Why are heating oil prices going up?

If you have an oil furnace in your home you may have noticed how the price of heating oil has been going up. And a less noticeable change if you use natural gas to heat your home, but still going up.

Why???

Because of the war in Iran also effects heating oil and natural gas prices.

Crude oil is used to make heating oil, so when the price of crude oil goes up dramatically, you can expect the price of heating oil to also go up. Natural gas is also effected by these price changes, but the impact is more delayed and less severe.

So how long will the Iran War last? 

The average war in the Middle East varies dramatically.

The Iraq War (the major phase of it) lasted 8 years. Iraq has relatively flat terrain and had (at the beginning) a population of 25 million.

The Afghanistan War lasted 20 years because it was mountainous terrain and Afghanistan had a population of 21 million at the beginning of the war. The USA eventually gave up and withdrew.

Iran meanwhile...

Mountainous terrain. Population of 90 million.

It would take decades to win a war in Iran, and the USA would eventually give up and leave, which would leave Iran continuing to control the Strait of Hormuz.

Thus we should expect oil prices to stay high for years (possibly decades), because it takes a long time for other countries to increase production.

So... Whenever you reach the point where you need to replace your furnace, what should you replace it with?

Well, the cheapest alternative to natural gas is to get a heat pump. It works like a reverse AC unit. You're pumping warm air inside and letting cold air outside.

 And if you want to save more money then you can also consider hiring a home inspector to come look at your house and they can suggest ways to improve the energy efficiency in your home.

Things like:

• Sealing leaks.
• Adding attic insulation (and the attic hatch).
• Checking to see if your furnace needs servicing. 
• Replacing an old inefficient furnace with either a high efficiency furnace or a heat pump.
• Weatherstripping doors.
• Plugging old chimneys.
• Replacing caulking.
• Insulating heating ducts in areas like the garage, which shouldn't be heated.
• Improving thermostat control.
• Fixing drafts. 

A quick one hour inspection could help you save a lot of money on your energy bills.

 

Looking for a home inspector in Ajax ON? Get a trained and certified home and property inspector from Moffat Inspections in Ajax.

The Ripple Effect: How Low Minimum Wages Impacts Housing Prices

In the intricate tapestry of our economy, every thread plays a vital role in shaping the overall picture. Among these threads, the minimum wage holds a significant position. Beyond being a simple paycheck, it exerts a profound influence on the local economy, a fact that becomes all too evident when we delve into the relationship between low minimum wages, the community's financial well-being, and the trajectory of housing prices. In this blog post, we'll unravel the complex web that links these elements, shedding light on how low minimum wages can send shockwaves through the heart of a locality.

The Local Economy: A Delicate Ecosystem

A thriving local economy is a symbiotic relationship, with businesses, workers, and consumers interwoven in a delicate dance. When the minimum wage remains stagnant or inadequately low, it casts a shadow over this equilibrium. Picture a scenario where workers are struggling to make ends meet, unable to invest in local goods and services beyond the essentials. This directly impacts businesses, causing reduced demand and, in turn, prompting cutbacks or layoffs. As a result, the vibrancy of the local marketplace diminishes, a testament to the inextricable link between the financial stability of workers and the prosperity of businesses.

Housing Prices: A Ripple Effect

Now, let's segue into the realm of housing prices, a realm where affordability and accessibility often collide. When minimum wages fail to keep pace with the rising cost of living, the dreams of homeownership are relegated to the periphery for many. As families and individuals grapple with stagnant wages, their ability to secure a place to call home becomes a distant reality. In a twisted paradox, low minimum wages contribute to a phenomenon where housing prices spiral upward, creating a chasm between aspirations and attainability.

A Dual Impact: Local Economy and Housing Prices

The connection between low minimum wages, the local economy, and housing prices is more intertwined than it seems. As local economies struggle due to reduced consumer spending, businesses may falter, leading to job losses and economic contraction. Simultaneously, the pressure on housing markets intensifies. Demand for affordable housing swells, yet the financial means to secure it remain constrained. This dual impact can set off a cycle where a weakened local economy contributes to unaffordable housing, and unaffordable housing further weakens the local economy.

Breaking the Cycle: A Call for Equitable Wages

The interplay between low minimum wages, the local economy, and housing prices is a wake-up call for policy makers, businesses, and communities alike. To break this cycle, it's imperative to recognize the interconnectedness of these factors and address them collectively. By setting equitable minimum wages that reflect the true cost of living, we can empower workers to engage more actively in the local economy. This increased purchasing power fuels business growth and ultimately nurtures a healthier economic ecosystem.

