The little short

WOLF modified

As of Friday, four of the Big 5 Canadian banks were on the list of the most-shorted stocks in the nation. Whoa. These guys are money machines, right? Why would so many investors be betting against them, taking positions that would profit if bank stocks withered?

Well, might have something to do with Elaine. She lives in Vancouver, and would like to share this:

“There is mass hysteria here as people rush to buy now or be priced out forever. I thought things were crazy before, now they are just beyond absurd. It seems like people are doing whatever they can do buy now, including (probably) pledging their firstborn children. Some have this mentality that they must buy to ensure the future of their children, otherwise their kids will never be able to afford a place years down the road, since people seem to have forgotten that Vancouver isn’t the only city in Canada, or the world, that has houses.

“A friend of ours has been looking to buy for months, to no success. Outbid on many properties, until they finally found one that had no other offers. Bad location, they made an offer and it was accepted. Price is $800k for a 3 bed townhouse. The bank gave them the bad news: they didn’t qualify for the mortgage. No s**t sherlock, hard to justify a $750k mortgage when the family income is only $70k per year. Following some fancy footwork by the broker (something that seemed to involve kiting cheques between family members)-voila! The deal is done, townhouse is theirs. It seems outrageous to me but this seems like a fact of life these days that it’s an any-price type of game….doesn’t matter what the price is, the broker can help you get the place you want. If the bank doesn’t follow through, private lenders can step in too.

“Will the madness ever end? I have a feeling this is the tipping point.”

There’s a scene in The Big Short where a fund manager seeking evidence of a housing bubble interviews a Vegas stripper while she lap dances for him. Turns out she has five leveraged properties, and is appalled to learn her mortgages are adjustable-rate. He flies back to New York and pours everything his fund’s got into shorting real estate. In the end, he makes a billion. Toots, presumably, loses her houses.

A couple of days ago a smart US site called The Visual Capitalist reminded us of what a weird thing Canadians have done with their homes, in sharp contrast to a lesson the rest of the world learned. Quoting a top-rated Wall Street short-selling hedge fund advisor, it said, “The cross currents are beyond crazy in Vancouver — it’s a mix of money laundering, speculation, low interest rates… A house is something you live in, but in Vancouver you guys are trading them like the penny stocks on Howe Street.”

And this: “Canadian real estate has reached “peak insanity”, and it’s part of the reason that investors around the world are trying to find a way to bet against the market.”

Here’s the most startling thing our American friends noticed – last month, a record for Canadian real estate, if you were to strip Vancouver from the stats, our real estate market’s a dud. “Vancouver’ housing market sailed again in February, shooting up a record 3.2% in just one month. This is the best month for the market since August 2006. It was so good, in fact, that it single-handedly propped up Canada’s national index for housing. Canada’s market as a whole saw gains of 0.6% in the month, but it would have dropped to a lacklustre -1.1% without the inclusion of Vancouver in the 11-city index.”

Here ya go…(Click to enlarge)

Canadian-Housing-Is-Being-Propped-Up-By-Just-One-City

By the way, the real estate industry is hoping you don’t notice this, that you take the buy-now-or-buy-never headlines coming out of Vancouver or Toronto as evidence this asset’s on fire everywhere. Last week CREA upped its forecast for 2016. “Canadian resale housing market trends this year are expected to resemble those apparent in 2015, with very tight supply leading to strong price gains in British Columbia and Ontario – particularly in the Lower Mainland and in and around the Greater Toronto Area.”

Realtors are now openly forecasting that the national average price – currently sitting at the highest level in recorded history – will bloat another 8% in 2016. That would be four times the expected rate of inflation and about six times the anticipated wage gains experienced by the average family. In other words, if true, it would signal a further descent into unprecedented household debt. Yep, held mostly by the big banks.

Of course, some people (this pathetic blog included) have been trying to spell out for a year that our housing market is incredibly unhealthy and uneven. Sales and prices in resource-based communities are toppling. Seven of ten regional markets are stagnant. There are fewer monthly sales in Toronto than took place two years ago. And the real estate industry nation-wide continues to obfuscate official numbers in a variety of ways, allowing moisty cub reporters and pandering politicians to do the job of fooling folks.

So when victims like Elaine’s friends pay $800,000 for a beater house in Van with three-quarters of a million in debt – over ten times their income – it sure feels like a Vegas lap dance. How can this possibly end well?

By the way, Warren Buffet figured this out a while ago when he looked at how real estate destroyed the US middle class:

“The basic cause, you know, embedded in psychology, was a pervasive belief that house prices couldn’t go down and everyone, virtually everybody, succumbed to that. But that’s the only way you get a bubble is when basically a very high percentage of the population buys into some originally sound premise. It’s quite interesting how that develops.

“The originally sound premise that becomes distorted as time passes and people forget the original sound premise and start focusing solely on the price action. So the media investors, the mortgage bankers, the public, me, my neighbor… you name it — people overwhelmingly came to believe that house prices could not fall significantly. And since it was biggest asset class in the country and it was the easiest class to borrow against, it created probably the biggest bubble in our history.”

Nobody’s certain how things will ultimately be resolved. We just know those who believe prices will go up, forever, are wrong. The rest of us should probably get out of the way.

234 comments ↓

#1 Bottoms_Up on 03.20.16 at 11:27 am

I think a sound premise is an average family income should be able to afford an average SFH in a safe and commutable distance from good jobs.

In secondary cities, sure. — Garth

#2 the Jaguar on 03.20.16 at 11:28 am

But why short the banks, Garth? Presumably they either have insurance (cmhc or other insurers) or an maximum 80% lending position on the property. Probably significantly less on higher end homes. Won’t that protect them? Help the blog dogs to understand.

Because many global investors (unlike most Canadians) know where interest rates and real estate values are ultimately headed. — Garth

#3 Cowtowner on 03.20.16 at 11:32 am

Got a friend that lives and works in Victoria.
He’s a regional branch manager at one of the big 5. He was offered a job in VanCity and turned it down because he said his quality of life would erode in that city, even while making more money. The going rate for a condo in a decent area near his VanCity office would’ve been in the order of $1200 to $1500 per sqft, when he lives in a a really nice place in Downtown Vic for $250 per sqft. Smart guy. The illusion of VanCity is nice and all, but people -smart people who can do math – know full well there is no positive end game in VanCity. Either buy into the hysteria or leave…..or stay out. Those are your options.

Good luck to anyone just getting into the Market there in VanCity……you’ll need it.

#4 Doug t on 03.20.16 at 11:38 am

You snooze you lose

#5 Retired Boomer WI on 03.20.16 at 11:42 am

Don’t know quite it will be shaped, but I’m going to bet the big money will be had by those ‘shorting’ the Canadian Housing market.

Since I don’t actively ‘short’ stocks, I know little about the mechanics of the practice.

Just know dam well the math does NOT currently work for most buyers. Therefore, if I were in that market I would not be a buyer at the present time.

Should we see oil dip again into the $20’s per barrel… it could get very stormy, very fast, in lending markets.

#6 Diversified in Oakville on 03.20.16 at 11:56 am

Toronto and Vancouver bubbles will not last, don’t do it if you are way over the rule of 90.
C’mon Oakville, give me one more year of SFH growth so that I can cash out and move to a different part of Canada and get more home for less money.
Great way to pad the retirement!

As always thanks for the great information, and good luck in Belfountain; such a great place!

#7 Porsche on 03.20.16 at 11:58 am

Looking for work and replied to a Electrical Engineer position in Vancouver just so I could comment.

“Your paying $24 an hour for an Electrical Engineer in Vancouver, the most expensive place on earth? Are you nuts or just stupid?”

#8 our American friends on 03.20.16 at 12:01 pm

What’s the weight of the targeted big CDN banks on the TSX?

Whats’ the weight of TSX or the direct investment in CDN big banks in the Canadian investors, pension funds portfolio?

What’s the percentage in the total Canadian labor participation of the Canadian housing, RE industry?

#9 Panhead on 03.20.16 at 12:10 pm

Kinda smells like the top out here in 604land to me … I am seeing more for sale signs than I have for a while. The house down the street (asking 1.9 for an early 80’s house with pool) has not sold yet after being on the market about 3 weeks. Looked like a house inspection yesterday though. This is in Tsawwassen … a nice burb of Van. But 1.9 is nuts. This could be the apex but as a Russian co-worker used to say … it’s very hard to say. And Van proper is it’s own market for shure.

#10 Canadian investor on 03.20.16 at 12:11 pm

The real question Garth:

Will you join the “global investors (unlike most Canadians) [who] know where interest rates and real estate values are ultimately headed” and short these Canadian banks?

Would you put your money where your mouth is?

#11 zoronqueen on 03.20.16 at 12:15 pm

in Singapore for a visit. Many are saying how hard it is to sell their condo when 2nd already purchased. And this is. a country of 5.4 million

#12 Damifino on 03.20.16 at 12:27 pm

#3 Cowtowner

“Either buy into the hysteria or leave…..or stay out. Those are your options.”

I took this option: Sold out in YVR 5 years ago and rented downtown at half the cost of ownership.

Now I ride around on the bus observing the madness.

It’s an audacious spectacle. Cirque du soleil has nothing on this town.

#13 Jimmy on 03.20.16 at 12:29 pm

Master Garth,
You left out an “l” in the last paragraph in italics on your
1888 website. Hope it reopens as scheduled.

#14 Rainclouds on 03.20.16 at 12:30 pm

#3 “The going rate for a condo in a decent area near his VanCity office would’ve been in the order of $1200 to $1500 per sqft, when he lives in a a really nice place in Downtown Vic for $250 per sqft. Smart guy.Either buy into the hysteria or leave…..or stay out.

Those are your options.”

Not completely, I Rent in DT Van for $3.00 per sq ft. Invest the other $1497.00. Seems to be working ok…..

#15 Chaddywack on 03.20.16 at 12:32 pm

The interesting thing is that people say that if prices fall in Vancouver droves of people will start buying on the cheap.

Although that might be logical when I look at previous falls and crashes it seems that people start abandoning the asset and it becomes damaged goods……

I guess kind of like the stripper in the movie.

#16 Bram on 03.20.16 at 12:42 pm

That top shorted list seems pretty bogus btw….
It is absolute numbers, not relative to market cap.
So yeah, the bigger the company the higher its position on the list, thereby not saying much.

The should do a list with shorts per share or something.

#17 Shredder on 03.20.16 at 12:47 pm

Shorting shares

My understanding is when shorting dividend paying stocks, the shorter has to pay said dividend to who they borrowed the stock from to sell short. The new owner of the shorted stock gets paid directly from the Co (in this case, bank).
Not an investment I would make

#18 boonerator on 03.20.16 at 12:57 pm

The lapdancer story reminds me of the famous story about Joe Kennedy in 1929.
He was getting his shoes shined and the shoe shine guy was telling him about all the stocks he owned and giving him tips on what to buy.

Uh oh, thinks Joe and he sold everything.

http://www.acting-man.com/?p=39468

#19 Blobby on 03.20.16 at 1:02 pm

What’s a short?

#20 here's how it works on 03.20.16 at 1:02 pm

Prices always go up on the big arc of time…which is infinite….
Because banks create new money as debt…
But what about the money required to pay back the debt?
It comes out of pool of existing money in the system.
Result, inflation.

#21 Brazil ex-pat on 03.20.16 at 1:04 pm

The most dangerous animal in Canada is undoubtedly the mother moose. Never get close to a mother moose. She will crush your skull like a beer can.

#22 fishman on 03.20.16 at 1:12 pm

Strangely calm at our small time west side Van R/E estate players coffee clutch. Its like the tidal wave has rolled over ,left the land flooded & is now into the burbs. Demand for short term money on 2nds exploding. Nobody close to qualifying. Applicants all older white guys with no exit plan except more of the same.

One guy finished a property development. First time in 30 years builders paid full price on completion, instead of structering payments. So much greed out there & we’re all nervous. Not that we aren”t greedy, fear is stronger.

I’ve got months into City Hall over a simple change of use application on a commercial property. Huge backlog, extraordinary jump in fees, the bureaucrats loathe us but still they come.

None of us want to admit it but sure looks like we”re out of the game. Imagine an era when you worked a hard rock mine or fished in the summer;came to UBC in the winter & had enough money to buy an old beater in Dunbar & cover your mortgage with rents from fellow students. We lucked out. Now, its bug out. West side Boomers don’t die: they sell their beaters & fade away.

#23 Island Bound on 03.20.16 at 1:13 pm

Hey Garth – great blog. I just recently discovered, and glad I did!

I’m in the Vancouver market, but currently looking at a move to the island. Have a Coal Harbour townhouse that has relatively little mortgage left (just over 1x gross salary). I am weighing 4 options, and developing growth/decline scenarios around each.

1. Hold on to Vancouver property (for either short term rental on AirBnB or long term tenants), and buy in Nanaimo

2. Sell the Vancouver property, and buy in Nanaimo

3. Hold on to Vancouver property (for either short term rental on AirBnB or long term tenants), and RENT in Nanaimo

4. Sell the Vancouver property, and RENT in Nanaimo

Your blog basically made me add options 3 & 4, because it looks to me like Nanaimo is also suffering from a Vancouver spillover effect and looks inflated.

There are intangibles here (short term rental allows my own periodic usage, my wife like all wives has an “own at all/any cost mentality :), etc), but just based on the economic case and dynamic between those 2 housing markets, curious to hear your thoughts (and those of other posters). Thanks!

#24 juno on 03.20.16 at 1:13 pm

That is why I don’t care how high real goes up, Because like an elastic band the longer it stretches the hard it will spring back, beyond equilibrium and then stabilize at equilibrium.

The Big short was a great movie. The economist see it. But they want to ride the horse until it breaks a leg. I like the part of the move when the bankruptcy was a problem but goldman sac’s recommendation was a stronger / stable market. The lady said, if we don’t give it a good rating someone else will. So the Ponzi continued. Until finally one of the brokerage houses failed then the house of cards all fell apart.

#25 Alex G. on 03.20.16 at 1:13 pm

Another interesting chart to look at is CREA’s most recent “Residential average price” http://creastats.crea.ca/natl/images/natl_chartA05_hi-res_en.png

It clearly shows the price decline in the maritime provinces.

Plus then there was this quote from last week’s CREA report: “The national average sale price rose 16.4% on a year-over-year basis in February; excluding British Columbia and Ontario, it declined by 1.4%.” http://creastats.crea.ca/natl/index.htm

Interesting to see that even their data starts showing more and more negative trends.

#26 Bram on 03.20.16 at 1:22 pm

Jaguar in #2 is right.
Banks are protected by CMHC.

Betting against Canadian banks is pretty dumb money.
And we don’t even know if people are actually doing just that: the list of shorts is not per-share, but absolute.

Bram

#27 BS on 03.20.16 at 1:31 pm

the Jaguar on 03.20.16 at 11:28 am

But why short the banks, Garth? Presumably they either have insurance (cmhc or other insurers) or an maximum 80% lending position on the property. Probably significantly less on higher end homes. Won’t that protect them? Help the blog dogs to understand.

Here in Vancouver the wealth effect from rising house prices where people do not save and borrow through HELOCs is massive. This stimulates the economy which helps banks. Plus the amount of employment directly related to RE construction and the RE industry is massive. I estimate 40% in Vancouver. When housing tanks Vancouver will go into a massive depression that will be felt throughout the economy. There will be just way less money being spent in all sectors and significant unemployment.

For the banks it is not so much about mortgage defaults but defaults on other unsecured or marginally secured loans (people stop paying credit cards, lines of credit, car payments, etc when they are tapped out or become unemployed).

There will also be a massive loss of revenue because there will be fewer new mortgages and other lending as credit contracts. If bank earnings go down due to less new mortgages and less lending coupled with other loan losses the bank stocks will plummet. You do not need mortgage defaults for this to happen. Plus when there is uncertainty in the economy and unemployment (like 2008) the banks will get hit even before earnings drop. Add in low oil prices and a T2 run economy and the banks are in tough going forward. The banks are a proxy on the Canadian economy.

#28 Randy on 03.20.16 at 1:31 pm

Better to piss away your savings than wait for the Bank Bail-In ?

