Liberals shut down debate on Carney’s condo bailout
Episode Stats
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Summary
Ron Butler, better known as the Mortgage Guy, describes himself as a big, old, overly opinionated, mortgage broker who is worried about the future of housing for average Canadians. Ron talks about the government's proposed $1.45B plan to buy 2,200 overpriced Vancouver condos, and why he thinks it s a bad idea.
Transcript
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The Conservatives are calling for a study into the Kearney government purchase of 2200 overpriced
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Vancouver condos. They say it's a billion dollar bailout for developers, including
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well-connected liberal backers, at the expense of taxpayers. Prime Minister Mark Kearney recently
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announced a plan to bail out developers, bankers, and investors by using taxpayer dollars to purchase
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more than 2,200 unsold condominium units in British Columbia.
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B, this bailout will not make housing more affordable,
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but will prevent a price correction from taking place,
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preserving high prices for developers rather than lowering them
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for British Columbians trying to enter the housing market.
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C, questions remain about which ministers were lobbied and by whom
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D, questions remain about which developers and lenders will benefit from this bailout,
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which condo units will be eligible, how prices will be determined, which financing tools
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will be used, and which entity or entities will ultimately own the units.
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E. Forcing home buyers to compete with their own tax dollars while raising housing prices
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for the benefit of developers is not in the interest of Canadians.
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And F. Prime Minister Mark Carney is building an economy of bailouts and handouts to Liberal
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insiders while creating higher costs, debt, and taxes for everyone else.
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Now, Carney himself has spoken about the potential losses facing those Vancouver developers.
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Developers who helped raise money for Carney could be on the hook for huge losses given
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the downturn in the Vancouver real estate market.
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If the Liberals didn't campaign on this policy, why are they suddenly deciding to pursue it
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is this being planned for more Canadian cities and maybe most importantly which
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well-connected developers big banks and foreign investors stand to benefit the
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most now I want to take a moment to share with the members of this committee a
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particular dictionary definition that I just think describes the direction of
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economic policy in Canada over the past year and I quote an economic system
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where business success depends heavily on close ties between corporate
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executives and government officials instead of competing in a free meritocratic market companies
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thrive by securing political favors such as bailouts tax breaks subsidies or specialized
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regulations that block competition that colleagues is the definition of crony capitalism and it does
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increasingly in my view represent the official economic policy of the liberal party of canada
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The committee's study would also look into whether Carney's former company, Brookfield Asset Management, might stand to benefit eventually from the government bailout.
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A $1.45 billion purchase of the Vancouver units would see each unit sell for an average of $659,000 per condo.
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Well, the Conservatives have lost another MP. This time it is Richard Martel quitting caucus to sit in the Senate.
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Prime Minister Carney appointed Martel as an independent member of the upper chamber.
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This post by Canada Proud, Conservative MP Richard Martel has decided to betray his constituents
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and has resigned from his seat so he can accept a Senate appointment from Mark Carney.
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Carney also appointed three others to the upper chamber, including his principal secretary, Tom Pitfield.
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special offers. Make sure that you're prepared. It's better to be safe than sorry. Our guest
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today is Ron Butler, well known as the mortgage guy who has a podcast he's more than happy to
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tell you a little bit about. He describes himself as a big, old, overly opinionated mortgage broker
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who is worried about the future of housing for average Canadians.
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who is worried about the future of housing for average Canadians.
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All right, so the Liberals have shut down debate
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over the proposed probe into the BC condo buyout plan.
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I think a lot of us were hoping that that would move forward
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so that we could have people like the condo king testify.
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It looks like that's not going to happen, but I know you have some strong views about that bailout.
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Listen, I mean, bailing out condominium developers just makes no sense.
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I mean, the idea that the BC government has put forward that they're going to take a great opportunity to buy condominiums below cost, below construction costs, and offer them to families as some kind of benefit on some kind of weird rent-to-own idea, it's not even rational.
