Time

There is one thing and one thing only that is truly the great equalizer – TIME. No matter if you are rich or poor, black or white, Christian or Muslim – it makes no difference as we all have 24 hours in a day. Elon Musk runs Tesla, Space X, Starlink and The Boring Company with his 24 hours, and some people collect welfare with their 24 hours. But no matter where you are in life, you have the same amount of time in a day as everyone else.

Now, we all know there are 24 hours in a day, and yet no one tries to squeak out more. Why? Because we all know that the clock keeps on ticking and no matter what you do – you can never change time. But, that hasn’t stopped a lot of people – mainly politicians – from trying to distort time. Politicians seem to think that time is this expandable thing that can be moved, manipulated and morphed to suit their political agenda. Recently we have witnessed a lot of political games in the housing market and all of them are for one reason, and one reason only – TIME

As the old saying goes ” time heals all wounds”. Or, as the sign outside of many podiatrists reads ” Time wounds all heels”. Either way, time is always a staple ingredient to fix anything. When I was younger I cut my finger off in the snowblower. To this day I have no feeling in my right hand middle finger ( good thing I am a leftie ). When I did that I went to the hospital and got it stitched up. But, it wasn’t the stitches or the band aids or the doctors that healed the finger – it was only time.

I find that the Canadian housing market is reminding me a lot of my old chopped off finger recently – bloodied, and a lot of pain. Much like a kid around farm equipment, we knew something had to go wrong eventually. How could it not have? Anyone who was in any sort of real estate related business prior to 2022 knew deep down in the pit of their stomach that something wasn’t right. We knew it couldn’t go on forever, but somehow so long as the music played – we seemed to dance. But, eventually the market started to turn. Inflation got cooking, Uncle Tiff took away the punch bowl at the party and started raising rates, and pretty soon we were looking at some pain. Now most of this is all normal. This is the circle of economic life. There are times of expansion, where people live too good, inflation starts to rise, central bankers raise interest rates and constrict the money supply to cool things down – which they usually get wrong and overtighten, and into a recession we fall. Interest rates get lowered – again, the central bankers over react, cut too much, and then money gets cheap and people start to live too good again. Around and around we go. The only thing that usually turns the tide is TIME. Time is always required to let things work their way through the system. When Tiff and Co. started raising rates in March 2022, we all knew it would take 12 to 18 months to see the full effect of that. Sure enough by September 2023 we were right in the middle of it, and now that the BOC is easing rates as of June 2024, we all know that between June and December of 2025 we will see the full effects of the easing cycle. We know this. We know it takes time. The problem with time is that not everyone sees time the same. The problem with time is exactly the problem with time.

Right now we seem to have a weekly non confidence vote in the House of Commons. The problem with our current timeline to let housing heal is that Canadians will more than likely head to the polls before the full effects of the central bankers easing cycle can be felt and seen by the average Canadian. Mortgage brokers know that it is happening, and some of the population does, but knowing something and feeling something are 2 different things. So, we now have a bunch of politicians that are trying to collapse time frames and screw with the space time continuum. The governing party knows that if they go to the polls today their time is up, so they have to try and expedite time tables to get people seeing and feeling the central bank policy quicker.

Now a couple of ways to do it is to extend amortizations to 30 years for new buyers. Another way would be to remove the stress test on switches. Another way would be to allow a refinance for “renovations” up to 2 million. All of these policies will help to make a large part of the voting block feel the effects of central bank interest rate cuts quicker. If people can afford their payments, have a place to live, and don’t have creditors chasing them, they are a lot more likely to vote in the incumbent. Politicians know this. However, much like a quick hit of morphine, what seems all good and groovy now can quickly wear off. Politicians hoping to keep their job have to someway, somehow get people at peak morphine for election day. Crap before, and even shitty later, but if you can make them feel good on election day, then the politicians win.

Unfortunately, nothing will get fixed. You cannot screw with the time continuum without consequences. If we extend amortizations, we just keep Canadians in debt for longer. If we allow Canadians to refinance to 2 Million of home value, we keep them in debt for longer. Keeping people in debt for more time will not save housing, it won’t save the population, but it may save a politicians ass.

The Canadian housing market needs time to heal – much like my finger did all those years ago. The housing market needs to return to normal, have sales sit on the market, have prices drop, and get back to a reasonable level that the average person, on the average income can afford. There is no other way than to let the housing market moderate and come back in a little bit. Canadian housing is one of the most over inflated asset classes in the world. That needs to change, and the only way it can change is for it to be given time. You cannot rip a tree up by the roots everyday to check on its growth and expect to get a large oak tree to grow.

Canadians will suffer for years to come because we weren’t able – or willing as a society to let the market heal properly. By giving the Canadian housing market the morphine injection the government has, it is just ensuring that the after effects will be even worse. I am saddened by this because we owed it to the next generation to let house prices fall. We owed it to the our kids to leave behind affordable homes for them to raise their families in. Housing will most likely see an uptick in the coming weeks and months, but it will be short lived in terms of cycles. My hope is that people don’t fall for it, and think it is the start of a new trend. There is still way too much of the bezzle to work off. (See my old blogs if you aren’t sure what the bezzle is.).

Personally I feel it is high time we get the political party of the week out of housing and have rules in place that make sense. Remove political interference from all parties and allow housing policy to be made based on what is in the best interest of everyone. It is time we ‘ Make housing great again – or at least affordable’ . Stop allowing politicians to use your home and your equity to buy your vote.

Time will tell if the recent moves by the government were all for show. Time will tell if the rules changes work out to be a detriment to the average person. Time was well on its way to healing the wounds of Canadian housing, but it appeared that a politicians time being up superseded that healing process. No matter what it will still take the same amount of time to heal, it was just that the regularly scheduled healing has been interrupted by a political campaign.