Outta here

It was somewhat insufferable visiting Calgary a few years ago. Oil topped a hundred bucks, and everybody looked down on lowly peons from Toronto. Even the car rental guy snorted a bit when he saw the Ontario driver’s licence.

Well, arrogance lives in the east now. If you’re a homeowner in the GTA, or anywhere close, you’re a god. You make money by waking up. Showering. Eating. Writing in to pathetic blogs.

“So,” says Mark, “my wife, daughter and myself currently live in Newmarket in a detached home that we purchased our home in late 2014 for $590,000 and it’s worth $1.1 million. That’s quite the profit in 2.5 years. So an option we are leaning towards is selling, and then renting for until we are ready to leave town and go north or east.”

Smart boy, Mark. Especially since you bought with little down and have zero other financial assets.

“So my main questions are what would your opinion be on that scenario? Good idea or bad idea? We don’t want to miss the boat on making maximum profit for our house, but we also don’t want to lose out on money if we would just wait a year to 2 years and then sell. Everybody is telling us that we’re crazy, and to wait.”

Well, let’s flash over to BMO economist Robert Kavcic who, like many others on Bay Street, have recently found their voices with respect to the Canadian real estate time bomb. Here’s his advice: “It’s pretty much the best time to be selling a Toronto home in at least 30 years. Supply-side fundamentals have been left in the dust.”

Even CREA, where old realtors go to croak, agrees. What is happening now in our giant bubble market, it says, “is without precedent.” Plus, it ain’t just 416, where the average crappy detached house fetches $1.5 million. Or 905, where the hairdressers live and a single is now $1.1 million. Prices in faraway places like Barrie, Guelph, St. Catharines or (shudder) Omemee have been zipping ahead almost 30% a year. Even in uncommutable London, the locals are watching Toronto “investors” moving in to snap up $225,000 houses so they can convert them into student rentals. Well, there goes the neighbourhood…

And did you see the news about bank economist Doug Porter’s little story regarding two young professionals in Toronto with a hefty $100,000 deposit and making $225,000 – almost the one percenters the steerage section of this blog wants to tax into the dust? Well, says Doug, the market has screwed them, too. The most they could pay and carry would be $987,000. “At best they can afford a semi-detached home on the fringes of Toronto, or maybe a low-end detached home verging on teardown status. Now just imagine the predicament a more typical couple of more modest means faces in the current market environment.”

TD eggheads agree. Our collective real estate stupidity – that lets a guy like Mark grow his asset from $590,000 to $1,100,000 in 30 months without lifting a finger – threatens the entire economy, they say. Arrogant, puffed-up, egocentric homeowners who suddenly believe they’re financial geniuses are getting more over-extended by the month. Consumer borrowing is on the rise and HELOCs are out of control – as people dip into their windfall equity or feel the wealth effect a bubble market brings.

“Home prices across the GTA and surrounding areas appear to be detaching from fundamentals and are simply unsustainable,” says the bank. And when Toronto blows, the spray will hit everyone. As reported here often, just about every economic and financial body in the world agrees, from the IMF to the World Bank, all the big credit rating agencies, the Economist, the Bank for International Settlements, legendary economist Robert Shiller and the Bank of Canada. But your Mom, of course, knows best. It’s always a good time to buy, honey.

Hey, and here’s CIBC economist Bejamin Tal, who just wandered in to get a GreaterFool muffin, the kind with gravel on the top. “Toronto is an unaffordable city,” he says. “We need to see the propensity to rent in this city rising and we need to see it now.”

Huh, Benny? You mean there’s nothing wrong with being… a renter?

“Basically what we are trying to tell you is that if you are 35 years old and have two kids and are renting, nothing is wrong with you – that should be the norm.”

Well, you’ve seen everything now. A senior spokesguy for a bank that makes billions lending out mortgages telling young couples they should be tenants, not owners. If that doesn’t tell you something about where we’re headed, nothing will.

Sell, Mark. The only reason not to is greed. It’s always fatal.

140 comments ↓

#1 TLG on 03.17.17 at 6:34 pm

As long as interest rates remain at all time lows there is no bubble. Demand will always greater than supply.

#2 pathcontrolmonk on 03.17.17 at 6:36 pm

I think Mark is trolling us all.

