Real estate prices have been in the headlines lately. Buying mania has reached our Innisfil neck of the woods over the last couple of years but I doubt foreign buyers are involved. Looking back over some figures, my property tax increased 73% in the last 16 years (an average of 3.7% per year); “market value” assessment increased by 133% (about 6.3% a year); but the current speculative market value of my property has increased about 500% (or more?) based on real estate agents’ estimates and recent home sales in the area. That’s about 10%/year compounded rate of appreciation.
We get approached about listing our home possibly once a week by mail or in person. I’m told that some real estate agents are hired by others just to solicit listings in this area. A local agent says the wave of transient agents from the GTA is upsetting the livelihood for local agents. In this ‘old’ Alcona neighbourhood, I have seen a property bought and rented by real estate agents. Builders have bought and redeveloped several properties. Some are infill on an empty lot. Otherwise, they demolish the smaller, but still livable, home and build a much bigger residence. In some cases they live in it for a year to avoid capital gains and then flip it. Just as condo towers are transforming the urban character in Toronto, newer, larger suburban style homes are slowly supplanting the casual, cottage-style atmosphere of older Innisfil neighbourhoods.
Meanwhile over at the gas pumps, the price leaped in some locations to as much as 119.9¢/L before the recent weekend. After about 2 hours, the same gas station lowered the price to 107.9¢/L. We know these wild fluctuations have nothing to do with the market price of crude oil. I’m guessing that Big Oil is determined to ambush us at the pumps if they can’t highjack us at the furnace. There is some interesting data online about annual oil consumption by country (as of 2013): Germany – down 18% since 1998; France down 17% since 2001; UK down 17% since 2005; Spain down 25% since 2007; Italy down 36% since 1998; Europe overall, down 13% since 2007; the US down 8% since 2007. Can we attribute all of this to a collapse in manufacturing in these countries? Or is it really more complex than that?
Over in the food aisle, prices here were expected to increase by 3% to 5% this year according to a report published last December. Some of the contributing factors are a lower Canadian dollar exchange rate, unpredictable weather that could disrupt imports, changing US policies that may disrupt transient farm labour, and the impact of carbon pricing on production and transportation. Climate change is driving agriculture into cities and indoors. In the Netherlands, where land is really at a premium, a “commercial facility is currently under construction … Fruit and vegetables supplier Staay Food Group is erecting a 900 square meter vertical farm, which will have a total cultivation area of 3,000 square meters”.
It seems daily life is becoming more unpredictable, unstable and possibly unsustainable, driven by greed on one side, desperation on the other. The common conclusion is that there is a ‘bubble’. I wonder how it will pop? We’re all in this together.