It's the Supply side - dummy!
Scott Wilson, MBA, P.App. AACI (Fellow), MRICS, FRI
Supervisor, Commercial Assessment at Government of Prince Edward Island
Today's Toronto Post's real estate headline continues to show that what we are doing is not continuing to work...
Toronto is no longer in a buyer's market. [headline from today's Toronto Star - 2022-02-06]
So why is Toronto's market shifting back from a buyer's market to a seller's market?
It is my opinion, that demand continues to far outstrip supply and so even the constraints of higher interest rates - causing prices to continue to rise - that still isn't enough to slow down purchasers...... YET.
People NEED housing they don't have a choice (other than type can vary on their budget and availability) - and with the combination of the baby echo and with more people choosing Canada as a great place to live (and who can blame them - right?? It is a wonderful place to live!) there is still too much demand for housing and not enough supply.
People NEED housing... they don't have a choice...
This high demand, however, could very well impact the Bank of Canada's decision on interest rates - they might decide to leave them high (or even move them higher ?? ) in the hopes that it will slow the demand. But at the end of the day, realistically all that the Bank of Canada is doing is continuing to make housing more expensive for buyers. At this time all indications are that the economy is still working hard - employment is remaining at an all-time high, and spending has slowed and instead saving is increased because the inflationary pressures make our earned wages less powerful. There are rational reasons for our interest rates to rise - because of international pressures caused by other nation's interest rates making our dollar non-competitive.
领英推荐
But you know what - by themselves, these things aren't bad - the high increase in prices is what is so troubling... perhaps instead of stifling demand we instead put a massive concerted effort into increasing the supply of these goods to help to meet that demand --> and by doing so reduce the prices?
We are going to continue to experience high prices in groceries, gasoline, and yes even housing until we can boost the capabilities of our economy. No one looks back at the 50's and 60's as a troubling time - the economy was booming then - it was a source of pride and you had everyone working as hard as they could to meet the demand.
No one looks back at the 50's and 60's as a troubling time - the economy was booming then - it was a source of National pride and you had everyone working as hard as they could to meet the demand.
So why don't we, as the collective citizens of Canadian society, accept that we need to work effectively through a combination of increased effectiveness, and productivity, and increase our core infrastructure and capacity to meet this demand locally and boost our National GDP in the process? It is time to increase the investment in the production of Canadian goods and services - we need to stop the unnecessary reliance on foreign countries to meet so many of our needs. We have the creative ability and knowledge to produce many of these goods on our own - so let's invest in Canadian businesses, our provinces, cities, our nation and in Canadians for the benefit of us all.
Once you have met the demand of the economy (even potentially reaching an over-supply situation) you will begin to see prices start to decrease. I will leave you with my point for today - Instead of trying to slow the economy down artificially - why don't we try to speed things up?
Instead of trying to slow the economy down artificially - why don't we try to speed things up?