Sunday, July 3, 2011

July 3, 2011

Dear Kids,
   After talking to Uncle Alex last night, we found out that the house in Canada going up very crazy because there are an influx of investors coming from China and Russia.  Most of the money coming from the high officials' relatives so that they can laundry the money to the safe place like HK.  After the money coming in, they will buy the real estate in cash without any financing from the bank.  This action makes the real estate market going up without any reason because of the unbalance of the supply and demand.  If you are living in a house worth 200K and now the price might be worth 350K instead.  Is this a good sign or bad?  If you have 2 or more houses, it is a good sign because you should sell one or two houses to regain your investment and you can wait for the falling market to buy it bad like a stock market.  If you have only one house, it is bad for you to sell the house to move up to the bigger house to increase your mortgage payments.  The reason is very simple, the price of the house is going up due to the speculators no the normal business improvements.  Therefore, the result for the housing market will cause the inflation and high unemployment rate due to the poor retail market.  This things are happening in USA a few years ago and the banks were trying to give out the easy financing such as the sub-prime mortgage to help the unqualified borrowers to buy the houses.  A few years ago, most of the people owned a few houses to show they are successful and most of these people nowadays have already filed bankruptcy because they can't afford it at the first place.  Nowadays, in USA if you have a house, you are rich because a lot of people couldn't qualify to buy a house now because the tight lending policy but it is too late after the crisis.
    Canada will follow the same problem because most of the economy coming from outside simulation from the investment of the new immigration.  This year, Canada Government is trying to reduce the investor immigration from 3500 to 700 instead to avoid the real estate speculation.  However, the damage is done and all the houses are sky high now and most of the retail businesses are dead.  It means the local people have lost the ability of spending power.  This will affect the mass layoff in the factory due to the products couldn't move fast enough to meet the production.  It is a sad story; Canada Government would never build the new roads and bridges to meet the influx of new immigration policy.  They are planning to set up the fee system to use the 401 and Don Valley Parkway.  What is the next solution for this, you need to find a better city to live or improving your income to meet the high inflation in this city.  Keep an eye to the world and find the place you can afford to live.  Be smart and alert all the time.


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