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Economists say a large part of the Canadian economy is spent on residential construction, not non-residential construction, or directly on machinery and equipment. Fundamentally speaking, this is unhealthy.
In December, Aaron Moore bought a humble three-bedroom house in Brampton, a suburb of Toronto, repainted it, covered it with new hardwood flooring, and then put it back on the market.
In March, he found a buyer. The price is C $810000, 28% higher than the price he bought.
Typically, economists, policy makers and financiers interpret this behaviour as an indisputable sign of a housing bubble. But Moore has been a professional real estate speculator in the Toronto area for more than a decade. In the meantime, the seemingly endless number of famous doomsayers, contrary to his bets on real estate in words and actions, turned out to be wrong.
Back in 2012, Mark Carney, then governor of the Bank of Canada but soon to take over from the Bank of England, said Canada’s dependence on property was “unsustainable”. Then came wave after wave of American financiers, whose joint bets on the Canadian real estate crash earned the nickname “Big short”.
Many of them, such as the famous Steve Eisman, use the lessons learned many years ago when the US housing bubble burst.
When COVID-19 struck, even Canada’s own national housing agency seemed convinced that it was finally over and predicted a collapse in house prices from bad to catastrophic. But instead, the housing market ushered in another record year, rising even faster than the red-hot U. S. stock market. Soon after, the head of the agency had to say on Twitter that they had made a mistake.
Throughout the process, Aaron Moore just kept buying and selling.
Just a few days before this article, Moore stood in the Brampton mansion, puzzled by the pessimistic predictions he had heard over the years. It made him feel strange. “if I want to lose confidence in the Toronto market, I need something crazy, such as the communist government.”