Why Ontario real estate prices will FALL to 2014 (except in some very select pockets)

[Thomas Beyer]

[quote user=invst4profit]How can a company that produces nothing (face book) be of any possible financial value, yet it is.
Facebook connects people that are willing to invest a LOT of their time to add content, as it adds value to them. In return facebook can mine the data and allow advertisers to display targeted ads. It is very effective, say if you are a flowershop in Toronto marketing to 55+ year old divorced women that love gardening. Even Google doesn't have this kind of detailed info on people. That is where the value is ! [Google reads your gmail emails, btw, so they too know what you're up to .. so if you discuss 'flowers" with your son in an email you might see more flower ads as opposed to, say car ads]



[quote user=invst4profit]Again now with the European situation we should be experiencing the same but the powers that be will not allow it to occur.


Let's assume for now Greece will either get their act together, or more likely, will leave the Euro, with Portugal soon. Government spending is out of control there, relative to income. Worse than Ontario's or Quebec even.



Expect strikes such as the ones we see now in GTA to become more violent and more frequent as governments start to cut back, on service, on wages, on benefits. Not just GTA, of course, but in many cities across the (over) developed world. Let's call it the (over)coddled world.



Of course no one wants to give up what they perceive rightly as "their right". Everyone will have to give up s.th. .. some a little .. some a lot.



How about: free healthcare services only for a vastly reduced catalog, free education only to grade 9, free garbage pickup only for one small bag/month, reduced OAS/CPP payouts etc. .. everything will be discussed in the months and years to come and most folks will get LESS than before as "the government" can't afford it anymore.



If people say "the government" they mean: other people as "the governemnt" is funded by "we the people". So "we the people" have to decide what is affordable and what is not. Many many services we took for granted for 30+ years will be on the table to be chopped, or reduced or amended.



[quote user=invst4profit]Logical thinking is apparently no longer relevant in a world with personal wealth beyond imagination.
Greed .. and fear drives this world. Always has .. always will be. And of course the price and availability of money and the desires of humans living in it. And intelligent thinking and unintelligent emotions will always drive decisions.



Canada is relatively blessed here in that it has lower debt, a conservative government and many physical resources the worlds wants (wood, water, uranium, coal, gas, oil, diamonds, potash, wheat fields, ...) and a large immigration "let's get it done" based population, although a lot of (over)coddling is certainly evident here too that will need correcting in the years to come.



Govern your investment decision accordingly.

 

[RealtorDave]

Great info Thomas. I don't believe you wrote this to raise money, but wouldn't care if you did. The info is is great.



I agree that the West has been coddled far too long. There's money to be made for those who are will to work and adapt. I have no patience for people who don't think they should have to do a particular job, or to do something they don't want to.



Now back to work.

 

[Thomas Beyer]

[quote user=RealtorDave]Now back to work.
For many of us .. but not for all, especially in those parts of the world with high deficits introduced by politicians that lie and voters that believe that smooth politicians uneducated in large business management can actually save them:



Greece: http://business.financialpost.com/2012/02/08/greeces-broken-promises-anger-eu-partners



Quebec: http://news.nationalpost.com/2012/02/08/quebec-on-pace-to-become-canadas-poorest-province/



Ontario: http://fullcomment.nationalpost.com/2012/02/07/john-ivison-canadas-coming-equalization-war/



Invest in cities/provinces/states/countries with economic growth AND low to no deficits .. and few will remain .. but there are a few.



Ask yourself: if I get only cash-flow, and NO equity growth in this (real estate) asset for 5 or even 10 years, would I still buy it ?

 

[Thomas Beyer]

Falling wages and public sector cuts to come soon in Canada's Greece, Ontario:



http://fullcomment.nationalpost.com/2012/02/15/don-drummond-report/

 

[Thomas Beyer]

Automobile worker's wages too high, says bailout study.



http://business.financialpost.com/2012/03/21/wage-cuts-must-accompany-future-auto-bailouts-study-says



Falling wages = falling real estate prices.

 

[Thomas Beyer]

Ontario budget: a missed opportunity and even more debt. Results: Even more jobs will head west, electric energy prices will soar, youth unemployment will rise and property prices decline, except in pockets.



Not a great investment climate for buy-and-hold !





http://opinion.financialpost.com/2012/03/27/ontarios-budget-missed-opportunity

 

[TodorYordanov]

Thomas,



When would be a good time to check back with you on your dire predictions?



2014? 2015?



On another note we just hired someone from Calgary on Monday. She is from Calgary, graduated in Toronto, went back to Calgary worked there for 4 year, but misses Toronto, the city, the people and the work opportunities. So she came back. Go figure! She will be making great money in IT-healthcare.

I was out and around downtown Toronto on a sunny Sunday. What a great city to live in.

