Doomicorns

BIKER modified

If the deviant comment section of this pathetic blog tells us anything, it’s that we live in times of extremes. Every day the doomers and the unicorns fight it out, one side saying we’re on the Eve of Destruction, the other expecting fat gains and long growth. The truth lies in the middle.

This much we know: our nation’s economy is weak, most people are debt slaves, financial illiteracy abounds and house lust still rules the land. It’s a given the majority will not be wealthy, and many will be insolvent. The real question, when the bulk of Canadians have adopted a one-asset strategy, is how bad it will get and what blow back will hit the rest of us?

That’s not doomer. But it’s not sunshine, either. It’s time we were more realistic about what 2016 might bring.

I noticed this weekend the guys selling Motley Fool were at it in force, saying “2016 could be very painful for Canadian homeowners.” This is based on a few key assumptions.

To wit, our housing market is massively overvalued based on what people here earn. So, we’ve become dangerously mired in debt, which makes us totally vulnerable. Our household debt level is greater than that in the US just before housing there blew up. Oil’s a disaster, as you know, and the effects are spreading. And now volatility in China has destroyed a lot of wealth, and BC house-buying along with it. Regional real estate markets are already plopping. So the conclusion: “With China’s main stock index plunging daily, much of this wealth is now disappearing. This combined with oil’s weakness now really being felt around the country could bode very poorly for Canadian real estate in 2016.”

Hey, all good points. But the Fool then goes on to tell you to short bank stocks, which is dumb (and self-serving).

Now here’s the CBC, with a fresh load of ponies and optimism.

A few days ago staffer Mike Crawley (a Toronto homeowner) penned his Five Reasons why anyone suggesting real estate may be troubled (including me) is a small-brained weenie. Demand for housing in the GTA (or YVR, for that matter) will never slacken. “There’s little room to build more single-family houses to increase the supply,” he said, apparently forgetting about Milton, Vaughan or Durham. Besides, Crawley added, houses keep going up even when the economy goes down, and mortgages may rise, but only slowly. No big deal. Mostly, “there is no bubble”, so how can it burst? And, finally, the poor people can always buy condos.

Mr. Crawley’s expert to support this is Sherry Cooper, chief shill for the country’s leading mortgage broker, and former bank economist: “Most people still want to own their own home. They may have to have a much longer commute to work and live in much smaller space but I don’t think the basic psychology is going to change.”

And she’s right. Most people will never come here, never read this blog and think I’m still a country singer. (“Hey, baby, whatever happened to Garth Brooks…?”)

So, realistically, let me spell out what we (the elite) should be wary of. Contrary to what the CBC says, I’ve not been calling for Toronto (or Van) real estate to ‘crash.’ That, along with the anti-America doomers in the comment section and the Motley Fool’s alarmism, is an extreme position.

No crash coming. No 50% or 80% drop. But one isn’t required to impact a huge swath of the population. Given oil, the economy, our tax-&-spend governments, the dollar, jobs and debt, only a modest decline can do the job. So just a normal housing ‘correction’ has the potential to bring far-reaching consequences – which few foresee. While most observers watch out for a speeding cement truck, they’ll be mowed down instead by a meandering Millennial on a fixie. Right up to the moment of impact, they’ll tell you all is safe.

The enemy is the unexpected. Virtually everyone in our bubble regions believes housing is immune from the commodity crash, job loss and financial angst around us. So they’re willing to absorb massive leverage to get in. Sadly, government is helping and encouraging it. For example, young buyers are being enticed into a new 84-unit condo development in suburban Port Moody (of all places) by both BC and the federal CMHC.

The deal is breath-taking. The developer says it will offer units for 8% ‘below market value’ which CMHC agrees will constitute a phantom down payment. That means the kids can get 100% financing with 0% down, and only have to commit to living there for two years – with all lending risk absorbed by taxpayers. Of course, the buyers believe prices will keep rising, and are actually told so by the developer. It’s like a free house. Free down payment. Free profits.

Here it is:

STRAND 1

So what? So, simply, there’s no guarantee beater condos in the YVR hinterland, particleboard palaces in Milton or million-dollar townhouses in suburban Toronto will be worth the same in the future. Higher mortgages, US Fed increases, tighter lending rules, job stress and debt fatigue suggest otherwise. Therefore even a 10% drop in prices means an army of recent buyers – all property virgins with zero experience, inflated expectations and loans they never expected to repay – will be snorkeling.

If you don’t believe that will impact prices overall, you’re no student of history. In the US, 8% of property owners became distressed, causing a 32% decline in national prices, erasing trillions in middle-class equity. Canadian houses are now more over-valued and families more over-borrowed than was ever the case to the south.

There. Feel better?

Update, Jan 12: The CBC followed up on this blog post with a story on the phantom 8% down payment and CMHC’s complicity. You can read it here.

292 comments ↓

#1 Penny Henny on 01.10.16 at 10:15 am

Holy First Batman.

#2 zee on 01.10.16 at 10:28 am

First!!!!!

#3 Randy on 01.10.16 at 10:30 am

Forgot the fictional adjustment ?

http://davidstockmanscontracorner.com/newsflash-from-the-december-jobs-report-the-us-economy-is-dead-in-the-water/

#4 crowdedelevatorfartz on 01.10.16 at 10:34 am

WHEN will the govt stop subsidizing greed and stupidity at the taxpayers expense?

#5 jeff on 01.10.16 at 10:38 am

two

#6 old gringo on 01.10.16 at 10:39 am

I remember when a developer could not sell houses on a Palm Springs golf course, so he included a new Cadillac with each sale and added double the caddy’s price to the house price.
Sold out like a damn.
People are so gullible.
There will be some serious PAIN with CDN real estate very soon.

#7 The real Kip on 01.10.16 at 10:50 am

We are at the boat show, prices are sky high. Many boats don’t even have prices on them, just like the bi-weekly payments.

I have a HELOC with 150k but I’ll leave that alone today.

#8 i.see.debt.people on 01.10.16 at 10:58 am

darn! ..2nd

#9 Jonathan on 01.10.16 at 11:01 am

Prices have already dropped 25% with the currency

#10 common sense on 01.10.16 at 11:06 am

Unbelievable!

Few have ever heard of reverting to a mean or gravity.

And the real shame is taxpayers are funding this.

What a sad, sad world we live in at times.

#11 Time is #1 on 01.10.16 at 11:09 am

Great post Garth. Thank-you. What is the point of minimum downs if there is no regulation to stop this kind of sale and predatory marketing? I fear this will become the norm suckering many more who cannot afford.

#12 Property Accountant on 01.10.16 at 11:10 am

Holy Moly, first fully financed by government and the banks and CMHC (taxpayers) project that I have ever seen:
http://townline.ca/projects/the-strand/pdf/affordability.pdf

It is common government practice to subsidize rent payments for lower income families or welfare recipients, but to offer full ownership of a condo, with 0% down in exchange for staying in there for 2 years with payments of $1187 / month … plus taxes & utilities… We definitely do live in a condo economy.

Funny enough, sell price was dropped 8% and was recognized as a “down payment” by CMHC. It is a GHOST down payment out of thin air.

What is next in line? Are we going to get houses like that soon?

#13 BlackDog on 01.10.16 at 11:11 am

“And now volatility in China has destroyed a lot of wealth, and BC house-buying along with it. ”

But I thought you said HAM is NOT contributing in any significant way to Vancouver’s astronomically high house prices.

#14 Fine Wild Roasted Gonads on 01.10.16 at 11:13 am

Nice column Garth.

#15 You're hinting Garth on 01.10.16 at 11:16 am

Basically one of things you are saying that if things continue as is, a long slow slide in RE prices is to be expected. How slow and by how much no one knows.

It seems to me you are also saying that a broad GDP sector external economic shock may create a RE drop in prices in the 32% range akin to the US.

If you look at CMHC stress test scenarios, one calls for a 26% drop in RE prices if oil stays at $35 or below for about 5 years.

Somewhere in there lies the truth…the latter two of the above.

#16 Min In Mission aka Geezer Idiot on 01.10.16 at 11:16 am

Really mixing up the timelines!

I totally agree that a minor drop in house prices will cause major stress for recent buyers. Even purchasers in the last few years.

I have been watching prices in my area and they have been dropping, not much, but noticeable. I also have neighbours carrying LOC’s that were taken out when the prices were at the top.

I have seen houses, that were listed a couple of years ago, back on the market again. With prices that would reflects what the purchasers expected to “make”. I have seen them sit and not sell, or be re-listed.

With the weaker job situation, a slowing economy, more expensive food – there doesn’t need to be much of an increase in rates to cause people to ‘feel the pinch’

#17 Chris L. on 01.10.16 at 11:18 am

No crash…you never?

“Crash, then slow melt” ~ GT; circa forever

Hmmm….

#18 RE: You're hinting Garth on 01.10.16 at 11:18 am

On the 32% I meant worst case scenario.

#19 Frank The Tank on 01.10.16 at 11:25 am

Yes.

#20 CHERRY BLOSSOM on 01.10.16 at 11:26 am

Business analysts now this there will be a massive flow of Chinese money into Vancouver housing because of there tenuous stock market. YIKES We have been calling it Hongcouver for years now.

Our banks have lost there ethics and CMHC should be charged with criminal activity and put in jail. Or just have their pensions revoked. There has to be a punishment for what they have done ad what they are doing to their fellow citizens

#21 LJ on 01.10.16 at 11:27 am

I don’t see how they can get away with the information listed in that posted offer. If you look back at the US subprime disaster, the banks didn’t even try to cheat the regulations or cook the books to this extent and look at where they ended up.

Looks like the interested parties are desperately trying to seduce those last couple of suckers before reality sinks in.

The next several years will not resemble those that have recently passed. Please adjust your expectations accordingly.

#22 Vancouver Troy on 01.10.16 at 11:27 am

I have 3 years left on my 5 year fixed mortgage. Is there any action I should be taking now?
I heard Ozzie yelling on Money Talks radio that people should renew now or they may not qualify.
I didn’t understand.

#23 Nanaimo Bar on 01.10.16 at 11:28 am

Canadian Dollar Fire Drill

Just a very short reminder to members of our household, that we will be conducting a mandatory Canadian Dollar Fire Drill commencing tomorrow at 9:00 AM. We are asking
our household members to search the house for any lose Canadian Dollars. Please take your time and search in the following places: Washer and Dryer, jacket pockets, purses, childhood piggy banks, and the couch.

All proceeds from the Canadian Dollar Fire Drill will be converted to US dollars.

For those of you that have plans on keeping your Canadian Dollars, we will showing the movie, “Warriors” followed by the soundtrack album. We expect everyone to participate on the chorus line, “Nowhere to run to, Nowhere to hide.”

On January 27th, we will be discussing our plans to visit DisneyLand. There will be no press conference or statements.

USA USA USA

USO USO USO – that will be the chant in a few months.

Go HAWKS Go

#24 to_be_frank on 01.10.16 at 11:30 am

An article in the Finance section of the Telegraph today warns that a “house price crash looms” in the UK. The writer cites six reasons: (1) A global asset price crash coupled with the end of US money supply expansion, (2) The real estate market is inefficient, so prices can remain for a long time decoupled from their fundamental value, (3) The termination of tax benefits on buy-to-let [rent] due to recent UK budgets, (4) loss of foreign buyers in the Gulf due to the oil price collapse and in China due to the stock market crash (which could revert to selling pressure if these former buyers retrench), (5) the impending rise of interest rates, and (6) the explosion of household debt in the UK to unsustainable levels. Commenters to the article were mostly in denial, calling the writer’s thesis “bizarre”, a “spoof”, that interest rates won’t rise, etc.

http://www.telegraph.co.uk/finance/property/house-prices/12087971/UK-house-price-crash-looms-as-global-asset-prices-unravel.html

#25 For those about to flop... on 01.10.16 at 11:44 am

A lot of things are still the same as when I got here over a decade ago.
One thing that has definitely changed is the appearance of Ujjal Dosanjh. I saw him for the first time in a long time on the news and had to do a double take.
I recall him looking like a well dressed business man with a tidy haircut.
The man I saw last night looked like a shaman with long silver hair and grampa clothing on, quite the contrast.
As long as he found his “happy place” I am glad for him.
Living a public life must have its advantages and disadvantages ,when I’m working I come home all dusty and dishevelled and no one cares. Nobodies can do that I guess…

M41BC

#26 Dominoes Lining Up on 01.10.16 at 11:46 am

No 50% or 80% drop.

_________________

I’m inclined to agree. However, the 1990s drop was around 30% and we are much more leveraged now, and the bubble in 416 has been growing for much longer.

I think a 30-40% drop in 416 over the next five years is about right.

(However, add in opportunity costs on down payments, transaction costs and market stagnation below the inflation rate, and the loss over the next 15 years or so might push towards that 80% mark. It took almost until 2011 for 1989 buyers to truly “recover” if you include all those things)

#27 Vampire Studies GMST 454 on 01.10.16 at 11:50 am

I wonder who Chris and Lesley are? Guy/girl? Girl/guy? Two Guys? Two girls? Two ????

Go Seahawks!!

#28 WallOfWorry on 01.10.16 at 11:50 am

If there is increased volatility due to overall higher debt levels, slower global growth etc a balanced and diversified approach is the most sound strategy. Why this blog decides to polarize the views is beyond me: rent instead of buy and own American equities because they are doing so great?

A much more sound strategy would look at the factors that is driving the volatility and exploring risk mitigation strategies such:
– high debt levels and money printing = owning a percentage of hard assets (including gold), TELCO’s,
– scarcity of resources – investing in food and water based stocks etc
– high level of wealth that is now retiring – invest in bio-technology as people will be able to buy solutions that can extend their life etc

Why does this blog always break it down to bad Canada and good America and Garth is right? Garth will be (and has been) right to some extent but as wrong as right too. The dialogue could be more interesting.

#29 Retired Boomer WI on 01.10.16 at 11:50 am

History never repeats, but it often rhymes, it is said.

WHY does every generation, every turn of the financial, political, employment, relationship screws engender the belief that “It Is Different This Time?”

It is NEVER different “THIS TIME” around. Sure, one can argue there are different forces at play, this I will grant you.

2016 has no overwhelming threats of WAR like say 1941.
2016 has no overwhelming threats of depression ala 1932
2016 has not much different from most years. Yes, the US economy is not back to 100%, but operating pretty dam well from this view from the cow pasture. Perfect? No, and I can’t recall a time it ever was PERFECT.

Fewer Union jobs abound with good wages, benefits, and retirement. No, the companies are not going to provide you with retirement just for showing up. You will be expected to contribute, and here -this applies to both government as well as private employers. You want a decent retirement, you ARE expected to assist.

Houses here are modestly priced. Rents are modestly priced. Land is modestly priced, wages are modestly priced. All in relative equilibrium.

So, the equity markets have been puking up Chinese hairballs since the turn of 2016. (6 days) We are still much closer to 18,000 than 9,000. Not cause to panic. Gee, we have enjoyed ONE FULL week of trading in the New Year…

Lots of News items to make one think, give pause, and reflect. Not so “Different” this time, or at any other time.

We can all make poor decisions, be impulsive, or maybe even worse -never making a decision.

2016 will be “OK” … -I am the decider-

#30 Drill Baby Drill on 01.10.16 at 11:57 am

“A recognised downpayment” ? I realise this is unethical but is it illegal? It really does show the depths of ignorance of the buying public but what of the responsibilities of the regulating authorities?

#31 rk usa on 01.10.16 at 11:58 am

re: Given oil, the economy, our tax-&-spend governments, the dollar, jobs and debt, only a modest decline can do the job. So just a normal housing ‘correction’ has the potential to bring far-reaching consequences – which few foresee.

so what is a normal correction in % terms

#32 hope & ruin on 01.10.16 at 11:59 am

Had a discussion this week with an irish tradesmen who got sucked into that property bubble 10 years ago. Still sending money back every month to cover the difference between rent and mortgage/housing costs. Still underwater 8 years after the crash. Can’t sell, can’t raise rent on the tenant.

Says he learned his lesson. I didn’t ask if he rents or bought his current place.

Found this on the wikipedia page about the irish bubble. An advertisement from 2007 for a 100% mortgage.

https://upload.wikimedia.org/wikipedia/commons/e/ee/Fishy.jpg

#33 PR on 01.10.16 at 12:01 pm

In the US, 8%…causing a 32% decline in national prices…

Wow! A real eye opener !

This blog is a gold mine.

#34 Harbour on 01.10.16 at 12:04 pm

POWERBALL 1.2B CANADIAN

Your odds are better sticking your hand into a barrel of sand and withdrawing the right kernel.

#35 AB Boxster on 01.10.16 at 12:10 pm

Wow.

Someone at CMHC should have their peepee slapped for that decision. ‘Phanton down payment’ my left nut.

Canada is doomed.

#36 Balanced Portfolio heavy on pessimism on 01.10.16 at 12:11 pm

I have tried to keep my portfolio balanced (30%USD/SP500, 25 intl, 20 Cdn, 25 fixed income mix of ZRP&VAB)

Since June things have been slipping. Definitely in the red. I haven’t sold so nothing is crystalized. However, I see this as losing money. I can move the goal post and say in the future it will be winning, but here and now its a loss.

Even if there was a correction in housing I wouldn’t want to jump in. I’d be taking loses in my RRSP and most of my TFSA is in the red. Feels like the little guy can’t win.

#37 Smoking Man on 01.10.16 at 12:14 pm

Nothing on tv?

Must see clip
https://youtu.be/hDxNg7rdT4U

#38 jane 24 on 01.10.16 at 12:14 pm

Hi 23 to_be_frank

All of the reasons that the Telegraph gives for house prices in Britain to fall are factually correct but they left out a big one for price rises – lack of development land. It is illegal in this country for green fields to be built on. Every village, town, city has a parish/town line after which all is green belt. You cannot build a pig pen on green belt.