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if these condos cannot be sold, then let the developer go into receivership and have the
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receiver auction off these condos and achieve the actual lowest price. That's the way the
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free enterprise system is supposed to work. And there's no sense in circumventing it. I mean,
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it's just not rational. According to the premier of British Columbia, David Eby, I mean, these are
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rock bottom prices, liquidation. I mean, the government's going to be getting these at prices
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that are below the construction costs. I mean, he's saying we can't resist such a deal and then
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make them affordable to make them available to Canadians who can't afford the market rates
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currently. Well, then tell the truth and liquidate them. You know, get a receiver involved. I mean,
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get get them put them on an open auction let's that's one way to get uh you know restrict the
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auction to first-time home buyers i mean there is no way in the world that i would let the
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provincial government of any province not even be let alone british columbia decide what rock
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bottom pricing is like that is that is not an the right approach that's not a fair approach that's
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not a sensible approach with taxpayers money let these units be auctioned off let's find out what
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the real below construction cost price is let's just not have somebody in a provincial government
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decide what it is well what does it say about the government that they frankly don't really want
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those values to go down much more than they already have done and so by the actions that
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they're taking they're essentially propping up these condo values currently aren't they
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well you the right approach is always just to let free enterprise find its correct point but
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the idea that a provincial government would buy one single unit of something a developer says
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they're having a hard time selling is not rational it's it's it's not it's not free
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enterprise. It's some kind of assistance being given to that developer. And that's wrong on all
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accounts. Here's the main thing. Developers in British Columbia minted money for 20 years. They
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made profit after profit after profit after profit. I don't believe that they contributed
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any of the profits to affordable housing. They just took the profits. Okay. So now it's time
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And there's no way British Columbia or the federal government
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should be involved in buying one single one of these units.
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I mean, I'm sure that there are probably some developers that you know
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They said, okay, we're going to put on a HST holiday.
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So we're going to use the money from the feds plus some provincial money,
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and we're going to say there's no tax on the sale of construction properties.
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It does allow these developers to get out from under tax,
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and therefore it's a more attractive offer for the condos they're stuck with.
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But it also, and this is the important part, it also stimulates the building of some other kinds of new construction, which keeps construction workers working.
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Like, the crazy part about BC is if you just buy the units, you're not creating any new construction.
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There could be no construction of condos in BC for the next five years, and all those workers are out of jobs.
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The Ontario idea is a much better idea than just buying unsold condos.
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Now, you've spoken about demographics and how aging boomers will soon be looking to sell a lot of these properties, people our age, you know, aging, getting older, and so they'll be looking for buyers.
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And the people that are most likely to be interested are already saddled with massive debt.
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How do you see that affecting the market going forward in the years ahead?
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I mean, the boomers are the biggest group of age bracket of people in North America, hell, in Europe, for that matter.
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And yes, their early boomers are entering their 80s.
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I'm a young boomer, but eventually I'll be dead, too.
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And the houses will be sold or we'll need to go into care and the houses will be sold.
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But it's going to be a little more gradual than people think.
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Now, is it true the young people have too much debt?
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Yes, of course it's true, absolutely true.
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Yeah, they could fall, but that's just commerce.
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That's just the natural cycles of marketplaces.
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Canada's housing correction is now the largest on record.
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national home prices are down 20% from the 2022 peak.
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they're down 29% erased back to roughly 2016 values.
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I guess, how bad are things going to get market-wise?
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thank prices will prices will continue to fall uh the main thing to understand is particularly
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in ontario and particularly in ontario particularly in british columbia they're starting to fall in
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quebec it's just starting right now it's just starting to come off in quebec prices are down
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in calgary um all right i think this is only good news this is not cause for any worry um
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you know it's it could be bad news for people who need to sell those homes who bought at the wrong
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time. But the important thing to understand is it's a market cycle. I mean, in the United States,
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in the world financial crisis, they did bail out the banks, but they didn't bail out a single
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property owner, not one. So I see no reason why we would bail them out here. And I guess that
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you're also looking at interest rates and the willingness of banks to lend to younger people
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as well. Those are all factors, aren't they? They are, but interest rates are still relatively low.
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We have all kinds of five-year fixed rate mortgages at 399, 404. Those are not high rates
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in the scheme of things historically. And banks will lend. I mean, there is no qualified buyer
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who wants mortgages turned down by a bank as long as the financials are right, the income is right,
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the credit score is right. Banks are eager to lend. Banks are doing mortgages. The reality is
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price. And the fact that today, even in British Columbia and Ontario, in many regions, it's still
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seven, eight, nine times family income is what the price of homes are. But when boomers bought
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those homes, it was two and a half times income. So these younger families are at a disadvantage
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still. How do people access your podcast? Angry Mortgage Podcast on YouTube and Spotify,
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Apple Store, all the places you want to go for the podcast, the Angry Mortgage Podcast.
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YouTube gets a little bit more action. There's more videos on YouTube. And by all means,
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we'd love for people to subscribe. Thank you so much for coming on the show,
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ron appreciate it thank you if you enjoyed the show consider supporting great independent
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journalism by becoming a premier member of juno news please go to junonews.com
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backslash straight up you can find the link below it helps us do what we do thank you so much for