#29 Damifino on 03.20.16 at 1:35 pm

#18 boonerator

If one accepts the axiom that picking individual stocks is a fool’s game (as this blog’s proprietor claims), then taking stock pick advice from a shoeshine guy should be no more foolhardy than taking it from any famous financier.

#30 Ace Goodheart on 03.20.16 at 1:39 pm

RE: Bank shorts: Canadian Banks have been overpriced for years. Don’t buy the stock. If you bought it in 2008, when it was on sale, you’d have tripled your money.

Right now the money’s in residential apartment REITs and oil stocks if you can find good ones. Also a certain medical equipment manufacturer based in the Netherlands is currently selling at an incredible bargain.

We’re in a credit bubble, which means high bank profits. When the bubble bursts, lots of write downs and the big 5 will be on sale. Should happen in a year or two.

I would never short sell anything, just because I like to own the underlying asset. Also it’s hard to predict when the flop will happen.

But happy trading. Watched my Toronto house increase in value over 300K. I own it anyway so I don’t care what it’s worth. Will watch it go back down with the same lack of interest.

#31 BS on 03.20.16 at 1:40 pm

Chaddywack on 03.20.16 at 12:32 pm

The interesting thing is that people say that if prices fall in Vancouver droves of people will start buying on the cheap.

That is correct. The key to your statement is people buying on the cheap. You need a 70% plus correction in Vancouver before things could be considered anything close to cheap.

#32 No rate hike on 03.20.16 at 1:46 pm

Nobody believes in a rate hike, at a party yesterday everybody slammed me “bank of canada will never raise rates because will destroy the housing”. This is the mentality in whole YVR. I replied that mortgages are decided by bond market, everybody was like wtf is that?

#33 DM in C on 03.20.16 at 2:10 pm

Cripes, and we felt nervous buying in Calgary for $500k at only 3x salary, and it was for a 1/4 acre lot with an unobstructed view of the mountains.

Vancouver is nuts. Glad I turned that job down two years ago.

#34 Read on 03.20.16 at 2:14 pm

Reason Mortgage Brokers exists is to ‘fudge’ your income.

They always get you the mortgage as the income in never verified by CRA.

#35 Read on 03.20.16 at 2:15 pm

Having said that, the real reason for the price uptick is foreign money inflows. the Joneses are just trying to keep up.

#36 Brian Richards on 03.20.16 at 2:17 pm

It seems like Canadians and US citizens have almost no education in financial matters. I can understand the desire for a house, in which to make a home, but there are other asset classes my friends. One day you will either not be able to work or have neither the energy or motivation. If your house comprises 75% of your assets, how will you fare? Real estate for personal use is a money sink. Listen to Garth. Think! And good luck. (really)

#37 Ace Goodheart on 03.20.16 at 2:21 pm

Re: #32 No rate hike: “I replied that mortgages are decided by bond market, everybody was like wtf is that?”

What I was saying yesterday. Bond markets are slowly freezing up. Banks finance mortgages by selling bonds. They make money on the spread. If you can’t sell bonds for the current yields, then interest on mortgages has to go up, until you get to a point where the banks can sell their debt instruments again. Banks know this, that is why they have been tightening their credit requirements lately (and why we suddenly have all these advertisements for sub prime mortgage lenders and bankruptcy counsellors).

Won’t make any difference what the BOC does with rates. If the banks can’t sell their bonds, then they have to increase their interest rates on their mortgages until it becomes possible to sell the bonds again.

#38 TurnerNation on 03.20.16 at 2:31 pm

As this is a biker blog….was at Trump Hotel’s (boo hiss) America club (yay growth) for a late night fashion show (lingerie natch) and what do I see at a booth but several young patched hells angels with their leather vests and entourage. Their political statement? Or dreadful irony? Security team in training? Who knows.

I wonder if they valet checked their bikes. Oh well I’m comfortable at anywhere from 2 to 5 starred establishments. Never thought the ‘ twain would meet. Half expected gullets to be flying.

#39 Tony on 03.20.16 at 2:34 pm

Re: #2 the Jaguar on 03.20.16 at 11:28 am

Credit will dry up drier than the Gobi Desert in Canada. That’s why they’re shorting the banks. Add in the stock market indexes are the most overvalued in history and it makes it a no lose situation for anyone short. As with any short sale you have to make sure you can hold margin if the trades go against you short term.

#40 Read on 03.20.16 at 2:39 pm

Another issue in the Vancouver area is that owners/landlords don’t give a F about reporting rental income. Vast majority don’t report it.

The speculators can be taken out by the CRA if they really wanted to. But won’t happen.

#41 Certified Yoga Instructor on 03.20.16 at 2:44 pm

Namaste, Garth and all Downward Blog Dogs.

As we await the coming real estate correction, your blog is like a satsang for those who know what they do not know, a sun salutation for the days to come.

Keep your chakras well, everyone, and stay away from the housing market while it encounters what Agni has in store for it.

#42 Musty Basement Dweller on 03.20.16 at 2:49 pm

The insanity in Vancouver will only end if the interest rates go up or they somehow make money laundering or hiding of large sums illegal. (not likely). Read an article this week on money laundering in Vancouver. The responsible federal agency is barely monitoring. And the only illegal money laundering is that which is associated with the drug trade and they aren’t even looking at that right now. All of the money coming from international sources and friends and family out of the country isn’t even illegal so why would they look at that. Anyone who thinks that isn’t a massive factor in Vancouver house prices is deluding themselves. The question is when will the music stop.

#43 Tony on 03.20.16 at 2:53 pm

Re: #23 Island Bound on 03.20.16 at 1:13 pm

Sell in July or August this year as mortgage rates will likely fall in the next couple of months here. October and beyond should be a write-off for the world economies. Commodities are seeing a bounce due to the falling U.S. dollar but it’s temporary as the worldwide recession deepens. They waited too long to try and devalue the U.S. dollar in this an election year. Normally the lag period of time is 6 to 8 months.

#44 NotAGreaterFool on 03.20.16 at 2:55 pm

I have stopped looking at houses in Toronto.

Any blog dogs with insights/evidence (sales activity, price, multiple bids, assignment flips) of what is going on Toronto proper non-condo market?

I don’t trust the published realtor cartel #s.

#45 the Jaguar on 03.20.16 at 2:57 pm

#27 BS on 03.20.16 at 1:31 pm

I agree completely. Heloc’s have been the product du jour for sometime. An ATM on peoples homes. And then there is the coming digitization in banking. The big five won’t need all those people, will they? Conversations where required can occur in the virtual world. The virtual world has cheaper labour costs.
Strap yourselves in…could be a bumpy ride.

#46 Tony on 03.20.16 at 3:00 pm

I remember the tip-off in the fall of 1987 when the real estate market hit an absolute peak in the GTA was when some guy put his garage up for sale for 99 grand in the eastern part of Toronto. With the caption “can easily be converted to a house”. This time around it will be completely different due to different races of people coming to Canada since then. Job loses will be the only thing that will kill the last remaining cities that are seeing up markets in housing. People will keep chasing alternative investments as interest rates fall in the coming years.

#47 MovieWatcher on 03.20.16 at 3:11 pm

The stripper in The Big Short was in Florida, not Vegas.

#48 Victoria Real Estate Update on 03.20.16 at 3:17 pm

# 1 Bottoms_Up

The sound premise you talk about was the situation (or close to it) from 1995 to 2000 in most Canadian cities before lax lending standards were brought in to inflate Canada’s housing bubble.

#49 Grey Dog on 03.20.16 at 3:18 pm

This week I watched the documentary offered on TVO “The Forecaster” about Martin Armstrong who developed a computer program noting and predicting financial cycles using historical models, he predicts serious economic trouble ahead, basically late 2017.

Last night watched The Big Short. My husband keeps saying Canada’s banks are safe…I read here daily and I’m not so certain.

Time to sell the Big Bank Stocks?

#50 LL on 03.20.16 at 3:18 pm

…”As of Friday, four of the Big 5 Canadian banks were on the list of the most-shorted stocks in the nation. Whoa. These guys are money machines, right? Why would so many investors be betting against them, taking positions that would profit if bank stocks withered?”…

I think the Canadian banks are not in so good position as before. There is also lower oil price…not good for them.

#51 Siva on 03.20.16 at 3:19 pm

Garth, you missed the stripper had a condo too.

#52 Peter on 03.20.16 at 3:20 pm

Posted in my Twitter feed without comment:
https://pbs.twimg.com/media/CeApls9UkAA7xVm.jpg

Yes. We have returned to boarding houses in the GVRD.

#53 Binder Dundat on 03.20.16 at 3:25 pm

@ Porsche

I recently applied for a position in Vancouver as well, with the thought I’d like to be closer to family. The end of the compensation conversation was this:

Me: “So, you’d like me to take a 20% pay cut to do an equivalent job, in a city where my housing expenses are going to be roughly double?”

HR person: “Uhhh……..”

My family and I left Van in 2007, and we haven’t looked back. We now have enough financial resources to have a great house, invest for retirement and our children’s education, and travel frequently. Couldn’t do any of that in Van. People are nuts.

#54 triplenet on 03.20.16 at 3:25 pm

#23 Island bound

Your first order of business is to consult with a real estate lawyer regarding your income strategy for your townhouse.
If not you may need furthet legal advice to mitigate the fines you are about to receive.

#55 Nobody on 03.20.16 at 3:31 pm

Odd how Vancouver is 10x overvalued and the speculation is being driven by billionaire Chinese investors looking to beat the markets.
These must be some dumb Chinese billionaires! I wonder how you get to become a billionaire in China if you are dumb enough to invest in illiquid assets that are 10x overvalued?

Of course it can’t be dumb Canadians homebuyers. Canadians are stereotyped aroudn the world for their business savy and hard negotiating.

#56 Brazil ex-pat on 03.20.16 at 3:33 pm

DELETED (anti-Chinese)

#57 Rexx Rock on 03.20.16 at 3:41 pm

House prices in Vancouver reflect a strong and robust economy.Average family income well over $150,000 that’s why real estate is so high.Common economics,supply and demand and affordability.Stop with all this speculation nonsense.

#58 Yuus bin Haad on 03.20.16 at 3:45 pm

Sunday humour: link

#59 cecilhenry on 03.20.16 at 3:48 pm

Real estate a little overblown???

Here’s a surprising story:

Speaking with my 12 year old nephew over skype last week about his holidays he suddenly tells me he has to go. The family are going to watch one of their favourite shows together. The show??

‘Love it or list it’

Can’t believe it. He’s 12.

#60 ed on 03.20.16 at 3:49 pm

Further evidence that we are over the cliff edge, walking on thin air, and a pleasant, slow descent is not in order. I know you do not want to feed the doomers who come here for a group hug Garth, but I think RE is headed for a quicker fall than you are predicting.

#61 Michael King on 03.20.16 at 3:50 pm

Reporting from Vancouver (Kitsilano). The spring real estate market has already begun. I’m retired and take daily long walks through the neighbourhood. My impression is that there are fewer “For Sale” signs this year in reference to detached houses, duplexes and town houses. Garth has already pointed this out. As for sales, I’m seeing lots of “Sold” signs on these properties and they appear to be selling quickly. Anecdotal scuttlebutt indicates that everything is selling over the listed price. Check out this charmer for only 2.1 million. It was listed @ 1.5 just two years ago. I’ve been here since ’81 and this is the most insane housing market I’ve seen yet.

http://www.gdrealestate.ca/property_details-3-93782.html

#62 Nodebt on 03.20.16 at 3:55 pm

DELETED (anti-Chinese)

#63 cashing in on 03.20.16 at 4:00 pm

If it all comes crashing down in Toronto it will be because of people finally cashing in, which I think is happening. Lot of pricey stuff on the market in the 2M plus range. Once that crashes, it won’t be sexy to have a big house in TO anymore because the big money will already have been made. There will be no joy in buying someone else’s retirement vehicle, even if you get it to for cheap. The buzz will be gone and nobody will care about your house in Leaside. You will be seen as somebody who missed the boat. Came late to the party.

#64 Peter on 03.20.16 at 4:32 pm

“The interesting thing is that people say that if prices fall in Vancouver droves of people will start buying on the cheap.”

…except that mortgages will *cost* more.

#65 Victoria Real Estate Update on 03.20.16 at 4:43 pm

# 57 Rexx Rock

“House prices in Vancouver reflect a strong and robust economy. Average family income well over $150,000 that’s why real estate is so high.”

Any proof , facts, links, etc. to back your claims?

Without today’s record-low rates, it would be easy to argue that house prices in every Canadian city would be falling.

Up to now record-low rates have enabled the real estate party to continue in the remaining few Canadian cities that Garth talked about. However, it’s just a matter of time for these remaining cities to peak as well.

Canadian 5-year fixed mortgage rates will soon be on a one way trail higher that will take then north of 5% within 2 to 3 years.

As mortgage rates rise, buyers will qualify for smaller and smaller mortgages and become less and less confident in their local housing market as rates continue to rise.

Rising rates will play a big part in changing the attitude of buyers in Canada. What seemed hot and wanted one day will seem cold and unwanted the next. This is how housing bubbles deflate.

The rest of the world is looking for ways to short Canada’s bloated housing market. They know what happens next.

Prople like you will try to keep the party going as long as possible with unsubstantiated claims for your own self-serving reasons.

Vancouver’s housing bubble will deflate. There is no example of a housing bubble anywhere in the world at any time that didn’t deflate.

It isn’t different in delusional, debt-bloated Vancouver.

#66 Penny Henny on 03.20.16 at 4:56 pm

#44 NotAGreaterFool on 03.20.16 at 2:55 pm
I have stopped looking at houses in Toronto.

Any blog dogs with insights/evidence (sales activity, price, multiple bids, assignment flips) of what is going on Toronto proper non-condo market?

I don’t trust the published realtor cartel #s.
//////////////////////////////////////////

In Etobicoke I’m seeing sold prices up 10% over last year.

#67 boonerator on 03.20.16 at 5:09 pm

#29 Damifino on 03.20.16 at 1:35 pm

#18 boonerator

If one accepts the axiom that picking individual stocks is a fool’s game (as this blog’s proprietor claims), then taking stock pick advice from a shoeshine guy should be no more foolhardy than taking it from any famous financier.

————————————————-
What I took from the dancer story and Joe Kennedy is that bubbles end and the trick is to anticipate when. Some people see what’s coming by talking with someone who does not recognize how overextended they are.
I bet a wise guy in 17th century Amsterdam was in a coffee shop listening to the server tell him that he had just bought a tulip for thousands of guilders and how he was going to double his money overnight and tulip prices could never fall.

#68 NoOneOfConsequence on 03.20.16 at 5:22 pm

There are some weird comments here about shorting the banks…it’s not about the banks FAILING…it’s about the bank stocks dropping in price.
If a shorted stock goes to zero…you lose everything. No bid.
The idea is that the banks take big hits on defaults, their earnings drop…and their stocks follow.

Now that said – I grabbed 300 shares of Canadian Western Bank a couple weeks ago at $19 per share. Tidy dividend of 5.4%. Nearly 30 points in a couple weeks!

I know I broke the “individual stock” rule…but it worked so far.

Do I rebalance to lock in the profit? Or let it run…hmmm.

#69 Herb on 03.20.16 at 5:26 pm

Once upon a time I was a shiny young Army officer on the CF Middle Management Course. I actually learned a few things, but what really stuck with me was the Kepner & Tregoe problem-solving method. Briefly, if something performs differently, find the change that causes it to perform differently.

Now, we have house lust (or Garth’s “horniness”) from coast to coast – people simply would rather live in their own homes (especially since any capital appreciation of primary residences anywhere is tax free.) We have cheap mortgage money from coast to shiny coast. We also have low to middling family incomes from coast to coast.

Vancouver has the highest house prices Canada’s, so house lust must be greater, money must be cheaper and/or incomes higher than in the rest of the country, right? House lust well could be greater in Vancouver than anywhere else, but house lust does not buy houses, money does. Yet money is not cheaper, nor are family incomes higher than anywhere else in the country. But there must be more or cheaper money available in Vancouver than anywhere else in the country.