The Living Wage in Toronto is $28.50. We need to embrace it. Employees and employers need to start using that as the bare minimum.

Conclusion

The relationship between low minimum wages, the local economy, and housing prices underscores the intricate balance that defines our communities. As advocates for sustainable growth and social progress, we must champion policies that ensure fair wages for all. By doing so, we lay the foundation for an economy where businesses thrive, workers prosper, and housing remains accessible. The ripple effect of change starts with a single commitment: to forge an environment where every thread of our economic fabric contributes to a tapestry of prosperity.

How would Eliminating Property Taxes for Family Farms benefit the Economy?

Eliminating property taxes specifically for family farms, while retaining them for corporate farms, can be argued to make smart economic sense for several reasons:

1. Support for Small-Scale Agriculture: Family farms often represent small-scale agriculture and contribute to the diversity and sustainability of the agricultural sector. By removing property taxes for family farms, the government can provide direct support to small farmers, encouraging their continued operation and helping to preserve the cultural and economic fabric of rural communities.

2. Maintaining Food Security: Family farms play a vital role in ensuring food security by producing a variety of crops and livestock. By reducing the financial burden on family farms, the government can help maintain their viability and promote local food production, which reduces reliance on imports and strengthens domestic food security.

3. Rural Development: Family farms are often deeply rooted in rural communities, providing employment opportunities and supporting local businesses. By alleviating property tax burdens on family farms, the government can foster rural development, promote entrepreneurship, and create economic stability in rural areas.

4. Preserving Agricultural Land: Property taxes can put significant pressure on family farmers, particularly when land values increase due to urbanization or speculative investment. By exempting family farms from property taxes, the government can reduce the financial strain on farmers, making it more feasible for them to hold onto their agricultural land. This, in turn, helps preserve valuable agricultural land and prevents its conversion into non-agricultural uses.

5. Stimulating Investment and Succession Planning: Eliminating property taxes for family farms can incentivize investment in agricultural infrastructure and encourage succession planning. Reduced tax burdens can free up capital for farmers to reinvest in their operations, improve productivity, adopt sustainable practices, and facilitate intergenerational transfers of farms within families.

6. Enhancing Competitiveness: Corporate farms often have greater financial resources and economies of scale compared to family farms. By retaining property taxes for corporate farms, the government can ensure a level playing field, encouraging fair competition and preventing potential concentration of agricultural production in the hands of a few large players.

7. Aligning with Agricultural Policies: Many governments have policies aimed at supporting family farms and sustainable agriculture. Eliminating property taxes for family farms aligns with these policies and demonstrates a commitment to fostering a resilient and inclusive agricultural sector.

It's important to note that the economic impact of such a policy change would need to be carefully assessed, taking into consideration alternative revenue sources to compensate for the potential loss of property tax revenue. Additionally, the specific definitions and criteria distinguishing family farms from corporate farms would require clear and enforceable guidelines to ensure the intended benefits are realized.

Economic Forces: Home and Condo Prices

Several significant economic forces influence home and condo prices. The interplay of these forces can vary depending on the local market, but the following factors generally have a substantial impact:

1. Supply and Demand: The basic principle of supply and demand plays a crucial role in determining home and condo prices. When demand exceeds supply, prices tend to rise, and when supply surpasses demand, prices may decline. Factors such as population growth, migration patterns, and housing development rates contribute to changes in supply and demand dynamics.

2. Interest Rates and Mortgage Availability: The availability and cost of mortgage financing are important economic factors affecting housing prices. Lower interest rates make borrowing more affordable, increasing demand and potentially driving up prices. Conversely, higher interest rates may reduce affordability and curb demand, leading to price moderation.

3. Economic Growth and Employment: The overall health of the economy and local job market significantly influence housing prices. Strong economic growth, low unemployment rates, and wage growth can increase purchasing power and stimulate housing demand. Conversely, economic downturns or job losses can dampen demand and potentially lead to price decreases.

4. Government Policies and Regulations: Government policies, regulations, and interventions can have a significant impact on home and condo prices. Measures such as zoning regulations, land-use policies, taxation policies, and incentives for affordable housing can shape market dynamics and affect prices. For example, restrictions on development may limit housing supply and contribute to price appreciation.

5. Consumer Confidence and Sentiment: Consumer confidence and sentiment play a role in the housing market. Positive economic outlooks, low unemployment rates, and general optimism can lead to increased demand and upward pressure on prices. Conversely, economic uncertainty, financial instability, or negative sentiment can have the opposite effect.