 

[Thomas Beyer]

[quote user=TodorYordanov]I was out and around downtown Toronto on a sunny Sunday. What a great city to live in.
Indeed. I used to live there.



It helps to like high rises, muggy summers and cold/damp winters.



[quote user=TodorYordanov]When would be a good time to check back with you on your dire predictions?



2014? 2015?



yeah, or when mortgage rates rise a tad, deficit has doubled and electricity rates have quadrupled .. all around 2014/2015. Then it might start to rise again.

 

[yys2000]

So the 2014 and 2015 will be the BAD time for Ontario? After that going up again?

 

[Thomas Beyer]

[quote user=yys2000] So the 2014 and 2015 will be the BAD time for Ontario? It will be bad UNTIL then .. then we'll see how the world will look like but for sure Ontario's retail electricity prices will have tripled and mortgage rates will be 1- 2% higher .. and overbuilt condo market will have found a new bottom after 12,000+ condos have been absorbed at blow-out prices by the surviving tower builders with demand and (low) supply finally in balance .. and many folks wondering if the 500 sq ft 1BR purchase 3 years ago was such a smart idea.

 

[Thomas Beyer]

GM's Oshawa plant closing : http://business.financialpost.com/2012/06/01/gm-to-close-oshawa-plant-lay-off-up-to-2000-union/



plus RIM layoffs won't help.



As stated, be very selective where to invest in Ontario.



High debt, thus high taxes, high energy prices due to failed government incentives and high labour costs are the main reasons why Ontario will remain muted for much of the next 2-3 years .. problems similar to Europe's Spain, Italy & Ireland !!

 

[TodorYordanov]

Is this what Ontario is competing with?





"Devastation on a scale the world has never seen before"



http://climatecrocks.com/2012/03/30/the-true-cost-of-oil-alberta-tar-sands/



"The greatest moral carelessness in human history"



http://www.guardian.co.uk/film/movie/134887/dirty-oil



http://www.beautifuldestruction.ca/



http://www.canada.com/news/Containment+underway+significant+leak+northwestern+Alberta/6678484/story.html



What is the definition of a "one pony town" or province?

It is a huge and dirty pony and we are all addicted to it.



"The greatest moral carelessness in human history"



Ask yourself: "What really is behind the Alberta "boom"? Did you create something? Made a difference? Left something for the next generation?

Or did you just made a bunch of money from the tar sands on your way to the white sands of Belize...



You govern yourself accordingly!

 

[Thomas Beyer]

[quote user=TodorYordanov]Ask yourself: "What really is behind the Alberta "boom"? Did you create something? Made a difference? Left something for the next generation?
Like any large scale energy project anywhere, such as Quebec's massive hydro plants or nuclear power plants it provides: Energy for the world at affordable prices, jobs, tax revenue, clean environment, ethical companies, driver of economic activity in Canada, high tech jobs, cancer centers, healthcare related research, new schools, new roads, progress ..



Great article below about 'Quebec and the fairy Godmother"



But then, this post is not about Alberta, but Ontario.



Fascinating article by Lisa Corbella of the Calgary Herald.



Calgary Herald

Sat Dec 19 2009

Lisa Corbella



Quebec and the Fairy Godmother



Today, let's have some fun and play Fairy Godmother to Quebec. Let's grant the province the wish it articulated in Copenhagen. Wave the magic wand and poof, wish granted. Shut down Alberta's oilsands, except, since it's Quebec making the wish, we have to call it tarsands, even though it's not tar they use to run their Bombardier planes, trains and Skidoos.



Ah, at last! The blight on Canada's reputation shut down. All those dastardly workers from across Canada living in Fort McMurray, Calgary and Edmonton out of jobs, including those waitresses, truck drivers, nurses, teachers, doctors, pilots, engineers, etc. They can all go on Employment insurance like Ontario autoworkers and Quebec parts makers! Closing down Alberta's oil industry would immediately stop the production of 1.8 million barrels of oil a day. Supply and demand being: 16pt; font-family: tahoma,sans-serif; color: black;"> what it is, oil prices will go up and therefore the cost at the pump will go up, too, increasing the cost of everything else.



But lost jobs in Alberta and across the country along with higher gas prices are a small price to pay to save the world and not

"embarrass" Quebecers on the world stage. Not to worry though, Saudi Arabia, Libya and Nigeria can come to the rescue. You know, the guys who pump money into al-Qaida and help Osama bin Laden target those Van Doos fighting in Afghanistan. Bloody oil is so much nicer than dirty tarsands oil.