So what accounts for the availability of more money to buy houses in Vancouver

A great tolerance for debt. BC is the only province with a negative savings rate. — Garth

#70 Bram on 03.20.16 at 5:36 pm

#49 Grey Dog on 03.20.16 at 3:18 pm
Martin Armstrong who developed a computer program noting and predicting financial cycles

Sorry, but someone who sees ‘Pi’ in the financial cycles is not a scientist, he’s a numerologist.

If you make your decisions based on that, you deserve to lose all your money.
https://en.wikipedia.org/wiki/Numerology

Bram

#71 Ret on 03.20.16 at 5:36 pm

#40
“The speculators can be taken out by the CRA if they really wanted to. But won’t happen.”

The same situation with illegal student housing slumlords.

You would think that the Canada Student Loans people would at least ask the student who was being paid the $4-5000 rental money for their student room and report it to the CRA. No disclosure, no student loan next year.

Why go after tax cheaters when you can slam the whole country with new carbon taxes!

#72 cto on 03.20.16 at 5:37 pm

So garth
Spring approaching.
What’s your take on ontario cottage coutry.

#73 cto on 03.20.16 at 5:39 pm

Common man answer…my wife wants to upgrade to road access on g bay

#74 bank loan officer (non-millenial) on 03.20.16 at 5:41 pm

Did we screw up?

#75 fleabitten monkey on 03.20.16 at 5:47 pm

Rexx Rock – where did the stat on vancouver family income come from?

He made it up. — Garth

#76 Retired Boomer WI on 03.20.16 at 5:55 pm

My gut is telling me to pull things back. Leave some money in the market, and lighten up on Bonds.

Gut is telling me raise cash, and keep the Bonds quite short. Am I starting to smell a liquidity crisis starting to develop? Gut says it is OK to hold stocks with minimal debt.

Hmmm…

#77 tundra pete on 03.20.16 at 6:04 pm

All this action going on where the know-it-alls come for degrees at UBC and SFU among other higher education institutions. Obviously not enough are studying finance. Maybe some should be attending the school of hard knocks.

I guess it may turn out to be learning by trial and error for some. You would think that some of these greater fools would use a little more common sense. Then again if it were common, there would be more of it wouldn’t there?

#78 Steerage Bilge on 03.20.16 at 6:06 pm

#76 Retired Boomer WI on 03.20.16 at 5:55 pm

My gut is telling me to pull things back. Leave some money in the market, and lighten up on Bonds.

Gut is telling me raise cash, and keep the Bonds quite short. Am I starting to smell a liquidity crisis starting to develop? Gut says it is OK to hold stocks with minimal debt.

Hmmm…

My gut says have a beer and not care the slightest!

#79 Ponzius Pilatus on 03.20.16 at 6:12 pm

#184 Smoking Man on 03.19.16 at 8:22 pm
Getting ready to turn on every light and appliance at 8:30 in celebration of earth hour.
————-
I’ll join you.
What time is 8:30 on the West Coast?

#80 Anonymous on 03.20.16 at 6:13 pm

I work in the industry here in soggy 604. Elaine’s story is the norm. I have witnessed stories like that for a while now but it really heated up after last spring’s interest rate drop. It’s insane now. I remember Garth saying be careful of advice from people with a vested interest. I laugh because those who have seen the big short say it won’t happen here because we are different. I guess with cmhc they have somewhat of a point but too many people are taking on too much debt they can’t afford and that equals risk. And no realtor or mortgage broker will tell you to hold off. You all think HAM is the reason here in YVR but I see the vast majority as the herd stampeding of the cliff with their family’s deposit cheques and mortgage approvals in hand. It’s crazy irrational out there right now.

#81 Ponzius Pilatus on 03.20.16 at 6:27 pm

cheque kiting!
That’s soo 70ish.
Not possible anymore.
Cheques are clearing much too fast.

#82 Ponzius Pilatus on 03.20.16 at 6:32 pm

Yeah,
I too, went for my lap dancer for advice.
Don’t seem to work.
Still living in my parent’s basement.
Goes to show, not all movies tell the truth.

#83 You asked... on 03.20.16 at 6:33 pm

#19 Blobby

A tall…

#84 Freeman on 03.20.16 at 6:34 pm

I think I have come up with a solution to the problem of getting the world’s economies back to normal: A WAR.

No, not the conventional war where countries are fighting each other, no, it will be something similar, a battle to rebuild the cities of each country.

In an actual war countries spend massively to fight each other, and they have to re-build their cities after the infrastructure in the cities are destroyed. Usually such rebuilding takes around 10 years to complete.

Now imagine the situation if we don’t have an actual war, but instead people are drafted into a ‘WAR TO BUILD THE COUNTRY’, all of the people who do not currently have a full time job are DRAFTED by the government at 1/2 of minimum wage, and put into military style camps, and their job over the next 10 years is to rebuild EVERYTHING (other than the actual buildings) as if it was all destroyed in a war. All roads, all bridges, all sewers / water mains, all electrical lines, all rail lines, everything rebuilt by the government as if it was actually destroyed by a war.

First this would take the unemployed / underemployed people and give them HOPE of gaining real life work experiences. At the same time they would not be homeless, they would live in military quality camps with free room and board (and food, but little else).

The spending by the government on such work would be quite low because of the low pay given to the workers, not the high pay given to UNIONIZED government workers. So our much needed infrastructure would be re-built at a bargain basement cost.

10% of the nations infrastructure would be re-built each year, starting after an initial 2 year recruitment and massive officer/worker training period.

This is the type of crazy thing that got the economy booming after WW2, both here in North America and in Europe as well. We cannot afford to have a world war because these days it would be a nuclear war in which no one survives, so let us do exactly the same thing as if there was a war, simply rebuild everything like they did back in the 40’s and 50’s. We can do it. They did it back then and I don’t see why we cannot do it again.

#85 Steerage Bilge on 03.20.16 at 6:35 pm

#79 Ponzius Pilatus on 03.20.16 at 6:12 pm

#184 Smoking Man on 03.19.16 at 8:22 pm
Getting ready to turn on every light and appliance at 8:30 in celebration of earth hour.
————-
I’ll join you.
What time is 8:30 on the West Coast?

8:30

#86 nutso on 03.20.16 at 6:35 pm

My coworker just bought a 1.2 mill east side fixer 2 bed up 2 bed down. .He says I will rent the 2 suite and live in the upstairs 2 bedroom. .I say where the 3rd suite? He says he will convert the 60 yr old double garage into an bedroom and get 1200$ a month.. yikes this is what it has come too

#87 Brazil ex-pat on 03.20.16 at 6:36 pm

Sorry, but someone who sees ‘Pi’ in the financial cycles is not a scientist, he’s a numerologist.

If you make your decisions based on that, you deserve to lose all your money.
https://en.wikipedia.org/wiki/Numerology

Bram

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

I remember when I was 7….and my brother would say he did not like something. When we asked why he said “because”.

Sounds like you are basing Mr Armstrong’s work on exactly the same philosophy. Have you even read anything of his? No didn’t think so.

#88 Brazil ex-pat on 03.20.16 at 6:43 pm

#56 Brazil ex-pat on 03.20.16 at 3:33 pm
DELETED (anti-Chinese)

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

O que?????? Por favor explique????

#89 Ponzius Pilatus on 03.20.16 at 6:43 pm

#59 cecilhenry on 03.20.16 at 3:48 pm
Real estate a little overblown???

Here’s a surprising story:

Speaking with my 12 year old nephew over skype last week about his holidays he suddenly tells me he has to go. The family are going to watch one of their favourite shows together. The show??

‘Love it or list it’

Can’t believe it. He’s 12.
———————
His parents must be realtors.
Can’t start the brain washing too early.
But still better than him joining ISIS.

#90 Cash is King on 03.20.16 at 6:45 pm

I remember a few posts a year or so ago about a company who opened a hedge fund strictly to short the Canadian banks.

Anyone remember their name and how the fund made out?

#91 Ponzius Pilatus on 03.20.16 at 6:47 pm

The tulips are up earlier in Vancouver this year.
Harbinger?

#92 Doug in London on 03.20.16 at 6:48 pm

I still don’t get it. Why aren’t more home owners in Vancouver area, who have seen a big run up in the value of their house, not frantically selling to cash in their winning lottery ticket? there may be no better time than right now.

#93 Mean Gene on 03.20.16 at 6:51 pm

The payments on a 750K mortgage 25yr 2.5% bi weekly is $1500.00 = 39K per year. There is no way in hell (Vanity city) a household income of $70K would support that… unless the income is net.

#94 not 1st on 03.20.16 at 6:51 pm

Ive got news for you Garth. The banks aint involved in that vancouver insanity. There is no way a bank lends you $800k on $70k income.

Our banks are pretty solid, they have stress tested a lot of scenarios and probably ave cleaned up their balance sheets this past year. Shorting them is a mistake.

#95 Siva on 03.20.16 at 6:55 pm

Total flight movements:

London UK – One million (Five airports combined)
Toronto YYZ – 450,000
Vancouver YVR – 316,000

#96 Raven on 03.20.16 at 7:01 pm

CMHC Is Getting Nervous

A little noticed event just occurred when CMHC put the banks on notice that they are looking into ways to share a larger portion of risk underwriting Canadian mortgages.

It should be interesting to watch how banks react to this “sharing” and how it affects their willingness take on new mortgages.

This may be the restriction of capital that begins, in its own subtle way, the Great Canadian Deflation.

List it or Lose It, coming to a channel near you.

#97 Retired Boomer WI on 03.20.16 at 7:05 pm

#78 Steerage Bilge

You’re probably right on having a beer, and not caring in the slightest. My gut, probably just gas anyway.

#98 Vanecdotal on 03.20.16 at 7:05 pm

Will be interesting to see how this plays out: http://globalnews.ca/news/2588323/many-vancouver-real-estate-firms-failing-to-follow-anti-money-laundering-laws-watchdog/

“Of the 80 realtor offices investigated by the federal money-laundering watchdog, 55 had significant or very significant deficiencies when it came collecting key information from buyers.

Financial crime lawyer Christine Duhaime said there could be hundreds of realtors in the same boat. “Had they done a greater analysis of many more realtors they would have found, I think, the same parallel where 70 to 75 per cent are not compliant,” she said.

The Financial Transactions and Reports Analysis Centre of Canada tracks attempts to launder money in Canada. Realtors are required to fill out a FINTRAC form for every transaction. FINTRAC’s non-compliance cases in Vancouver have quadrupled from a year earlier.

Premier Christy Clark said she is “disturbed by what we’ve heard from FINTRAC about a failure to disclose.”… “Now you should know that we are sharing tax information with the federal government,” she added.”

CRA Special Project also actively auditing 604 rental income back through time as we speak. Nothing to worry about if you’re playing by the rules in either circumstance, of course.

#99 Don't Be So Mean on 03.20.16 at 7:07 pm

So according to you “a smart US site called The Visual Capitalist… said, The cross currents are beyond crazy in Vancouver — it’s a mix of money laundering, speculation, low interest rates…”

Are you finally admitting that money laundering is a big part of the problem here in YVR? I know you would hate to admit that Garth. I guess you acknowledged the statement ’cause it omitted the word “Chinese.”

No need to reply in some critical manner – we already know what you think of us Vancouverites who are living through this and see what’s really going on.

Yeah, you’re obsessed. — Garth

#100 Garth this technology is just plain scary on 03.20.16 at 7:09 pm

https://www.rt.com/viral/336379-change-face-trump-putin/

#101 $7 trillion of negative-yielding debt in the world on 03.20.16 at 7:12 pm

http://www.businessinsider.com/interest-rates-dangerously-negative-2016-3

The ECB lowered its overnight deposit rate to -0.4%

The European Central Bank went “all in” with negative interest rates and lowered its key overnight deposit rate from minus 0.3% to minus 0.4%. The ECB also expanded its quantitative-easing program by an additional €20 billion per month.

Japan sold $19.4 billion of negative-yielding bonds

Lots of government debt already has negative yields, but for the first time ever, a corporation was able to sell a new bond issue with negative interest rates.

German mortgage bank Berlin Hyp AG was selling a €500 million (US$550 million) 3-year bond at a yield of minus 0.162% last week.

Overall, there is $7 trillion of negative-yielding debt in the world, which equals 29% of the Bloomberg Global Developed Sovereign Bond Index.

I’m not talking about backwater, third-world countries either—I’m talking about central banks from developed countries like Switzerland, Sweden, Japan, Denmark, and the European Central Bank.

Don’t think for a minute that negative interest rates can’t happen here. For a short time in 2008 during the Financial Crisis, yields on US Treasury bills actually turned negative.

Nervous investors bought Treasuries with such force that prices soared and yields dropped into negative territory.

When things get ugly, the Wall Street crowd has demonstrated that it is willing to lose a small amount of principal in exchange for safety.

Sadly, I think the outlook for conservative, risk-averse retirees who depend on portfolio income to survive is pretty darn bleak if they continue to invest in fixed-income securities like bonds and CDs.

The fixed-income rules have changed, and the only way to generate any substantial portfolio income is going to be with stocks that pay generous dividends.

#102 Siva on 03.20.16 at 7:12 pm

Busiest airport by passenger traffic:

London UK – 112 million (Five airports combined)
Toronto YYZ – 41 million
Vancouver YVR – 20 million

#103 Victoria on 03.20.16 at 7:15 pm

#57 Rexx Rock
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/canadas-old-standards-of-housing-affordability-need-an-update/article27126408/

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm

#104 The real life Gordon Gekko is supporting Bernie Sanders on 03.20.16 at 7:32 pm

Speking of movies, the real life Gordon Gekko is supporting Bernie Sanders because of a basic economic principle.

http://www.businessinsider.com/asher-edelman-endorses-bernie-sanders-2016-3

Asher Edelman, an investor who was one of the inspirations for the nefarious corporate raider Gordon Gekko in the movie “Wall Street,” made a surprise presidential endorsement on CNBC’s Fast Money last week: He came out swinging for democrat Bernie Sanders.

Most interesting was Edelman’s reason for supporting Sanders:

“Well, I think it’s quite simple again. If you look at something called velocity of money, you guys know what that is I presume, that means how much gets spent and turns around. When you have the top 1% getting money, they spend 5-10% of what they earn. When you have the lower end of the economy getting money, they spend 100-110% of what they earn.

As you’ve had a transfer of wealth to the top and a transfer of income to the top, you have a shrinking consumer base basically, and you have a shrinking velocity of money. Bernie is the only person out there who I think is talking at all about both fiscal stimulation and banking rules that will get the banks to begin to generate lending again as opposed to speculation.”

Edelman suggests — as have economists like Paul Krugman — that governments need to do more direct economic interventions in the form of more generous fiscal policy such as tax cuts or infrastructure spending.

The trickle-down ideology of economy is dead:
Seven years of near-zero interest rates and quantitative easing did in fact increase the overall monetary base by nearly 70% since the beginning of the recession, but, velocity, which had been declining for a while, absolutely collapsed.

#105 George Soros on 03.20.16 at 7:36 pm

My evil plan to have my minion Donald Trump elected president is working. By funding violent protests against his speeches and shutting down roads, I have successfully given him the sympathy vote. Ha ha ha, I will take over the US government now as I have done with so many other countries! Money is wonderful and Doglike. I have money, so I am Dog! Wait, this is a real-estate blog? What happens to a million people living in BC is of no more consequence to me than what happened to the people of the Ukraine, Syria, Libya or Egypt. I will appoint your rulers and I will rule you. I will create bubble after bubble and then sell it short forever indebting you to my will. I will be Dog.

#106 crowdedelevatorfartz on 03.20.16 at 7:38 pm

@#19 Blobby
‘Whats a short?”
******************************************

Thats what underwear is called for one legged people…

#107 JSS on 03.20.16 at 7:40 pm

#93 not 1st on 03.20.16 at 6:51 pm

I agree with you. Canadian banks are sooo sneaky, they have many levers they can pull to keep Canadians in debt forever, while showering shareholders with increasing dividends.

In short, I would not short the banks.

#108 ROCK BEATS PAPER on 03.20.16 at 7:40 pm

#2 the Jaguar on 03.20.16 at 11:28 am

But why short the banks, Garth? Presumably they either have insurance (cmhc or other insurers) or an maximum 80% lending position on the property. Probably significantly less on higher end homes. Won’t that protect them? Help the blog dogs to understand.