6. Location and Amenities: The location of a property and the availability of amenities and services in its vicinity significantly influence home and condo prices. Desirable neighborhoods, proximity to employment centers, good schools, transportation infrastructure, and amenities like parks, shopping centers, and recreational facilities can drive up prices due to increased demand.

7. Market Speculation and Investor Activity: Speculative behavior and investor activity can impact housing prices, especially in volatile markets. Investor demand, driven by the expectation of future price appreciation, can contribute to price inflation or volatility. Speculative bubbles can occur when prices detach from fundamental economic factors.

It's important to note that these economic forces interact with each other and are influenced by various external factors, such as demographic trends, global economic conditions, and geopolitical events. Additionally, local market factors and regional dynamics can also significantly impact home and condo prices.

The Economic Dangers of Real Estate Bubbles

 

Conservatives Vs Liberals - How does the election effect housing prices?

In terms of real estate, how does the Canadian election effect home prices?

Well it depends. Are you buying or selling?

If you are thinking of voting for the Conservatives, expect more of the same laissez-faire approach to economics - which means to say the Conservatives like to do nothing unless they absolutely have to.

Remember the recession that started several months ago? Stephen Harper denied it was a recession until economists told him, yes, yes it is a recession. And even after the recession was confirmed Stephen Harper has actively avoided using the word "recession" - because talking about the recession is bad for his re-election campaign. (Instead Harper has been trying to distract people by fear-mongering about Muslims.)

In terms of real estate a recession lowers house prices, so that is good for home buyers, but bad for people looking to sell.

Voting for the Liberals means lower taxes for the middle class, which makes homebuying more affordable - which means prices may end up going higher, which is good for sellers, but more affordability also means the economy is more robust and Canadian homebuyers will be more able to afford that new home. So that is a win-win.

In contrast the Conservatives like to lower taxes for the rich - which they have been doing for 10 years now. This has resulted in the richest Canadians becoming richer, while the middle class has failed to make any progress. The Conservatives had 10 years to lower taxes on the middle class, and they squandered those ten years on partisan politics and betting on oil futures. Thus the rich are now more able to buy property and make themselves richer. Land ownership in Canada has become very skewed towards the rich during the last 10 years, plus foreign ownership of land in Canada has skyrocketed, with much of Canada's oil and mineral reserves being bought up by the Chinese.

Also we should note that the polls show that the best the Conservatives can hope for right now is a minority government, which would be hamstrung by the fact the Liberals, NDP and the Bloc are all refusing to support a minority Conservative government. So even if the Conservatives managed to cling to power, they would be essentially powerless.

In contrast the Liberals are currently poised to seize a possible majority government, which could usher in years of economic benefits for the middle class.

Canada's political system is really about class warfare - squabbling over who should pay more taxes and how much we should spend on social programs.

The Conservatives support the rich, and cut taxes for the rich while cutting social programs that help the middle class and poor.

The Liberals support the middle class, and cut taxes for the middle class, raise taxes on the rich, and use a moderate amount of funding for the social programs.

The NDP support the poor, cut taxes for the poor, raise taxes for the rich and upper-middle class, and spend oodles of money on social programs.

So who you vote for is really a matter of whether you buy, mortgage or rent real estate.

If you are rich, you buy real estate outright. No mortgage. Therefore you should vote Conservative.

If you are middle class, you buy real estate with a mortgage and pay it off over time. Therefore you should vote Liberal.

If you are poor, you are still renting an apartment, living in your parent's basement, etc. You should vote NDP.

There you go - Canada's political parties explained in real estate terms, in a nutshell.

GTA and Vancouver Suburbs Prices Soaring

When will Canada experience a US style burst?

If you think the prices within Toronto and Vancouver are skyrocketing, wait til you see the prices for the suburbs - which would normally be considerably cheaper. All of this adds up to an ever-inflating housing bubble in two of Canada's hottest real estate markets.

According to the latest Royal LePage housing report, the cost of homes in the suburbs are surging, eclipsing those of the city core in some cases.

Home prices in the Toronto area climbed 11.3 per cent in the third quarter from a year earlier, to $612,261. In the city proper, the cost was almost $640,000.

The median price of a two-storey Toronto home, is up 17.1 per cent to $961,656. The price of a similar home in nearby Richmond Hill rose 18.6 per cent to $963,561 and in Vaughan by 18 per cent to $842,173.

Vancouver homes are also high, up 17.3 per cent at more than $1.9-million. The corresponding prices in Richmond and Burnaby surged 23.5 and 20.9 per cent, respectively, to about $1.2-million. A  two-storey in North Vancouver is $1.3-million, while those in West Vancouver are going for about $2.8-million.

