Notes from the Trenches (26)

Article source: ConstructConnect

• Canadians have entered the pandemic unprepared. In total, they have a record high level of household debt to disposable income, a ratio exceeding 170%. The reason for the debt buildup has been an exceptionally strong residential real estate market.

• For years, speculation concerning a runaway housing bubble in Canada has been noted but, for the most part, brushed aside … although it is worth mentioning that there have been some government-imposed steps to cool overheating home prices. Nevertheless, the roosters have finally come home to cock-a-doodle-doo, but in an unexpected way.

• Canadians have tapped the collateral in the steeply escalating values of their primary residences to borrow money for spending on vacations, cars and additional ‘income’ properties (i.e., to rent them out and generate an earnings stream). The financial legerdemain has been working just fine, until most recently, when it has crashed into a coronavirus wall. One of the nastiest side effects of seeing one’s job disappear is a reduced ability to meet loan-specified principal and interest obligations.

• In ‘normal’ times, buying an expensive condo with the thought of covering some or most of the cost through a hospitality placement with Airbnb or similar service makes sense. But the plan counts on business executives and tourists coming to town. Such visits, however, have now vanished and owners of additional properties are stuck with unnecessary extra mortgage payments.

• Be sure to put some of the extraordinary things you see these days in your memory bank. Late the other night, when I was walking Darcy in our townhouse area. I came across a young lad, probably in his early 20s, ‘boogieing’ in place on his roller blades, in the middle of the road, spotlighted by a streetlamp. He was bustin’ some pretty good moves. Ear buds in, he must have been listening to Spotify or some such. And why not? It brought to mind how maybe I should get out my skateboard. When I returned home, all excited, and told my wife what I was thinking, she suggested I ponder on it some more.

Tags: banking, bids, cement, Construction, coronavirus, COVID-19, developers, Economy, lumber, recovery, shareknowledge, steel, tenders

Category: ConstructConnect

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