Because many global investors (unlike most Canadians) know where interest rates and real estate values are ultimately headed. — Garth
____________________________________________
Presumably, even if the banks do not need to take loan losses, their earnings growth could reverse substantially, and what looks cheap on a forward basis will look expensive when reality hits.

Garth, if you believe that interest rates are rising, then presumably you own few bonds in that balanced portfolio?

#109 Smoking Man on 03.20.16 at 7:46 pm

Life of an idiot.

Drinking early in Salamanca NY. I wanted to watch Mayday all day today. Wife gave me two choices, clean up all the cigarette buts on the front lawn or take me.

Nothing like a good road trip when your in a bind.

#110 Ace Goodheart on 03.20.16 at 7:48 pm

Prem Watsa on the Canadian Housing Market:

“As we have said a few times before, the collapsing commodity prices will not spare Canada. Canadian housing prices, particularly in Toronto and Vancouver, have gone up significantly, driven by lax policies at CMHC (Canada’s equivalent to Fannie Mae and Freddie Mac). Canadians have accessed their increasing real estate wealth through lines of credit easily available from the banks. Sounds familiar? This is exactly what happened in the United States before the financial crisis in 2008/2009. If history is any guide, this will reverse and we continue to be shocked at the massive debt levels incurred by young people (below 45 years old), with no financial buffer against hard times as the C.D. Howe report, Mortgaged to the Hilt, shows.”

‘Nuff said

#111 SWL1976 on 03.20.16 at 7:50 pm

We just watched the Big Short this weekend. Fantastic movie and my favourite take away was this…

<Truth is like poetry, and most people f**king hate poetry

The movie also got me thinking about peoples morals and being involved with the banking and or financial industry and having good morals. I’m sure the good really do out weigh the bad – actually, not sure – anyways, I have never worked in, or worked anywhere close to that sort of business.

It must be difficult to want to do the right thing, yet ultimately be frustrating being around and dealing with so much corruption. Do I take to moral high road, and possibly mysteriously end up falling out of a building, or do I simply play along shut up and take my piece of the pie?

Or, like in the movie, figure out how to short the system and profit from everyone else’s loss, which is not entirely different from the set up

Anyways I thought it was a great movie that many people should see

We humans sure have rigged on hell of a financial charade

#112 crowdedelevatorfartz on 03.20.16 at 7:51 pm

The scene in The Big Short reminds me of a friend who was golfing in Palm Springs in the Spring of 2008 and related a similar story.
The waitress in the restaurant he was eating at arrived late for work because…”she bought a new house and had to sign some papers”. The bartender was amazed because she had just finished divorce and bankruptcy proceedings….The broker had “fixed” everything for her.
I wonder if we’ll be having the same type of Royal Commission hearings here in Canuckda like the Senate Hearings in the states after all is said and done.

Interesting times…..

#113 Scott on 03.20.16 at 7:52 pm

#84 Freeman – Don’t worry,you’ll get your war.

#114 CanMex on 03.20.16 at 8:07 pm

Vancouver RE up 3.2% in 1 month. That’s a compounded rate of 145% in a year. Clearly it won’t continue for 12 months, but equally clearly some people believe it will, and are extrapolating to infinity and drooling over their potential profit. They’re going to get cut off at the knees. It’s a crying shame, because those who will be hurt most are those who can’t afford it. Financial literacy and economic history should be taught in our schools.

#115 Bank of Millennial on 03.20.16 at 8:11 pm

Look at the “Non-viability contigent capital” preferreds being issued by the banks.

Banks are issuing these convertible preferreds at a 4pt credit spread over 5yr bond.. A higher dividend then their common’s get with conversion rights at a $5 floor price at $25 par value.. 5:1 ratio to common shares if things go south and a bail-in is required.

The common will get stuck with the bill, de-valuation and massive dilution. No mystery why people are shorting the system.

Secondly, keep an eye on Canadian REIT’S receivables. Some are up 100% YoY, not a healthy credit market.

Be smart. Buy ETFs. — Garth

#116 Mark on 03.20.16 at 8:21 pm

“I still don’t get it. Why aren’t more home owners in Vancouver area, who have seen a big run up in the value of their house, not frantically selling to cash in their winning lottery ticket? there may be no better time than right now.”

Because those super-high prices mostly aren’t available to mere mortals. Most of the price changes alleged are on account of a shift to the sales mix. And a substantial chunk of the transactions are just speculators passing properties amongst each other.

The ‘average’ house in Vancouver has been stagnant, if not been declining in value over the past 2-3 years. What the Realtors quote when they say “rising prices” is the stuff they happen to be dealing in at the moment, which is mostly only high end units these days. And even then, those houses probably aren’t appreciating either, but because they now make up a disproportionate amount of the overall mix, even with stagnant prices, they pull up the averages.

Metaphorically its similar to that what is happening in the US economy right now. A small chunk of the population is doing well, with unemployment allegedly low. However, the participation rate has plunged. If you look at just the raw ‘unemployment’ number, one might be fooled into thinking that the economy is doing well overall, which it clearly is not.

#117 Fed-up on 03.20.16 at 8:25 pm

Yet unbelievably, not a single, significant price correction anywhere in this frozen tundra of a country thus far, not even in Alberta’s biggest markets.

Look harder. — Garth

#118 Mark on 03.20.16 at 8:27 pm

“Banks are issuing these convertible preferreds at a 4pt credit spread over 5yr bond.. A higher dividend then their common’s get with conversion rights at a $5 floor price at $25 par value.. 5:1 ratio to common shares if things go south and a bail-in is required.”

First of all, if there is any danger to the common equity of the Canadian banks, adjustable rates (ie: Prime or anything linked to prime) rise, and rise very quickly. (all the big-5 banks basically run nearly identical businesses, so if one runs into troubles, the others probably will too!). The adjustable rate borrowers will be smoking holes in the ground before the common has any meaningful danger to it.

If a bail-in is required, the preferreds, by definition, go to zero as well. As do the bank bonds. A chunk of the depositors’ liability to the bank is converted to equity. But you’d need a systemic collapse for that to happen.

Shorting Canadian banks is entirely irrational. Sure, there could be political theatre that cuts their value down, especially stuff relating to the CMHC. I actually see this as likely. But to say that the banks, at current prices, can’t generate a ROE > 0.5% (ie: the requisite return for a ‘short’ to be profitable over the medium-long term) defies credibility. The shorts are offside, victims of their misunderstanding of the Canadian banks. Either that, or they’re doing some sort of severely misguided “pair trade” such as long US banks, short Canadian banks. Which is highly problematic for a whole litany of reasons.

Stop talking about that of which you have zero knowledge. Not a single bank bond or preferred would ever become worthless in the event of a bail-in. — Garth

#119 buy ETFs on 03.20.16 at 8:30 pm

#114 Bank of Millennial on 03.20.16 at 8:11 pm

Look at the “Non-viability contigent capital” preferreds being issued by the banks.

Banks are issuing these convertible preferreds at a 4pt credit spread over 5yr bond.. A higher dividend then their common’s get with conversion rights at a $5 floor price at $25 par value.. 5:1 ratio to common shares if things go south and a bail-in is required.

The common will get stuck with the bill, de-valuation and massive dilution. No mystery why people are shorting the system.

Secondly, keep an eye on Canadian REIT’S receivables. Some are up 100% YoY, not a healthy credit market.

Be smart. Buy ETFs. — Garth

——–

Which ETFs? (“Platonic question, unless you are a client.)

This is by the way quite a change about Garth’s view on Canadian banks, look up the archive. It’s just a bit shy from spelling out the s-word.

#120 Dave in Kincardine on 03.20.16 at 8:31 pm

# 8 made a good point.

The top ten holding in mutual funds in Canada are CDN Financial institutions (ie 4 banks and 2 life insurance companies, and some alternate financial company). If housing gets rocked those funds are going to see some nasty returns. Just like in the US in 2008. Hurt locker.

#121 Smoking Man on 03.20.16 at 8:35 pm

I’m convinced Mark is some mad scientists experiment with robots and artificial intallagents.

There not quite there yet.

#122 Millennial Realist on 03.20.16 at 8:36 pm

As Garth has pointed out, one of the things that has undermined our ability to understand the reality of this market is the wilful failure of our media to properly and objectively report on real estate, and just about everything else that PR spokespeople spoonfeed them on.

Our media culture is now dominated by “…executives who own luxury yachts and private helicopters…looking for subsidies.”

http://www.theglobeandmail.com/arts/television/john-doyle-canadian-tv-is-a-place-of-squalor-and-neglect/article29292356/

(Even the comedy program that won a recent CSA award was cancelled by Rogers, so more profits could flow to the top)

The head of the CRTC, echoing others, makes it clear in his report that there is no reason but greed for local television stations to have given up on thorough news coverage. They actually are in a “position of strength” to do proper local news, if they gave a damn.

Instead, they now merely parrot what CREA and others want them to say, lay off more staff, pander to local real estate businesses with free “programming” about housing, while their networks pump more ‘Love it or List It’ – type crap onto the other channels.

So it is the upper 1%, the media elites, who have thrown the public under the bus when it comes to this real estate bubble, completely failing to fund the resources needed even for barely adequate media coverage of news, business and this impending financial calamity for many Canadians.

When this bubble deflates, and it will, and hopefully we are “out of the way” as Garth suggests, we should remember the role played by some very wealthy executives in ensuring that our media has been so far incapable of properly warning us about what may lie ahead.

Shameful.

#123 Smoking Man on 03.20.16 at 8:37 pm

#113 CanMex on 03.20.16 at 8:07 pm
Vancouver RE up 3.2% in 1 month. That’s a compounded rate of 145% in a year. Clearly it won’t continue for 12 months, but equally clearly some people believe it will, and are extrapolating to infinity and drooling over their potential profit. They’re going to get cut off at the knees. It’s a crying shame, because those who will be hurt most are those who can’t afford it. Financial literacy and economic history should be taught in our schools.
….

Schools are too busy trying to turn boys into girls. And girls into boys.

Than to actually teach what’s important.

#124 Maybe on 03.20.16 at 8:38 pm

#68 NoOneOfConsequence on 03.20.16 at 5:22 pm

“If a shorted stock goes to zero…you lose everything. No bid.”

Um..are you sure about that? If a stock you shorted goes to zero – would you not realize maximum return possible?

#125 Mark on 03.20.16 at 8:39 pm

“if you believe that interest rates are rising, then presumably you own few bonds in that balanced portfolio?”

Of course a balanced portfolio always should include bonds (and gold), but its bonds that probably would suffer, of most major asset classes, the most in a rising rate environment. After all, bond prices are inversely correlated to interest rates historically. Interest rates go down, bond prices go up. And vice versa. Plus, MTM effects of interest rates aside, the real after-tax returns of bonds tends to become increasingly poor in a higher rate environment. Its the falling rate / low rate environment that has delivered outperformance to bond investors over the past 30-40 years. Much of that outperformance will need to be unwound, in a rising rate environment, until bonds can revert to their historically normal performance which is to perform 3-6% more poorly than stocks (albeit with less volatility), and roughly 1-2% higher than inflation as a nominal return (ie: a 1-2% real return).

Rising rates, a falling bond market, its going to be the great equalizer and destroyer of the wealth of the elderly in the decades to come. The RE marketplace tends to be correlated (as RE is heavily financed with bonds), and of course, will suffer accordingly.

#126 Ronaldo on 03.20.16 at 8:40 pm

#15 Chaddywack on 03.20.16 at 12:32 pm

”The interesting thing is that people say that if prices fall in Vancouver droves of people will start buying on the cheap.”

A 50% drop and it still wouldn’t be cheap at current prices.

#127 Langley Lad on 03.20.16 at 8:43 pm

#91 Doug in London on 03.20.16 at 6:48 pm

I still don’t get it. Why aren’t more home owners in Vancouver area, who have seen a big run up in the value of their house, not frantically selling to cash in their winning lottery ticket? there may be no better time than right now.

_____

I live in Langley Doug, part of the metro of Vancouver. We are moving to the other side of the country, Nova Scotia, in a couple days to escape the madness and get a better life for our kids. The challenge people face out here is simple: this is their home, their community, and frankly, people don’t want to leave due to their ties to community, family, etc.

We are thrilled to be moving, but now that we are near the end of the planning, buying, celebrating and saying goodbye, we are exhausted. We can’t wait for this to be over and get to our new home and community. My wife has been a basket case from all the goodbyes to her nursing friends. She’s exhausted from all the crying. My 18 year old has only known this area as his home, and he has had some real difficulty dealing with the fact he’ll never see most of his friends again.

Our neighbors who we care about are mad and concerned by the fact that our communities are being changed for the worse, not the better. It’s emotionally taxing to be a part of this craziness. Craziness is the most common phrase used by people I talk to about what’s going on in the housing market.

We said goodbye to our chiropractor yesterday, and he’s frustrated by the loss of good people who can’t afford to live here anymore. There is a massive brain drain going on right now.

In conclusion…it’s a rather tough process to go through for many people. We know we made the right decision, but the ties to people are strong and we are creatures of habit.

#128 betamax on 03.20.16 at 8:47 pm

#23 Island Bound: “Nanaimo is also suffering from a Vancouver spillover effect and looks inflated”

Correct, but obviously not as inflated.

If your wife wants to own, sell in Van and buy in Nanaimo. If there’s a correction, then your short-term paper loss in Nanaimo is more than compensated by your realized cash gain in Van. Happy wife, happy life.

#129 Scott on 03.20.16 at 8:49 pm

As in any market tops can take a long while to play out. Take care out there friends,because these are dangerous times we are entering into.

#130 betamax on 03.20.16 at 8:49 pm

#23 Addendum: just make sure you want to stay in Nanaimo before buying. They don’t call it “Surrey by the Sea” for nothing.

#131 WalMark of Sadkatoon on 03.20.16 at 8:50 pm

can’t remember if the real estate craziness in the 80s were as bad as today. kinda feels like it

#132 Sultan on 03.20.16 at 8:51 pm

Visual Capitalist Canadian.. Based in Vancouver..

#133 Smoking Man on 03.20.16 at 8:57 pm

#130 WalMark of Sadkatoon on 03.20.16 at 8:50 pm
can’t remember if the real estate craziness in the 80s were as bad as today. kinda feels like it
….
When boc govenour crow went bat shit crazy with rate spikes real estate doubled in price inside a year and half.

8 % a year like now. Not as bad.

But still crazy. In spite of low wages.

The ones fueling the madness. Melinial men. To frightend to tell his sweety this is nuts were no buying a house with John Wayne conviction.

Thay all talk like Justin.

Dr Smoking Man
The king of Hedonomics

#134 Mark on 03.20.16 at 9:00 pm

“Stop talking about that of which you have zero knowledge. Not a single bank bond or preferred would ever become worthless in the event of a bail-in. — Garth

Not true at all Garth. The whole point of a bail-in is the orderly resolution of an insolvent bank by converting debt of the bank to depositors to at least a partial allocation of equity. Preferred shares are explicitly structured as part of the capital structure of Canadian banks to quality as Tier1 capital. Basically a way to boost the leverage of the common shareholders. If a bank bail-in were to be required in Canada, preferred shares, like the commons, would be rendered worthless (or nearly so).

Bank bonds are junior to depositors in the capital structure, so if the depositors are subject to bail ins, by definition, the bank bonds would see most of their value destroyed.

Thankfully bail-ins are incredibly unlikely, but it is just wrong to think that preferred shareholders will be immune from complete loss of their investment in such a scenario.

Read the legislation. — Garth

#135 WalMark of Sadkatoon on 03.20.16 at 9:01 pm

Stop talking about that of which you have zero knowledge. — Garth

that’s like asking a fish not to swim. how else do u think WalMark got banned in various forums and remains unemployed?

#136 WalMark of Sadkatoon on 03.20.16 at 9:03 pm

I still don’t get it. Why aren’t more home owners in Vancouver area, who have seen a big run up in the value of their house, not frantically selling to cash in their winning lottery ticket?

because almost nobody cashed out at the top. just like nortel or blackberry or whatever. almost impossible to cash out at the top. people will hang on to a ‘sure thing’ until it’s too late

#137 JP on 03.20.16 at 9:08 pm

More fuel…

http://www.vancouversun.com/business/blame+politicians+metro+vancouver+housing+price+crisis/11797902/story.html

#138 Shirley valentine. on 03.20.16 at 9:09 pm

#108 Smoking Man on 03.20.16 at 7:46 pm
Life of an idiot.