Shutting down the oilsands will reduce Canada 's greenhouse gas (GHG) emissions by 38.4 Mt (megatonnes). Hooray! It's so fun to be a Fairy Godmother! While that sounds like a lot, Canada only produces two per cent of the world's man-made GHGs and the oilsands only produce five per cent of Canada 's total emissions or 0.1 per cent of the world's emissions. By comparison, the U.S. produces 20.2 per cent of the world's GHG emissions, 27 per cent of which comes from coal-fired electricity.



The 530-square-kilometre piece of land currently disturbed by the oilsands (which is smaller than the John F. Kennedy Space Center at Cape Canaveral, Fla. at 570 square kilometres) must be reclaimed by law and will return to Alberta 's 381,000 square kilometres of boreal forest, a huge carbon sink.



Quebec, of course, has clean hydro power, but more than 13,000 square kilometres were drowned for the James Bay hydroelectric project, permanently removing that forest from acting as a carbon sink.



But Fairy Godmother is digressing all over the place. While the oilsands only produce five per cent of Canada 's GHGs, it contributes much more to Canada 's economy. After all, oil and gas make up one-quarter of the value on the TSX alone. Alberta is also the largest net contributor per capita by far to Confederation and there are only two more -- B.C. and Ontario .



Quebec hasn't made a net contribution to the rest of Canada for a very long time. This is not to be critical (after all, Fairy Godmothers never criticize), it's just a fact. In 2009, Albertans paid $40.46 billion in income, corporate and other taxes to the federal government and received back just $19.35 billion in services and goods from the feds. That means the rest of Canada got $21.1 billion from Albertans or $5,742 for each and every Alberta man, woman and child. In 2007 (the last year national figures are available), Alberta sent a net contribution of $19.49 billion to the ROC or $5,553 per Albertan -- more than three times what every Ontarian contributes at $1,757. Quebecers, on the other hand, each received $627 net or a total of $8 billion, money which was designed to help "equalize" social programs across the country. Except, that's not what is happening. Quebec has more generous social programs like (nearly) free university tuition (paid for mostly by Albertans) and cheap provincial day care (paid for mostly by Albertans).



But in this Fairy Godmother world, poof, those delightful unequal programs have now disappeared! Quel dommage!





The July 2009 Canadian Energy Research Institute (CERI) report states that between 2008 and 2032, the oilsands will account for 172,000 person-years of employment in Ontario during the construction phase, plus 640,000 for operations over the 25-year period. For Quebec, the oilsands will account for 84,000 person-years of employment during the construction phase, plus 292,000 for operations over the 25-year period. In total, the oilsands are expected to add $1.7 trillion to Canada 's GDP over the next 25 years.



Wave wand and Poof, Jobs, gone! So, now that the oil industry has shut down and left Alberta, Alberta has become a have-not province and so has every other province. Equality at last! Hugo Chavez will be so pleased.



Meeting our Copenhagen targets suddenly looks possible, as most of us can't afford to drive our cars or buy anything but necessities, so manufacturers have closed their doors and emissions are way down.



The dream of many Quebecers to form their own nation and separate from Canada has died at last. Alas, in Alberta , separatist sentiment has risen dramatically, citizens vote to separate and the oil and gas industry returns.



Albertans start to pocket that almost $6,000 for each person that used to get sent elsewhere and now their kids get free tuition. Fairy 16pt; font-family: calibri,sans-serif; color: black;">Godmother's work is done. Wish granted. Quebecers must now sign up for a foreign worker visas to work in Alberta to send their cheques back home so junior can start saving up to pay for college.



Licia Corbella is editorial page editor of The Calgary Herald.

 

[TodorYordanov]

Propaganda at it's finest.

Scare tactics.

Canada will plumed to the third world if not for the oil-sands and those generous Albertans.



Love the first few paragraphs. Speaks loud and clear: If you don't agree with my point of view, you must be sympathetic to Al quaeda and Osama Bin Laden.



There is no other choice. You are with us or you are in the Osama camp!



Or is there?



More green energy, less mindless consumption, more electric cars and natural gas powered vehicles.

We really don't need all this much to be happy. More and more of the young people are waking up to this fact and finding happiness with less. They are also more aware than ever of where everything comes up from and the impact it has on the planet and our way of life.



Comforting to know that they are spending money on cancer research and health related studies. Are you kidding me?



We have to make money from oil, so we have money to spend on healthcare and cancer research?

 

[Thomas Beyer]

[quote user=TodorYordanov]Canada will plumed to the third world if not for the oil-sands
Look at Italy, Spain or Greece to see what would happen to Canada without extensive resource extraction & transportation across the country. Most regions benefit and have extensive mining operation: coal, oil, gas, potash, copper, gold, diamonds, in almost every Canadian province. Oilsands extraction north of Ft. McMurray happens to be the biggest mining project, but is not the only one, and it happens to be surface mining. If you go further east, into Cold Lake or Saskatchewan it is underground, green oil, really through SAGD methods.