We have been trying for years to find a building plot but it is impossible. This green belt policy must be modified or there will be nowhere for my kids to live. Of course the NIMBYs want green belt lines set in stone, they would as they already have houses.

You have to be very careful what the Telegraph says anyway as it is a left wing paper and represents the Labour party agenda.

#39 Ronaldo on 01.10.16 at 12:15 pm

Illusionary down payments. What comes next? I think we all know the answer to that.

#40 For those about to flop... on 01.10.16 at 12:16 pm

#293 common sense on 01.10.16 at 12:26 am
#251 Freedom First.

Do you have any idea what a “Tool” is?

Flopper and I want to go out with you some night to learn how you charm the ladies….You ole sly fox you!

You never cease to amaze!

////////////////////////////////////////

Please no!Common , I have suffered enough lately I don’t think I could take a night out with Freedom First at the moment.
I am still unstable on my feet ,but then again if I was to take a tumble Freedom First’s ego would cushion the fall for me !

Go Seahawks!

M41BC

#41 crossbordershopper on 01.10.16 at 12:17 pm

there are so many people with an unsecure job that is the risk, its all about the conistancy and the amount of the flow to support or hide almost anything. i run into people who have unstable income streams, that is the real stress, you cannot commit yourself to anything if you dont know you will be able to afford the payments.
how can you lend someone 90% of the value of anything ,and assume he will pay you in 25 years at only 2.59%. like its insane and will correct itself in due course.
in the meantime we are all stressed out and poor. our dollar is for sure going to 62.5 cents, the metric dollar is a good term, at 1.60 premium no snowbirds, no trips to the usa, no nothing, and inflation, who is going to eat the margin contraction, the wholesaler the middleman no the retailer, canadian consumers dont buy anything and once you tell them, hey i buy i us dollars so you have to pay the equivelent they push back. canadian consumers will not buy, its going to hurt from high end boats to low end dollar store stuff.
and the jobs reports are all cooked, self employed means i am unemployed with a dream to sell crap made in china to a canadian or i will provide a service where consumers dont want to pay me. self employed is a dream, directly after a job loss. been there done that.
many people will be working all their lives for nothing, i can explain in greater detail as the ponzy scheme of money will recycle itself and you end up exactly where you are now. which for most is nowhere.

#42 Van real on 01.10.16 at 12:22 pm

Garth. Just how many years have you been saying that housing prices will fall? At least 8 years by my count. At one point you did call for a crash. Now you’re saying it will be a gradual decline. Yet still nothing. Hmmm. You’re beginning to lose credibility.

#43 cyclist on 01.10.16 at 12:36 pm

Phfffft…..F’in poser…..

#44 joe on 01.10.16 at 12:38 pm

Garth I bet The Strand will sell out by the end of the day now that you posted it on your blog.

#45 Mike on 01.10.16 at 12:39 pm

FACT: my cousin builds homes in North Vancouver. He built/sold 4 homes in 2015 for ~1.2M CAD, cash, all buyers flying in from China. None was local resident.

#46 Bram Stolk on 01.10.16 at 12:40 pm

#21 Vancouver Troy on 01.10.16 at 11:27 am
I have 3 years left on my 5 year fixed mortgage. Is there any action I should be taking now?

The next Bank-of-Canada rate change will be DOWN.
So if you want to pay the early-renewal penalty on your mortgage: why not do that just after this happens?

Bram

#47 The sure thing - Realties.ca on 01.10.16 at 12:42 pm

[…] Source: http://www.greaterfool.ca/2016/01/10/the-sure-thing-12/ […]

#48 Estrella on 01.10.16 at 12:43 pm

Any predictions on which way the euro will move? Seems to be getting stronger but I can’t figure why.

#49 BS on 01.10.16 at 12:59 pm

The deal is breath-taking. The developer says it will offer units for 8% ‘below market value’ which CMHC agrees will constitute a phantom down payment. That means the kids can get 100% financing with 0% down, and only have to commit to living there for two years – with all lending risk absorbed by taxpayers.

If something was priced at 8% below market value then I would think some smart rich Chinese guy would buy them all and then just resell them for market value for a quick 8% gain. The definition of market value is what it can sell for in the market right now. Obviously if they were priced below market value they would not need a 0% scheme to sell them all very quickly.

If one developer is allowed to do 0% down we can assume many others are not far behind. It looks like the T2 regime’s small downpayment increase in Feb was just a smoke screen to look like he is doing something when in fact they are going to 0% down.

#50 D.D. Corkum on 01.10.16 at 1:01 pm

CMHC is guilty of violating a most basic concept of capitalism: something is worth what it actually sells for.

You could appraise the property at $1 million, but CMHC should treat it as worth $257 thousand if that’s what it actually sold for in an arms-length transaction.

#51 Rabbit One on 01.10.16 at 1:12 pm

Would banks lend money based on “Appraised market value”? I don’t think so.

If purchase financing, banks always take lesser of appraised value or purchase price.

Or now banks are cooperating on this scheme?

#52 BS on 01.10.16 at 1:16 pm

Mark on 01.09.16 at 4:06 pm
“Mark,what is your prediction for RE in Vancouver,year 2020 ?”

…If the PM sector starts to do very well, it probably will mean significantly rising interest rates for the housing speculators, as credit will be in significant demand to speculate in the PM stocks. Existing owners will lose a lot of their equity on account of the rising rates and negative carry, and will be increasingly forced to sell. However, they will be selling to PM sector participants who will probably be, at such point, laden with cash…

That was funny. I would put aliens coming from space buying up houses as more probable to support RE in Vancouver.

A typical gold junior mining company in Vancouver may employ 5 people. The whole sector likely employs under 500 people total in Vancouver. Even if the sector boomed that number wouldn’t change much. Most of those people already own a house. Currently the gold juniors are down about 95% off their highs a few years ago. The stocks could go up 20 fold and investors would just be even. Even the most sleazy realtor couldn’t come up with such a ridiculous and truly impossible scenario.

#53 ben on 01.10.16 at 1:19 pm

Getting interesting. How low will they led CAD fall before they raise rates? 0.6?

Gonna be a lot of boomers eating beans instead of chicken if that happens.

#54 Jay on 01.10.16 at 1:19 pm

I’m really surprised that more isn’t being said about the effects of the low dollar.

Lots of housing markets have been stagnant or falling the past couple years, and the PPP value of the money it would take to buy those homes has dropped by 30%. The finance minister is telling us this is how things will look for a long time.

So housing has had an invisible crash. If there’s a further crash, it is on top of all that lost value.

#55 Scott in Gibsons on 01.10.16 at 1:34 pm

Most of us “Doomers” have a few basic beliefs. The existing global economic system is unsustainable because it relies on exponentially increasing debt issuance. At some point this becomes mathematically impossible and the system makes a painful adjustment. If I understand Garth’s position correctly, he believes we are operating within normal parameters and things will adjust and correct in a manageable way. We may be at a point in time where we see which view is closer to the truth. So far we have to concede that the Doomers were correct to say that QE could not end without severe consequences. (collapsing commodity prices/hits to commodity producing country currencies and economies) If we see a wave of debt defaults and resulting strain on the financial system in 2016, we will have one more confirmation that the Doomers were right. Garth likes to paint Doomers as extremists by pointing out some of the more unlikely claims made by some of us. He’s almost certainly right that these extreme claims will not come true. For me the debate boils down to this; can the global economy grow its way out of the debt it has created over the last few decades? Doomers say no, Garth says yes. It look like we are beginning to see the answer.

#56 pinstripe on 01.10.16 at 1:38 pm

as long as the money laundering continues there will be no downturn in either the realestate market or the overall economy.

The money laundering is too Big to Fail.

#57 Greg on 01.10.16 at 1:51 pm

Hi #23 to_be_frank, re: If you’re interested? Link to a 22min interview.
I just watch this Jan.9,2016, 22min. interview with “economic expert Harry Dent” about why he thinks the collapse is coming in 2016. His present guess, I guess, and with another book to sell too I’d guess?
I did a one min. quick web search on the guy and some of his prediction have been off in amounts and his timing from time to time it seems. So for what it may be with?
He don’t like gold now, say he looks at demographics, thinks US treasury bonds are safe, thinks we are looking at the start of a stock market reset… Housing is in a bubble, China stock market drop is an indication of…
If you’re interested, see link? I hope he’s wrong again in his guess at degree and timing, or just incorrect again.
http://www.infowars.com/expert-2016-as-bad-as-the-great-depression/

#58 TRT on 01.10.16 at 1:52 pm

The Appraisers are corrupt, getting paid under the table. Buddy knows one developer company in Surrey that builds town homes and they do this all the time. Get appraisers to overestimate the appraisal and then they produce a magical down payment. The buyers gets it for zero down.

#59 ROCK BEATS PAPER on 01.10.16 at 2:05 pm

“And now volatility in China has destroyed a lot of wealth, and BC house-buying along with it. Regional real estate markets are already plopping. So the conclusion: “With China’s main stock index plunging daily, much of this wealth is now disappearing. This combined with oil’s weakness now really being felt around the country could bode very poorly for Canadian real estate in 2016.”

Hey, all good points.”

Is Garth agreeing with the link between China buyers and YVR Real Estate prices?

The conclusion is not likely to play out in 2016 if Poloz drops another quarter point. More importantly, the flight of capital partly arrives in Canadian real estate which represent a bargain to those who view the world from a US$ perspective.

#60 Marco on 01.10.16 at 2:16 pm

Thanks Garth.

@Jane 24

“You have to be very careful what the Telegraph says anyway as it is a left wing paper and represents the Labour party agenda.”

Quite the opposite. The Telegraph has been named the “Torygraph” in the past, and even recently, by left wing papers like the Guardian UK.

Cheers.

#61 Kreditanstalt on 01.10.16 at 2:17 pm

One thing you neglected to mention: government resource revenues, etc., will PLUNGE. Nat gas & oil of course, but also lumber…

Normally you would think that taxes and spening would be cut to compensate, leaving more income in the hands of the productive private sector.

But the LAST thing governments ever do is austerity. Hopefully, this time extend-and-pretend + borrow-&-spend will fail and cutbacks will be forced on them.

#62 The real Kip on 01.10.16 at 2:22 pm

We’re finishing the boat show now. Canadian built boats seem like smokin deals compared to anything built in the states. I guess the exchange rates are going to pinch.

Oh well, I bought a refurbished fish finder for my 1973 project boat, $100. HELOC is safe, I paid cash.

#63 Brandy on 01.10.16 at 2:26 pm

Not a Unicorn with fairy dust.
Commerce between Europe and North America has literally come to a halt. For the first time in known history, not one cargo ship is in-transit in the North Atlantic between Europe and North America. All of them (hundreds) are either anchored offshore or in-port. NOTHING is moving.

This has never happened before. It is a horrific economic sign; proof that commerce is literally stopped.

The reason commerce has stopped is simple: People are not buying things. When people do not buy things, retailers do not sell things, so they do not order more goods for stock.

When retailers do not order goods, manufacturers don’t make anything because there are no orders to fill. When manufacturers do not make goods, they don’t order raw materials for manufacturing.

When there are no orders for raw materials, commodities sellers do not sell raw materials. When no raw materials are sold, there is no shipping by large cargo ships, (or railroads or tractor trailers) to move anything.

Put simply, the global economy is LITERALLY stopping. Right now. Today.

How things go from this point forward is simple: Without sales, retailers are not even “turning dollars” so they will have to layoff employees and close stores. Without orders, manufacturers will have to layoff employees and shut down. When manufacturing shuts down, suppliers of commodities will have to layoff employees and cease operations. As all of this economic activity comes to a halt, then the disaster REALLY takes off:

When businesses are not even “turning dollars” they cannot pay back their loans. Retailers, manufacturers and commodities suppliers will begin defaulting on bank loans within 30 days. When enough of them default, it begins taking-out banks. As banks begin to fail, others will run to their banks to withdraw money for fear THEIR bank will fail too; and therein starts “bank runs.”

In the meantime, stock values plummet and people’s life savings in retirement accounts, 401-k’s, IRA’s and the like, get wiped out of existence.

We are literally standing at the edge of an abyss. It appears we are about to go over that cliff . . .

#64 Ray Skunk on 01.10.16 at 2:26 pm

#37

You have to be very careful what the Telegraph says anyway as it is a left wing paper and represents the Labour party agenda.

Umm, I think you may have gotten mixed up. The Telegraph – aka the Torygraph – represents the Conservative agenda.

The Guardian is the paper of which you speak that represents the left.

#65 BG on 01.10.16 at 2:31 pm

Milton, Vaughan or Durham are a bit remote.

Honestly I don’t see how any decent single family house close enough to downtown Toronto (or Vancouver) could be at risk of a significant correction.

#66 Paul on 01.10.16 at 2:36 pm

Does it really matter the the powers that be are lending to anyone with a heart beat houses,cars,trips, reno’s boats, cottages. you name it sign here and you are in.

#67 Nanaimo Bar on 01.10.16 at 2:38 pm

# 41 Van Real

Garth. Just how many years have you been saying that housing prices will fall? At least 8 years by my count. At one point you did call for a crash. Now you’re saying it will be a gradual decline. Yet still nothing. Hmmm. You’re beginning to lose credibility.

——————————————————————-

But you probably took his advise on buying USD. Please don’t tell me that you have all your money sitting in Real Estate. You are missing out on a glorious opportunity.

#68 jane 24 on 01.10.16 at 2:39 pm

Opps sorry – too much Sunday evening wine. Telegraph is right wing and Guardian is left wing!! If you want centre politics then read the Times.

Off to watch the new BBC costume drama – War and Peace on the telly. Great film shots and costumes but already terribly confused by all the Russian named characters.

#69 Michael King on 01.10.16 at 2:46 pm

Reporting from Vancouver (Kitsilano). Something is up with the high end of the market. These three properties are on a regular walking route and I’ve been looking at their “For Sale” signs for months. They are in one of the most desirable locations in Canada. Two of them are directly on English Bay. No billionaires left to scoop them up in Canadian pesos?

http://www.rew.ca/properties/R2011935/1650-waterloo-street-vancouver

http://www.rew.ca/properties/V1141657/3293-point-grey-road-vancouver

http://www.rew.ca/properties/R2020148/3537-point-grey-road-vancouver?property_search=356872621

#70 Steve on 01.10.16 at 2:47 pm

We keep seeing this thing about “no crash,” but a “correction” and then some ambiguous melting for a little while. Then people like me keep on posting that the amount of price increase we’ve had in even the last 2 years equals any “modest correction” that we’ve been talking about for 8 years. I was a younger, different person when I started deciding not to buy a house.

So, why doesn’t someone show me a chart of the real house prices in Toronto (for example–I live there) extrapolated according to this “modest correction” projection. Then we can draw a relatively flat line and see what year it stopped making sense to buy (and no arguments about % growth vs. the stock market, because of the obvious leverage advantage; also no arguments about paying realtors commission or the land transfer tax since at present you’ve still got to pay those no matter when you buy).

Do I agree that housing prices *ought* to have gone down much earlier according to any rational analysis? Yeah. That’s why I’m sitting here reading this blog. Am I going to feel vindicated by a “modest correction,” and will that justify not having bought many years ago? Not remotely. We all mis-saw the way this would turn out. Period.

But it’ll justify not buying this year. So let’s keep on truckin’.

#71 Hirsute Hipster, head down, texting.... on 01.10.16 at 2:51 pm

Hiya Garth!

Dude, do me a solid, will ya? I hear yesterday’s post was a good one, but I was busy updating my Instagram account and got waylaid by an epic game of Candy Crush, so couldn’t read it.

So, be a bro’ and delete today’s post for a while, and put the other one back up. And hurry, I am super busy multitasking today! A dude’s only got two thumbs, eh!!

#72 fancy_pants on 01.10.16 at 2:55 pm

maybe the central bank should change their home page motto. it reads: “We are Canada’s central bank. We work to preserve the value of money by keeping inflation low and stable.”

that simply is not true or they would not be entertaining lower rates while our purchasing power gets creamed.

#73 Millennial falcon on 01.10.16 at 3:00 pm

Feel better?

NO

#74 Chris on 01.10.16 at 3:30 pm

This is probably off topic. But with housing and everything I see a declining demand for excellence in Canada. Canada is a democracy and democracy cannot work without an active citizenry. We will only get the cons and not the proa of democracy if our citizeney is sleep at the wheel. We need to demand more transparency in government, tax dollar spending, better and more efficient public service, more transparency in housing data. The only ones not sleep at the wheel are the unions. Most of them are for taxpayer paid service workers. So guess in which direction the power is going to shift. I’d like to see a more active and demanding citizenry but I guess they are too busy buying houses and getting into debt.

#75 Cici on 01.10.16 at 3:37 pm

#37 jane 24

“It is illegal in this country for green fields to be built on. Every village, town, city has a parish/town line after which all is green belt. You cannot build a pig pen on green belt.”
____________________________________________

So you think…but that can change fast.

In my city, a huge slab of prime agricultural/greenbelt land was recently handed over to developers and will soon be converted into yet another condo wasteland. This land (which has been cultivated for over a hundred years) will never again be arable, let alone suitable for high-yield food crop production.

#76 Julie K. on 01.10.16 at 3:39 pm

Yesterday it was all about the cauliflower. Today it is Uni…er…doomicorns.

With all this light-weight fun, can’t help but notice the titles of Garth’s Recent Postings:

DOOMICORNS live in a place called VEGGIE NATION.

To achieve PERSPECCTIVE on ONE OF THOSE DAYS in the life, read the TALE OF TWO CITIES. No, it is not a just another useless, FLACCID story about THE KIDS. Thankfully, the author, EL PREDICITO asserts we should all HANG IN THERE as the GRAVITY of the BIG THINGS we face TOGETHER are rapidly COMING TO AN END.

Like the fools before them, it is ALL THEY WANT.