Drinking early in Salamanca NY. I wanted to watch Mayday all day today. Wife gave me two choices, clean up all the cigarette buts on the front lawn or take me.

Nothing like a good road trip when your in a bind.


Smokey alien stud…. Wasnt is just 36 hrs ago you were getting facial carpet burns in a casino.

That is some serious dedication. Do they lap dancers there?

#139 great handle on 03.20.16 at 9:16 pm

WalMark of Sadkatoon

**

I love your handle! I’ve always called anyone from
Sask. – as being from Saskabush. Probably a by-product of being raised in Manitoba :)

#140 SamIAm on 03.20.16 at 9:16 pm

“Of course, some people (this pathetic blog included) have been trying to spell out for a year that our housing market is incredibly unhealthy and uneven.”…….

I thought that is what you have been trying to ‘spell out’ since the beginning of time when this ‘prophetic blog’ started ?

#141 GTA Girl on 03.20.16 at 9:20 pm

Ontario Ferrari dealership has the latest 488 sales down. This despite it being a superior car than all the 458 Italia’s being driven by flashy upstart developers and contractors, the last few years.

I personally judge GTA RE health by the fact, that a very well known Developer, a superstar to his BNN spots and condo showroom sales girl conquests, had a lackluster big birthday recently. No private jet to Vegas. No yacht in Bahamas, no wine tour of Tuscany with the wife, and raunchy Miami romp with the mistress. Nope. Stayed in Toronto, huddled around a table at a downtown eatery. Home by 11pm.

When a superstar developer is acting skittish, the house of cards must be falling onto the roof of his La Ferrari

#142 Damifino on 03.20.16 at 9:22 pm

#84 Freeman

Interesting concept but…

It falls down badly on the assumption that a quality infrastructure could be built with an army of random unskilled laborers somehow willing to dig holes by hand for a pittance wage and yet still create lasting public works that meet modern standards.

This is not the world of the depression era. The power of an individual has been amplified a hundredfold by advances in machinery, materials and technique.

And therein lies the heart of the problem. Extensive education and consummate expertise are what we have come to expect from city builders in the new world. The grunt working in a trench is now completely obsolete.

Many are now assuming huge debts to procure inconsequential liberal arts educations in an attempt to avoid joining them. Ironically, it moves them closer to the fate they seek to avoid.

#143 Sam the Sham on 03.20.16 at 9:24 pm

“We just know those who believe prices will go up, forever, are wrong.”

You have to admire Garth’s persistence. He’s been at it a long time. One of these days he’s going to be right. I’m just not sure if it’s going to be in my life time (I’m 72).

#144 Robert on 03.20.16 at 9:26 pm

The Vancouver “bubble” will continue until the Central Committee decides otherwise :) Colonization is a nifty way to grab control, just ask the British. After all, who would want all these resources we are camping on?

#145 heloc question on 03.20.16 at 9:27 pm

Is HELOC also insured by any entity like CMHC?

#146 Maaa on 03.20.16 at 9:29 pm

Yet back home in China the government is trying to address the housing bubble (Economist, Mar 12 issue). In Shanghai “Non-residents who are single are banned from buying property. The married are welcome but only so long as they have paid local taxes for two years and make nearly a third of the purchase in cash”. In 4 other overheated markets they are restricting access. Vancouver – free for the taking…

#147 hope & ruin on 03.20.16 at 9:33 pm

#7 Porsche on 03.20.16 at 11:58 am
Looking for work and replied to a Electrical Engineer position in Vancouver just so I could comment.

“Your paying $24 an hour for an Electrical Engineer in Vancouver, the most expensive place on earth? Are you nuts or just stupid?”
_______________________________________

Depending on the company, they might not be the delusional one. If they are a manufacturer or an exporter, they have to compete with the rest of the world.

So the fact that Canadians want to have a bloated public sector, expensive real estate. And now carbon taxes. Well, that isn’t the companies problem. They have to sell a product and make a profit. $24 may be the price point that makes it possible for them.

The driving factor has nothing to do with Canada. Only thing that matters is if an overseas competitor can do it for less.

I wonder how long it will take the liberals to realize that “green” tech manufacturing looks very similar to traditional manufacturing. Products or plants need steel, electricity, workers need homes, utilities, etc.

#148 Panhead on 03.20.16 at 9:37 pm

#85 Steerage Bilge on 03.20.16 at 6:35 pm
#79 Ponzius Pilatus on 03.20.16 at 6:12 pm

#184 Smoking Man on 03.19.16 at 8:22 pm
Getting ready to turn on every light and appliance at 8:30 in celebration of earth hour.
————-
I’ll join you.
What time is 8:30 on the West Coast?

8:30

Good one … count me in too … I’ll spark up my welder right at 20:30. Make a few passes …

#149 Smoking Man on 03.20.16 at 9:41 pm

#137 Shirley valentine. on 03.20.16 at 9:09 pm
#108 Smoking Man on 03.20.16 at 7:46 pm
Life of an idiot.

Drinking early in Salamanca NY. I wanted to watch Mayday all day today. Wife gave me two choices, clean up all the cigarette buts on the front lawn or take me.

Nothing like a good road trip when your in a bind.


Smokey alien stud…. Wasnt is just 36 hrs ago you were getting facial carpet burns in a casino.

That is some serious dedication. Do they lap dancers there?
..
Sherly baby.
Actually there is a strip joint called tiffanies down the road. Never been. It’s not part of my book. No point.

But I will tell you something. I have angree lesbians with sharp sissors after me on twitter. I’ve had a good day today, creativity ozzing out. You can’t bend what you can’t offend.

I may have crossed a line or too.

Don’t have the lugery of an editor and chief on there.

#150 Fed-up on 03.20.16 at 9:45 pm

#116 Fed-up on 03.20.16 at 8:25 pm

Yet unbelievably, not a single, significant price correction anywhere in this frozen tundra of a country thus far, not even in Alberta’s biggest markets.

Look harder. — Garth
——————————————————————————-

I have. I (like most people), consider significant at least 15-20% correction or much more after a 15 year run up. And Alberta’s major markets (Edmonton and Calgary) have not come close to correcting nearly that much, if at all. And that goes for any other major market in Canada, not yet anyway. Should they correct and by a huge amount? Emphatically, yes.

But “flat” prices or -1 or 2% is not a significant correction.

#151 Sheane Wallace on 03.20.16 at 9:54 pm

Just by reducing future guarantees and credit (if we are at peak real estate, with a chance of 85 %) bank profits will tank by 60 % – impact by reduced future mortgage debt.

If more than 20 % of the sub-prime mortgages are transferred back to the lenders they could loose anywhere between 50-75 % of their value.

Lonnie will tank to bellow .50

banks down to 30 % of their future valuations.
————————

For every percentage up in house prices if they continue to blow this gas bad, (the biggest housing credit bubble compared to income in the world ever!)
we will get 1-1.5 % further decline in the loonie and the same decline in bank valuations. From the top.

Of course banks will be shorted! They are toast.
How can they keep extracting water out of a stone?

It is over.

#152 Kenchie on 03.20.16 at 9:54 pm

#9 Panhead on 03.20.16 at 12:10 pm
“Kinda smells like the top out here in 604land to me … I am seeing more for sale signs than I have for a while. The house down the street (asking 1.9 for an early 80’s house with pool) has not sold yet after being on the market about 3 weeks. Looked like a house inspection yesterday though. This is in Tsawwassen … a nice burb of Van. But 1.9 is nuts. This could be the apex but as a Russian co-worker used to say … it’s very hard to say. And Van proper is it’s own market for shure.”

Was in White Rock yesterday. I saw about 40 for sale signs over about 5 or 6 streets. There were 3 houses for sale right beside each other on one street. I was shocked, but bit my tongue in front of my friend who lives there.

If it is a “peak bubble”, I would anchor the tipping point the listing of that rotting house in Kits for $7.2m (owned by absent Chinese owners – could see others follow their lead) and the launching of “Epic At West” by the Olympic Village. I associate the previous launching of the Olympic Village in late 2007 as the previous peak. So I wouldn’t be surprised if this new and ambitiously priced project is the new peak.

(And the fact that John Shorthouse, the Canucks tv announcer, is shilling for a debt and bankruptcy consultancy – Sands and Associates. Wait for their research piece to be published tomorrow. Should be an interesting read.)

#153 45north on 03.20.16 at 10:03 pm

Mark: First of all, if there is any danger to the common equity of the Canadian banks, adjustable rates rise, and rise very quickly. adjustable rate borrowers will be smoking holes in the ground before there is any meaningful danger to the banks’ common equity.

that rings true!

Canada’s market as a whole saw gains of 0.6% in the month, but it would have dropped to -1.1% without the inclusion of Vancouver in the 11-city index.”

the key phrase being “in the month” The month of February in terms of volume is one of the lowest in the year. I mean it doesn’t ring any alarm bells but my feeling is they’ll be ringing in June. In Ottawa, I’m hearing stories about people having to sell. They’re dropping their price by 2%. Which is not enough to sell.

#154 Christeve Clarker on 03.20.16 at 10:05 pm

@heloc question: HELOCs aren’t insured. They use your home as collatoral, which is how they can charge you only 3% interest on one. But “loser renters” don’t have anything to back a loan, so the banks give us 9.5% unsecured LOCs, even if we have been their customer for decades. Rat bastards, aren’t they?

While I’m being a blog dog, what’s going on with preferreds? CPD and ZPR are still on sale. Will they rise again as interest rates rise?

#155 Shirley Valentine on 03.20.16 at 10:06 pm

#148 Smoking Man on 03.20.16 at 9:41 pm

#137 Shirley valentine. on 03.20.16 at 9:09 pm
#108 Smoking Man on 03.20.16 at 7:46 pm
Life of an idiot.

Drinking early in Salamanca NY. I wanted to watch Mayday all day today. Wife gave me two choices, clean up all the cigarette buts on the front lawn or take me.

Nothing like a good road trip when your in a bind.


Smokey alien stud…. Wasnt is just 36 hrs ago you were getting facial carpet burns in a casino.

That is some serious dedication. Do they lap dancers there?
..
Sherly baby.
Actually there is a strip joint called tiffanies down the road. Never been. It’s not part of my book. No point.

But I will tell you something. I have angree lesbians with sharp sissors after me on twitter. I’ve had a good day today, creativity ozzing out. You can’t bend what you can’t offend.

I may have crossed a line or too.

Don’t have the lugery of an editor and chief on there.

Geez, I thought it was just the Mrs with the knives!

Angry lesbians – confused they are.

#156 Observer on 03.20.16 at 10:14 pm

Poloz and or the Feds could shut this down overnight if they wanted to.

#157 Sheane Wallace on 03.20.16 at 10:14 pm

Read the legislation. — Garth

I did and it reads that over the guaranteed by CDIC limit you are pretty much qualified as unsecured creditor to the bank which puts you among the first to suffer in ‘the unlikely’ (but not improbable!) event of failure and disposition of property.

It is BIS – Bank of International Settlement requirement.

Wrong. No retail deposits will ever be used as liquidity in the more-then-unlikely case that a bank needs capital. We have been over this ground many times here. Ignorance is no longer an excuse for… ignorance. — Garth

#158 Sheane Wallace on 03.20.16 at 10:17 pm

#119 Dave in Kincardine on 03.20.16 at 8:31 pm
# 8 made a good point.

The top ten holding in mutual funds in Canada are CDN Financial institutions (ie 4 banks and 2 life insurance companies, and some alternate financial company). If housing gets rocked those funds are going to see some nasty returns. Just like in the US in 2008. Hurt locker.
—————-
The point is we kiss goodbuy our pensions.

#159 AfterTheHouseSold on 03.20.16 at 10:19 pm

#126 Langley Lad (in response to Doug’s comment)
“…this is their home, their community, and frankly, people don’t want to leave due to their ties to community, family, etc.”

#91 Doug in London
“Why aren’t more homeowners in Vancouver area…not frantically selling to cash in their winning lottery ticket?”

Doug never mentioned anything about ‘leaving’. He just wondered why they aren’t selling and taking those multi million dollar gains off the table. The proceeds generated by those millions would cover the cost of a very fine rental, so those inclined to, could stay near family and community.

That’s why many of us are shaking our heads in disbelief that these home owners aren’t cashing in their lottery tickets, jumping for joy and doing the happy dance!

They think prices will steadily rise forever. The fact no asset has performed that way in human history doesn’t seem to register. — Garth

#160 lee on 03.20.16 at 10:24 pm

#144 heloc question

No.

#161 Smoking Man on 03.20.16 at 10:25 pm

Lorrie Goldstein rocks on twitter.

He’s got to be a closet lush.
Come on gartho greater minds need to know.

He’s a beauty. Perfect on not crossing the line in polical correctness white bitch slapping stupidity.

He’s talented.

#162 lee on 03.20.16 at 10:28 pm

I see lotsa people in TO preparing to cash in. I have a feeling 1M to 2M properties will be flooding the market soon if they aren’t already and the boards are just holding them back as other listing sell or run out.

#163 BS on 03.20.16 at 10:30 pm

Langley Lad on 03.20.16 at 8:43 pm
#91 Doug in London on 03.20.16 at 6:48 pm

I still don’t get it. Why aren’t more home owners in Vancouver area, who have seen a big run up in the value of their house, not frantically selling to cash in their winning lottery ticket? there may be no better time than right now.
____________

I live in Langley Doug, part of the metro of Vancouver. We are moving to the other side of the country, Nova Scotia, in a couple days to escape the madness and get a better life for our kids.

Better life = own a house. Sad.

You could have saved your family a whole lot of stress, trouble and expenses by renting in Langley. You can rent a whole house for $2000 per month. To move your family from BC to NS for no other reason than cheaper housing seems silly. Especially considering the cost of moving that far. By the time you make that back in cheaper housing costs, housing in Langley will have corrected.

#164 Kenchie on 03.20.16 at 10:31 pm

#57 Rexx Rock on 03.20.16 at 3:41 pm
“House prices in Vancouver reflect a strong and robust economy.Average family income well over $150,000 that’s why real estate is so high.Common economics,supply and demand and affordability.Stop with all this speculation nonsense.”

I can’t tell if you’re being sarcastic or not. But I will assume you’re being serious.

I was just chatting with a friend a few days ago. We went to the same high school, albeit she is younger by 1 year. We got into talking about our respective groups of friends, of which we each know most of each other’s groups of friends. She said in all the people she knows from high school and university, only 1 person makes over $100k, and that person lives in HK. I was shocked. She makes about $60k and her husband about $80k.

I was chatting with my GF’s bro (Uber hipster dude) and he knows only 1 person who makes +$100k too out of all of his friends. If you took an avg of his friend’s incomes, it would likely be about $60k because he has a lot of friends (male and female) that make $30k-$40k range. And these people are in their late 20s. Once again, I was shocked, and blessed to be better off.

So there is slim to no chance that “Average family income well over $150,000” based on the anecdotes I know of in Van.

#165 Smoking Man on 03.20.16 at 10:31 pm

#154 Shirley Valentine on 03.20.16 at 10:06 pm
#148 Smoking Man on 03.20.16 at 9:41 pm

#137 Shirley valentine. on 03.20.16 at 9:09 pm
#108 Smoking Man on 03.20.16 at 7:46 pm
Life of an idiot.

Drinking early in Salamanca NY. I wanted to watch Mayday all day today. Wife gave me two choices, clean up all the cigarette buts on the front lawn or take me.

Nothing like a good road trip when your in a bind.


Smokey alien stud…. Wasnt is just 36 hrs ago you were getting facial carpet burns in a casino.

That is some serious dedication. Do they lap dancers there?
..
Sherly baby.
Actually there is a strip joint called tiffanies down the road. Never been. It’s not part of my book. No point.

But I will tell you something. I have angree lesbians with sharp sissors after me on twitter. I’ve had a good day today, creativity ozzing out. You can’t bend what you can’t offend.

I may have crossed a line or too.

Don’t have the lugery of an editor and chief on there.

Geez, I thought it was just the Mrs with the knives!

Angry lesbians – confused they are.
..