#3 I'm stupid on 03.17.17 at 6:44 pm

Bulls make money
Bears make money
Pigs get slaughtered

Don’t be a pig!

#4 RentYVR on 03.17.17 at 6:45 pm

The problem is gov’t incentivises home ownership and that’s not going to change. The current budget will probably only make this worse with the heaver cap gain and dividend taxes. Can’t fight the fed (gov or bankers)

#5 Arto Tavukciyan on 03.17.17 at 6:46 pm

The Banks only decided to call bubble now because they are being asked to put skin in the game.

#6 Doug t on 03.17.17 at 6:47 pm

Garth respect ya bud – but please don’t quote any of these “bank” dudes – they tend to reek somewhat

#7 Arto Tavukciyan on 03.17.17 at 6:47 pm

The Banks only decided to call bubble now because they are being asked to put skin in the game. Self-interest is always their game.

#8 IM in C on 03.17.17 at 6:50 pm

GTA house prices are not going to fall. They are being supported by fundamentals, just not the fundamentals we can see; or admit to !

#9 GFC v2.0 on 03.17.17 at 6:59 pm

If Canadian 1%’ers are no longer able to qualify for a house in the GTA, that pretty much confirms that it is not Canadians who are currently gassing this bubble.

#10 OnlyTheBankersLaugh on 03.17.17 at 7:02 pm

Interesting article in Globe ROB on Innovation. This budget will finish off any hopes of innovation staying here or any startup companies. Go South, young woman or man!

Since they will now make it even harder to save for retirement in private sector with a balanced portfolio, the decision to leave Canada is easier for any professional or entrepreneur. For the government worker, things have never looked sweeter.

Bring on someone with some financial acumen from the Conservatives. JT is an unmitigated school teaching disaster as an economic leader. Budget is balancing itself at expense of middle to upper middle class in short term but will drive anyone with ambition out of this socialist state. Wynne has caused even more long term pain that has not totally come back to bite the youth yet but these deficits will become as big as their mortgages when interest moves up in the USA Fed. Our chincey little Bank of Canada will lead us to ruin if they try to resist. It doesn’t look particularly bright here in our 150th year but Trudeau will order a huge party paid for by our taxes. Feel good? If so, you ain’t paying attention. Wow, are we screwed.

OnlyTheBankers(andCivilServants)Laugh

#11 mark on 03.17.17 at 7:03 pm

You made the news in Australia, Garth.

Behind a Murdoch paywall so put the link into google first and then click through to access.

http://www.heraldsun.com.au/business/barefoot-investor/barefoot-investor-why-gifting-firsthome-buyers-cash-is-bad/news-story/3dd5207de3265f92b9a73c6ed4287ebd

#12 keepingy'allhonest on 03.17.17 at 7:04 pm

For those fools that believe something in low supply cannot be a bubble or decline in price.

Billionaire takes 74% loss on a Gaugin:

https://www.bloomberg.com/news/articles/2017-02-28/that-85-million-painting-bought-as-an-investment-now-down-74

Even if this was a supply problem (and there is ample evidence that it is not), it does not justify paying any price because it can only go higher. Why are people so stupid to repeat the same errors over and over again?!

#13 Jerry on 03.17.17 at 7:06 pm

For those of you in Toronto, keep in mind that almost all the way up when real estate in Vancouver was skyrocketing for the past 8 years, Garth was telling everyone that there will be a correction, yet it kept going up, and up, and up….

#14 Lee on 03.17.17 at 7:06 pm

TLG,

Rising interest rates were it the culprit in the early nineties. Rates went from 12 to 14 % which had a negligible effect on carrying costs. But Garth is right we are creating two extremes. Hairdressers who think they are Warren Buffet bc they own real estate and highly skilled and or educated pretty high income earners who are giving up.

#15 @careeraftschool on 03.17.17 at 7:11 pm

I just don’t get it. This winter I saw homeowners of multi-million dollar homes in Vancouver line up in the cold for hours for free salt. Any signs like this in Toronto?