Across Canada, home prices rose 0.6 per cent in September from August, and 5.6 per cent from a year earlier, according to the Teranet-National Bank home price index released yesterday. The index showed that prices climbed 10.4 per cent in Vancouver and 8.6 per cent in Vancouver

"The Vancouver index, at 201.24 in September, is the first to top 200, meaning that prices in that market are slightly more than twice as high as in June 2005."

With respect to these two markets a bubble has been forming for over two decades, with prices reaching dizzying heights - especially in Vancouver. At some point the bubble has to burst and prices will tumble, but to do so there has to be an impetus - something to set it off. A proverbial flea that broke the camel's back.

The 2008-2010 recession wasn't enough to do it. The current 2015 oil-collapse recession plaguing Canada likely won't be enough either, because when you consider that the Canadian dollar has slid dramatically over the past two years, what you realize is that if you measure housing prices in US dollars, the prices haven't really gone up that much.

The Canadian dollar hasn’t been above parity with the U.S. dollar since Valentine’s Day 2013. Since then it’s dropped at a record-setting pace of 23 per cent by July 2015.

Now you might think, oh the dollar is down, wouldn't that effect our economy? And you would be right - it does. It boosts our exports because the prices of doing business/buying goods in Canada is now cheaper. It also means the prices of investing in real estate in Canada is now cheaper too (for non-Canadians).

One would wonder if it were possible to take your money you had invested in oil - if you timed it right before the oil prices collapsed - and reinvest in real estate. Then when the oil prices go back up eventually, the price of the Canadian "petro dollar" would rise in value too - which means when you sell the real estate, you've then made a bundle on both the increased value of the real estate, but you've also made a bundle off the fluctuating US-CDN exchange rate. Hypothetically speaking.

Meanwhile Canada has an election coming up very soon...

American banks pushing home equity loans to seniors

Bankers are becoming eager to bump up sluggish revenue growth and are therefore once more returning to a business model that lost much of its appeal during the 2007 - 2009 financial crisis: home equity loans.

If you don't what that is, basically it is a reverse mortgage wherein you bargain the value of your home (which has already been fully paid for) and reverse refinance it so you gain money back from the value of your home - essentially selling the bank part of your house, so that when you later sell it (or you die and it gets sold) then the bank collects on the debt after you die.

Thus if you are watching TV, an American channel, you will likely start noticing these ads for reverse mortgages / home equity loans.

The problem during the 2007-2009 subprime lending crisis was that home prices dropped so rapidly that banks were losing money on the value of the homes they had bought into.

New home equity loans reached a record of $430 billion in 2006. Banks made record profits during that time period on home equity lending as home prices soared, but many property owners treated their property value as a personal ATM and spent the money on luxuries they didn't need. As the housing market turned sour, 30% of home equity in the country was destroyed - and with that the banking industry lost billions.

During 2010 and 2011 the banks began offering home equity loans again, but they weren't really pushing them because the market was considered to be too soft and there wasn't enough profit to be made at the time.

But starting in 2012 the USA has recovered from the financial crisis completely and American consumers are now receiving pitches in their mail boxes, email, and brochures in bank branches. Bankers admit the competition is increasing rapidly and they are all trying to capture customers with more flexible terms and lock them into reverse mortgages.

This spells more profits for banks in the long run - so long as home prices in the USA remain stable.

Which, judging by the median new home prices, is happening.

As the USA economic pictures continues to brighten the banks are relaxing their standards for who they are willing to loan money to - and home equity loans to seniors who already have their homes fully paid for is considered a pretty safe bet that can only be affected if the value of someone's home drops.

It isn't just homes being offered reverse mortgages either. Businesses are being offered the same deal for their commercial real estate - pushing the idea that if you own the land, why not cash in on its value NOW instead of later?

According to the U.S. Office of the Comptroller of the Currency survey of 86 of the largest banks in the USA as well as federal savings associations (the survey was conducted between Jan 1st 2012 and ended on June 30th, 2013) it showed a dramatic increase during that 18 month time period of home equity loans. The survey represented 87% of total loans in the system, with 11 categories of commercial lending addressed and 7 categories of retail products, including conventional and high loan-to-value (LTV) home equity products.

Which means banks are again increasing their appetite for risk, which means they are also easing their standards on credit cards, asset-based lending, and more.

High LTV home equity loans saw the most tightening of standards during the 2007 to 2011 period. In 2012, standards were eased at 17% of financial institutions. Many banks however tightened their standards, but are now pushing home equity lending because they are trying to cash in on those people who fit the standards - and thus still make some good money off those people.