Without oil, this industrialized world could not function, and that includes a thriving car manufacturing industry in Ontario.



Of course doing more with less should be promoted as should renewable energy if the costs are similar. Way too much money is invested into so called "green" energy projects which are essentially a waste of tax and/or rate payers' money.



Ontario used to have two big advantages over Europe: lower energy costs, and lower taxes (due to lower debt), and a big advantage over the US: lower labor costs, but all three of those major advantages are gone and caused me to write this article.



Electric cars are useful in cities for smaller distances, but try to drive even from Toronto to Montreal or God forbid, with 4 people in the winter from Saskatoon to Edmonton. If only 10% of car owners had an electric car the grid couldn't handle it. Plus there is the massive toxic content in the "green" batteries. Not as green as advertised.



Did you now that Alberta has the most wind energy production in Canada per capita ? http://www.canwea.ca/farms/wind-farms_e.php With almost no subsidies !! Not exactly "green" if you are a bird or have to look at it or live nearby with its "whoom whoom whoom" massive blades, but OK in remote locations.



As we see now in Europe the massive subsidies to solar and wind are unsustainable, like Ontario, and one reason for the massive debt and decline of living standards and house prices: failed government energy policies.



So, let's continue this blog about Ontario, if you want, and/or about failed energy subsidies.



It is not about Alberta.

 

[TodorYordanov]

This is not a blog about Ontario. It is a blog against Ontario.

You've pained a pretty dark picture for the future of this province and your view of property prices for the next 2-3 years. Then you kept on posting every article that has anything negative to say about Ontario. Repeatedly and methodically. I can do the same about Alberta if I wanted to. But now I am done.



What was the value of all of that?



Ontario is f***ed, come invest in Alberta.



Am I the only one who is sick and tired of this message?



Anyone?

 

[Thomas Beyer]

The truth shall set you free.



This blog is about relevant facts. It is not against or for a specific property or province. You can lose money in Alberta or make a killing in Ontario if you buy well. It is a fact or experience based opinion, like all my blog entries.



I have seen Eastern Europe before the wall came down in the last 80's. Hence my disdain for socialism and its implications such as increased taxes, increased regulations (such a too tenant friendly & rent control laws), lower job growth, lower wages, and related: lower real estate values.



Look what happened to socialistic SK after they voted Brad Wall in: the economy and real estate prices exploded. This could happen again in Ontario .. but not before 2014 [Hence the blog title]

 

[invst4profit]

[quote user=Todor Yordanov] What was the value of all of that?



Ontario is f***ed, come invest in Alberta.



Am I the only one who is sick and tired of this message?



Anyone?




I can't say that I am "sick and tired" of the message but as a Ontario investor I definitely agree "Ontario is f***ed" in my opinion. Definitely not investor and especially not landlord friendly.



As far as the Alberta oil situation is concerned I personally don't give a damn about the green movement. If some group decides to target the cause of the problem instead of the symptom (pollution) I might get on-board that campaign.



Clearly the money is west but that doesn't mean everyone needs to follow the money.

 

[EdRenkema]

[quote user=invst4profit]Clearly the money is west but that doesn't mean everyone needs to follow the money.



Interesting exchange here and I can't say I disagree with any of the last 3 posts.

I agree most with Greg's last point, I have direct family that moved to Calgary Ab 12 years ago and they certainly don't regret it. Ontario still has a bright future but that is only in spite of the left leaning, vote buying prov. gov't.

Some of my right leaning friends are installing solar panels and why not? They can get paid 80c per kwh they produce and they pay about 15c per kwh for the same power they use. Duh!



The world wants and needs more of Canada's politically stable and ethically produced petroleum products. Anyone that calls it dirty oil had better stop driving their cars... and I see very few of the general public who choose to walk or cycle instead of drive even when it is a viable and logical option!

[quote user=invst4profit]As far as the Alberta oil situation is concerned I personally don't give a damn about the green movement. If some group decides to target the cause of the problem instead of the symptom (pollution) I might get on-board that campaign.
And that quote says it all!

 

[housingrental]

Yes

Thomas - Please stop comparing Ontario to former Communist countries. Or at least include Alberta and BC in your critiques for balance





[quote user=TodorYordanov] This is not a blog about Ontario. It is a blog against Ontario.

You've pained a pretty dark picture for the future of this province and your view of property prices for the next 2-3 years. Then you kept on posting every article that has anything negative to say about Ontario. Repeatedly and methodically. I can do the same about Alberta if I wanted to. But now I am done.



What was the value of all of that?



Ontario is f***ed, come invest in Alberta.



Am I the only one who is sick and tired of this message?



Anyone?