#16 BlogDog123 on 03.17.17 at 7:12 pm

In my neighbourhood, Lakeview, Mississauga: 60x130ft lots, bungalows being torn down “daily”. Fancy fill-the-lot sized houses going up. These teardown bungalows being bought up for $850k+, plus construction costs to build these behemoths. Don’t worry, this will all end well…

#17 Lulu on 03.17.17 at 7:14 pm

Well, since everyone saying Toronto is a world class city, our RE prices is not that world class yet. Recently a pre-construction condo in Hong Kong fetching 1.4 million cad for a 270 sf open concept no bedroom studio unit. So, our’s still VERY affordable even compare to the SFH sector. Prices still going upper and upper, so as the rent, glad they now try to have rent control all across the board.

Bubble pop? Nah!!! It’s not gonna happen! Let’s keep buying left center and right! We are different!! Because we are Canadian!! LOL

#18 Long-Time Lurker on 03.17.17 at 7:17 pm

Limited Sage, did you read that?

—-

Did you hear about O’Leary? He was right –Conservative Party membership fraud.

#19 AK on 03.17.17 at 7:18 pm

“The only reason not to is greed.”
——————————————–
Remember. Greed is always good.

#20 Mark on 03.17.17 at 7:19 pm

The guy, like many others in the GTA, will probably go to list, but be told that ‘his’ house didn’t appreciate like the ‘averages’ may imply.

The delusion sure runs deep these days, and those who attempt to rely upon Realtor ‘averages’ for either buying or selling are either seriously overpaying, or seriously deluding themselves as to what their transaction will actually clear at.

Having said that, I have heard anecdotally that CIBC has really begun a crackdown on their credit card customers. Even people with great income, and little utilization on other cards are having their limits slashed. A friend of mine had his $10k credit limit slashed to $500 overnight on his CIBC card, despite having relatively low utilization on his card and no other debt. Bankers are either getting cold feet, or they are facing some serious liquidity problems and are calling in the loans of some of their most credit-worthy customers just to shore up their cash balances.

#21 Porsche on 03.17.17 at 7:25 pm

I remember in 2010 working in GTA on contract for a Chinese Telecom company called ZTE.

We were installing and commissioning a new Central Office for a new wireless company called Public Mobile.

All the local telecom engineers were buying high rise condos on speculation.

I thought they were so stupid because I was a Greater Fool reader.

I even told the Portuguese family in Etobicoke I was renting a basement suite for $900 cash a month they should sell.

“Shhh… you don’t say to government” in broken English. lol

I wonder how richer they are today… 7 years later.

#22 Nonplused on 03.17.17 at 7:28 pm

“Basically what we are trying to tell you is that if you are 35 years old and have two kids and are renting, nothing is wrong with you – that should be the norm.”

Given the current market conditions, both in housing and in the job market, I wouldn’t advise young people to have kids at all, renting or not.

I know a lot of people don’t see children as a responsibility, but more as something you “want” like a puppy or a fancy car, but I don’t view it that way.

Having children is ultimately a personal decision based on the parent’s desires and goals, not the child’s. The child does not exist yet and is not part of the decision. Thus, we can blame the birth of any child (in the first world anyway) entirely on the parent’s personal desires and decisions.

But yet how many parents take into account their long term ability to support the child? Not many. During the “age of growth” this was not such a big deal as affordable education and readily available good jobs awaited both parents and children alike. However the “age of growth” appears to be over. Many factors, including AI based automation, declining Energy Return on Energy Invested (EROEI), and mass migration is devastating the job market. Slowly at first, but eventually it will be all at once.

This is no country for young men (or women).

I caught the tail end of “the age of growth” and was fairly lucky. I own my home outright and can now exist on part time work. But looking at the cost of living and education now, plus the job opportunities available, I can’t imagine being 22 with a brand new engineering degree and a student loan now. Back then jobs were everywhere you looked, houses were affordable at 3-4 times income, and a trip to the grocery store did not require a call to Visa to up your credit limit. Gas was $0.49 a liter and had been for eons, there was no carbon taxes or GST, car loans were for 3 years not 7, the government wasn’t $640 billion in debt, Alberta was running a surplus, and life was good at $50,000 a year (you really could buy a lot of beer, to quote the song).

Somehow or another we’ve ruined everything.

#23 crowdedelevatorfartz on 03.17.17 at 7:31 pm

Mark has almost doubled his money in 2.5 years , tax free no less, and has to think about selling?

Yeesh.

#24 Don on 03.17.17 at 7:41 pm

As long as the rates is low, the bank and government are printing money, the house price will continue going up. take a look Japan, the rate is zero or even negative, it has been like this for at least 20 years. The GTA will be in seller’s market for at least another 20 to 30 years. we will see average detached house at least at 10 million. which is the norm in most asian countries.

