States. The U.S. offers a more favourable tax environment and stronger asset protection laws. Peter J. Merrick, a renowned cross-border specialist, assists Canadians in navigating international wealth management complexities, facilitating seamless asset transfers to diversify holdings and safeguard their hard-earned assets from potential risks.

For Full Details, CLICK HERE

To continue receiving my posts, please follow Adrian C. Spitters FCSI?, CFP?, CEA?, then click on the NOTIFICATION BELL below my profile picture to ensure you do not miss any of my posts, and finally sign up for my LinkedIn Newsletter, Lasting Financial Security?.

Please also check out and join my new group, The Counter Narrative?.

Do you find value in the articles I write? Please subscribe to my weekly newsletter, which summarises my best stories of the week: SUBSCRIBE.

For more in-depth insights on de-risking your wealth, SUBSCRIBE to my colleague's LinkedIn Newsletter: The King of Main Street

To receive a complimentary digital copy of "The King of Main Street," email me at [email protected]

Learn more about Peter J. Merrick...

FOLLOW ME ON LINKEDIN.

#HousingCrisis #CanadaRealEstate #AffordableHousing #InterestRates #BoC #EconomicPolicy #RealEstateInvesting #MarketTrends #ItStartsWithGold