As always, BLESSEDLY yours.

#77 Vancouver Troy on 01.10.16 at 3:42 pm

#45 Bram Stolk on 01.10.16 at 12:40 pm

Ok, so sitting tight. Thanks Bram.

#78 JSS on 01.10.16 at 3:46 pm

Are we done with the cauliflower discussion, or can we still bring it up?

#79 Freedom First on 01.10.16 at 3:49 pm

Canadian debt levels are bigger than the U.S. debt levels before the U.S. housing market tumbled and the ensuing GFC rocked the economy. Canadians learned nothing.

A smart man will learn from his own mistakes. A wise man will also learn from the mistakes of others.

Meanwhile, in Canada, the cattle have been herded into a massive million plus sized herd and is now stampeding towards the edge of the cliff. Now, of course, we know that all of the herd will not go off of the cliff, that would be deviant doomer thinking, but we do know that many will be going over the edge. The edge has seen a few of the herd go over already as a matter of fact. Witness Alberta. And it has only just begun. The part of the herd in Vancouver and TO can’t see the edge…….yet.

That being said, if you can stay calm, while you see euphoria, greed, fear, and panic all around you, you’re doing it right.

#80 Bram on 01.10.16 at 3:50 pm

#68 Michael King on 01.10.16 at 2:46 pm
No billionaires left to scoop them up in Canadian pesos?

Two of those seem to be building sites.
The billionaires don’t have, nor require, the patience to deal with the City bureaucrats processing the permits.

You can read about the horrors of dealing with them, here: http://buildinginvancouver.com

I would think twice before embarking on a building project in Vancouver: maybe there is a tree on the lot that you cannot remove, or maybe the plan’s approval is delayed by a year.

I would just build my lair in a citizen-friendlier municipality.

Bram

#81 Sheane Wallace on 01.10.16 at 4:01 pm

http://www.msn.com/en-ca/money/topstories/why-the-loonie-will-remain-weak-and-what-to-do-about-it/ar-CClgV1?li=AAggNb9&ocid=mailsignoutmd

#82 Sheane Wallace on 01.10.16 at 4:07 pm

No crash coming. No 50% or 80% drop.

There is no question that properties are 50% or 80% overvalued based on true market conditions.

Poloz (who lacks any intelligence or integrity) will kill the loonie to make them ‘affordable’ which will inflict horrific pain to the consumers, specially the savers and retirees.

There is no floor for the loonie if they reduce rates further.

In real value (in terms of purchasign power – in USD, Euro, Swiss frank, GBP) Canadian houses will loose the 50-80 % from the top, there is no question about it.

In Canadian pesos?

Who frankly cares?

#83 For those about to flop... on 01.10.16 at 4:08 pm

Bernie Madoff…still in jail.
El Chapo…back in jail.
Seattle Seahawks …just got out of jail!

M41BC

#84 Sheane Wallace on 01.10.16 at 4:08 pm

loonie will go down far beyond the high or even low sixties (0.6). 0.35-0.45 is my bottom.

#85 Freedom First on 01.10.16 at 4:10 pm

75 Julie K

Clever. :)

#86 Jane Sampson on 01.10.16 at 4:14 pm

I know people don’t want to hear this but I would not be surprised that Canada will be a second and possibly third world country in 10 years or less.

#87 Scumop on 01.10.16 at 4:22 pm

“The developer says it will offer units for 8% ‘below market value’ which CMHC agrees will constitute a phantom down payment. ”

The jaded me wonders who in CMHC got the brown envelope for declaring a made-up number to be a down payment.

But on second reading, CMHC declared it a “phantom” downpayment, that is, not a real down payment.
So buyer signs on, goes for CMHC. CMHC tells buyer to gtfo and come back with real money.
Since buyer will feel he/she already bought it, they cough the money (perhaps from mom).

In that case, truth in advertising with a side of deception. I hope.

#88 Mark on 01.10.16 at 4:35 pm

Finally drove into the City yesterday to watch The Big Short. An incredibly bland movie that nearly put my guest to sleep (poor her!), but a lesson that those who pursue extreme bets in the financial markets often can often drive themselves to near insanity, if not lose their positioning altogether, before the postulated set of circumstances appears. And that is, if the counterparties themselves aren’t bankrupted by the whole thing, which is exactly the problem not initially anticipated by the hedgies in question.

While Canada does not have the extensive behind-the-scenes game-man-ship of credit default swaps being traded on subprime MBS (subprime loans, aptly called “shit” in the movie, is largely something that’s been taken up by the CMHC in the Canadian context, CMHC being a sovereign guarantor, an arm of the GoC), one has to wonder if some of the recent CAD$ weakness and TSX underperformance over the past few years has been the funds trying to position themselves for a repeat of the same. After all, the Canadian economy really isn’t doing all that bad (heck, we’re not even officially in recession), and to have the currency fall off a cliff so bad and so rapidly really speaks to excesses in speculation, not fundamentals.

The movie was also a good lesson in how far the industry will go to protect itself, and its demented interpretation of reality. Lots of parallels these days in Canada, with manipulated RE datasets, selective release of information, a refusal to acknowledge that we’re entering a 3rd year of RE price declines across Canada (took the USA about 3 years till their freak-out occurred!), and mortgage bond spreads that are rapidly blowing wider despite the incredulous (but debunkable) claims that RE is still rising in price in Toronto/Vancouver.

Anyone else think the same way?

I’m really surprised that more isn’t being said about the effects of the low dollar.

The CAD$ has only lost 1.4% YoY, so what really is there to say? Garth and others have pointed out on too many occasions to count that foreign buyers are such a statistically insignificant part of the transactional mix that currency fluctuations are not all that meaningful. Not sure why there’s been such an effort amongst blog commenters to rationalize Canadian prices in terms of foreign currencies that are rarely used to transact in Canadian RE.

#89 Nagraj on 01.10.16 at 4:43 pm

about that MEANDERING MILLENIAL in “Doomicorns”

Meandering, like serious boredom, is the consequence of subconscious conflicts sapping the conscious life of energy and direction: thus C.G. Jung.

GT has got it quite right when he suggests that you’ll escape the speeding cement truck (which is a feint, a ruse) – only to get pushed into traffic the next minute by a meandering millenial on a bicycle. (“Life is what happens when you’re not looking.”)

Because the meandering millenial isn’t conscious of any itinerary doesn’t mean there ain’t one: the seeming aimlessness covers up an unrecognized agenda.

Meander was a river god whose parents were Oceanus and Thetys, he himself sired a passel of brats – and his meandering had all sorts of purposes; at one point he got dragged into court for messing with jurisdictional boundaries.

Beware of meanderers, bored and listless people, the aimless young, people resigned to the rut they’re in, people comfortable with their confusions, seemingly happy with just “Five Easy Pieces”. They can’t know what’s driving them. (Into an accident with you.)

[The other line that got my attention was “we live in an age of extremes” – but Millenial Meander is an easier topic.]

[Which reminds me of our gracious host’s use of Nimrod some time ago. Ya don’t suppose our gracious host is somehow particularly (and unconsciously) susceptible to mythological stuff –
happens to clear-headed rational types. ]

#90 Alberta Ed on 01.10.16 at 4:43 pm

Anyone who goes to the CBC for investment advice (or hard news, for that matter) deserves everything they get.

#91 JimH on 01.10.16 at 4:52 pm

Great post once again, Garth! Thanks!

“Hey, all good points. But the Fool then goes on to tell you to short (Canadian) bank stocks, which is dumb (and self-serving).”

“Contrary to what the CBC says, I’ve not been calling for Toronto (or Van) real estate to ‘crash.’”

First off, if ‘the Fool’ is actually advocating shorting Canadian banks at this point, it would not just be dumb; it would be totally irresponsible advice. Shorting any stock that is already at 52 week lows has a risk/reward potential similar to Hillary Clinton waltzing into an NRA convention.

As for RE “crashes”, it seems that many Canadians still love to refer to the decline in American RE valuations as the Great American Housing “Crash”.

Perhaps a drop in valuations that occurred from 2006 through 2013-2014, a seven to eight year long painful decline, might impress some folks as a “crash”.

It felt much more like ‘death by a thousand cuts’ as we were going through it! Many a vulture got its tail-feathers burned off by jumping in after declaring false housing bottoms in 2010, 2011, 2012 and even 2013.

#92 JimH on 01.10.16 at 4:59 pm

#51 BS on 01.10.16 at 1:16 pm
reply to Mark on 01.09.16 at 4:06 pm
“Mark,what is your prediction for RE in Vancouver,year 2020 ?”

“…If the PM sector starts to do very well, it probably will mean significantly rising interest rates for the housing speculators, as credit will be in significant demand to speculate in the PM stocks.”
=================================

Mark: did you really say that???? Really?
Seriously?

#93 For those about to flop... on 01.10.16 at 5:03 pm

Two shoutouts…
Boomer WI ,I hope your Packers do you proud.

Bobs ur uncle ,I’m looking forward to Ricky Gervais tonight doing the Golden Globes…could get messy!

M41BC

#94 A box in the Sky on 01.10.16 at 5:06 pm

#54 Scott in Gibsons on 01.10.16 at 1:34 pm

Most of us “Doomers” have a few basic beliefs. The existing global economic system is unsustainable because it relies on exponentially increasing debt issuance. At some point this becomes mathematically impossible and the system makes a painful adjustment. If I understand Garth’s position correctly, he believes we are operating within normal parameters and things will adjust and correct in a manageable way. We may be at a point in time where we see which view is closer to the truth. So far we have to concede that the Doomers were correct to say that QE could not end without severe consequences. (collapsing commodity prices/hits to commodity producing country currencies and economies) If we see a wave of debt defaults and resulting strain on the financial system in 2016, we will have one more confirmation that the Doomers were right. Garth likes to paint Doomers as extremists by pointing out some of the more unlikely claims made by some of us. He’s almost certainly right that these extreme claims will not come true. For me the debate boils down to this; can the global economy grow its way out of the debt it has created over the last few decades? Doomers say no, Garth says yes. It look like we are beginning to see the answer.

————————————-

You are a nutjob. This just in – commodities are cyclical, they go up and they go down as a function of supply and demand.

To say the doomers have been proven “right” already is just pure idiocy.

#95 Love my Kia on 01.10.16 at 5:07 pm

Should I weed out ‘After the Crash’ from the library collection?

The ‘crash’ referred to the 2008 stock market event. Obviously you didn’t read it, so toss it. — Garth

#96 Linda on 01.10.16 at 5:13 pm

Regarding a housing correction/drop/lost equity etc – this may or may not be an issue. If you don’t own a house, no issue. If you do own a house outright but don’t have any ‘need’ to sell it to finance your retirement or pay for your living expenses, no issue. If you are mortgaged, maybe a big issue. It depends on what your personal financial situation might be. Lots of equity, no other debt, still gainfully employed or have income coming in somehow, not really an issue. High debt levels, unemployed, have to sell in order to finance your lifestyle or pay for retirement, big issue – unless you can offload that sucker for at least what you paid & slide out from under that heavy debt thereby.

The human population of the world is aging. That is going to affect how markets react if Japan is any example. So the issue is going to be how long it takes for markets, including housing values, to recover from even a gentle ‘correction’ in housing values. I don’t see any way out from demographics. Even if a plague came along & finished off everyone aged 60 plus world wide, still not going to fix the oversupply/plunging demand issues……

#97 crowdedelevatorfartz on 01.10.16 at 5:16 pm

@#79 Bram
The link you provided might explain why there are so many vacant houses in the city of Van.
Unbelievably beaurocratic and zero accountability.
Not the first time a govt worker used their “power” to make a person jump through endless hoops with no end in site. 12-24months to finalize plans, demolition, landscaping, building permits before starting.
Severance all the slackards off. Good riddance.
Send all those overpaid jobs in the Permit, Planning, By-Law depts to India for faster , better service.

#98 crowdedelevatorfartz on 01.10.16 at 5:18 pm

@#87 Mark
“Finally drove into the City yesterday to watch The Big Short. An incredibly bland movie that nearly put my guest to sleep (poor her!)
+++++++++++++++++++++++++++++++++++

Did your Mom have to pay for her popcorn?

#99 Black and White Cat Black and White Cake on 01.10.16 at 5:24 pm

As I mentioned earlier, it depends on where you sit in the theatre, and how long you’ve been watching. Try as we may, financial decisions and human psychology cannot be completely isolated from one another. This is particularly the case when we encounter facts and analysis which run counter to our recent financial decisions, such as purchasing a new home.
The last thing anyone in this position wants to hear, is that many variables can and may reduce the value of one’s purchase. This is why it is so crucial to examine history before making the decision to purchase. A few of these precedents include, of course, the recent history of interest rates, currency values, economic growth, unemployment, consumer confidence, and household debt. Oh, and if the neighbours seem nice.

#100 Why Why Jay on 01.10.16 at 5:37 pm

#49 D.D. Corkum on 01.10.16 at 1:01 pm

“CMHC is guilty of violating a most basic concept of capitalism: something is worth what it actually sells for.”

———-

Exactly. The “fair” market value of a property is closing price except in a few circumstances (e.g. sale to family member which is at an obviously favourable price).

These prices don’t seem particularly favourable. The remind me of the tourist trap shops that continuously have 50% off sales (where they sell $5 t-shirt for $10 that are priced at $20).

The buyer has no skin in the game. They aren’t risking any capital or even any collateral.

Next up the particle board mini houses on postage size lots will pulling these stunts. They very nearly 3d print the things, they go up so fast (and the hurried hardi falls off just as fast). Bah. Monkeys like shiny things.

#101 Aggregator on 01.10.16 at 5:41 pm

The B.C. government's affordable housing conundrum

De Jong was taking a cab from the Vancouver International Airport when he struck up a conversation with the driver. After they exchange pleasantries the driver says: "You've got to do something about housing prices."

The driver says his kids want to live in South Vancouver, but they can't afford it. To which De Jong responds: "Well, where do you live?"

"Vancouver," the driver answers.

"So basically," De Jong says. "You'd like the government to do something to reduce the value of your home?"

It should be clear by now that the government isn't going to tinker with this market, and if you're wondering why, have a look at this pie chart showing how construction and the FIRE industry (debt financing) now account for more then 1/3 of BC's GDP, which is exactly why BC's average home price has soared to 11 times GDP per capita, one of the highest in the world.

To act now is political suicide.

#102 Entrepreneur on 01.10.16 at 5:41 pm

I think each nation has forgotten it’s own people and how important they are to the economy; it is like building a strong/weak foundation before building up. If the leader does not support or defend the people of a province/country than there is no strength; it all crumbles down to the mean/people. But, with a proper leader that strengthens/protect their people that creates a solid foundation, and can safely, build up.

Have our leaders forgotten their people? You bet they have! Their are many examples and you just have to look at BC politics or stick your head in the sand. Is that why about half the people don’t vote? People only have a short window to carry on, and if don’t, what is the point.

#103 Matthew Good on 01.10.16 at 5:46 pm

With the markets taking a beating lately, is the time right to take out a HELOC to invest in dividend payers?

#104 Market Man on 01.10.16 at 5:51 pm

The catalyst will be
Job losses and high debt will force
Homeowners to sell quicker
During the 90s higher interest rates forced many to sell
This debt load will force people to sell

#105 economictsunami on 01.10.16 at 5:52 pm

If only we’d taken our medicine post 2008, and as in the past, slowed debt accumulation and used low rates as an opportunity to pay down debt. That’s responsible.

Neither our government nor the BoC encouraged this. They offered us larger shovels and we just dug the debt pit that much deeper. That’s risky.

There is a reason they call it the wealth ‘effect’…

Saeid Fard: Canada forgot to plan for its future by leaning on oil and the loonie

“Housing is the only thing keeping the Canadian economy afloat. Unfortunately, as the United States saw in 2008, an over reliance on the housing sector can be a recipe for disaster. Pundits can bicker over the differences between the U.S. and Canadian housing booms or whether we are indeed experiencing a bubble, but one simple parallel points to a startling problem: We are building a lot more houses than we really need. From 2006 to 2011, Canada’s population grew by 3 per cent while housing stock grew by 7.1 per cent (Canada Mortgage and Housing Corp. housing stock surveys are compiled every five years, so we should have updated numbers this year). According to Statistics Canada, household sizes stayed steady over that period, so additional production was likely not purchased domestically.”

http://www.theglobeandmail.com/report-on-business/rob-commentary/canada-forgot-to-plan-for-its-future-by-leaning-on-oil-and-the-loonie/article28083772/

#106 Apocalypse2016 on 01.10.16 at 6:02 pm

#62 Brandy

Strange as it sounds, you are correct. Cargo shipping between Europe and North America has come to a historic stop.

You can see the same thing in malls this week. Almost empty.

I know of several couples right now struggling to get their HELOCS down as the bank is about to lower the valuation on their homes.

Catastrophe is coming.

Here’s news on the complete stoppage in shipping:

https://www.superstation95.com/index.php/world/750

#107 nonplused on 01.10.16 at 6:14 pm

That add for “The Strand” should get somebody put up on charges. You can’t say the market value of something is $280,000 and then sell it for $257,000. The market price of something is what people will pay for it, so if the price people will pay is $257,000 then that is the market price. It wouldn’t probably even be that high without the “free” down payment.

It reminds me of a very early work experience I had in a retail store. My job was to put together floor models and fetch product from the store room. But I did get to observe the owner pricing merchandise a few times. The price tags all said “Compare at:” and then below “Our price:”. He’s set “Our price:” basically at what he paid times 2 and then rounded, but for the “Compare at:” price he’d literally make it up! Was this false advertising? I don’t know maybe other shops were asking that much, and he never said “Market value:” only “Compare at:”. “Our price:” was pretty clear. Anyway it was a good job for a kid barely out of diapers. And he wasn’t using the difference between “Compare at:” and “Our price:” to enable financing. And for I all know he may have had a good idea what his competition was listing at. The margins in retail at that time were pretty high for these sorts of goods. Anyway my point would be there is something wrong if you are using these tricks to arrange financing.