Banks say they are being more cautious about home equity loans and are ensuring customers can afford the loan, but they are also covering their assets to make sure they make money off these people.

The push to increase revenue comes as banks are facing increasing pressure from investors to grow revenue, which has declined along with the mortgage refinance business. When mortgage rates spiked in 2013, demand for mortgage refinance loans dried up, and this cost the big banks millions in potential income.

Today banks are pushing the idea that they don't want to lend to people who just have equity - they also want the person to have a strong credit score above 700, and a sufficient income / stockpile of cash to fulfill their new standards.

Toronto home prices are a big risk says BMO

Toronto home prices are a deep concern to Canadian banks - and they're banking on a drop in real estate prices.

So much so that surge in Toronto prices is described as a major economic threat in a new Bank of Montreal report.

In an economic forecast for North America released this week, BMO noted three "risks" to the North American economy, namely:

1. embattled emerging markets.
2. the continuing tussle over the U.S. government debt ceiling.
3. residential real estate in Canada’s biggest city.

Seriously, Toronto's housing prices / real estate bubble has bankers quaking in fear and using words like "collapse", "crumbling", "major economic threat", etc.

For months some economists have been trying to downplay the worries of big Canadian banks - who stand to lose a lot of money if the Toronto real estate bubble bursts. Some have tried to describe the impending doom as "a minor setback", hoping that when it happens it will simply be a market correction that causes prices to drop a mere 10% - whereas the Toronto real estate market's bubble is overpriced by about 40 to 50%. A realistic market correction would be ballparked at between 25% to 45% drop in real estate prices - and a huge unemployment rate that would send construction workers, auto manufacturers and bankers running for the hills and wanting to hibernate in a cave (bear market pun) until the chaos is over.

I find it really funny when market analysts try to downplay the size of Toronto's real estate bubble. Let me explain by doing a little economics lesson.

What is Toronto's two biggest industries?

#1. Banking.

#2. Construction.

We don't really manufacture anything, Toronto's economy is basically just banking, construction and the service/sales industry. Money pours into Toronto from Canada and the USA thanks to Canada's big banks - and a lot of that money - the lion's share - is from mortgages.

If housing prices drop, Canada's big banks lose money. If housing prices drop significantly, the banks lose a LOT of money.

Simultaneously if housing prices drop, the construction industry dries up. Construction workers are laid off, they and their families stop spending money, and thus the economic down spiral begins. A local recession ensues and many jobs are lost as companies "tighten their belts" by shedding jobs of anyone they don't see as necessary.

If Toronto has a robust manufacturing sector that ships internationally, this wouldn't be as much of a problem. South Western Ontario has a lot of manufacturing jobs, but that is over near Hamilton, Guelph, Kitchener. The auto manufacturing sector will be hit the hardest - but other types of manufacturing will be fine for the most part.

The problem however is that home prices in Toronto have skyrocketed at a ridiculous rate during the last 20 years - largely due to foreign investors in Toronto's condo market. That means that when prices start going down it won't be any minor dip. It will be more like a landslide as investors suddenly sell off their assets and flee the market in droves.

"In Canada, accelerating home prices in Toronto (7.1 per cent year-over-year in January) risk straining affordability further, causing a correction when interest rates normalize and the market is trying to absorb a record number of newly built condos," says BMO senior economist Sal Guatieri.

Mr. Guatieri’s comments follow last week’s report from the Toronto Real Estate Board, which showed the average selling price in January surged more than 9 per cent to $526,528 from a year earlier. The so-called benchmark price rose 7.1 per cent, as the BMO economist noted while warning that real estate price growth is outpacing family income by a huge margin.

In layman's terms that means Toronto home prices have become so ridiculous people can barely afford them - so a single large economic hiccup could be the flea that breaks the camel's back. The real estate market in Toronto is the keystone that holds Toronto's economy in place - give it a big bump and the whole structure collapses.

In Toronto, this is one of the bigger risks, more so to the local economy, Guatieri says in an interview. Guatieri worries what will spark trouble over the next few years is when interest rates rise.

The higher interest rates would cause people to slow their home buying - which is already slowing - and result in people looking to sell to drop their prices in an effort to find buyers. If they see a collapse coming they will be rushed to market and try to sell faster rather than later when prices will be even less.

Consider, too, that according to the latest report from the Canada Housing and Mortgage Corp., also released this week, which showed Toronto ignoring the national trend when it comes to residential construction starts.