Could be imagining it all. But the tweets I sent to Wynnes wife. Not going anywhere near young street for the next 20 years.

They don’t like individuals in that part of town.

#166 Bram on 03.20.16 at 10:31 pm

#158

They think prices will steadily rise forever. The fact no asset has performed that way in human history doesn’t seem to register. — Garth

What if it did register? They just have no incentive to sell early.

Garth, I vaguely remember you writing some time ago that prices are sticky on the way down.

So if decline is a prolonged affair, then there is no need to cash-out at this moment.

Just wait until Vancouver actually does -3% and then offer to sell at -6% of peak.

And in the mean time… ride that wave going higher as month$ tick by.

Bram

#167 TRT on 03.20.16 at 10:33 pm

@Langley Lad,

Your situation is unacceptable. And it not acceptable you move to the other side of the country.

There will soon be a political movement to oust those regulators from positions of power who condone what is happening. These regulators won’t be able to hide and will be shamed and driven out of this country.

Immigration needs to be drastically cut to the average of G7 countries. All Foreign workers streams eliminated. International students eliminated.

Don’t let people use the race card to quiet you. Most people voicing their opinions are not Caucasian.

Stay tuned. Election coming 2017 in BC. And most residents of Vancouver city rent. Watch the power of social media this time.

5% annual surcharge bill on properties owned by anyone other than PR or citizens? What? Can’t happen. Enough people backing it and it will happen.

#168 Sheane Wallace on 03.20.16 at 10:34 pm

Wrong. No retail deposits will ever be used as liquidity in the more-then-unlikely case that a bank needs capital. We have been over this ground many times here. Ignorance is no longer an excuse for… ignorance. — Garth
————–
I very respectfully disagree

http://www.theglobeandmail.com/report-on-business/ottawa-clears-up-confusion-over-bank-bail-in/article10697667/

“The bail-in scenario described in the Budget has nothing to do with depositors’ accounts and they will in no way be used here,” Finance Minister Jim Flaherty’s press secretary Kathleen Perchaluk said in a statement Tuesday. “Those accounts will continue to remain insured through the Canada Deposit Insurance Corporation, as always.”

https://en.wikipedia.org/wiki/Canada_Deposit_Insurance_Corporation

Coverage[edit]
Insurance is restricted to registered member institutions, and covers only the first $100,000 in very specific categories of accounts, such as savings accounts and chequing accounts, guaranteed investment certificates (GICs) and other term deposits with an original term to maturity of five years or less, money orders, travellers’ cheques and bank drafts issued by CDIC members and cheques certified by CDIC members, and debentures issued by loan companies that are CDIC members. Credit unions and Quebec and New Brunswick’s caisses populaires are not insured federally, because they are created under provincial charters and backed by provincial insurance plans, which generally follow the federal model. Deposits in foreign currencies are not insured, even when held by a registered CDIC financial institution. Guaranteed Investment Certificates with a term longer than 5 years are also not insured. Funds in foreign banks operating in Canada are not covered. Some funds in Registered Retirement Savings Plans or Registered Retirement Income Funds at a bank may not be covered if they are invested in mutual funds or held in specific instruments like debentures issued by government or corporations. The general principle is to cover reasonable deposits and savings, but not deposits deliberately positioned to take risks for gain, such as mutual funds or stocks.

I thought the order in case of liquidation of assets (not in case of raising capital) was: bondholders, then preferred holders, common share holders and unsecured depositors but I could be wrong.

——————————

I totally agree that the case of failing financial institutions is highly unlikely but AIG and Enron, as well as Bear Sterns were rock solid high rated financial institutions as well.

If CMHC could not physically handle the fallout from the sub-prime mortgages and a political decision is made to offload some of it to the banks I would not be the one holding their stocks.

But I agree that probably no financial crises will ensue, instead we will just get loonie in the .25-.45 range

#169 TRT on 03.20.16 at 10:37 pm

#155 Observer on 03.20.16 at 10:14 pm
Poloz and or the Feds could shut this down overnight if they wanted to.

—————

They (Big 5, Poloz, FIRE Complex) are all in bed together. Don’t believe any of the BS.

#170 Andres on 03.20.16 at 10:39 pm

When I was flirting with condo ownership I got a pre-approval from RBC and then got another through a mortgage broker. The broker managed to to get me $60k more than RBC was willing to lend me. Shady? Probably, particularly since when I looked at the numbers I wasn’t sure how I could make my budget every month. Funny enough I saw the Big Short just this weekend like a lot of people here and the combination of greed and corruption should be enough to make people nervous.

#171 tb on 03.20.16 at 10:40 pm

I agree with Elaine about moving to another city that has houses, but for one fact, a lot of people can’t easily transport their work to another city. Vancouver housing has become so absurd now, completely detached from wages. It is so disheartening to see crack shacks asking and getting three million. Is it too much to ask that a family earning 250K a year with no debt be able to live in a nice neighborhood where they can walk to work, have their child walk to a good neighborhood school etc…? Let me remind people that a 2 million purchase results in mortgage of 12k a month. This is what land costs now. My portfolio manager explained things so succinctly to me the other day. Wealthy “off-shore” buyers have to choose between their dictator possibly taking all their money one day or overspending on a house here in vancouver. Our houses are their bank/insurance to get their wealth out of the country. Which is why they don’t rent their investment, further compounding the crisis in affordable living. It is so sad that our government has knowingly and willfully sold us out to collect higher taxes on disgustingly overpriced pieces of land. Christy Clark, Gregor Robertson and Stephen Harper have willfully sold us out to the highest bidder here.

Now, I would move, but I can’t easily get work in another city. So I am trapped in a city that I can not afford. And commuting is not an option as it is just another ring of hell. No quality of life there.

Renting? A decent house is 5k a month. Condo? Not great living.

Where is the outrage Vancouver? Where is the protest? People should be screaming mad….

So where does this end? Is Vancouver now just going to be an empty hotel for ultra wealthy “Internationals”?

Totally Disgusting!

#172 Mike in Toronto on 03.20.16 at 10:48 pm

#135 WalMark of Sadkatoon

It’s as hard to catch the top as it is to catch the bottom.

A friend of the family sold 10 years ago when they thought the market peaked. They rented and waited. The market took a dip, then emergency rates, and the rest is history.

They eventually bought a smaller, crappier house and spent years fixing it up. Since then, he got a stroke and isn’t enjoying anything anymore.

Some people are happy just to have a home and a job, timing the top isn’t what they want to do with their lives. Many people who do try to time the market would be better to just not worry about it.

I’m still paying nothing to rent in Toronto. GF asked today what we would do if we won $2M… she suggested a nice house in the beaches…

… I showed her the listings. Even winning the lottery means a compromising crapshack.

#173 No Canada, No on 03.20.16 at 10:56 pm

Garth, you may want to get ready business jet for a trip to Van. If you could interview few strippers and find out how many properties they got right now – that would help community tremendously!

Thanks for your hard work, man.

#174 Langley Lad on 03.20.16 at 11:01 pm

#158 AfterTheHouseSold on 03.20.16 at 10:19 pm

#126 Langley Lad (in response to Doug’s comment)
“…this is their home, their community, and frankly, people don’t want to leave due to their ties to community, family, etc.”

#91 Doug in London
“Why aren’t more homeowners in Vancouver area…not frantically selling to cash in their winning lottery ticket?”

Doug never mentioned anything about ‘leaving’. He just wondered why they aren’t selling and taking those multi million dollar gains off the table. The proceeds generated by those millions would cover the cost of a very fine rental, so those inclined to, could stay near family and community.

That’s why many of us are shaking our heads in disbelief that these home owners aren’t cashing in their lottery tickets, jumping for joy and doing the happy dance!

___

Your logic is sound. I’d bet the other problem many would have would being perceived as “less than” because they were renting as opposed to owning. I doubt many would even consider renting as an option. So for them, it’s sell, make profits and leave, or don’t sell. Garth’s comment about the false belief of never ending increases is correct, but many people don’t care about how much their house is worth…they want to live in “their” neighborhood.

If someone has lived in the same neighborhood for 20, 30 or more years, they have children, grandchildren, parents, etc, that they don’t want to leave. What good is that extra money if a person doesn’t have their children and extended family around? It’s a very personal thing, but one that is really tearing our region apart. People are lamenting the loss of family and friends because of the housing bubble’s impact.

#175 Ronaldo on 03.20.16 at 11:04 pm

#75 Fleabitten Monkey

Here are stats on average family incomes for cities in Canada. The 2010 census showed Toronto and Vancouver ranking 21st and 22nd.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm

#176 Smoking Man on 03.20.16 at 11:13 pm

Just got scathing bitch slap by a young street libral about sexism .

I rebutted with logic. If your dad wasn’t a sexist you would not been born.

She blocked me on twitter.

Librettist. The art of the no idea of what is up or down.

#177 Langley Lad on 03.20.16 at 11:15 pm

#158 AfterTheHouseSold on 03.20.16 at 10:19 pm

#126 Langley Lad (in response to Doug’s comment)
“…this is their home, their community, and frankly, people don’t want to leave due to their ties to community, family, etc.”

#91 Doug in London
“Why aren’t more homeowners in Vancouver area…not frantically selling to cash in their winning lottery ticket?”

Doug never mentioned anything about ‘leaving’. He just wondered why they aren’t selling and taking those multi million dollar gains off the table. The proceeds generated by those millions would cover the cost of a very fine rental, so those inclined to, could stay near family and community.

That’s why many of us are shaking our heads in disbelief that these home owners aren’t cashing in their lottery tickets, jumping for joy and doing the happy dance!

___

A couple more thoughts.

My son is 18. I’ve spoken with scores of men from age 40 to 70 and asked them about when they were 18-20. How many of us, when we were that age, had the option to strike out on our own? Most of us had that option. In my son’s peer group, nobody. I’m not exaggerating either. This is very bad for society.

My point…the repercussions of this bubble are vast and the personal toll is very high. Only accounting for the money side of the equation is short sighted.

#178 Smoking Man on 03.20.16 at 11:19 pm

Can’t belive how much bozze I can consume without typing errors with a key board designed my marks robotic engeinerres

#179 Ronaldo on 03.20.16 at 11:21 pm

#91 Doug in London on 03.20.16 at 6:48 pm

”I still don’t get it. Why aren’t more home owners in Vancouver area, who have seen a big run up in the value of their house, not frantically selling to cash in their winning lottery ticket? there may be no better time than right now.”

No where to go and afraid that they will not be able to buy back in and others are greedy and think it will go higher. Houses in Vancouver have now become traps for a lot of people. It’s interesting to hear some of the Gen Xer’s who bought in back in 2008/09 and the big talk at the time was the low mortgage rates they were able to get to buy their tear downs for $850,000 which are now assessed at around 1.2 mil. I over heard a group of them talking about their huge gains and suggesting that a few of them should get together and pool their cash and buy the worst house they can find to fix and flip and resell for double. Methinks were nearing the top of this mania. Who will be buying these places when the herd finally wakes up and realize the parties is over. We should see a flurry of listings coming up soon given all the press coverage on the overpriced Vancouver houses. The panic to sell will be something to behold.

#180 Smoking Man on 03.20.16 at 11:34 pm

Book promotion

When the humans try to nuke me and Barrington when we fly over area 51

This song is what I’m singing.

https://youtu.be/R044sleOW6I

#181 Bank of Millennial on 03.20.16 at 11:34 pm

Be smart. Buy ETFs. — Garth
—-
As an unsophisticated investor that is my only viable option. Still haven’t quite come to grips with making money off of everyone else’s extreme irresponsibility..

#133 Mark
First sign that things are really going south… I’d short the common and go long the convertibles.

#182 Smoking Man on 03.20.16 at 11:43 pm

In the pent house suite in Salamanca . 4 rooms. 6 tvs .

And I’m out of bozze.

What the hell is point of bing rich when you miss the small stuff.

Dident see this coming.

#183 Brazil ex-pat on 03.20.16 at 11:47 pm

#174 Ronaldo on 03.20.16 at 11:04 pm
#75 Fleabitten Monkey

Here are stats on average family incomes for cities in Canada. The 2010 census showed Toronto and Vancouver ranking 21st and 22nd.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm

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

yes but remember there is 100% ZERO data on foreign money buying 2.5 million dollar moldy shacks in greater Vancouver. It’s all those 60K per year family incomes paying 50% a year in taxes doing it. Because 30K a year of take home cash can easily buy a 2.5 million dollar shack right?

I promise.

#184 Smoking Man on 03.20.16 at 11:59 pm

When you have signs everywhere that say no smoking.

Steal an ashtray. Click my name for the photo grafic evidence.

Come get me commies.

#185 Langley Lad on 03.21.16 at 12:03 am

#162 BS on 03.20.16 at 10:30 pm

Langley Lad on 03.20.16 at 8:43 pm
#91 Doug in London on 03.20.16 at 6:48 pm

I still don’t get it. Why aren’t more home owners in Vancouver area, who have seen a big run up in the value of their house, not frantically selling to cash in their winning lottery ticket? there may be no better time than right now.
____________

I live in Langley Doug, part of the metro of Vancouver. We are moving to the other side of the country, Nova Scotia, in a couple days to escape the madness and get a better life for our kids.

Better life = own a house. Sad.

You could have saved your family a whole lot of stress, trouble and expenses by renting in Langley. You can rent a whole house for $2000 per month. To move your family from BC to NS for no other reason than cheaper housing seems silly. Especially considering the cost of moving that far. By the time you make that back in cheaper housing costs, housing in Langley will have corrected.

__

We bought a 2600 sq ft. house, made of brick, that’s in impeccable shape for it’s age (80 years old) for…$150,000. My wife is a nurse and her pay is only slightly less than what she makes in Langley. A friend of hers is a Psychiatrist who has a very good practice and I can safely assume she makes more than my wife…she can’t afford to buy here.

The bigger picture is this: what about my kids? What hope is there for my 18 year old? These kids his age are terrified because their options are almost non existent.

A lady down the street bragged to me last summer about the fact that she and her hubby bought one of the first houses in the area in 73-75 for 27,500 and now it’s worth $750,000. People like her miss the bigger picture. What about the next generation? We have more “kids” in their 20’s and 30’s still living with mom and dad than is healthy for any society. Our community that was once a simple middle class area is losing it’s children because people raising kids can’t afford it.

Regarding stress, we’re thrilled, and I mean “thrilled” to be moving to Nova Scotia. The pace of life, the people, the ocean…I could go on and on. Langley is not the be all and end all. My main point was to highlight the human element to this housing bubble that gets very little attention.

#186 Smoking Man on 03.21.16 at 12:10 am

Meet Blythe Barrington

A fellow nectonite

https://youtu.be/NYgjOD9377Y

#187 NEVER GIVE UP on 03.21.16 at 12:27 am

#220 Mirror Mirror On The Wall on 03.20.16 at 10:28 am

Agree with your observations.

I just returned from my 48th business trip to China. As an experiment I asked every factory owner I met if they would like to come to Canada or emigrate to any country in the world.
All said they were very happy in China.
All of the factory owners were millionaires in Dollars.
2 of them had outhouses for toilets in their factories.
Really gross to have to use them.

I have said it in previous posts that a man who is self made and builds a business in his community will not likely move to Canada because he has family, friends familiar food and a lifestyle he grew up with. They would also have a high level of self esteem having built up a good healthy business in China.

It is mostly the Criminal Government element that will emigrate to Canada or elsewhere. They know the Government corruption cops are hot on their heels and they need to get the family and wealth out of the country.

This is so common knowledge in China that they even have a special word for the ones who have moved their wealth and family out of the country but still hold their “Filthy Lucre” jobs in China. It is known as a “Naked Bureaucrat” and it is being tracked in China.

http://chinadigitaltimes.net/2014/12/china-demotes-1000-naked-officials/

http://en.people.cn/90882/7730530.html

(there is a wealth of information about this from Chinese and foreign sources online)

Knowing what I know from close associates in China, the people there do not trust the Stock market as it is obviously a tool for political purposes. The Gov puts a stop to trading when it gets too embarrasing to allow the Stock market routs to go on.

They only have real estate to park money.
Even though they do not own the land and only lease it for 70 years.

When they come here with their limited understanding of investing they simply buy real estate.