Another example, when I bought my truck the MSRP was $72,000 but hello! The Diesel upgrade was free plus other incentive meant I could have one for but $60,000. Could they list the $12,000 as a down payment? No, they could not. At the time $60,000 was what they could get and that was the market price, or they wouldn’t be selling them for that. And anyway by the time I got back from the test drive it had 100 km on it so it was only worth $50,000.

#108 Mark on 01.10.16 at 6:20 pm

“Mark: did you really say that???? Really?
Seriously?”

Yes I said that. Credit-driven speculation in one sector of the economy (ie: RE, for example, but could also be other sectors), usually ends up increasing the cost of credit to other sectors of the economy.

The result is that owners of leveraged assets which have not participated in the bubble of the time, end up suffering. Not because they’re intrinsically a bad set of assets, but only because they’re out of favour.

The thing to keep in mind with the valuations of sectors is that they’re cyclical. Today RE is very much in favour, and other stuff is out of favour. At some point, the disfavoured stuff will come back into favour, and RE will go out of favour. This is why contrarian investors can (and usually do) make a lot of money, and the balanced portfolio, implemented correctly, can provide relative stability under a whole plethora of market conditions.

#109 HellYeah on 01.10.16 at 6:22 pm

Actually, Crawley didn’t say “GTA,” he said “Toronto,” which sure as heck (to someone who lives in Toronto) doesn’t include Vaughan, Durham or Milton. Which is an important distinction. Vaughan, Durham and Milton are all more-or-less interchangable; Toronto not so much. And that in my opinion (and I guess his) will be reflected in the demand for 416 houses vs 905 houses.

#110 Drayton on 01.10.16 at 6:24 pm

Our local municipal (Township of Mapleton) wants to raise the taxes by 5.75%. Mortgages and taxes are out of control. Now municipalities are using the water rates as revenue source! Thinking of leaving Ontario. The sad part the tax pain will get worse with current governments.

#111 Mark on 01.10.16 at 6:26 pm

” According to Statistics Canada, household sizes stayed steady over that period, so additional production was likely not purchased domestically”

Pretty sad, the Globe and Mail fomenting the whole ‘foreign ownership’ idea. If those numbers are true, it could also point to a per capita increase in consumption of housing stock (ie: single people buying 2-bedroom condos instead of 1-bedroom condos). It could also point to families buying more than one house (ie: more vacation or second homes), especially since we have seen a substantial amount of temporary interprovincial migration (ie: Newfoundlanders and Ontarians temporarily living in Fort McMurray, for instance!).

A very weak and overly simplistic analysis, IMHO. Coming to a conclusion which just isn’t supported by the lack of evidence pointing to foreign ownership.

#112 April. on 01.10.16 at 6:28 pm

Although I think your political position is misguided, I never feel that you are promoting information that will profit you personally; therefore, whenever I feel the tender yearnings for particle board and granite, I come to you to be reminded that the people I envy, who have all the toys I do not, are doing it on thin thin debt-riddled ice, and I go back to my subject-any-moment-to-renoviction rental and continue to stuff my money into my TFSA, and paddle sadly in the beginners’ pool of the investment ocean. Thanks. :)

#113 joblo on 01.10.16 at 6:32 pm

87 Mark on 01.10.16 at 4:35 pm

“Finally drove into the City yesterday to watch The Big Short. An incredibly bland movie that nearly put my guest to sleep ” blah blah blah as usual!

Saw it yesterday too and not like cauliflower, not bland etc.
but rather good, so as Margo Robbie (so hot!)says now f… off

https://youtu.be/d80xVJC4pso

#114 Paul on 01.10.16 at 6:34 pm

#33 Harbour on 01.10.16 at 12:04 pm

POWERBALL 1.2B CANADIAN

Your odds are better sticking your hand into a barrel of sand and withdrawing the right kernel
————————————————————-
Well you never know!
https://www.youtube.com/watch?v=zMRrNY0pxfM

#115 tom jones on 01.10.16 at 6:39 pm

Garth – what do you feel provides that kind of support to housing in Canada? Why do you feel there wouldn’t be a full crash?

#116 Greyhelm on 01.10.16 at 6:41 pm

My earlier post appears to have been ignored. A DELETED with an explanation would have been preferable. Was it because I noted that our conservative, low cost, mutual fund portfolio gained 6.6% in 2015, probably beating most balanced ETF portfolios? Was it because I mentioned the name of a particularly good mutual fund? (Although individual ETFs are mentioned by name all the time.)

Just would like to know Garth.

You confirm why I had reservations. Mentioning individual securities in context is allowed. Advertisements are not. — Garth

#117 For those about to flop... on 01.10.16 at 6:43 pm

When I want to know about the world economy a British tabloid seems like the way to go…

http://www.dailystar.co.uk/news/latest-news/486598/Global-financial-meltdown-2016-stock-market-crash-US-China-Britain-UK

M41BC

#118 Retired Boomer WI on 01.10.16 at 6:43 pm

#92 Flop

Hey, thanks on the good wishes for the Pack! See the Vikings lost by the last bad field goal (think Buffalo’s Super Bowl missed field goal!)…

Still anybody’s game 17/11…

#119 Robert on 01.10.16 at 6:54 pm

With only 21% of the stocks on the NYSE over their 200 day moving average I have to wonder about the Financial Community who laugh at the mention of a Bear Market. Well just last week a Trillion Dollars went up in smoke! The buy dividend mantra is proving to be a disaster just as the preferred market and now its the diversified mantra they are promoting. Each of these mantras ended with the same words, “don’t worry”. Last February to March dividend chasers were buying Potash at $45 a share in order to capture a 4.2% dividend yield. Fast forward 9 months, and that 1000 share purchase of $45,000 is worth $22,900. Over 9 months the holder has collected just over $1400 in dividends. This holder better start worrying! With a 9.5% dividend as of Friday the red flags are blowing in the wind. Two reports this weekend are strongly suggesting that POT will slash its dividend by up to 75%. If this comes to pass the holder of these shares is in a disaster zone. His adviser will no doubt suggest he is not losing until he sells. hmmm.. Drives me crazy to hear the experts say don’t worry and in Garths’ case he says oh don’t worry, no bear market but you better dump that home cause he believes the bubble will burst. With a trillion dollars lost over the last week, you have to understand if you are in the market you have contributed to this loss of value. Finally if real estate values enter a sharp corrective trend how will this impact the stock market?

Why would anyone buy Potash? — Garth

#120 Brazil ex-pat on 01.10.16 at 6:59 pm

Speaking of Doomicorns I just watched the Big Short. Nothing has changed. Good luck everyone.

#121 waiting on the westcoast on 01.10.16 at 7:01 pm

For a second, I thought this was going to be a Transformer movie… Doomicons… ;-)

Here is my interpretation (IN BOLD) of what Mark says…

“The movie was also a good lesson in how far the industry will go to protect itself, and its demented interpretation of reality. Lots of parallels these days WITH MARK’S COMMENTS, with manipulated datasets, selective release of information, a refusal to acknowledge that we’re entering a 3rd year of RE price INCREASES across Canada (took the USA about 3 years till their freak-out occurred! – TRUE BUT THEIR MARKET ONLY PIQUED IN 2006 AND BEGAN TO DROP IN LATE 2007), and mortgage bond spreads that are rapidly blowing wider despite the TRUTH (but debunkable) claims that RE is still rising in price in Toronto/Vancouver. Anyone else think the same way?”

Mark – I am a big believer in free speech but not stupid speech. Your points have been debunked here many times. Like your quote above, merely saying the same thing over and over does not make it correct. I think house values in YVR and GTA are overvalued but that doesn’t change the fact that they have been going up (hopefully it is now over as well). Same for your USDCAD calls, gold, etc.

I think Trollstoy is mean but correct!

#122 For those about to flop... on 01.10.16 at 7:23 pm

Mark ,you did not exactly cover yourself in glory the first week or so of 2016.
I won’t do a Leo Toiletspray on you but I’ll give you a couple of reminders ..
P.M sector gonna effect Van r.e…yada ,yada
Engineers are the heartbeat of the economy..yada ,yada.

Some people called for your banning ,one lost soul stuck up for you ,fair enough they are entitled to their opinion.

Occasionally you make a solid point or two but then follow it up with 98 points of idiocy, which lessens your credibility going forward.

It’s going to be a long year for you if you keep going down this road ,if I were you I would pick and choose my battles instead of fighting everyone on every front.

You appear to me to be book smart ,real world dumb but have thick skin and I like how you to stay respectful ,but most of the time you are arguing a persona / shapeshifter so I would recommend going forward that you simply not respond to L.T.
You still have lots of other people that will argue a topic with you so that will keep you busy.
You are a persistent s.o.b if nothing else…
Good luck son ,your gonna need it!

M41BC

#123 lee on 01.10.16 at 7:24 pm

Correctional workers in ontario just lost right to strike which means all wage issues will go to arbitration. I think they have a rough scary job ID never want to do but this will cost Ontario another $100,000,000 a year.

#124 Not tonight honey on 01.10.16 at 7:25 pm

#27 WallOfWorry on 01.10.16 at 11:50 am
If there is increased volatility due to overall higher debt levels, slower global growth etc a balanced and diversified approach is the most sound strategy. Why this blog decides to polarize the views is beyond me: rent instead of buy and own American equities because they are doing so great?

A much more sound strategy would look at the factors that is driving the volatility and exploring risk mitigation strategies such:
– high debt levels and money printing = owning a percentage of hard assets (including gold), TELCO’s,
– scarcity of resources – investing in food and water based stocks etc
– high level of wealth that is now retiring – invest in bio-technology as people will be able to buy solutions that can extend their life etc…..

================================

Thanks WallOfWorry,

I appreciate your post, thank you. I’m a complete newbie to the financial investing world but eager to learn & keen to Understand ALL sides of the coin ;-)

Could you kindly point me to some resources that speak to your thoughts with respect to ‘mitigation strategies’/ hard assets/food & water/ biotech?
Thanks in advance & thanks again for sharing!
Regards,
NTH
Ps. In my mature yrs I have come to the conclusion that it must be in our human nature/DNA to be divisive and think/argue in black or white terms. That flight Or flight positioning may have served us well when being chased by tigers and lions and bears (oh my) but it seems oft unhelpful in modern life. I work very hard to teach my preschoolers to think flexibly and behave resiliently…. Sorry, TMI ;-) but now you know where I’m coming from as I tackle learning to manage our portfolios. Cheers!!

#125 Sebee on 01.10.16 at 7:31 pm

8%, eh?

I forget from reading all those surveys, but how many are living paycheque to paycheque? And how many don’t have any savings for an emergency? And how many aren’t stressed already?

Are we going to let the Americans out do us? 8%? Come on, let’s go for 11%!

#126 Daisy Mae on 01.10.16 at 7:38 pm

#12: “But I thought you said HAM is NOT contributing in any significant way to Vancouver’s astronomically high house prices.”

******************

Have you been reading the news?

#127 Conspiratard on 01.10.16 at 7:42 pm

WE ARE DOOMED!

Tonight on the Golden Globes, host Ricky Gervais will deeply offend Kim Jong-un, Donald Trump, Vladimir Putin and the state of Israel.

Nuclear triggers will be fired before sunrise tomorrow.

Only Sean Penn and Stephen Harper will be safe. They know the best places to hide out.

Building 7 will re-appear at midnight. I’ll be there in the basement.

Whatever you do, do NOT use fluoridated toothpaste tonight!!!!!!!!

#128 Mike on 01.10.16 at 7:48 pm

I lived in the US and owned a home before, during and after the bust. One thing to keep in mind, if you believe our bubble is about to burst; banks in the US at the time, cancelled Home Equity Lines of Credit. So, if you count on this money, believe in a bubble that is about to burst; you might want to take all the HELOC money while you can. I don’t believe in a crash, maybe a 10 – 15% correction.

#129 Ben Linamex on 01.10.16 at 7:49 pm

Garth or Mark, How is credit made? Why don’t they just supplant the worldwide Companies with more credit and kick the can really far down the road? And how does credit dry up..or anyone else..a few tips would be great!

#130 Mark on 01.10.16 at 7:55 pm

“Occasionally you make a solid point or two but then follow it up with 98 points of idiocy, which lessens your credibility going forward.”

Ordinarily I’d worry about people like you not finding me credible. But then I actually read what you wrote, and noticed it wasn’t strung together with anything resembling proper grammar.

Like or hate me. Think I’m wrong or right. People do take me seriously because I at least bring a certain level of decorum to the table. For better or worse.

#131 JimH on 01.10.16 at 7:59 pm

#107 Mark on 01.10.16 at 6:20 pm
JimH: “Mark: did you really say that???? Really?
Seriously?”

Mark, in response: “Yes I said that. Credit-driven speculation in one sector of the economy (ie: RE, for example, but could also be other sectors), usually ends up increasing the cost of credit to other sectors of the economy.”
==================================
In well over 20 years as a speculator, trader and investor I have never, ever, witnessed overall, general interest rates being driven higher simply through speculation in any one sector. Not once.

Significant speculation on credit in financial markets is 99% of the time accomplished on margin borrowing; either in derivatives (usually options), through shorting, or through leveraged ETF bull/bear long positions.

That speculation in Precious Metals would drive up overall general interest rates is a fantasy of your overactive imagination. You have hopelessly confused correlation with causation!

Go! And sin no more!

#132 JimH on 01.10.16 at 8:03 pm

#129 Mark on 01.10.16 at 7:55 pm
in response to: “Occasionally you make a solid point or two but then follow it up with 98 points of idiocy, which lessens your credibility going forward.”

Mark’s reply: “Ordinarily I’d worry about people like you not finding me credible. But then I actually read what you wrote, and noticed it wasn’t strung together with anything resembling proper grammar.”
===================================
Childish, sophomoric and pedantic response, Mark!

Grammar? That’s it?

You should slink away in shame! What a juvenile response!

#133 Mark on 01.10.16 at 8:11 pm

“Garth or Mark, How is credit made? Why don’t they just supplant the worldwide Companies with more credit and kick the can really far down the road? And how does credit dry up..or anyone else..a few tips would be great!”

Credit is created when a borrower, and a saver get together. The borrower pledges something, whether it be property, or a promise, in exchange for the saver advancing some of his savings to the borrower. Typically they agree upon a rate of interest which reflects the probability of default, and the “time preference” of consumption. Most of the time, people prefer to consume in the present than in the future, hence, the rate of interest is usually positive.

If the currency is a fiat currency, the rate of interest agreed upon also reflects things like inflation. Heck, even credit denominated in commodities or precious metals include a rate of interest for the increasing or decreasing availability of that commodity/precious metal.

Its as simple as that.

#134 Nanaimo Bar on 01.10.16 at 8:13 pm

Should be an interesting month for Oil.

Tariq Zahir, who oversees $6 million as managing member of Tyche Capital Advisors LLC, told The Wall Street Journal the glut would likely intensify in the coming months. He pointed to new supplies from Iran flooding the market – a result of economic sanctions being lifted – as well as the tension between Tehran and Saudi Arabia that could lead to higher oil output as the two Middle Eastern nations try to undermine one another’s economy.

http://www.foxnews.com/politics/2016/01/08/saudi-iran-oil-war-could-flood-market-but-will-us-pay-price.html

#135 broader mind on 01.10.16 at 8:16 pm

I’m buying my next house for cash from Mr. Coleman just before the big price increase when our government opens up a canvas town in every metro-city.

#136 Longterm on 01.10.16 at 8:22 pm

74 Cici on 01.10.16 at 3:37 pm

#37 jane 24

“It is illegal in this country for green fields to be built on. Every village, town, city has a parish/town line after which all is green belt. You cannot build a pig pen on green belt.”
____________________________________________

So you think…but that can change fast.

In my city, a huge slab of prime agricultural/greenbelt land was recently handed over to developers and will soon be converted into yet another condo wasteland. This land (which has been cultivated for over a hundred years) will never again be arable, let alone suitable for high-yield food crop production.

******

Cici, not a chance in the UK. The greenbelt was created 69 years ago by the 1947 Town and Country Planning Act and the great conservative masses through to the National Trust and the RSPB [birder charity with millions of members] would have a fit. It’s a conundrum. Beautiful countryside devoid of our highway side rubbish development and sprawl. On the flipside the countryside, especially in the SE is so expensive if it has a house that it’s really the playground for rich horsey people. As it is you can buy acres of woods within an hour drive of London for tens of thousands but since you can’t build on it the land is essntially worthless. A tiny plot next door with a tear down would sell for hundreds of thousands or more. If it wasn’t for the right to roam on public right of ways that criss cross the entirely private land of the English countryside it would be a total museum of the rich only viewed from the road.

#137 common sense on 01.10.16 at 8:24 pm

I am truly blessed…

Lying on the couch, watching football, reading this blog and playing Forex on the side..up $120 in 3 hours realized profits just watching the trend and controlling risk…

Only in the free world…geez.

#138 Ronaldo on 01.10.16 at 8:25 pm

The following is in response to an email I sent to Irvin Leroux congratulating him on his successful 20 year fight against the CRA. This man lost everything he had as a result of an error on CRA’s part where they claimed he owed them a million dollars when in fact it turned out he owed them nothing. His loss he estimated to be 4 million dollars. Everything he had. This is absolutely disgraceful and no accountability on their part. This victory on Irvins part affects each and everyone of us and he asks that we spread the word as not many people are aware of this. Please spread the word.

”Jill and Irvin
Attachments3:53 PM (1 hour ago)

Much obliged Ron,
Yes, please spread the word – not everybody knows about this. Especially accountants and lawyers.
I am grateful and proud for the many supporters along the way – financial and otherwise. This victory goes to all of us together.
Thanks for the email.
Onward and upward,
Irvin”

http://globalnews.ca/news/2443608/b-c-man-pays-revenue-canada-10-after-19-year-battle/

#139 Mark on 01.10.16 at 8:29 pm

” Why don’t they just supplant the worldwide Companies with more credit and kick the can really far down the road? And how does credit dry up..or anyone else..a few tips would be great!”