While those across the country edged down, housing starts in the Toronto area climbed to an annual pace of 36,186 units in January from 32,281 in December - mostly bought on credit from the banks.

The six-month moving average puts the number at 36,367, up from December’s 35,547.

"Apartment starts remained high as the relatively high number of projects which began selling in 2011 reached sales targets that allow construction to begin," CMHC said of the Toronto market.

Across Canada, housing starts slipped to an annual pace of 180,248 in January from 187,144, the agency said, with the six-month moving average declining to 191,456 from 194,518.

Which means the Canadian economy is cooling, but Toronto is steaming ahead fueled by easy credit.

"The decline in starts is an indication of housing supply falling into alignment with demand in most major markets (Vancouver, Calgary, Edmonton, Quebec City)," says economist Connor McDonald of Toronto-Dominion Bank.

"However, we expect Toronto to follow suit as homes under construction reach completion and more supply comes online. Over all, the recent cooling of housing starts supports our view for a soft landing of the Canadian housing market in 2014 and 2015."

See his choice of words? "Soft landing" is his wishful thinking. He is just thinking in terms of supply and demand, he isn't thinking of what will happen when those same construction workers are laid off and the economy sours - and housing prices drop at a sharper rate than he is expecting.

In his report Guatieri notes how the boom in Canadian housing is largely over as potential home buyers adjust to tighter mortgage insurance rules brought in by the government to head off Toronto's real estate bubble - a tactic designed to prevent it from bursting.

"Not so in Toronto, however, as its prices continue to outrun median family incomes, which averaged slightly over 2-per-cent growth from 2001 to 2011," says the BMO economist.

"Consequently, affordability continues to deteriorate even with relatively steady and low interest rates. While Vancouver remains the least affordable city in Canada, some softening in prices there has allowed Toronto to rapidly narrow the gap."


Yada yada yada, Toronto can't afford these ridiculous high prices in homes so the bubble is going to burst when too much supply outpaces demand and the construction workers are all laid off.

Apartments and Condos in Mallorca

Why Mallorca makes a great option for condo buying instead of Toronto

Mallorca (also known as Majorca, so I will alternate which name I use) is a tiny tropical island off the coast of Spain in the Mediterranean Sea, an island that is 80% dependent upon tourism for its entire economy.

So you would think that the prices of condos and apartments there are probably pretty expensive, right?

After all, we're talking about a tiny country that in 2013 sold 30 estate villas for over 5 million Euros each - the most expensive of which was 18 million Euros. That is a lot of very expensive estates for one little Spanish island.

Thus you would think Majorca really only caters to wealthy estate properties - but we are forgetting that the locals at Mallorca have to live somewhere too, right?

Which means that wherever they are living, it has to be affordable - either by renting a property, owning a condo, or owning a house.

What I have learned is that vacant beach front properties are very expensive. Vacant lots on the beach are in the 450,000 to 600,000 Euros range. (That is $675,000 to $900,000 CDN.)

I browsed some websites for condos and apartments in Majorca and on one of the websites I found 3 small condos for sale 69,000 Euros, 90,000 Euros and 90,000 Euros. (So between $103,000 and $135,000 CDN.)

Now compare those prices in Majorca to small condos in Toronto - and they are about the same. A small condo in Toronto costs about the same as a small condo in a tropical paradise.

And to be fair, the really expensive condos in Mallorca are about the same prices as the really expensive condos in Toronto - a city that so far this winter has average -15 degrees outside, so bitterly cold you start thinking "Hey, why am I living here? Why aren't I living in a tropical paradise instead???"

At which point you have to stop and think why anyone would bother to live in Toronto when they could live in Majorca or some other tropical place instead.

Like just look at these photos I found of Mallorca. I think they demonstrate the difference.

Yada yada yada, basically why would anyone live in Toronto - one of North America's most expensive cities to live in - when you could live in Majorca instead for the same price?

Job? Learn to telecommute. Most of the high paying jobs in Toronto are in the banking and investment industry - jobs that could easily telecommute. Entire workplaces could all move to Mallorca and still hold meetings and do their regular banking stuff while enjoying sun, surf and relaxing drinks in a paradise.

It boggles my mind that tropical islands are not the financial centres instead of cold cities like London, New York and Toronto.

Commercial Real Estate in Vaughan

How do you know a region is doing well in terms of economics?

When the prices of commercial real estate start going up, you know the economy is booming.

In Toronto this is really evident in the satellite regions of the GTA, places like Vaughan, Richmond Hill, Markham, Woodbridge and Thornhill.