Two things go on in their head. One is that everything seems cheap to them because our real estate prices are much lower than theirs in terms of years of income to purchase ratio.

Another thing is they really want the money out of a bank and into real estate so they can feel that the money is safely out of reach of the Chinese corruption cops.

Even though the Chinese Government do not have jurisdiction (even though they have thousands of spies) here there is a lot of pressure to extradite the most egregious offenders. Something our good government doesn’t like to talk much about because it sounds “racist” and it costs votes to even remotely look “racist”.

Our Government takes another tack. Milk the offenders dry of most of the ill gotten gains in endless appeals to extradition so that it constitutes a penalty even if they do not become extradited in the end.

We only need a few percent of extra buyers over the natural local contingent to cause a bubble in prices.

Even one more buyer than there is supply causes a rise in prices to eliminate the poorest buyer from competition. The market MUST balance itself with an equal number of buyers and sellers and the mechanism is price. How could anyone dipute that a large amount of cash rich money laundering immigrants could not affect our market.?

Agreed it is helped along with unnatural low interest rates used by our own corrupt officials to buy votes from homeowners.

As Garth has said and the numbers have shown that in most areas of Canada the low interest rates are not much of a factor now because prices are stable or declining in all areas except the areas with a large contingent of money laundering immigrants. Vancouver and Toronto.

Do you see anyone from China moving to Winnipeg or Moose Jaw? I think not!

#188 Keep dreaming on 03.21.16 at 1:16 am

Ronaldo, do you really believe the average Toronto family earns 73000 a year? What about the Boston Pizza waitress who stuffs 500 a night into her bra? Or the stripper who drives a Viper and a Porsche yet tells CRA she lives below the poverty line? Or the house painter who wants 700 a day paint your rec room? Or the hair stylist who charges $2000 on a Saturday to do five girls hair? Or whatvaboutvthe club owner in Toronto who always seems to have enough money on weekends to go to Vegas to drop 10000 plaing black jack yet declares profit if 20000 a year? I keep saying stats Canada is a dinasour. Smarten up. The average home owner family in Toronto is bringing in upwards of 200000 a year tax adjusted. Keep dreaming its all coming crashing down.

#189 White Rock Jerry on 03.21.16 at 1:22 am

# 57 Rexx Rock
By national standards, Vancouver is actually a “have not” city. According to Statistics Canada, median family income in Metro Vancouver was only $73,390 in the most recent year for which data is available (2013). This is less than the national average, and almost $30,000 less than the corresponding figures for Calgary and Ottawa.

#190 NorthOf49 on 03.21.16 at 1:25 am

Garth, a G&M article states Newfoundland’s economy has hit the skids to a level such that:

“Credit-rating agencies have downgraded Newfoundland and Labrador’s debt and changed their outlook from “stable” to “negative,” which could eventually drive up borrowing costs at a time when the province has little spare cash.”

http://www.theglobeandmail.com/report-on-business/economy/newfoundlands-economic-woes/article29297377/

Although the federal debt/GDP ratio raises no concerns relative to the G7 average, are the debt problems at the combined provincial level enough to drive up government borrowing costs?

#191 Big Dipper on 03.21.16 at 2:27 am

Mortgages do not remain on the balance sheets of banks. They are securitized and sold to investors as assest backed securities.

The liabilities are also transfered to the abs buyers. Point is that banks will not be greatly impacted by non performing mortgages.

Buy bank stocks.

#192 betamax on 03.21.16 at 2:42 am

#91 Doug in London: “Why aren’t more home owners in Vancouver area…not frantically selling to cash in their winning lottery ticket?”

They’re homeowners, not speculators, and they don’t foresee a correction. Rightly or wrongly, time will tell.

#193 Squish on 03.21.16 at 4:58 am

#165 Bram on 03.20.16 at 10:31 pm

Garth, I vaguely remember you writing some time ago that prices are sticky on the way down.

So if decline is a prolonged affair, then there is no need to cash-out at this moment.

Just wait until Vancouver actually does -3% and then offer to sell at -6% of peak.

Bram
_____________

You’re misunderstanding what it means for prices to be “sticky on the way down”…

Prices tend to be “sticky” not because of a slow moving, steadily declining market you can get out of in a leisurely fashion, but because of a kind of stalling effect. As the market turns, sellers – convinced their property is “worth” a certain amount – refuse to drop their prices by much. 6% is nothing. Potential buyers, seeing that prices are moving downward, won’t want to pay what sellers are asking. So there’s not much activity in this period, it’s a kind of deadlock, and the stats won’t show much decline in price (see Calgary). Then as time goes along, reality sets in and would-be sellers realise prices really aren’t coming back up. Some will be counting on the money from their homes for retirement, some will have second or third properties they need to unload, some will get into financial difficulties of some kind and need to sell, etc. Maybe there’s some foreclosure sales, maybe there’s a bunch of foreign money that figures out it’s time to vacate. By the time the reality sinks in for most people, it’s too late…they’ll have to sell at a significantly lower price than if they’d bitten the bullet right away (ie price-dropped aggressively earlier in the downturn to get out), lower even than offers they may have previously refused.

When the market (and sentiment) turns, you can’t just drop your price a few percent and count on a sale. Sure, you might get lucky and score yourself a fool, the psychology of a market in a bubble shifts quickly and dramatically; real estate stops being seen as a good investment, nobody thinks they need to “buy now or be priced out forever”, demand has been pulled forward during the boom leaving a much diminished pool of potential buyers, and those buyers are generally willing to wait for prices to drop further. Why buy now when it’ll be cheaper in a year, or two, or five?

That’s why you’ll see sales volume fall first, and selling prices “stick” for a time, but then fall precipitously when the realization hits that the party’s over, and people head for the exits in a bunch.

#194 TurnerNation on 03.21.16 at 7:16 am

CANADA: Closed to small businesses. Open for Public Sector unions. Kids, join in. Capitalism is for dorks.

Yet people living their Netflix-induced lives still deny a master plan being rolled out.
News for you. The Big Short is your life: you are being shorted. Your life, culture, and freedom.
Keep blaming bogey men not the Master Planners:

http://www.atlanticbusinessmagazine.net/article/between-the-lines-12/

“The lunatics are running the asylum.”

Bob Hallett’s summation of the City of St. John’s 2016 budget wasn’t the most politically correct phrasing, but as far as analogies go it was spot on.

“Virtually every property in the city saw assessed values jump by unbelievable percentages — 200 per cent and more in some cases.”

“This in a budget that approves an 11 per cent salary increase for the mayor and councillors over the next three years. In fact, the City’s total human resources budget is projected to jump by — wait for it — 176 per cent from 2015 to 2018.”

“Hallett, a member of renowned East Coast music group Great Big Sea, is also a proprietor of two downtown businesses (Erin’s Pub and Tavola restaurant). He says that his taxes on Erin’s alone have gone up by $3,000 to $5,000 a year, a figure roughly equivalent to a month’s income.”

#195 TurnerNation on 03.21.16 at 7:24 am

Again, Public Sector unions are the way to go. We don’t have overruns due to graft here wink wink.

Toronto has record un-debated police budget too. Why would any fool spend 4-6 years in University to earn 40k a year? Free money:

http://www.cbc.ca/news/canada/manitoba/winnipeg-police-union-worries-about-cost-overruns-at-police-headquarters-1.3499722

Increased costs to the police service for occupying its new headquarters have contributed to the shortfall within its budget. Lower revenue from photo radar and a rise in salaries for officers are also adding to the budget pressure.

The police headquarters project is more than $75 million over budget
….
City council will debate the 2016 budget this week, including that of the police service. A 6.3 per cent increase in funding for police may not be enough to stop staff reductions at the police service.

#196 George S on 03.21.16 at 8:03 am

to #84 Freeman
“I think I have come up with a solution to the problem of getting the world’s economies back to normal: A WAR.

No, not the conventional war where countries are fighting each other, no, it will be something similar, a battle to rebuild the cities of each country.”

Good idea, but, to do this you have to raise taxes, and for some reason people don’t mind paying/borrowing to support a war but they really complain about raising taxes to do anything else. And you are talking about what sounds like Crown Corporations to do the construction. For some reason people will pay way more to private sector businesses for the same services as Crown Corporations provide just because they don’t like the idea of government running businesses because they have been told by people like trump and harper that it is bad. Your biggest problem will be finding support to do this.

#197 pBrasseur on 03.21.16 at 8:05 am

Socialist Canada is in so much trouble and doesn’t know it yet.

Take Quebec for example where private investment in in a free fall, down 8% in 2013, 9.7% in 2014 and 2.4% in 2015, in 2015 for the first time public money investment surpassed private investment! (And you’d want to tax capital gains more!!!) Yet infrastructures are crumbling, the health care system is a shameful zoo (animals receive better care at the vet) and schools are closing because they are plagued by molds! And since household deleveraging has not even started the worse is most likely yet to come.

Canada take a good look at Quebec, this is your future!

And you wonder why others are shorting us?

#198 crowdedelevatorfartz on 03.21.16 at 8:14 am

@#187 Keep Dreaming.
“The average home owner family in Toronto is bringing in upwards of 200000 a year tax adjusted. ”
*******************************************

$500 a night in tips selling Pizzas? Are they selling Heroin on the side?

#199 WalMark of Sadkatoon f on 03.21.16 at 8:16 am

Not true at all Garth. The whole point of a bail-in is the orderly resolution of an insolvent bank by converting debt of the bank to depositors to at least a partial allocation of equity.

stop defending your ignorance. it’s as embarrassing as your years of being unemployed

#200 crowdedelevatorfartz on 03.21.16 at 8:22 am

@#140 GTA Girl

Stayed in Toronto, huddled around a table at a downtown eatery. Home by 11pm…..”
*******************************************

Or his wife finally wised up and gave him a financially testicle removing ultimatum.

So?
Which condo sales showroom do you work at?

#201 pBrasseur on 03.21.16 at 8:25 am

@TurnerNation #194

Same corruption here in Québec, after year of «austerity» cuts that squeezed the budget of most (already bad quality) services offered by the province the government caved in to the public sector unions and gave them raise worth hundreds of millions, thus most of the sacrifices made by the population served to help public servants, who work on average less than 35h per week, to get raises!!!

#202 LL on 03.21.16 at 8:43 am

#57 – Average family income well over $150,000 that’s why real estate is so high.

Not everyone having a huge salary in Vancouver (see below).

….”The bank gave them the bad news: they didn’t qualify for the mortgage. No s**t sherlock, hard to justify a $750k mortgage when the family income is only $70k per year”….

#203 LL on 03.21.16 at 8:51 am

#186 – I just returned from my 48th business trip to China.

And you’re still alive? I guess you went when the “heating coal season” was closed because some childrens in some part of China never saw the stars!

#204 data on 03.21.16 at 8:55 am

Diversification was mentioned a few posts back – Garth argues for that, however if you are not diversified and you put all your eggs in one basket and it works, you should expect leveraged gains and windfall as we see today…however it goes the other way also and people should keep that in mind….

The devil is in the details in today’s post….however this won’t stop people from reaching for homes. Many people have come to this blog talking about “now even a pull back won’t help me” the absolute level is too high…should have, could have bought…at the same time you are lost with the 7% balanced portfolio ? This is because of access to cash

Joe
Leveraged investment portfolio – borrow to invest and then pay rent and expose to margin calls ??? Never

Leveraged investment into a home, invest very little if anything, no margin call ?? Yes

This blog compares them as they are fluid, they are not and should not be viewed that way.

The best lesson at these levels if you are worried about never being able to buy – use this formula

Annual Rent/Total Home price < 5% then rent. Keep in mind, it takes 100% to move from 50 to 100, but only 50% to move back to 50!

You need to have a good way to understand the money you are paying in rent is actually "won back" while waiting for home prices to correct, as you need to live somewhere. If you pay 50k in rent and wait for a 1M house to drop 10% (your view) then if your predication doesn't come true in 2 years, you lost, etc….this is the only way to think about purchasing, because each year you are behind and thus comes the lust "priced out of market" the rent vs buy, mortage payment vs rent are REAL choices for most of the population. Sad fact is that not many people have the luxury to invest in markets and deal with swings….this is why homes have a long term upward trend that find's the following

Annual growth in house price/Annual Costs = 1

No free money in the long term, current home owners have been prepaid forward growth, the point Garth is making now is, take it, run, rent and invest which is smart and tactical and worth the moving expense and headaches….

At these prices, you are getting paid to wait by renting….

#205 Sheane Wallace on 03.21.16 at 10:12 am

Visited some friends on the weekend.
Outside of Aurora.

Drove by newly build townhouses (on the field, used to be a farm a year ago), location is advertised as Richmond Hill on mls/realtor.ca

Looked it up on internet after that:

https://www.realtor.ca/Residential/Single-Family/16678153/1-DARIOLE-DR-Richmond-Hill-Ontario-L4E0Z2-Oak-Ridges-Lake-Wilcox

The price?

$ 928 k.

That’s right. Considering the closing costs it is basically a million dollar home. With virtually no land. 1 h to Finch subway considering the traffic.

The people around hardly make 70k per household, I know people making 35-50 k (the whole household), living in supposedly million dollar detached homes in the neighborhood. They can’t save even 4-5 k per year. Walking score is negative.

I would not live there even for ¼ of the price (I am considered top 1-2 percenter here).

In my old Toronto neighborhood a house that was worth 260 k 15 years ago currently ‘fetches’ 1.4 mil. A house that was worth 350 k 15 years ago in a desirable location close to Sheppard is ‘worth’ 2.7 mil.

No one that I know living in these areas has had any real increase in income in the last 10 years.

I don’t really know how to qualify the degree of overpricing of the real estate here but after visiting a friend in Austin, Texas (his detached house, on huge lot costs 140 k, his annual salary before taxes, he paid it out for 2 years), groceries at the store at 50 % (after converting to CAD), I can tell you that the houses I mention here are overpriced at least 5-6 times when compared to income.

Through around the ‘social country’, ‘rich foreigners’, ‘we are proud (and stupid)’, ‘nice weather’ myths that ‘justify’ some premium, it could come down to 4 times overpriced real estate. Vancouver is in the same situation, 4-5 times overpriced real estate.

I don’t really know how the finance minister, the BOC and the CMHC leadership and the pretty boy T2 or the bank CEOs can sleep at all (and it seems they actually sleep pretty well), but if you ask me I think we are in a very deep and smelly doo-doo. When it actually hits the fan it might be impossible to find any cover here.

It is absolutely beyond me how such prices, even cut in half can be considered ‘affordable’, I also don’t see how one can attract further any quality workers or immigrants with such expensive lifestyle offering that we have currently.

10%, 20 %, even 30 % decline in prices does not make any sense to me. Even 70 %. Most of the people I know have everything in real estate with no investment in equities whatsoever and the lucky few with ‘government’ pensions are backed by significant amount of MBS sold by the banks and government bonds (mandated by government) with virtually no yield and priced in melting-down currency (apart from CPP which actually is doing pretty well).

I think we would have not 1 but 1.5, maybe 2 lost generations trying to get out of this mess.

Every person I speak to sees these prices as simply unreal but the ‘feel rich’ effect has great impact on these people who have no money or other equity. And the prices keep going up and up.

I think what we have here is arguably the biggest housing credit bubble when compared to income and economy in the history of the world and the point of no return was actually passed in 2005-2006, not even in 2009.

There is absolutely no way in my mind that there is going to be a soft landing of any kind. Such is not even remotely probable considering current valuations.

Is the lesson learned, as usual: ‘Suck it up and move on’?

In the meantime the lucky few will just cash in their lottery tickets and move on to a better life but be aware, these tickets have expiration dates.

The remaining will just keep sucking it – it is hard to move on with that mortgage or live on that pension with skyrocketing prices of basic necessities.

#206 Ronaldo on 03.21.16 at 10:22 am

#182 Brazil ex-pat on 03.20.16 at 11:47 pm

I know exactly what you mean. My thoughts exactly. It will come to an end soon.

#207 Ronaldo on 03.21.16 at 10:28 am

#187 Keep dreaming on 03.21.16 at 1:16 am

”Ronaldo, do you really believe the average Toronto family earns 73000 a year?”

Just provided the stats. Doesn’t mean I believe them. I doubt very much your theory on average income being $200,000……dreamy though if its true.