Sorry, I didn’t answer the totality of the question in my previous post (although I did get started on it).

In a negative rate environment, the presumption is, the economy is in such bad shape that savers find very few prospects worthy of lending to. The “default premium” portion of the interest rate thus becomes quite significant. If central bankers force the interest rate to be abnormally low (ie: negative, for example), savers simply decide that they won’t lend as no lending prospects actually, adjusted for risk, meet their hypothetical “hurdle rate”.

Hence, deflation and strong inflation actually end up looking like pretty similar sets of circumstances — a loss of confidence in lending. In both deflation and significant inflation, default fears are significant in non-sovereign credit.

Because both inflation and deflation tend to be self-reinforcing, central banks are keen to avoid such scenarios. But every so often, historically, they find themselves backed into a corner unable to achieve the stability they desire. This often come to manifest itself as a symptom of systemic problems in the economy far beyond simply that of central bank mismanagement.

#140 hope & ruin on 01.10.16 at 8:29 pm

#87 Mark on 01.10.16 at 4:35 pm
Finally drove into the City yesterday to watch The Big Short. An incredibly bland movie that nearly put my guest to sleep (poor her!)
____________________________________

She was on a date with a guy who spends his evenings: arguing about the sales mix, IT sector, job visas, engineering job market, ospe studies, precious metal sector, etc, etc.

And you think the MOVIE put her to sleep? lol.

#141 Mark on 01.10.16 at 8:43 pm

“In well over 20 years as a speculator, trader and investor I have never, ever, witnessed overall, general interest rates being driven higher simply through speculation in any one sector. “

Think back to the late 1990s. Demand in the economy was being created overwhelmingly by the tech sector. Huge amounts of speculation, on credit. And yes, the cost of credit did rise, even though relatively few people actually were participants in the tech sector itself.

That’s the danger of being over-leveraged and thinking that the local economy will just bail you out. It might keep the price of one’s house collapsing, but the economic vibrance generated by such demand probably will increase one’s mortgage costs and thus sap equity. Quite damaging if one’s income or other assets don’t bear at least some correlation to the local economy.

I suggested a scenario yesterday which might prove to be quite damaging to rank-and-file Vancouver homeowners (generally heavily over-leveraged and without balanced portfolios) even if house prices don’t end up dropping as much as the doomers believe they will.

#142 For those about to flop... on 01.10.16 at 8:47 pm

#129 Mark on 01.10.16 at 7:55 pm
“Occasionally you make a solid point or two but then follow it up with 98 points of idiocy, which lessens your credibility going forward.”

Ordinarily I’d worry about people like you not finding me credible. But then I actually read what you wrote, and noticed it wasn’t strung together with anything resembling proper grammar.

Like or hate me. Think I’m wrong or right. People do take me seriously because I at least bring a certain level of decorum to the table. For better or worse.

/////////////////////////////////////////
You see? I try to have a proper conversation with you and you shit on my cauliflower!
The only person that takes you seriously is yourself.
I might not have the best grammar, but I know an idiot when I see one!
I don’t want to see you banned, I would prefer if you kept embarrassing yourself daily.
How do you like them apples?

M41BC

#143 WUL on 01.10.16 at 8:50 pm

While I try to avoid frostbite up here in the Athabasca oil sands region, I visit a Remax website in Cowtown to keep a finger on the pulse where my one asset (depreciating) is. One ‘hood I check out is Haysboro. Now you can buy a condo at Heritage and McLeod which features:

“…open concept urban-sheik designer living…”

Perhaps with the current state of the oil biz, urban-sheik might be better than Middle Eastern Chic.

http://www.remaxcentral.ab.ca/cgi-bin/re/listings.cgi?overlord=Details&featured=&@mlnum=C4041853&listingtype=res&realtor_mysqldb=redbcalgary

#144 TurnerNation on 01.10.16 at 8:51 pm

Kanada’s resembling a Cheech and Chong movie.
Garth’s not here man go away.

This January I’ll be smoking my TFSA all at once in case the fuzz come.

Black Monday anyone?

#145 TurnerNation on 01.10.16 at 8:53 pm

TFSA = T2’s tax free smoking account :-(
10K we hardly knew ya.

#146 Sydneysider on 01.10.16 at 8:54 pm

Garth, do you have any relatives in Australia?
http://www.theguardian.com/business/2016/jan/11/australia-bet-the-house-on-never-ending-chinese-growth-it-might-not-end-well

#147 Paul on 01.10.16 at 8:55 pm

#136 common sense on 01.10.16 at 8:24 pm

I am truly blessed…

Lying on the couch, watching football, reading this blog and playing Forex on the side..up $120 in 3 hours realized profits just watching the trend and controlling risk…

Only in the free world…geez.
———————————————————-

I am truly not blessed…

Lying on the couch, watching football, reading this blog and playing Forex on the side..down $120 in 3 hours trying realized profits just watching the trend and controlling risk…

Only in the free world…geez.
Every winner = one loser

#148 Smoking Man on 01.10.16 at 9:01 pm

USDCAD Hits 52 week high little while ago.

#149 Leo Trollstoy on 01.10.16 at 9:18 pm

TIL ‘decorum’ = ‘stupidity’

#150 Leo Trollstoy on 01.10.16 at 9:19 pm

And you think the MOVIE put her to sleep? lol.

Lol

#151 Retired Boomer WI on 01.10.16 at 9:20 pm

Garth,

While 8% of US homeowners became “distressed” we need to understand HOW, and WHY, and WHEN they became distressed.

It is no secret the longer the US real estate bubble expanded, the lower the ‘quality’ of the buyer became.

As sub-prime loans expanded, (sub-prime meaning anyone less than an 80/20% mortgage to value, whatever the cause i.e. borrowing 80% on a 1st mortgage 20% on a second mortgage, or a liar’s loan, Interest Only… borrowers with essentially ‘no skin’ in the game.

When that “teaser rate” maybe a 1 or 2% rate passed into history, and they could no long re-finance, and the new re-set rate was higher, they found they could not make the payment.

Of course toward the end, the newer deals were showing defaults right away indicating no intent to repay.

Canada will probably not turn out quite that way. A 3 or 5 yr mortgage is a BIG bet in the present lowest interest rates ever environment. Any normalization in rates will be some trouble. Couple that with oil’s prospects, and fall out as some have been living through it currently, and a downdraft in the overall economic picture.

What do we see? NOT a recipe for higher real estate values. Why do I have this deja vu feeling?

#152 Keith in Calgary on 01.10.16 at 9:21 pm

Received a flyer in the mail yesterday for new construction rental condos (read unsaleable spec condos) located in the “hood” here in Calgary……….

With a one year lease you get all of the following…….one month’s free rent…….a $500 VISA gift card……free internet for a year……..a 2 bedroom, 2 bathroom unit etc, etc…….

#153 Leo Trollstoy on 01.10.16 at 9:21 pm

#142 For those about to flop… on 01.10.16 at 8:47 pm

i can see what u mean. the ignorance is somewhat amusing.

#154 Leo Trollstoy on 01.10.16 at 9:23 pm

#129 Ben Linamex on 01.10.16 at 7:49 pm

i like your style. clever.

#155 Smoking Man on 01.10.16 at 9:25 pm

#145 TurnerNation on 01.10.16 at 8:53 pm
TFSA = T2’s tax free smoking account :-(
10K we hardly knew ya.
…..

Looking at my terminal.

Going to ugly tomorrow…

#156 TurnerNation on 01.10.16 at 9:28 pm

Mark should be banned and sentenced 2 years shelf stocking duty at Dollarama.
Yes M’lud.

#157 Rexx Rock on 01.10.16 at 9:34 pm

Yes ,Canadians are more leveraged than Americans but we have almost free health care and have a much higher family income to service our debt.The road to serfdom for all Canadians and free welfare to anyone in the world who wants to come to Canada and declare refugee status.

#158 Leo Trollstoy on 01.10.16 at 9:36 pm

these comments made me laugh coffee out of my nose…

I am a big believer in free speech but not stupid speech

Occasionally you make a solid point or two but then follow it up with 98 points of idiocy

CAD$ has only lost 1.4% YoY

Did your Mom have to pay for her popcorn

You appear to me to be book smart ,real world dumb

i love this blog

#159 common sense on 01.10.16 at 9:37 pm

#155 Smoking man

Just HOW ugly?…3am and she looks good ugly?

China is only down 1% (so far)

#160 Fed-up on 01.10.16 at 9:40 pm

#85 Jane Sampson on 01.10.16 at 4:14 pm

I know people don’t want to hear this but I would not be surprised that Canada will be a second and possibly third world country in 10 years or less.
——————————————————————————–

We are well on our way.

#161 common sense on 01.10.16 at 9:46 pm

#147 Paul

Are you enjoying life with no worries on a Sunday night?

#162 Nanaimo bar on 01.10.16 at 9:51 pm

# 148 Smoking Man

USDCAD Hits 52 week high little while ago.
——————————————————

Now that is funny. Every hour is a new 52 week high. Lol

#163 gut check on 01.10.16 at 9:51 pm

Here’s some of those amazing infrastructure dollars at work:

https://ca.news.yahoo.com/northern-ontario-bridge-fails-cold-232925407.html

I think the engineering company who got the contract for the Nipigon Bridge deserves a shout out:

http://www.hatchmott.com/projects/nipigon-river-bridge

Way to go, Infrastructure Ontario! Good on ya, Hatch Mott Macdonald!

Doesn’t matter that we don’t have an east west link across the country.. it only matters that a few jobs were created for a short period of time and that the taxpayers paid for it.

And Bill Morneau thinks this kind of thing will save Canada. (and some posters here apparently agree)

#164 common sense on 01.10.16 at 9:56 pm

Mark

I have honestly never read a complete post of yours.

You come across as a nice guy, willing to help and maybe it’s my short attention span but after the first sentence in a half, I’m lost and only get an idea of what you wrote by other bloggers comments which usually are not that positive.

Less is more son. Less is more.

#165 salonist on 01.10.16 at 9:59 pm

this greenbelt existed in Oakville.north of dundas st (highway #5)
poof, gone
a speculators’ sport
a swath of meandering urbanites

sm..
watched the fisher king,today
saw a maddenened fire raging nectonite

https://www.youtube.com/watch?v=yAEpLMTjCC8

#166 Nemesis on 01.10.16 at 10:12 pm

#FormerOwnerOfTheTeleProleGraph… #BaronBlackOfCrossHarbour… #’Champion’OfThePoor&… #ScourgeOfTheProfligate*… #*JustKidding,ConvictedFelon…

https://youtu.be/PVjSvKNBEro

#167 #3 Blair Walsh on 01.10.16 at 10:12 pm

Garth, you and your doomer gloomers here just don’t know what you’re talking about.

To say that real estate is overvalued in Toronto and Vancouver is like saying you’d miss a 27 yard chip shot field goal when it counts. Not gonna happen, fella *

Me, I’ll be operating as a realtor again now that the off season has started. Just like kicking, it’s all about location, location, location!

(*er….again)

#168 to_be_frank on 01.10.16 at 10:27 pm

Hi #24 Jane –
I sympathize with your frustration and hope you eventually succeed in finding a place to live that you can both truly enjoy and afford. Clearly, a shortage of land to build on makes that very difficult. It is a dilemma though, from a societal point of view because we must preserve enough green space and agricultural land to maintain a viable environment and feed ourselves. Encroaching on it to build housing is like ripping the 2x4s out of your wall to heat your house when you’ve run out of firewood. You can keep warm for awhile but if you keep it up eventually the house collapses and you realize that you made a mistake. When your country becomes sufficiently overcrowded, polluted and hungry, you naturally want to emigrate to someplace like Canada, unless you are living here 50 years later when we have caught up with you and are facing exactly the same problems. The root cause of the intensifying land conflict you describe is that in both Canada and the UK we are importing too many people, our population is growing on a finite land base, and maybe you are right that diminishing supply will raise the floor on any decline in housing prices.

You mention that the Telegraph is left wing and not to take too much stock in what is written there. I don’t worry about whether something I am reading is left wing or right wing, I just like to learn what the facts are. I do enjoy the Telegraph and the Guardian, as they both broaden my perspective and provide important information that is missing in Canadian news, but there are also interesting parallels such as the story on housing price inflation we are both experiencing. On the environment I am definitely left wing and on immigration I am right wing. The dots seem to connect that way.

#169 and the shoeshine boy says 0%, I can afford that! on 01.10.16 at 10:31 pm

“For me the debate boils down to this; can the global economy grow its way out of the debt it has created over the last few decades? Doomers say no, Garth says yes. It look like we are beginning to see the answer.”

I have to say this ? interests me very much….
Doesn’t the desire for ‘inflation’ have a lot to do with the ‘solution’ to excess debt?

#170 Smoking Man on 01.10.16 at 10:38 pm

#159 common sense on 01.10.16 at 9:37 pm
#155 Smoking man

Just HOW ugly?…3am and she looks good ugly?

China is only down 1% (so far)
….

You tell me.

http://investmentwatchblog.com/impending-financial-doom-for-the-first-time-in-history-atlantic-ocean-is-empty-of-all-cargo-freighter-ships-the-global-economy-is-literally-stopping-right-now-today/

You read that fiction? — Garth

#171 james on 01.10.16 at 10:46 pm

The thing that irks me most about the ‘arguments’ made by the real estate shills is this.

If they were good arguments, they would imply that the US housing bubble never imploded.

Yet it did. Therefore, they are crappy arguments.

Miami doesn’t have a ton of land, for instance. And there were plenty of condos. Not only that, but it has higher in migration than many Canadian cities.

Yet it crashed. Hard.

#172 james on 01.10.16 at 10:48 pm

#163 gut check

The Japanese spent trillions building infrastructure. Every minor seaside town has the most amazing roads and seawalls.

Didn’t work. Nor will it work here.

Infrastructure by itself does not create wealth. Infrastructure that increases productivity, stimulates R+D (etc) can have positive effect on wealth creation.

The government could pay you to dig a hole in your backyard in the morning and fill it in come evening. Money would be exchanged, but no wealth would be created.

#173 45north on 01.10.16 at 10:50 pm

The real question, when the bulk of Canadians have adopted a one-asset strategy, is how bad it will get and what blow back will hit the rest of us?

I think the real answer is debt. I mean if Canadians owned their own homes then they would be resilient but they don’t and they aren’t. How bad will it get? I’m thinking worse than the US.

As I said before the US had advantages that we don’t have: they reduced interest rates from 5% to 0%. We cannot. They had 30 year fixed mortgages. We have 5 year fixed mortgages.

#174 Paul on 01.10.16 at 10:51 pm

161 Common sense.

Yes and till the end of days!

#175 betamax on 01.10.16 at 10:51 pm

I looked at that Port Moody development, The Strand, and $280k will buy you a 600 sq/ft 1bd condo. Plus, it’s in a lousy area of Port Moody and located right beside the railway tracks.

I expect primary buyers will be speculators hoping to buy with no down payment and renting out the units. In a few short years, it’ll be a rental ghetto. Welcome to the boomtown.

#176 Love my Kia on 01.10.16 at 10:52 pm

Should I weed out ‘After the Crash’ from the library collection?

The ‘crash’ referred to the 2008 stock market event. Obviously you didn’t read it, so toss it. — Garth
************************************
My apologies Garth, it was something that was relevant in the day and was signed out a few times on my recommendation to students. Yes I did read it way back. We generally don’t keep titles beyond 5 years as their relevancy diminishes.

I’m sorry for the hurt feelings.

#177 A box in the Sky on 01.10.16 at 11:02 pm

#86 Jane Sampson on 01.10.16 at 4:14 pm

I know people don’t want to hear this but I would not be surprised that Canada will be a second and possibly third world country in 10 years or less.

————————————

lol doomers. Derp derp derp.

#178 Smoking Man on 01.10.16 at 11:02 pm

Watching golden globe awards. Wife is main stream.

as Long as I got a drink in my hand I can tolerate anything.

I feel sorry for these people, they live there lives in complete ass kissing 24/7

How degrading.

No privacy, just lear jets and living in fear every second of there lives.

I would not trade long branch and my vise grip shower control for the prison that they live in for anything.

Pathetic way to live.

Simpathy is what I feel for them.

#179 Trey on 01.10.16 at 11:03 pm

Garth no offense but so what if someone buys a house at the top of the market and it losses 10% or even 25%.

As long as they don’t lose their job and are able to make the mortgage payments then they can wait it out – even if it’s a decade. Don’t see your logic here as to why this is a problem – or should I say no problemo….

Is the goal of life a house? Think bigger. — Garth

#180 Bobs ur uncle on 01.10.16 at 11:13 pm

Flop,

No golden globes for me, but since you mentioned it, I found this from Gervais’s monologue:

“If you do win, remember that no one cares about this award as much as you do. That award is, no offense, worthless.”

I am happy to hear he is taking the piss out of the whole spectacle. Not likely he will be hosting again next year. But I give him credit for not toning it down – he is who he is.

Enjoy!
BUO

#181 Basil Fawlty on 01.10.16 at 11:16 pm

To suggest that US economic statistics are manipulated is not anti-American, just common sense. Of course, nine out of ten unicorn chasers would strongly disagree.
The US job statistics are pure hookum, as the purveyors of this pixie dust continually ignore the labor particpation rate, which measures those who are no longer considered looking for work, simply because their unemployment benefits have ceased.
In regards to US auto sales, check out the % of financed vehicle loans that are sub prime. The US economy is a mirage.

#182 Smoking Man on 01.10.16 at 11:21 pm

You read that fiction? — Garth
..

Not really, but been accused many times of being of topic.