Lets take for example the Vaughan Mills Shopping Centre, located near Bass Pro Mills Drive. It is a booming shopping centre on what would traditionally be the outskirts of Toronto, but because of the exploding population growth in Vaughan - lots of suburbs and apartment buildings - the end result has become a strong need for places close to home where people can go shopping and buy their amenities.

The Vaughan Mills Shopping Centre however is just one example of this phenomenon - and I should point out that historically the location was more well known for the fishing and hunting store Bass Pro (hence the street name), but now the place is a haven for shoppers looking for high fashion, shoes and generic shopping mall products.

Another example is companies like Omni Hearing, a hearing clinic located in central Vaughan, a small company which is doing so well financially that they are now expanding to a new location in Oakville. Omni Hearing offers excellent service, a broad selection of hearing aid styles / hearing products, and free hearing tests. It is so small that when you look at a photo of the location you realize just how easy it is to make a financially successful business in Vaughan.

What this means is that when you build a business in a place with a booming economy, as long as you provide great service / fair prices, you are guaranteed to succeed financially.

So what if I wanted to open a company in Vaughan, either a new business or expanding an existing business?

Well then I will need to find a good location - or depending on the niche market, a place I can afford and then do a good job advertising it.

In which case the website I like browsing is ICX.ca. It isn't just for Vaughan, it is commercial real estate for all of Canada. So if you are looking to buy commercial real estate, that is the website I recommend.

When browsing Vaughan's commercial real estate on ICX you realize something... there isn't a lot of places actually available. Why? Because the businesses in Vaughan don't seem to suffer from bad economics very often. The few companies that don't survive (and the land ends up being sold) simply were not competitive, had a bad niche market, the manager probably mismanaged the business, etc.

You can also browse leases instead of sales.

Just for fun I am also browsing other locations across Ontario to see what is available. One of the things I enjoy doing is browsing the listings for small towns that have a really bad economy - sometimes they have very few places on the market, and sometimes they have a LOT - but the prices are super cheap because nobody is buying. (A bit like browsing commercial real estate in Detroit.)

For example if you browse the commercial real estate of Windsor (right across the river from Detroit) what you find is that even larger buildings are for sale - and while the prices are sometimes still in the millions, they are comparatively cheap since the economy in Windsor-Detroit is so weak.

Canadian real estate bubble grows 10%

The Canadian real estate bubble continues to grow as the average price of a Canadian home increased 10.4% to $389,119 (a new record high) in December 2013, compared to the same month in 2012.

The Canadian Real Estate Association (CREA) released data Wednesday showing that a total of 457,893 homes changed hands in Canada last year, an increase of about 0.8% from 2012's sales levels.

"Absent further mortgage rule changes, sales in 2014 may surpass the annual total for 2013 if demand holds steady near current levels as strengthening economic and better job growth offset the impact of further expected marginal mortgage interest rate increases," says CREA's chief economist Gregory Klump.

As has been the case for years now, CREA says the large jump in Canadian real estate prices was largely due to what was happening in Canada's most active and expensive markets - namely Vancouver and Toronto.

Canadian Real Estate Bubble to Burst?

Sales activity in December 2012 in Toronto and Vancouver was abnormally low, which dropped the national average during that time period, a sign that the growing bubble is ready to burst.

"Removing Greater Vancouver and Greater Toronto from national average price calculations cuts the year-over-year increase to 4.6 per cent," CREA said.

CREA says the average price can be misleading, as it can be too easily influenced by individual factors which drive prices up - factors like too much credit, high demand, etc.

The realtor group says its MLS Home Price Index "provides a better gauge of price trends because it is not affected by changes in the mix of sales activity the way that average price is."

That index shows home prices rose 4.31% over the past 12 months. Gains were seen in all housing types - including condos which is expected to cool sharply in 2014 - 2015.

The index was led by an 8.7% gain in Calgary and a 6.3 per cent gain in Toronto.

Vancouver's market index posted a second straight increase of 2.13% after declines for much of the time between late 2012 and late 2013.

The thing is, the higher those percentages go the bigger the bubble is then the bigger the problems will be when the prices crash.

Worried Bankers and Economists

Economists and policy-makers have been scrutinizing the Canadian housing market for indications of weakness and warning signs of a possible crash - something that is expected to happen sometime in the next two years.

"If you run a bank, you should be worried about it," says Ed Clark, the outspoken CEO of the Toronto-Dominion Bank.

Worst condo sales in a decade in Toronto, August

The number of new condos that sold in the Greater Toronto Area during the month of August 2013 dropped to a mere 633, making it the lowest level for that month in a decade, according to RealNet Canada Inc.