Garth, you have been wrong a few years. Go buy a condo or something, you can become wealthier faster, better than writing a book or blog.

#25 TurnerNation on 03.17.17 at 7:43 pm

Hey I partied a few times in Omemee. It’s located halfway between Peterborough and pestilence.
Back in the day.

As the other Garth sang: “Cause I’ve got friends in low places Where the whiskey drowns And the beer chases… my blues away ”

M41ON

#26 paulo on 03.17.17 at 7:45 pm

The greatest threat to the Canadian economy is the out of control real estate bubble, that has been created by greed stupidity and poor governance by the banking system and central bank.
As we approach a 2nd T2 budget the fed looks to be looking to do serious damage to the country by taxing our doctors, risk takers and small business persons,you the ones that provide essential medical services,do dumb things like create jobs and commerce,take risks and essentially keep the country moving forward.
nothing like giving our best reasons to move to the US or elsewhere.
all this while the real estate time bomb ticks to a eventual explosion that take out the country and the liberal party will be the whipping boy
so some thoughts for the T2 to consider that reap a win fall of tax revenue, while putting the brakes on the now almost totally speculator driven real estate market and deflate it,reduce future liability to the taxpayer and make it possible to make canada great again:

1) Terminate the capitol gains exemption on proceeds of sale of any property
2) Replace it with a sliding scale tax write-off of mortgage interest payed on principal resident starting at 20% first year increasing 20% yearly to 100% after 5 yrs current property owners given the option of keeping the cap gain or taking the mortgage interest write off
3) On the CHMC: limit coverage to 75% of mortgage principle on most excepting high risk markets defined where average values have increased by more than 5X the core rate of inflation, limit them to a maximum of 50% coverage in either case eliminate high ratio mortgages and establish a minimum down payment of 25% to be qualified for insurance.
this would clean up the very questionable underwriting that is obviously happening and put the risk where it belongs,with the lender not the public purse.
4) Mandate that provinces put in place vacant home(Speculator) tax of 1% per month of appraised value
5) Establish a federal NON CITIZEN real estate sale tax of 20% of the sale price.
The above actions would be tough medicine but fair and equitable and put the worlds greatest PONZI GAME to a quick end.

#27 Cici on 03.17.17 at 7:46 pm

Valuations are so stupid in Toronto and Vancouver that even renting is a wealth trap…the monthlies on crappy condos and semis cancel out most of the benefits that would usually accompany the elevated professional salaries.

#28 Smoking Man on 03.17.17 at 7:56 pm

crowdedelevatorfartz on 03.17.17 at 7:31 pm
Mark has almost doubled his money in 2.5 years , tax free no less, and has to think about selling?

Yeesh.
….
And go where? Bidding wars west of London.

I need to sell soon cause I’m almost broke and have no job. Mind you I haven’t really been appliying.

Hard to get off the couch. Mabey next week. What I have noticed though. My claim to fame is I’m the best vba code smith god ever created.

I have never seen so many companies looking for vba dudes in Toronto. Always a shit load vacancies in the USA. But never Toronto. What the hell is going on.

Toronto must be booming.

#29 If that doesn’t tell you something on 03.17.17 at 7:57 pm

What the bank dude is saying that the banks loaded up plenty of people with money did not qualify for and the reckoning is coming.

It won’t look good on banks, especially after the full-blown teller-financial advisor resistance, which will open the door for a fat class-action suit once mortgages will start to fold, threatening bank management bonuses.

#30 45north on 03.17.17 at 8:03 pm

Toronto is an unaffordable city,” he says. “We need to see the propensity to rent in this city rising and we need to see it now

but if some people need to rent, other people need to own rental properties

Reevely: With hydro prices solved, Liberals turn to rent control

Ontario instituted rent controls in 1975 and tightened them repeatedly for 20 years. In the 1980s, rental construction fell off a cliff.

The thing is, according to the CMHC, average rents in Toronto haven’t increased all that much overall. An average two-bedroom went for $1,327 a month in the Toronto metropolitan area, which is up $40 a month from the year before.