So as the headling goes. Doomicorns

Trying to stay on topic. Plus I create fiction way better than my ability to read it.

#183 Mark on 01.10.16 at 11:21 pm

“Garth no offense but so what if someone buys a house at the top of the market and it losses 10% or even 25%.”

If it was just 10% or 25%, that wouldn’t be the end of the world. But the contemporary buyer is buying with a huge amount of credit (leverage). A 25% loss puts them into negative equity which is extremely difficult, if not almost impossible to extricate oneself from.

Meanwhile, those with more balanced portfolios, those who invested in cheap inversely correlated assets, will move forward in their financial lives. Their kids will get sent to school with tuition and room paid, while those who bought at the peak, will have the albatross of wealth destruction to deal with.

There’s been a lot of press these days that Canadians, on average, are significantly unprepared for retirement. Is it any coincidence that Canadians also own record amounts of a historically low-returning asset class, real estate? Is it any coincidence that many of the nation’s most innovative companies have almost no access to capital? Is it any coincidence that many of Canada’s crown jewels in terms of industrial assets have either been sold, or are currently on-sale for a mere fraction of their long-term value? Or the same for Canada’s human assets?

These are the practical consequences of large numbers of individuals just throwing all their money (and all their borrowings) at RE as a single asset class. Canada performs far below potential on account of such. Individuals suffer. Not only is a person throwing their money away by buying any asset for too much money, but they’re also arguably shirking their patriotic duty.

#184 Shirley valentine on 01.10.16 at 11:22 pm

#178 Smoking Man on 01.10.16 at 11:02 pm
Watching golden globe awards. Wife is main stream.

as Long as I got a drink in my hand I can tolerate anything.

I feel sorry for these people, they live there lives in complete ass kissing 24/7

How degrading.

No privacy, just lear jets and living in fear every second of there lives.

I would not trade long branch and my vise grip shower control for the prison that they live in for anything.

Pathetic way to live.

Simpathy is what I feel for them.
—-
When do we see the Sean penn interview of the great smokey man!! Didn’t you make your first million with interesting crop trades….. Nudge nudge.. Say no more.

#185 Trey on 01.10.16 at 11:23 pm

Is the goal of life a house? Think bigger. — Garth
————————————–

For some yes as it’s normally the building blocks of the family life.
But still don’t see the problem unless you lose your job.

You build a family out of a house? Sad. — Garth

#186 bill on 01.10.16 at 11:29 pm

#170 Smoking Man on 01.10.16 at 10:38 pm
this is just one company plying the worlds trade routes…
http://www.seaspancorp.com/fleet-summary/fleet-map/

#187 pwn3d on 01.10.16 at 11:32 pm

#129 Ben Linamex on 01.10.16 at 7:49 pm
Garth or Mark, How is credit made?
—————————-
Hey Garth, on a scale of 1 to 10, how insulting was that?

#188 The American on 01.10.16 at 11:39 pm

At #181: Basil Fawly, do you mean *these* subprime auto loans within CANADA? LMFAO!!!!
http://www.canadianbusiness.com/economy/canadas-subprime-car-loan-bubble/

http://www.autonews.com/article/20140820/FINANCE_AND_INSURANCE/308209948/canadians-stretch-out-auto-loans-as-debt-warnings-go-ignored

http://business.financialpost.com/personal-finance/debt/how-canadas-auto-loan-bubble-has-become-a-ticking-time-bomb

http://wolfstreet.com/2015/08/26/new-vehicle-sales-collapse-in-canadas-oil-patch/

Now, as for the U.S. subprime auto loans you *claim*, here is what Equifax has to say… http://www.cnbc.com/2015/06/22/subprime-auto-sales-bubble-not-so-say-experts.html

And as for U.S. labor force participation rate, you should learn what it really means… http://qz.com/286213/the-chart-obama-haters-love-most-and-the-truth-behind-it/

SHIIIIIIIIIIIIT.

#189 pwn3d on 01.10.16 at 11:46 pm

#146 Sydneysider on 01.10.16 at 8:54 pm
Garth, do you have any relatives in Australia?
http://www.theguardian.com/business/2016/jan/11/australia-bet-the-house-on-never-ending-chinese-growth-it-might-not-end-well
—————————-
I saw an article explaining why 2016 would be a slump for the capital city markets in Australia. They defined a slump as being 5-6% increases. If only my ETFs slumped ahead 5-6% in 2015.

#190 juno on 01.10.16 at 11:46 pm

Don’t forget the Canadian dollar is going down faster than an east van crack whore.

#191 bill on 01.10.16 at 11:46 pm

#106 Apocalypse2016 on 01.10.16 at 6:02 pm
you too there apocalypse….
http://www.seaspancorp.com/fleet-summary/fleet-map/
here is another…
http://www.maersk.com/en/hardware/fleet/vesselfinder#map-anchor

#192 ANON on 01.10.16 at 11:46 pm

The Sure Thing #12:
There be Unicorns.
There be Doomicorns.

Can the exponential function, and its close cousin, the logarithmic decay compounded by human psychology be silenced by a plateau? Stay tuned, next week’s drama will reveal how this will play out.

#193 to_be_frank on 01.10.16 at 11:47 pm

Hi #57 Greg –

Harry Dent did a pretty good job promoting himself to the investment industry for awhile. He was an advisor to the “AIM Dent Demographics Trends Fund” and the “Dent Tactical ETF (DENT)”. The former fund had $2 billion in assets at its peak in the early 2000’s but became extinct after it lost 80% of its assets. Dent claimed the loss was because the manager did not follow all of his advice. The latter ETF lost 12.9% of its value between its launch date in Sep 9, 2009 and Jun 30, 2012, drastically underperforming the market. Maybe he’s trying to promote himself yet again, and I don’t know all of the facts behind those two failures, but that’s not much of a track record.

#194 ohoh on 01.10.16 at 11:53 pm

Pot and ssw at 52 w lows both nearing 10% dividend. Bye buy bi by dividend chop coming

#195 For those about to flop... on 01.10.16 at 11:54 pm

Mark#183
Not only is a person throwing their money away by buying any asset for too much money, but they’re also arguably shirking their patriotic duty.

//////////////////////////////
My patriotic duty is to get you a TN visa and get you out of this country ASAP.
I will call the Metrosexual Messiah first thing in the morning,right now I am going to think about the sales mix to help me fall asleep…
Goodnight Princess!

M41BC

#196 Joe on 01.10.16 at 11:54 pm

So if you don’t think there will be a 50% crash, the correction you anticipate is maybe 20-30 percent? If so, this would still leave prices higher than they were when you called for a correction 7 years ago.

#197 Van Isle Renter on 01.11.16 at 12:06 am

I just lover the Global real estate “experts”. When the Chinese stock market was booming, they said that this would create a huge demand for housing in Van. Now they’re saying that the crash in the Chinese stock market is creating a huge demand.

When everything is evidence of your thesis, then your thesis is wrong. Kind of like the now passe Global Warming scare.

The definition of insanity is being able to simultaneously hold to opposing ideas in your head. Ipso facto, the Global real estate “experts” are simply banana crackers.

#198 ANON on 01.11.16 at 12:39 am

#129 Ben Linamex on 01.10.16 at 7:49 pm

And how does credit dry up..or anyone else..a few tips would be great!

Credit is a promise. The promises cannot be kept anymore, everyone starts noticing that minor fact, and “poof” cloud of smoke briefly appears where the pile of promises stood before. That’s how credit dries up, by the process called BigD in some circles. This happens because debt is wealth fo real, for both the lender and the borrower, no matter what the constant lamenting of many ideologies tell you about debt and wealth not being the same thing. This happens, of course, as long as the narrative is still trusted. Which brings us to:
Another thing that happens with promises is people don’t trust the narrative anymore, and the promises are quickly losing all value, as they are seen worthless. This is BigH. See Brazil for a fresh real-time case study. People swap their promises for the promises of others, seen more worthy (they are usually green and have dead presidents printed on them). This results in further BigD for the promises with the dead dudes printed on them.

#199 Bram on 01.11.16 at 12:40 am

So sure, Shanghai is down -3% or so, for today.
But the funny thing is: year-over-year it is perfectly flat!
Investors in TSX would have loved a flat 2015.

https://www.google.com/finance?q=SHA%3A000001&ei=Oz6TVsD5FsPtigKzxIrIAw

#200 GoldnSilver on 01.11.16 at 12:50 am

http://www.bloomberg.com/quote/BDIY:IND

Add this to the shipping reports. Cannot deny world trade and container traffic is down. Index at its lowest level in decades.

#201 waiting on the westcoast on 01.11.16 at 1:04 am

It’s the blog mix…

#202 good investing all on 01.11.16 at 1:51 am

http://www.theguardian.com/business/2016/jan/11/australia-bet-the-house-on-never-ending-chinese-growth-it-might-not-end-well

garth, I found a article written by your twin but instead of being from oh Canada, its from the land down under!!!

cheers,
keep up the good blogging

#203 TRT on 01.11.16 at 2:35 am

China hard landing coming. MSM trying to keep it under wraps. Electricity usage and commodity prices telling the story.

China trying for soft landing. Spent $300 Billion so far buying stocks. But economy will slow down IMO by another 3-5% soon thereby triggering a massive debt crisis.

It’s a self fulfilling prophecy now.

The USA rates hikes will halted in the summer. You will see.

#204 old gringo on 01.11.16 at 3:16 am

Let’s hope you non believers finally can see that, “the Chinese ripples in their stock market are tsunamis over here”.
You had better understand we are all connected financially.
This rout is far from over.

#205 liqudincalgary on 01.11.16 at 3:36 am

BlackDog on 01.10.16 at 11:11 am
“And now volatility in China has destroyed a lot of wealth, and BC house-buying along with it. ”

But I thought you said HAM is NOT contributing in any significant way to Vancouver’s astronomically high house prices.

===============================================

sarcasm is lost on some…

#206 East Van Crack Whore...Too Funny on 01.11.16 at 7:25 am

#190 juno

LMAO, ROTFL still…

Used to drive by that area and park every morning and for years on the way to work.

I visualized from memory what you said, still killing myself laughing…sorry if in poor taste, but so true what you said.

#207 The Other Chris on 01.11.16 at 7:42 am

@200 GoldnSilver on 01.11.16 at 12:50 am

Thanks for that link. I had read that the Baltic Dry shipping index was down, but I didn’t realize that it’s down to that extent. That is legitimately worrying for the world economy.

#208 Apocalypse2016 on 01.11.16 at 7:46 am

To add to the shipping shutdown in the Atlantic, the Trans Canada highway is now CLOSED!!!!

Shut off by a bridge collapse near Nipigon.

Canadian trade is cut in two!

http://www.cbc.ca/news/canada/thunder-bay/nipigon-river-bridge-closed-transcanada-1.3397831

How many triggers can our weakened economy survive before it tips over?

It’s already too late…..

David Bowie R.I.P.

You left this world because you know the shitstorm we’re heading into.

:(

#209 Chinese stepping up capital controls on 01.11.16 at 7:53 am

Reported Jan. 8 by FT Asia-Pacific, where China is stepping up ad hoc capital controls to stem accelerating capital outflows.

So if Canada is relying on Chinese flight money, think again.

This is one country that does not mess around with its rich or its billionaires…just ask Xu Ming (died of a “sudden heart attack” on the toilet of his jail cell in December) and soon thereafter, Guo Guangchang (China’s Warren Buffett), went missing but now has been found after “assisting authorities” as part of a sweeping anti-graft campaign.

China will do anything to support its currency and stock market…bad news for YVR/416 high end RE.

#210 CJBob on 01.11.16 at 8:05 am

You build a family out of a house? Sad. — Garth

In my case we settled on a decent neighbourhood close to schools and have been there for 18 years. My son grew up with the knowledge that his bedroom was always the same, a safe place for him to come home to after a good day or a bad day. Yesterday we dropped him off at college. We have developed many friends in the community. If owning a home cost me more than renting it’s the best trade off I’ve ever made.

You can make a life maximizing every dollar, but in my opinion that is the life we should pity.

It’s not about dollars, but experiences. Sounds like your life has been Groundhog Day. And the house helped create that. Time is irreplaceable, so why spend every day waking in the same, safe bedroom? — Garth

#211 pbrasseur on 01.11.16 at 8:05 am

«No crash coming.» – Garth

But let’s not lose perspective here, only a few years back the Loonie at par, unemployment was lower than the US and the TSX was flying 3000 points above the Dow. We were teaching those «arrogant yanks» a lesson!

What a difference handful of years make! Just because things are moving slowly, much slower than many of us expected, does not mean changes cannot be dramatic, they already are and that’s just the beginning. It may not be a crash but the end result will likely similar.

In any case you’ll do well to understand this: markets such as the TSX and even the CAD value are mostly forward indicators…

A crash you be better actually, it would allow us to bounce back more quickly, as it is our less responsive (to markets because more gov. control) economy will take longer to adapt and the pain will stay longer. This is the Canadian way.

#212 gut check on 01.11.16 at 8:11 am

@#172 james on 01.10.16 at 10:48 pm
#163 gut check

The Japanese spent trillions building infrastructure. Every minor seaside town has the most amazing roads and seawalls.

Didn’t work. Nor will it work here.

Infrastructure by itself does not create wealth. Infrastructure that increases productivity, stimulates R+D (etc) can have positive effect on wealth creation.

*******************************

Yes, I’d love to see that… infrastructure that creates wealth, that is. I’m sure we could come up with a dozen examples of such investment easily.

I cannot understand how the people in charge are not able to do that, or how the general public falls for their excuses when their efforts fail over and over again.

One is left with only two options to explain government ineptitude: they are mentally inferior to the rest of us; they are doing it on purpose.

#213 crowdedelevatorfartz on 01.11.16 at 8:38 am

@#208 Apocalypse 2016
“David Bowie R.I.P.

You left this world because you know the shitstorm we’re heading into.
++++++++++++++++++++++++++++++++++

REALLY?
You used David Bowies’ 18 month private battle with cancer and ultimate death to promote your “apocalypse” agenda?

Classy…………….

#214 zentao on 01.11.16 at 8:45 am

Interesting investing advice from Blackrock:

https://www.blackrock.com/investing/literature/brochure/5053a-mc-investment-outlook-r10b.pdf

#215 JimH on 01.11.16 at 9:09 am

#188 The American on 01.10.16 at 11:39 pm
At #181: Basil Fawlty; who writes; “… The US job statistics are pure hookum, as the purveyors of this pixie dust continually ignore the labor particpation rate, which measures those who are no longer considered looking for work, simply because their unemployment benefits have ceased.”
To which you reply: “And as for U.S. labor force participation rate, you should learn what it really means…” http://qz.com/286213/the-chart-obama-haters-love-most-and-the-truth-behind-it/
================================
Thanks for the great link!

The definition of the US labor force participation rate is clear and unambiguous: “The civilian labor force participation rate is the number of employed and unemployed but looking for a job as a percentage of the population aged 16 years and over.”

This definition does, of course, require a minimum of 10 seconds of reflection, which the America-bashers and government data-deniers seem to be totally incapable of mustering. What is truly amazing, however, is the fact that their bashing and denial fails to open any portal towards financial gain and/or profit!

Our (US) economy is certainly not booming; at least not compared to previous historical ‘booms’. But those who consistently fail to recognize the opportunity that the slow and somewhat unsteady American recovery offers (even in the face of strong global headwinds), also fail to notice that time is not at all on their side.

While missed opportunities are easier to correct than lost capital, ‘time and the tide waits for no man’ as the saying goes; or in the case of the bashers and deniers, ‘if the fox hadn’t stopped to shit, he’d have caught the rabbit’.

Thanks again for the link.

#216 JimH on 01.11.16 at 9:13 am

Those dogs who do look at published numbers and data from all countries might benefit from this resource. (You can get rid of the annoying ads by clicking on the little “X” in the right hand corner of the ad. The site is free and they have to pay for it somehow.)

http://www.tradingeconomics.com/united-states/calendar

#217 salonist on 01.11.16 at 9:15 am

Gibson 2015 Les Paul Standard Wine Red Electric Guitar

http://www.amazon.ca/Gibson-2015-Standard-Electric-Guitar/dp/B00NAVUG0A/ref=sr_1_1?s=musical-instruments&ie=UTF8&qid=1452308112&sr=1-1&keywords=Gibson+2015+Les+Paul+Standard+Wine+Red+Electric+Guitar

#218 JimH on 01.11.16 at 9:16 am

#212 crowdedelevatorfartz on 01.11.16 at 8:38 am
@#208 Apocalypse 2016
“REALLY?
You used David Bowies’ 18 month private battle with cancer and ultimate death to promote your “apocalypse” agenda?
Classy…………….”
================================
X2
thank you

#219 Cosworth on 01.11.16 at 9:41 am

First modest post I’ve seen from you in a while Garth. (in my mind anyways). I actually like this side of you, I was the focus of a post you made for me more than 4 or 5 years ago. I was newly starting my career, wife in school, and bought a 275,000 townhouse. We sold that for 325, moved up to a home, wife is working full time and I’ve been promoted a few times. Do I continue to see the craziness you warned us about? Absolutely and having someone whispering scare tactics in my ear have helped me NOT lease that expensive German car, saved cash, and maximize my RRSP.

That being said, I can’t even read the comments sections anymore. I don’t think I have in over a year Are we in trouble? Sure. Are we going to see 100% gains in 10 years, or whatever Calgary experienced that I was too young to take advantage of? Probably not. Do I have way too big of a mortgage that I am comfortable with, but still well below what a ‘normal’ Canadian does? Absolutely.

That being said, I think that my house will be the same price around the time I am willing to retire. So I am just focusing on paying off my mortgage and enjoying where I live.

#220 Penny Henny on 01.11.16 at 9:41 am

#88 Mark on 01.10.16 at 4:35 pm
Finally drove into the City yesterday to watch The Big Short. An incredibly bland movie that nearly put my guest to sleep (poor her!)
////////////////////////////////////////////
BTW, how is your mom?