That is a 18% drop from the dismal 772 sales in August 2012. And way below the 1,923 sales in August of 2011.

Toronto’s condo market is cooling so fast it has policy makers in Ottawa worried that if the condo market collapses, the housing market might go too - and thus dropping Canada into the biggest recession we have seen in decades. (2007-2009 will seem like a minor blip).

The Finance Department and Bank of Canada are justifiably concerned.

Finance Minister Jim Flaherty expressed concern in 2012 that too many new condo units were being built, a phenomenon that will ultimately lead to a crash - especially since so many were being built on credit borrowed from Canadian banks. The Bank of Canada has said that such a financial crash will pose a threat to the country’s broader economy and possibly even hurt the US economy too as many American investors are amongst those investing in Toronto condos with the intention of flipping them for a profit.

Real estate agents, brokers and pundits (myself amongst them) say the warnings have already been having an impact on the market, by causing some buyers to think twice about getting in to the Toronto condo market. But is it enough to prevent a crash by warning people not to invest? Doubtful. Most of the investors are Americans or from overseas, and they're borrowing Canadian bank money to make the investment - so if a crash happens and they lose their investment, it will be Canadian banks left holding the bag because the foreign investors will just pull out and ignore any legal threats from afar. (Because if you hold a foreign debt it really isn't that big of a deal if you just avoid that country for 7 years or so.)

For his part Mr. Flaherty has tried taking a number of steps to cool the real estate market, most notably tightening the mortgage insurance rules 14 months ago. One of the changes he made was to cut the maximum length of an insured mortgage to 25 years from 30, a move that took a number of first-time buyers out of the market (and first time buyers are more risky) and cooled it down a bit.

But such moves won't deter the overseas investors, who see Toronto's real estate market as being stable and think they can beat the odds and make a killing in profit BEFORE the market collapses.

But looking at the sales records, it is obvious the market is slowing and will stall sometime in the next year or so.

The total number of new homes, both low-rise and high-rise, that have sold in the Toronto area so far this year stands at 16,775, making it the lowest year-to-date total of the last 10 years.

There were 777 sales of new low-rise houses during August. That is 43 per cent below the 10-year average for the month of August. So the slowdown is effecting the housing market, not just condo sales.

While a growing number of tall condo towers are dotting the city’s skyline, the amount of land that’s available for the construction of new low-rise homes is constrained because of government policies aimed at curbing urban sprawl and maintaining green space. That means that condo growth is the future of Toronto, but it has to be built at a sustainable rate.

The price gap between new high-rise condos and low-rise houses has widened to a record level of $222,149. The low-rise price index rose 8.1 per cent over the past year to a record high of $658,938, while the high-rise price index eked out a mere 0.1 per cent gain to $436,789. What it means is that homebuyers definitely want houses more - and it is driving up prices faster, whereas condos are considered to be more risky despite the lower prices.

The gap between the price of condos and houses averaged about $75,000 between 2004 and 2011, but the gap has been growing at a fast clip during the last two years now that condos are flooding the market and becoming cheaper comparatively.

Many people swear off condos entirely, stating that the maintenance fees are way too high - and this is true for some condo buildings where they have gone overboard on expenses.

The unsold inventory of new low-rise houses now stands at 7,247, RealNet said, while there are 21,028 new unsold condos.

The month of August also marked the fourth straight decline in high-rise inventory, as developers have been bringing fewer new condo units to market of late. But economists say that the number of new condo buildings going up that will hit the market in 2014 - and even more that will be finished in 2015.

So we will see that unsold inventory of condos rise from 21,000 to 30,000 or 40,000 within the next couple of years.

At which time prices should drop significantly, which means people with the money available should be able to buy a condo for a lot less money when the market bottoms out.

Graduated and Living at Home

The infographic below is proof that there is something wrong in America...

Both in terms of lack of jobs, but also a shortage of affordable housing for people. And by affordable housing I also mean the cost of renting. House prices and the costs of renting are simply way too high for university and college graduates to be able to afford to live on their own.

And the careers that they trained for simply aren't available because too many people are training for things that there simply isn't enough jobs in that field to go around.

Which says to me more Americans should be BUILDING affordable houses, hiring people to do construction, creating jobs in the construction industry - while simultaneously making affordable housing more available.

There is ALWAYS more room for more people in the construction industry - especially the green homes industry. People who become experts at how to build green eco-friendly homes are guaranteed to find work in comparison.

Note: I had to modify the original infographic because it was too tall and wouldn't fit on here properly.