#208 cramar on 03.21.16 at 10:55 am

Fantastic post Garth! A classic!

There was a nursery rhyme that we all heard as children that has the name “Vancouver” written all over it:

“Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall;
All the king’s horses and all the king’s men
Couldn’t put Humpty together again.”

I predict that Elaine friends with the $750K mortgage will end up in poverty, and shake their heads asking “How in the world did we ever end up like this?”

#209 Bat Flipper on 03.21.16 at 11:00 am

The banks have been on the top shorted list for years! It isn’t anything new. Lots of investors are waiting for the shoe to drop in Canada. We all know what will set it off, higher rates or unemployment. Also, real estate is somewhat local. A long lasting drop in oil will effect AB, and automation will take its toll in Ontario. Just wait till your bank branch is converted to an app and branches their doors. Branches now are a place where people complain. No one would go into the branch if they can do it themselves. More or less, fear drives the market. People are scared of not being able to get a home. When people are scared of losing their job, not being able to pay their bills, or being unemployed, then the winds will change. As for hedge funds, they can wait out the Canadian economy for the shoe to drop.

#210 Grantmi on 03.21.16 at 11:02 am

Stay tuned. Election coming 2017 in BC. And most residents of Vancouver city rent. Watch the power of social media this time.

Yea! lets see how Premier Krusty and Mayor Moonbeam like these EMPTY home voters not casting votes for them, because they actually don’t live here.

#211 Sheane Wallace on 03.21.16 at 11:20 am

#208 Bat Flipper

I agree, it is inevitable and whoever is shorting it (including the currency) in mid to long term in any shape or form could make a killing.
Keep my word, then they would then blame the ‘speculators’, the ‘international financiers’, even the gold bugs.
But not the real culprit – CMHC, a crown corporation.

Have you seen a clogged toilet backup? It is not pretty.

#212 Noel on 03.21.16 at 11:22 am

Hedge funds in the US have been betting against the housing market (by proxy by shorting Canadian banks) for a few years now, and they’ve been getting creamed. Just because they have a lot of money doesn’t mean that they’re going to be successful in their short positions. Canadian mtgs account for less than a third of TDs total loans, and over 2/3rds of TD’s Canadian mortgages are insured by the CMHC.

So maybe a tenth of TD’s total loan value is residential and uninsured by the CMHC. If default rates increased ten-fold (highly unlikely) it would effect less than 1% of their liabilities.

Shorting TD has been a losing bet for years now – these guys are not, as you say ‘money machines’, unless that machine is a shredder.

#213 The Other Chris on 03.21.16 at 11:43 am

@187 Keep dreaming on 03.21.16 at 1:16 am

There’s no way the actual average household income in Toronto is $200k.

I do have a cop friend though who seriously believed that the average individual income in Canada was around $120k. It’s easy to be misled by the circle of friends one hangs out with.

#214 fancy_pants on 03.21.16 at 11:47 am

Imminent rising rates, non existent HAM and BofC governor finger wagging for the last 7 years have not transpired. Most people don’t know what voices to listen to anymore, they just see RE owners getting richer by the day so they pile aboard.

I think the cons set this stage only to spite Garth. If the floor completely gives way, we might fall back to where we started. When/if this changes direction, it should swing just as heavy the other way. It will likely be an ‘unexpected’ event that triggers the fall.

#215 TurnerNation on 03.21.16 at 12:07 pm

As I say next few years will be hellish here in Kanada.
Huge uptick in Calgary vehicle thefts.
Beats empty shelves and bread lines I guess.

http://www.cbc.ca/beta/news/canada/calgary/multimedia/calgary-vehicle-thefts-by-community-see-where-the-crime-surge-happened-1.3497780

#216 AfterTheHouseSold on 03.21.16 at 12:20 pm

#173 Langley Lad
“I’d bet the other problem many would have would being perceived as “less than” because they were renting as opposed to owning.”
#176
“Only accounting for the money side of the equation is short sighted.”

And therein lies the real crux of the matter; ego, fear and greed. ‘Who am I without my prestigious house’, ‘What will others think of me if I rent’, ‘Prices will go up forever’.

This is a financial blog which includes real estate. ‘The money side of the equation’ is what you should expect to find on a financial blog. Garth has been trying to help the ‘short sighted’ Vancouver home owners take a longer view to their financial futures; a future that includes the financial security of their children.

It’s a shame that so many come here only to vent, so focused on the past, they are blinded or fearful, to the huge opportunities that lay within their grasp. So sad.

#217 Keep dreaming on 03.21.16 at 12:20 pm

Ronaldo and The Other Chris,

The $200,000 number is for homeowner families (usually two income earners) not all individuals. The average couple in TO that owns a house is likely at that level of income, especially when one includes undeclared income. Trust me, ask any waitress at Boston Pizza or The Tilted Kilt what she earns in tips each week. You’ll be shocked. I would bet some waiters at high-end restaurants in Toronto take in more than some doctors do. There are probably over 100,000 waiters, waitresses, restaurant owners and construction people in Toronto who earn more in cash than that $73,000 number Stats Canada bandies about. The point is, there are a lot of people earning a lot more than you think in Toronto.

#218 Mike in Edm on 03.21.16 at 12:42 pm

#149 Fed-up on 03.20.16 at 9:45 pm
#116 Fed-up on 03.20.16 at 8:25 pm

Yet unbelievably, not a single, significant price correction anywhere in this frozen tundra of a country thus far, not even in Alberta’s biggest markets.

Look harder. — Garth
——————————————————————————-

I have. I (like most people), consider significant at least 15-20% correction or much more after a 15 year run up. And Alberta’s major markets (Edmonton and Calgary) have not come close to correcting nearly that much, if at all. And that goes for any other major market in Canada, not yet anyway. Should they correct and by a huge amount? Emphatically, yes.

But “flat” prices or -1 or 2% is not a significant correction.
************************************
You need to stop relying on the local RE boards for stats. Calgary is down around 15% right now, Edmonton 10%, Saskatoon at least 10% from the peak 2 years ago, and Fort McMurray is down nearly 20%…

#219 Shortly on 03.21.16 at 12:48 pm

But why short the banks, Garth? Presumably they either have insurance (cmhc or other insurers) or an maximum 80% lending position on the property. Probably significantly less on higher end homes. Won’t that protect them? Help the blog dogs to understand.

Because many global investors (unlike most Canadians) know where interest rates and real estate values are ultimately headed. — Garth

Buying Opportunity, but like all opportunities might be next week might be next year, best to stick to a balanced portfolio.

#220 Ponzius Pilatus on 03.21.16 at 1:38 pm

#86 nutso on 03.20.16 at 6:35 pm
My coworker just bought a 1.2 mill east side fixer 2 bed up 2 bed down. .He says I will rent the 2 suite and live in the upstairs 2 bedroom. .I say where the 3rd suite? He says he will convert the 60 yr old double garage into an bedroom and get 1200$ a month.. yikes this is what it has come too
—————-
My wife’s coworker did the same.
Except he’s now living with his family of four in the basement.
Isanity no longer describes it. we need a new word.

#221 Ponzius Pilatus on 03.21.16 at 1:41 pm

#181 Smoking Man on 03.20.16 at 11:43 pm
In the pent house suite in Salamanca . 4 rooms. 6 tvs .

And I’m out of bozze.

What the hell is point of bing rich when you miss the small stuff.

Dident see this coming.
—————
I know. What happened to the MiniBars?

#222 Ponzius Pilatus on 03.21.16 at 1:54 pm

#190 Big Dipper on 03.21.16 at 2:27 am
Mortgages do not remain on the balance sheets of banks. They are securitized and sold to investors as assest backed securities.
The liabilities are also transfered to the abs buyers. Point is that banks will not be greatly impacted by non performing mortgages.
Buy bank stocks.
—————–
Not so. the mortgagee continues to pay the bank.
There is why the French called them “death pledges”.
And if he does not, the bank takes the hit.

#223 jess on 03.21.16 at 1:59 pm

“productive” = no employees?

In 34 cases, banks have subsidiaries in offshore territories that have no staff at all.

http://www.taxjustice.net/2016/03/16/following-the-money-french-banks-activities-in-tax-havens/

#224 ILoveCharts on 03.21.16 at 2:07 pm

Garth – this isn’t mere media speculation anymore – it’s a research article in a peer reviewed journal.

And of course, this lines up well with observations at open houses and from realtors in Vancouver.

Besides, mortgages can not explain how large parts of the region are now $2m + or at least $1.5m +. Who can qualify for a $2m mortgage?

Come out here for a weekend and tour the open houses – you will see what is happening.

http://www.vancouversun.com/business/story.html?id=11797902

#225 salonist on 03.21.16 at 2:17 pm

nectonite

Join Pam Damoff, Member of Parliament for Oakville North-Burlington and Vice-Chair of the Standing Committee on the Status of Women, on Wednesday March 30th at 6:00 PM at the River Oaks Community Centre for a screening of the documentary “He Named Me Malala”. The screening will be followed by a panel discussion about the film, led by three prominent women from our community.

Where: River Oaks Community Centre, 2400 Sixth Line, Oakville, ON L6H 3N8

When: 6-9 PM. The screening will begin at 6:30 and will be followed by a panel discussion.

#226 family beagle on 03.21.16 at 2:18 pm

My little short… My family is full of themselves. Shallow, narcissistic, motivated by things rather than character, judgemental, opinionated, elitist. They are the children of old money, yet share little. So, imagine their chagrin when I, the independent rock star of the family, moved into a junkyard rental in 604 bogland. Hehe.

It drives them bonkers. My brothers, aunts, even Mom, refuse to stay over and if they stop by they refuse to use the washroom (1960s linoleum). Visiting relatives relegate to my bros fancy mansions in South Van or Burnaby. I am apathetic to their concerns– and their constant badgering to buy a fancy house for their convenience has long subsided. I am the bad boy. I am the rebel. I am a renter. I’m on five acres of lowly berry farm.

However, the nieces and nephews love me. They see their uncle as the future, an attainable life goal possibility, the rejector of mainstream. The kids like the old tools strewn about, dogs, cats, chickens, wildlife, gardens, motorbikes, 4x4s, bonfires, freedom, lack of rules. I have won the hearts and minds of their children. I now have a small army.

As my wife suggests, I have achieved god-like status for my rejection of the status quo. I treat the kids as individuals with a brain, not as extensions of my own personality. Now they see their parent’s predjudice and bigotry clearly and the kids can reject the current paradigm willingly. I have given them an escape route. My work is done. He who dies with peace of mind wins.

Ps. This uncle just bought a mountain in 250 and gave them each an acre to live and build independently. Two are already moving up there. The parents are loathe to visit. 1 general store five miles away. Outdoor plumbing. Hahaha. Canada is massive, really really big with vast expanses of wide open land, rural land without fences or survey posts. The people climbing over each other for a postage stamp prop in 604 are akin to locusts gyrating in an infestation…a carnival of fools. But thank God for it, because it keeps the idiot class confined to the urban zoo. Cheers Mr. Turner. Stop by for home made blueberry pie someday. The door is always open.

I won’t have to use the can, right? — Garth

#227 Prairie Oysters for All on 03.21.16 at 3:31 pm

#220 Ponzius Pilatus on 03.21.16 at 1:41 pm

#181 Smoking Man on 03.20.16 at 11:43 pm
In the pent house suite in Salamanca . 4 rooms. 6 tvs .

And I’m out of bozze.

What the hell is point of bing rich when you miss the small stuff.

Dident see this coming.
—————
I know. What happened to the MiniBars?

Smoking man could not survive on a minibar… he drained it already as an appetizer to wet his whistle.

He actually must be an alien seeing as he lives off of copious quantities of booze cigarettes and chips.

#228 family beagle on 03.21.16 at 5:21 pm

I won’t have to use the can, right? — Garth

You’ll get your very own tree.

#229 Ken Nash on 03.21.16 at 5:51 pm

So now would be a really good time, for the federal and provincial governments, to build 80,000 new houses? Like in Seaton, Pickering, GTA Ontario. North America’s largest, one time housing development ever planned. Bring housing costs down?

So many believe supply has something to do with real estate prices after all. Create onetime jobs, on some the of world’s best once upon a time agricultural land, for malls, parking lots and houses. Seaton will need like 300,000 people to fill it.

Yeah that’s the ticket, waive CMHC credit capacity criteria for new Canadian’s . Find people who need a place to live. Not want to live here.

They can all buy a home and in 10 years, when they’re destitute, realize they’ve been robbed and victimized again. But hey the banks will be okay, jobs will jump for maybe a 4 year political term to build it.

Only in Canada, would some think offering another in need an MLS Listing. Is showing compassion?

A little surely today. Cannot believe Bombardier, who’s asking for government cash, is going to outsource work from Toronto to Mexico and China? I was onboard thinking aerospace is critical to national security. whatever

#230 jess on 03.21.16 at 6:21 pm

..so the psychic consultations didn’t pay the mortgage at the old tavern?

#231 jess on 03.21.16 at 6:23 pm

Monday, March 21, 2016
Justice Department Settles Claims Against Barrios Street Realty Inc. for Discriminating Against U.S. Workers

The Justice Department reached a historic settlement agreement today with Barrios Street Realty Inc., a company based in Lockport, Louisiana. The agreement resolves claims that the company and its agent, Jorge Arturo Guerrero Rodriguez, discriminated against U.S. workers by preferring to hire foreign workers under the H-2B visa program.

The department’s investigation found that in July 2014, Barrios Street Realty and Guerrero Rodriguez failed to consider or improperly rejected 73 U.S. workers who applied for positions as sheet metal roofers or laborers, and then solicited foreign workers to fill these positions. The department determined that the company’s applications for foreign workers falsely claimed that its earlier efforts to fill the sheet metal and laborer positions failed to identify qualified U.S. workers. Refusing to consider or hire qualified U.S. workers because of their citizenship violates H-2B regulations and the Immigration and Nationality Act’s (INA) anti-discrimination provision.

Under the settlement, Barrios Street Realty must create a back pay fund of $115,000 to compensate U.S. workers, pay $30,000 in civil penalties and be subject to monitoring for a three-year period. In addition, Barrios Street Realty acknowledged in the agreement that its misuse of the H-2B visa program constituted valid grounds for debarment from the program and agreed to a voluntary debarment prohibiting it from seeking H-2B visa workers or any other classification of non-immigrant visa workers from the Department of Labor’s Employment and Training Administration for a period of three years. This represents the first time the department has obtained a voluntary debarment as a remedy for violating the INA’s anti-discrimination provision.

https://www.justice.gov/opa/pr/justice-department-settles-claims-against-barrios-street-realty-inc-discriminating-against-us

#232 going short? on 03.21.16 at 7:01 pm

Is Garth going short the market? His sources told him (and the blog) that American investors were going short the C$ couple years ago. Can’t remember when exactly but the call was a good one. Now their going short the Big Five? Wowsa, things are coming unglued hard and fast, folks. Hang on it’s gonna be a bumpy ride down the RE roller coaster.

#233 Ronaldo on 03.21.16 at 9:01 pm

#204 Sheane Wallace on 03.21.16 at 10:12 am

That pretty much sums it up. Good post.

#234 Neil on 03.22.16 at 3:48 am

The only question is how much of the 1 Trillion that left China in 2015 went into the Vancouver market. This isn’t racist. Doesn’t matter to me where foreign investors are from. The point is the market Vancouver is being driven buy a huge volume of foreign influx of cash.
If you don’t think so then sell your place now because it’s going to burst huge.

But if a large amount of foreign investment has come in then actually the market is going to go flat or down a little bit but won’t bubble out huge and in fact may still keep going up.

If 1% of the 1 trillion dollars that came out of China in 2015 went into the Lower Mainland. That would be 10 billion dollars of new money going into the area. Don’t forget that the value of all residential real estate transactions in BC for the entire Province was only around 50 billion last year. So just for giant round numbers realize that a ten-billion-dollar injection in the province would equate to 20% of all the money going into residential real estate for the whole province. Imagine for a second that maybe it is actually two or three or 4% of all the money that came out of China last year and in fact it’s a localized primarily in Vancouver and close surrounding regions. You have a recipe for doubling or tripling the entire market just on foreign money that isn’t leveraged.