#221 liqudincalgary on 01.11.16 at 9:43 am

WallOfWorry on 01.10.16 at 11:50 am

============================================

if you would like specific recommendations, and your portfolio is large enough, hire and PAY an advisor

#222 The American on 01.11.16 at 9:59 am

At #91: JimH, your post is spot-on. I love when people refer to the U.S. RE decline as a “crash.” It was indeed a slow, steady, and painful decline over six-seven years (depending on region) across the country that ensued. Sure, Canada’s RE is not going to “crash,” just as the U.S. RE did not “crash.” Canada’s RE market is going to be in a steady decline over a period of several years. Many will try to time the market and enter when they see values decline 7%, or 10%, or 15%, or 20%. Rest assured, these are also the fools who will be catching a falling knife. As short-term memory is concerned, Americans are bad. Canadians, however, clearly suffer from this affliction to greater degree.

#223 Penny Henny on 01.11.16 at 10:01 am

It’s not about dollars, but experiences. Sounds like your life has been Groundhog Day. And the house helped create that. Time is irreplaceable, so why spend every day waking in the same, safe bedroom? — Garth
////////////////////////////////////////

It’s like being married to a blog.

Right, but without the property tax, mowing, utilities, insurance, maintenance, realtors or mortgage, while being mobile, flexible, liquid and free. Otherwise just the same. — Garth

#224 Calgary Rip Off on 01.11.16 at 10:07 am

Just got my property valuation back, bought the mortgage in 2011 for $415K, now the city says it is worth $479K. Whatever.

Had I listened to the advice just to rent, well, that “increase” wouldnt be present and the rent wouldve gone out the window.

What really needs to happen next is get Trump in and build that pipeline.

The issue really about rent vs. own in Calgary is whether you can afford the rent long term. I cant and dont want to because it is many cases the same as a mortgage. So everything said in this blog goes out the window unless you are retiring soon or in an unstable job.

#225 Apocalypse2016 on 01.11.16 at 10:14 am

#212 crowdedelevatorfartz
_________________________________________

@#208 Apocalypse 2016
“David Bowie R.I.P.

You left this world because you know the shitstorm we’re heading into.
++++++++++++++++++++++++++++++++++

REALLY?
You used David Bowies’ 18 month private battle with cancer and ultimate death to promote your “apocalypse” agenda?

Classy…………….

________________________________________________________________________________________

Hmm…..let me get this right… so a guy whose name boasts that he likes to noisily emit noxious, disgusting moist gases from his anus in close-packed public spaces is the approval-seeking, self-appointed arbiter of what is “classy”?

Only on this blog – you gotta love it here :)

#226 Penny Henny on 01.11.16 at 10:19 am

It’s not about dollars, but experiences. Sounds like your life has been Groundhog Day. And the house helped create that. Time is irreplaceable, so why spend every day waking in the same, safe bedroom? — Garth
////////////////////////////////////////

It’s like being married to a blog.

Right, but without the property tax, mowing, utilities, insurance, maintenance, realtors or mortgage, while being mobile, flexible, liquid and free. Otherwise just the same. — Garth
//////////////////////////////////

Finding the ideal neighbourhood and staying put while your children progress through elementary and then high school. Feeling of security knowing that you are not having to move anywhere and starting over. Actually getting to know your neighbours and having an extended community and a feeling of attachment.
Sorry Garth, your ideal is not the ideal of many.
Doesn’t mean you’re right or wrong. Different strokes.

#227 White Crock BC on 01.11.16 at 10:42 am

Here we are Monday morning. TSX is down 100pts…will finish down for the eighth day in a row. Probably another triple digit loss.

I’ve been assured however that another ’29 ’87 or ’08 can never happen again.

#228 BlackDog on 01.11.16 at 11:02 am

@liquidInCalgary #205, yes silly me, lol….I clued in that Garth might be kidding after I hit submit. But then again, you never know. Sometimes people change their tunes. But it is Garth we are talking about here, so I should known better.

#229 Nick on 01.11.16 at 11:22 am

If this economic slump worsens globally as well as nationally…which seems to be the case…then a recession turned depression isn’t too far away.

Where is the good economic news anywhere anymore? I can’t seem to find it unless it’s somebody spinning a story. The Canadian media’s whole mandate is to ensure the masses don’t panic…but for how much longer???

#230 Tony on 01.11.16 at 11:25 am

Re: #223 Calgary Rip Off on 01.11.16 at 10:07 am

You should’ve rented as rents are falling fast. Home prices are also falling fast. Vacancies are rising very fast.

#231 For those about to flop... on 01.11.16 at 11:38 am

In 1999 ,I was living in the U.K on a work visa.
Myself and 20 travel buddies decided to go to the Glastonbury festival in the summer which is a big deal each year.We camped there for 4 days and seen some of the best musical talent in the world.
They gave David Bowie the “legends” spot ,prime time 8 pm Saturday night I couldn’t wait to see him but something in the back of my head told me it might be a train wreck as I wasn’t sure if he still “had it”
He wowed the crowed and showed me the difference between a singer and an entertainer, I loved every minute of it and didn’t want it to end.
So glad I got to do that, and in the intervening years,always my mind go back to that night every time I hear him on the radio.
Legend, gets chucked around too much but David Bowie is a Legend.
R.I.P. David Bowie.

#232 Calgary Rip Off on 01.11.16 at 11:50 am

@229 Tony:

Home prices are falling fast? Where? In Calgary NW? Go to the MLS. It still lists as being higher than what the mortgage was sold for. Sure rents may be “falling fast” in some areas, and in others, they are still the same as a mortgage. Given that I did not overextend(qualified for a $650K mortgage and put $25K down with payments the same as my rent) Im not worried. It’s the fools that borrowed as much as they could with minimal income and subsist on Top Ramen out in Bearspaw that may have problems.

#233 Brazil ex-pat on 01.11.16 at 12:19 pm

#211 gut check on 01.11.16 at 8:11 am
@#172 james on 01.10.16 at 10:48 pm
#163 gut check

The Japanese spent trillions building infrastructure. Every minor seaside town has the most amazing roads and seawalls.

Didn’t work. Nor will it work here.

Infrastructure by itself does not create wealth. Infrastructure that increases productivity, stimulates R+D (etc) can have positive effect on wealth creation.

*******************************

Yes, I’d love to see that… infrastructure that creates wealth, that is. I’m sure we could come up with a dozen examples of such investment easily.

I cannot understand how the people in charge are not able to do that, or how the general public falls for their excuses when their efforts fail over and over again.

One is left with only two options to explain government ineptitude: they are mentally inferior to the rest of us; they are doing it on purpose.

+++++++++++++++++++++++++++++++++++

I would suggest it could be both. It certainly is both ineptitude and corruption here in Brazil.

#234 Not tonight honey on 01.11.16 at 12:20 pm

#220 liqudincalgary on 01.11.16 at 9:43 am
WallOfWorry on 01.10.16 at 11:50 am

============================================

if you would like specific recommendations, and your portfolio is large enough, hire and PAY an advisor

*****************************************

Hi Liquidincalgary, I’m not sure if this post was also directed towards my query. ???

To clarify, I’m not looking for freebie professional advice, I’m just looking for resources to educate myself about the basics of investing.

Wall of worry is right, the comments here could be much more helpful and engaging.

Btw, in my area of expertise I’m very frequently asked for freebie advice and I give it. …sometimes it’s nice to share & help folks that need & appreciate the assistance, makes for good karma and a nice dose of the warm & fuzzies.
Kinda like what Garth is doing here, no?

(Thanks Garth! I wonder just how many folks you’ve helped/saved, awesome!!)

NTH

#235 Leo Trollstoy on 01.11.16 at 12:52 pm

I’ve been assured however that another ’29 ’87 or ’08 can never happen again.

3 of the best periods for bargains. i hope it happens again. easy money

#236 IHCTD9 on 01.11.16 at 12:53 pm

Looks like billions if not trillions will be fleeing their native homes to the USA in 2016. Tough start to the year – I browsed the CBC today – not one pic of Trudeau!

I’m rooting for a .65 Loonie, and $25.00/bbl – yes this is bad in general, but it is great for folks doing what I do for a living. My portfolio will recover before I retire :).

#237 Noel on 01.11.16 at 1:15 pm

Owning a home and being mobile, flexible, liquid and free are not mutually exclusive in any way.

And since when is stability a bad thing? I bet people who are struggling to pay rent, or are living in run down neigbourhoods in community housing would trade just about anything to own a safe & comfortable house in a good neighbourhood.

Homeownership is probably the single most highly correlated variable with life expectancy, and success, no matter how you want to define it.

You are so Etobicoke. — Garth

#238 kommykim on 01.11.16 at 1:20 pm

RE:

#131 JimH on 01.10.16 at 7:59 pm

#107 Mark on 01.10.16 at 6:20 pm
JimH: “Mark: did you really say that???? Really?
Seriously?”
——————————
You have hopelessly confused correlation with causation!

There seems to be a strong correlation between Mark and correlation/causation mix ups. Here’s a quote that Mark should read:

“Most of you will have heard the maxim “correlation does not imply causation.” Just because two variables have a statistical relationship with each other does not mean that one is responsible for the other. For instance, ice cream sales and forest fires are correlated because both occur more often in the summer heat. But there is no causation; you don’t light a patch of the Montana brush on fire when you buy a pint of Haagan-Dazs.”
― Nate Silver, The Signal and the Noise: Why So Many Predictions Fail – But Some Don’t

#239 Smoking Man on 01.11.16 at 1:23 pm

R.I.P. David Bowie.

R.I.P CAD, Alberta, and OIL

Woo Hooo on the big Long USDCAD

#240 IHCTD9 on 01.11.16 at 1:24 pm

#61 Kreditanstalt on 01.10.16 at 2:17 pm
One thing you neglected to mention: ***government resource revenues, etc., will PLUNGE.*** Nat gas & oil of course, but also lumber…

Normally you would think that taxes and spening would be cut to compensate, leaving more income in the hands of the productive private sector.

But the LAST thing governments ever do is austerity. Hopefully, this time extend-and-pretend + borrow-&-spend will fail and cutbacks will be forced on them.
________________________________________

This is a fact, and it’s going to be interesting to see how our Provincial and Federal leadership will deal with this.

The big one may not have even hit yet – consumer spending. 60+% of GDP just waiting to get spooked, just starting to worry about job security, only just beginning to eye that big pile of debt in a negative light…

Then there are the 200K+/yr earners who will be working overtime to offset their tax losses. And even working stiffs like me plotting all kinds of tax avoidance strategies – many which are off the beaten path – and for the very first time.

2016 is bringing in a storm of epic proportions, good bloody luck to Justin and Bill.

Hopefully brains will trump ideological bullshit in Canada over the coming months. Now is not the time to blow billions on ANYTHING that does not help the average Canadian…

#241 Smoking Man on 01.11.16 at 1:27 pm

http://www.cbc.ca/news/business/bank-of-canada-business-outlook-survey-1.3398650

There you have it, another BOC cut on the way

#242 JimH on 01.11.16 at 1:31 pm

#223 Calgary Rip Off on 01.11.16 at 10:07 am
“… What really needs to happen next is get Trump in and build that pipeline.”
===================================
Better be careful what you wish for!

Trump is almost as unfriendly to Frost-backs as he is to Mexicans. Trump would:
1. scrap or renegotiate NAFTA so as to make the deal even more advantageous to the USA.
2. ensure that any American company operating in Canada would suffer huge tariff impositions up to 45% until they relocated and set up shop back in the USA.
3. insist that Canada adopt “right to work” legislation similar to that enacted in the southern states to eliminate trade unions.
4. insist that Canada take steps to strengthen its currency so as drive up export prices.
5. restrict all high-paying professional and technical jobs to American citizens only.
6. use his mindless and empty bombast to make a complete fool of himself throughout the world and by association do the same to his mindless and unthinking supporters; the “Trumpettes”.

Sorry, but if you’re a Canadian hoping and praying that Donald Trump will somehow “Make Canada Great Again”, you’re hopelessly mistaken.

That job will be up to you!

#243 kommykim on 01.11.16 at 1:32 pm

RE:confusing correlation with causation

Here’s some funny charts:
http://www.tylervigen.com/spurious-correlations

The 3rd chart from the bottom disagrees with Garth about Kias. The real danger is Hondas and Toyotas!

#244 Smoking Man on 01.11.16 at 1:34 pm

Is a 2.0 USDCAD in the cards. Who knows, Only Aliens, I guess. 50 cent Looney.

The Communist agenda has four years left. Hasen’t realy started yet.

Poor T2 he’s going to be in a world of shit soon.

Wonder what Butts is thinking?

#245 espressobob on 01.11.16 at 1:49 pm

A sea of red in the markets today. The emotions are stirring and a hint of panic.

Investors look over the horizon and ponder where the broad based indices will be in 10, 15, or 20 years or more.

Speculators on the other hand tend to think more short term and have a bad habit of reacting instead of ignoring.

Is it better to buy when markets are down or after they rally? Just a thought.

#246 TRT on 01.11.16 at 1:53 pm

So Canada has officially crashed.

TSX about to go into the 11,000’s, dollar about to go into the 60’s any minute, and WCS Oil into the low to mid teens.

Alberta RE holding up well. YVR RE on fire. Money is coming from somewhere and it isn’t locals who are losing their jobs.

#247 IHCTD9 on 01.11.16 at 2:04 pm

#70 Steve on 01.10.16 at 2:47 pm
We keep seeing this thing about “no crash,” but a “correction” and then some ambiguous melting for a little while. Then people like me keep on posting that the amount of price increase we’ve had in even the last 2 years equals any “modest correction” that we’ve been talking about for 8 years. I was a younger, different person when I started deciding not to buy a house.

So, why doesn’t someone show me a chart of the real house prices in Toronto (for example–I live there) extrapolated according to this “modest correction” projection. Then we can draw a relatively flat line and see what year it stopped making sense to buy (and no arguments about % growth vs. the stock market, because of the obvious leverage advantage; also no arguments about paying realtors commission or the land transfer tax since at present you’ve still got to pay those no matter when you buy).

Do I agree that housing prices *ought* to have gone down much earlier according to any rational analysis? Yeah. That’s why I’m sitting here reading this blog. Am I going to feel vindicated by a “modest correction,” and will that justify not having bought many years ago? Not remotely. We all mis-saw the way this would turn out. Period.

But it’ll justify not buying this year. So let’s keep on truckin’.

___________________________________________

You know the minute you finally bought, everything Garth predicted would happen right? (LOL)

Reality is, the GTA and Van will probably always be the worst bang for your house buying buck cities in Canada, if not North America.

If I were you, and wanted the “own a house” lifestyle – I would put my energy into finding decent employment in a 50-100K city. You’ll get 99% of what Toronto offers at 1/5th the price.

My house was just over 1X our combined annual income. I probably don’t need to tell you how that can completely change your life compared to this 10X stuff going on in To./Van.

Right now at today’s prices, we could buy our house at just under 2X our combined income, so the deal still looks great.

If moving out is a no deal, then you probably should get used to the idea of renting for life.

#248 Philburt on 01.11.16 at 2:08 pm

I know you are a Bull on the stock market in CanukleHeadStand Garth but Ive been a bear for sometime.
Wanted to share my view with out writing! http://jugglingdynamite.com/2016/01/11/secular-bear-mauling-canada-encore/

#249 TRT on 01.11.16 at 2:08 pm

Canadian peso will be at 68 cents at the end of the month. Bank of Canada will CUT rates this month.

New bottom IMO now going to be around 62 cents instead of earlier forecast of 66 cents.

Now where are those graphs comparing Canadian house prices vs US house prices both in USD? LOL

#250 Yeah baby who luvs ya on 01.11.16 at 2:09 pm

Tank it all baby.. down down it all goes.

#251 Yeah baby who luvs ya on 01.11.16 at 2:11 pm

#225 Penny Henny on 01.11.16 at 10:19 am

It’s not about dollars, but experiences. Sounds like your life has been Groundhog Day. And the house helped create that. Time is irreplaceable, so why spend every day waking in the same, safe bedroom? — Garth
////////////////////////////////////////

It’s like being married to a blog.

Right, but without the property tax, mowing, utilities, insurance, maintenance, realtors or mortgage, while being mobile, flexible, liquid and free. Otherwise just the same. — Garth
//////////////////////////////////

Finding the ideal neighbourhood and staying put while your children progress through elementary and then high school. Feeling of security knowing that you are not having to move anywhere and starting over. Actually getting to know your neighbours and having an extended community and a feeling of attachment.
Sorry Garth, your ideal is not the ideal of many.
Doesn’t mean you’re right or wrong. Different strokes.
=—————-

The blog will henceforth be signed……

Garth Landers, Life Coach

#252 Drill Baby Drill on 01.11.16 at 2:16 pm

RIP David Bowie
I was 17 back in 1972 in grade 12 when my buddy said his older brother just bought an album that I just had to listen to. It was called “Ziggy Stardust and the Spiders from Mars” been hooked on him ever since.

#253 Dups on 01.11.16 at 2:41 pm

Oil towards 20$ / barrel. Wow. Alberta is gone.
It will drag the housing market down as well. Best time to get out of Canadian housing market is now. Last call…

#254 Noel on 01.11.16 at 2:44 pm

#239 IHCTD9

“Hopefully brains will trump ideological bullshit in Canada over the coming months. Now is not the time to blow billions on ANYTHING that does not help the average Canadian…”

Actually now is exactly the time the federal government needs to start funding infrastructure projects that will provide jobs and transfer money from the government to the private sector. Deficit spending is by definition stimulative when the economy is not in full-employment. Austerity measures, which I assume you’re proposing, will only deepen and lengthen the slump we’re in. This has been proven empirically time and time again.

Don’t let the hacks from the Fraser institute tell you otherwise.

#255 Trading Naked on 01.11.16 at 2:47 pm

Attention Big Red Canadian Bank With Significant Business in Latin America:

In regards to your latest advertisement: https://www.youtube.com/watch?v=f1Kr0PtZykQ

1. What the freak is the “real economy”? If there is a “real” economy, which one is the fake one? Are you acknowledging the “fake” economy arising from criminal enterprises laundering their money into the legal economy?

2. Is this soothing folk song supposed to make somebody in Alberta feel better about getting laid off?

3. How many people have YOU laid off when you outsourced their jobs overseas?

It makes me yearn for the lameness that was “you’re richer than you think”.

#256 gut check on 01.11.16 at 2:47 pm

there are definitely times during ones lifetime when stability is easier and maybe, arguably better, too.

For those of us who have had to balance full time work and children without the financial means to pay for everything else – such as the care of an elderly parent, special medical needs, housekeeping & food preparation, driving services – routine is essential for survival. Owning a home in a decent neighbourhood with good services makes life bearable if not pleasant. :)

there’s no point arguing the ENTIRE philosophy of home ownership because each person is different.

However, if you don’t HAVE to be in the sort of rut described above, why on earth would you??????? I think that goes for many people currently hunting like mad for a house of their own, or those hanging on to one who no longer need to be stuck in ‘Etobicoke.’

#257 Kreditanstalt on 01.11.16 at 2:49 pm

#110 Drayton

“Our local municipal (Township of Mapleton) wants to raise the taxes by 5.75%. Mortgages and taxes are out of control….”

The last thing any government will do is engage in real austerity: retrench, cut programs and “services” or most especially LAY OFF STAFF.

Ours (Vancouver Island) is planning a 6-7% tax increase. There will be no serious protest until the job losses, in the high-earning sectors, begin in earnest…

#258 Yeah baby who luvs ya on 01.11.16 at 3:09 pm

Another one bites the dust… well that leaves energy east which will be killed by Ont and Que most likely as well…since they are oh so eco-green…. kiss those transfer payments bye bye…

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/british-columbia-to-oppose-kinder-morgans-pipeline-expansion-report/article28106524/

#259 Philburt on 01.11.16 at 3:13 pm

And those of you interested on the US side and respect Tom one of few.
http://www.mcoscillator.com/learning_center/weekly_chart/stock_market_committed_to_2008_scenario/

#260 James2 on 01.11.16 at 3:14 pm

I’m not a Harper fan, but what else was there to hitch our wagon to from 2008 to 2013? I guess Harper should’ve bailed out manufacturing…..oh ya the cons did.

It should be noted that Oil accounts for 3% of our GDP, I’m not sure how our drop is directly tied to oil only.

#261 Chris on 01.11.16 at 3:14 pm

Garth – you keep trumpeting this line – “The real question, when the bulk of Canadians have adopted a one-asset strategy”. I’d like to see actual stats to back this up, as I don’t believe it. Yes, surely some Canadians own RE and nothing else. I would bet tho, that the majority own both RE and other assets. So a small percentage of new homeowners are likely all in RE, as well as some who love RE above all else, but I highly doubt it is the “bulk” of Canadians, whatever that’s supposed to mean.

#262 Vundo on 01.11.16 at 3:17 pm

#223 Calgary ripoff: stop. Read first. The ground you are attempting to stand on is very, very well-tread here. If any of the below is news to you, spend more time thinking and reading before you post.

1) Rent is never the same as a mortgage because rent is the total cost of tenancy while mortgage payments are only a part of the total cost of ownership (my furace quits, I put on a sweater and call my landlord, your furnace breaks, your put on a sweater and call the repair guy, the difference is that your pay your repair guy and my landlord pays mine). Likwise: you cannot compare the cost of a bus pass to the cost of gasoline without considering the time and money that goes into a car for windshields, engine maintenance, new tires, etc. If it was cheaper to drive then public transit would be full of rich people. If it was cheaper to own a house than rent it, more poor people and fewer rich people would own houses.
2) You are in an unstable job if you care that much about what POTUS thinks about pipelines. The vast majority of jobs are unstable to some degree, but especially yours if you are holding your breath until oil rebounds. Trump will be a disaster if he wins and nothing he can do will save Alberta from its hangover.
3) Nobody ever said houses never make money. Some people who bought at the right time and sold a few months ago struck it rich. Nobody who bought at the top will see the same thing unless they can hold on while the pendulum swings all the way to the other side and back again. And then maybe in 20 years the bet pays off. If that comes to pass for you: superb, congratulations. But to pretend that this isn’t high risk is insane. It is very high risk. All the power to you if you’ve got the risk tolerance for that. I sure don’t.

#263 Noel on 01.11.16 at 3:21 pm

#253 Trading Naked

The real economy is the production and provision of goods and services, while the financial economy is trading, derivatives, policy making etc.

#264 Smoking Man on 01.11.16 at 3:40 pm

#254 gut check on 01.11.16 at 2:47 pm
there are definitely times during ones lifetime when stability is easier and maybe, arguably better, too.

For those of us who have had to balance full time work and children without the financial means to pay for everything else – such as the care of an elderly parent, special medical needs, housekeeping & food preparation, driving services – routine is essential for survival. Owning a home in a decent neighbourhood with good services makes life bearable if not pleasant. :)

there’s no point arguing the ENTIRE philosophy of home ownership because each person is different.

However, if you don’t HAVE to be in the sort of rut described above, why on earth would you??????? I think that goes for many people currently hunting like mad for a house of their own, or those hanging on to one who no longer need to be stuck in ‘Etobicoke.’
……………..

Re Etobicoke

Now that we are on the way to negative rates.

Real estate in etobicoke- Long way from a top yet. as a precaution, looking at Shower controllers on line.

#265 The Other Chris on 01.11.16 at 3:44 pm

The stress test scenario that the CMHC was running that assumed $35 oil doesn’t seem all that conservative now.

This is way beyond anything they probably modeled.

#266 Watching Rome Burn on 01.11.16 at 3:51 pm

Ha the unacquainted that want to purchase a home in Toronto now have to shell out some enormous $$ for what? Congestion, polluted air, overtaxed burdens, lousy public services, lousy municipal government, failing infrastructure, crime, lack of respectable paying jobs. The condo crowd are the ones that are really going to agonize. With their uncontrolled corps and repairs to the common elements they will suffer the greatest. The next few years will be a menagerie with folks trying to walk away from their properties. Unfortunately here in Ontario you cannot walk away from your mortgage. You are sealed in that is unless you desire to declare bankruptcy. No wonder everyone calls them concrete coffins.

#267 For those about to flop... on 01.11.16 at 4:08 pm

Is Etobicoke the Surrey of the GTA?

M41BC

#268 Philburt on 01.11.16 at 4:12 pm

#253 Trading Naked on 01.11.16 at 2:47 pm
Globalization is SLAVERY for the middle class…
Jobs gone by by…..

#269 Smoking Man on 01.11.16 at 4:22 pm

Don’t you love the 3:30 plunge protection team.

#270 espressobob on 01.11.16 at 4:23 pm

#213 zantao

https://www.blackrock.com/investing/literature/brochure/5053a-mc-investment-outlook-r10b.pdf

That is an interesting link. Suggesting that an actively managed portfolio suffers less losses during a downturn or volatile period, may have its merits in the short term.

Unfortunately like most ‘mutual funds’, they tend to be under-invested on the upside. ‘Sales pitch’ comes to mind.

Is there something wrong in owning their benchmark?

#271 JimH on 01.11.16 at 4:24 pm

#244 espressobob on 01.11.16 at 1:49 pm
“… Is it better to buy when markets are down or after they rally? Just a thought.”
================================
A great question! I like the way you have considered timelines and the distinctions between ‘investors’, ‘traders’, and ‘speculators’ as their horizons are very different. Risk tolerance is also a critically important consideration.

Anyway, I do have an opinion on your question.

Trying to catch market tops and bottoms is extremely difficult, but just the same is something all market participants are strongly tempted to take a shot at; at least once in their lifetimes!

Personally, I have no problem leaving some money on the table after locking in profits on a successful trade. I also will gladly let buyers take the first few percentage points on a bottom turnaround.

The problem is that we never know where tops and bottoms lie until well after the fact.

So, here’s my 2-bits worth; it may not be to your liking, but it works for me, my risk tolerance, and my trading/investing philosophy.

Buying into a trade position: I only enter a trade position in an equity when:
1. it is trading above a rising 5 DMA
2. it is trading at a price above a flat or rising 15 DMA
3. it is trading above its 25 DMA
4. MACD is bullish (has crossed over)
5. the stock price has made at least one higher low after a potential bottom and is breaking above that first high.

That higher low will be the first stop.

Exiting a profitable trade is simpler: Stock price breaks below a declining 5 DMA.

That is essentially how I make swing and position trades. It requires prudence and discipline that took me 5 years to acquire, and makes for low-risk but high probability of reward trading with the buyers in control.

In the end, you have to do what’s right and comfortable for you!

#272 Hope & Change (Canada) on 01.11.16 at 4:27 pm

1) Rent is never the same as a mortgage because rent is the total cost of tenancy while mortgage payments are only a part of the total cost of ownership (my furace quits, I put on a sweater and call my landlord, your furnace breaks, your put on a sweater and call the repair guy, the difference is that your pay your repair guy and my landlord pays mine).

With risk comes reward. If you’re terrified of the furnace, or the lawn mower you should keep on renting and putting your money in the stock market.

For me, I keep in mind that 90%+ of retail investors are losers in the stock market unfortunately, and I can’t live in Goldman Sachs’ offices after they steal all my money in the black swan of the month club.

Not saying that the market doesn’t have it’s place but as far as I am concerned, I built the foundation first before starting on the main floor.

I actually don’t even bother with the markets much because quite frankly, I’d rather build a business and some kind of revenue stream that I have at least some control over.

PS-> On gas furnaces, you have to take out the flame sensor and wipe it regularly with sand paper to take out the gunk that accumulates. Otherwise, your furnace wont light up and the repair guy will gladly charge you 400$ for doing it for you.

You can also buy spare flame sensors online for 1.50$/each.

#273 Andres on 01.11.16 at 4:31 pm

It’s like we’re officially in pyramid scheme territory with that phantom down-payment plan. How can everyone realize these magic condo profits when the people buying this place already represent the extreme fringe of available buyers? Because anyone who can properly afford to buy a place is not moving to a tiny condo in freakin’ Port Moody.

#274 Godth on 01.11.16 at 4:34 pm

I think we’ve left situation normal (whatever that means). Situation normal = all f**ked up, same as it ever was but it’s on steroids now. World records will be broken and women will become men, and men will become women, as a result of their vitamin treatments.

What a world of marvels we live in.

#275 Godth on 01.11.16 at 4:37 pm

p.s. I love debt as long as somebody else has to pay for it, hello kiddies! The party was great man but do you have some hair of the dog for this hang-over?

#276 waiting on the westcoast on 01.11.16 at 4:38 pm

Warehouse/production jobs to be fading away… Watch this…. Pretty impressive tech.

http://sploid.gizmodo.com/these-totally-mesmerizing-robots-that-sort-batteries-ar-1752197105

#277 JimB on 01.11.16 at 4:59 pm

“suburban Port Moody”

Port Moody has suburbs?! Wow, they must be unbelievably depressing.

#278 Nick on 01.11.16 at 5:15 pm

I’m going home to watch the 1930’s depression documentaries tonight.

#279 For those about to flop... on 01.11.16 at 5:27 pm

With all the poop happening in the world ,here’s a couple of photos to make you laugh.

M41BC

http://www.thesun.co.uk/sol/homepage/features/6850624/Pooped-pooches-are-snapped-sleeping-houndly.html

#280 Why Why Jay on 01.11.16 at 5:45 pm

#259 Chris on 01.11.16 at 3:14 pm
“I’d like to see actual stats to back this up, as I don’t believe it. ”

I’m curious too, but my anecdotal evidence backs it up. Anyone I know that both “owns” and has investments, the house outweighs investments by a large amount (usually 2-1). These are families making decent livings (120-200K). If they have a difficult time investing and paying for a house then I don’t see how anyone making less could be doing any better. The few families I know a bit about making under 100K have debt beyond their mortgage (family loans, credit card, LOC, vehicles loans, student loans.. etc etc).

They call themselves house-rich. Sure. Broke and in debt.

#281 Yeah baby who luvs ya on 01.11.16 at 5:52 pm

#271 Godth on 01.11.16 at 4:34 pm

I think we’ve left situation normal (whatever that means). Situation normal = all f**ked up, same as it ever was but it’s on steroids now. World records will be broken and women will become men, and men will become women, as a result of their vitamin treatments.

What a world of marvels we live in.
———–

https://www.youtube.com/watch?v=emF3gtmVS0s

#282 NoName on 01.11.16 at 5:58 pm

#273 waiting on the westcoast

pft robot sorting batteries, watch this robot playing ping pong.
https://youtu.be/tIIJME8-au8

#283 Penny Henny on 01.11.16 at 6:04 pm

#264 For those about to flop… on 01.11.16 at 4:08 pm
Is Etobicoke the Surrey of the GTA?

M41BC
////////////////////////////////////
I know nothing of Surrey but that sounds like an insult.

#284 espressobob on 01.11.16 at 6:21 pm

#268 JimH

Like you, a long time ago, I engaged in trading. Trailing stop loss, sell orders with limit price, and others I don’t care to share. Results were mixed. Missed a whole lotta upside on some and wondered “what the hell was I thinking” on others. MA’s & technical analysis? Waste of time.

Over that period it became obvious. I wasn’t smarter than Mr. market. A watershed moment? Hitting a “Grand slam” takes enormous risk only a fool would engage in.

Having examined mutual and hedge funds at the time, it became abundantly clear that the majority of professional traders get it wrong most of the time.

A balanced and globally diversified portfolio ended all that frustration. Learned a few facts from Garth as well.

Investing is easy, Speculation-impossible! Ain’t gonna work over the long haul.

#285 Intuitive Missus on 01.12.16 at 12:00 am

Oh the irony of the name – the “Strand”.

Who will be stranded when the ship starts to sink.

#286 broader mind on 01.12.16 at 11:01 am

What does it mean when Dollarama is leading the tsx gainers?

#287 Chris on 01.12.16 at 12:54 pm

Kind of agree with this latest blog posting, but at the same time not entirely. In order to make this argument work, you would need some statistics on the % of highly leveraged houses in Toronto versus houses that are owned. Reason being that Toronto is an odd place overall. Each neighbourhood is a collection of oddities and unlikely scenarios. For example, if you drive to Mississauga and take a ride through one of the newly built McMansion neighbourhoods, the demographics are flat. Each house is “owned” by one or more high income persons. Each house is heavily mortgaged. Same is true for most of the suburban areas around the City. You can predict who will be living in any particular neighbourhood and you can predict with a great degree of certainty, what their incomes and debt loads will be.

Not so for Toronto. Toronto neighbourhoods are not predictable. On one street, you can have a range of incomes, going from a CPP and OAS pension, to a million dollar a year income earner. You can have a range of indebtedness, from someone who owns their house outright (and has owned it since 1952) and someone who owes a million dollars and bought the house last week for a million two hundred thousand.

There is no reliable way of determining what street contains which people, or who owes what.

What seems to happen in Toronto is that every so often, a little old lady breathes her last, the family takes over the house and then you have a million dollar + real estate sale, to people who then gut and renovate and move in. There is almost no new home building south of highway 401.

So while I would be getting nervous if I owned property in a suburb where everyone is heavily leveraged and things could blow up, I don’t know if I’d be as concerned owing property on a street where it is impossible to build new houses, where demand always outstrips supply and where a large number of houses are owned outright by the title holders.

#288 Jim Porter on 01.12.16 at 1:28 pm

I’ve read that there is capital flight from China that is winding up in real estate investments in select cities around the world, Toronto and Vancouver being 2. I’ve also read that the Chinese gov’t is unhappy with the major loss of capital, and that they are considering how they can clamp down on capital leaving the country. If that were to happen, the real estate markets that they helped inflate will quickly deflate.

Do you know if any of this is true?

Jim

#289 Calgary Rip Off on 01.12.16 at 2:14 pm

#260 Vundo:

1) Health care.

2) Lose job. Lose house. Move. Retrain.

I own a mortgage. Yes there are costs, absolutely. And when your rent is the same as a mortgage, how does that work out long term? There isnt an easy answer.

If Clinton gets in and not Trump that will be a disaster.

#290 SJ on 01.12.16 at 6:56 pm

#68 Michael King on 01.10.16 at 2:46 pm
No billionaires left to scoop them up in Canadian pesos?

#80

Two of those seem to be building sites.
The billionaires don’t have, nor require, the patience to deal with the City bureaucrats processing the permits.

You can read about the horrors of dealing with them, here: http://buildinginvancouver.com

I would think twice before embarking on a building project in Vancouver: maybe there is a tree on the lot that you cannot remove, or maybe the plan’s approval is delayed by a year.

I would just build my lair in a citizen-friendlier municipality.

Bram

I’m afraid you’re a little out of the loop. There are over 600 demolition permits granted in the city a year and close to 2 houses Coke down daily. If anything it’s a matter of finding a builder who’s available with all the demand.

#291 .....huh???? on 01.12.16 at 7:02 pm

You that you haven’t suggested a 50% – 80% drop in the GTA….?????

Okay then. I am not sure when this blog started, but if GTA RE drops by 20, 30 or even 40%, then would one not still have been better off buying 5 years ago given the average detached home price increases experienced in the GST over the past 5 years??????

#292 Sean on 01.12.16 at 7:30 pm

Where in the Motley Fool article does it suggest to short bank stocks? As a subscriber to the Fool, I’d be amazed to see this suggestion, as its very ethos is buy and hold, and I’ve never once seen a short recommendation.