And the government is going to make your rent affordable. We’ll see soon whether they, unlike any other government that’s tried it, can find a way to do it without destroying the rental market for everyone.

http://mcaf.ee/27cf6q

a good housing stock which includes a viable rental market is the basis for our country. It is the job of government to create the conditions which allow private industry to create the housing stock. In the age of the internet, things are not forgotten: governments , premiers and members of parliament are recorded for all time.

#31 Smoking Man on 03.17.17 at 8:05 pm

A buddy knowing I’m unemployable suggested unload Shlong Branch. Move to Saint Marttan buy a big ass boat. Live on it and do charters.

I think I might go with that…. I see it.

Smoking Man’s Shakey Sea Adventures.
Then what do I do with the remaining million.

Oh Gartho…I need to know. Who’s better. Doug or Ryan?

#32 Economystical on 03.17.17 at 8:05 pm

“And did you see the news about bank economist Doug Porter’s little story regarding two young professionals in Toronto with a hefty $100,000 deposit and making $225,000 – almost the one percenters the steerage section of this blog wants to tax into the dust? Well, says Doug, the market has screwed them, too.”

Not so Garth, embrace Economystics. You too can see the light, but you must expand your mind and become one with the cosmos.

Under Economystics, debt is not meant to be repaid, only serviced. Governments learned this long ago because they were the first to embrace economystics, but the populace is now slowly converting.

So using Economystical theory, here is how you buy a house: Based on the monthly payment. You don’t look at the purchase price, that is irrelevant. You don’t look at the age of the structure because it will never actually be rebuilt anyway unless it burns in a fire and insurance rebuilds it. The only thing that matters is the cost of carry.

The unenlightened might say “what if the market goes down and I lose my job????” This is extremely old school thinking. Master Economystics like Mr. Trump know the answer to this and have for many years: Bankruptcy. Now sure, Mr. Trump is a 1st degree master Economystic, so he knows how to use a limited liability company and protect his other assets. But for most new to economystics this is an unnecessary complication and you should not try to perform the rituals until properly trained. Instead, it’s simple: The house is all you own and the mortgage is all you owe. If things go south you walk away. Sure it will destroy your credit rating, but did you think any sane person was going to lend you money that wasn’t backed by a house in the first place? You had nothing going in, and you walk away with nothing, worst case scenario. But in the new Economystic utopia, the upside is unbounded.

There is still much work to be done in the area of Econmystics. We aren’t there yet. But the day will come when an independent truck operator can buy a truck and it will go up in value every year instead of down. No more capital depreciation. No worries for the bank how much they loaned or whether the trucker even works. The asset will be self-financing. Ultimately one day even cars will appreciate instead of depreciate. Think what that will do for the auto industry! Sales will go through the roof as everyone scrambles to buy more cars as “investments”! Some cars have done this already, for example a 1967 Mustang that can’t be driven without a complete restoration is already worth more than it cost new to buy. One day, with Economystics, all cars will be like this. But we had to start with houses because they are worth more. For now. Eventually the price of everything will be infinite. Even cauliflower. And water. And sunlight, but that’s a ways off.

I am the voice crying in the wilderness! Come to me, all those who have financial distress! I can lead you to the path of leverage!! Nothing but wealth awaits!

Economystics is not only the past, but the future. The only future.

#33 Ardy on 03.17.17 at 8:13 pm

Garth, I understand your suggestion to take the profits and run. But what about the flip side of that transaction.

To sell, some greater fool will have to buy. There may be many of these transactions before the correction takes place. At that time, the last line of buyers will be left holding the bag.

They will either lose their shirts or go bankrupt. Mind educating me on the eventual fallout for the economy?

RD

#34 Capital Gainz on 03.17.17 at 8:16 pm

Garth, your doomsday predictions are just that. Even if markets correct anywhere in Toronto or Vancouver they won’t correct to the tune of 20 percent. Maybe 8 percent.
You’d rather have grown adults pay someone else’s rent in hot markets for the foresee able future just because all your doomsday predictions have been wrong since as long as I can possibly remember. You were wrong in Vancouver when that city experienced considerable gains, and you will also be wrong in Toronto because well you just are plain wrong based on whatever you said on this blog 10 years ago.

#35 bigrider on 03.17.17 at 8:17 pm

I don’t believe that an RE 590k purchase in Newmarket , back in 2014 ,is now worth 1.1million.

That represents a gain of over 86% which is more on a percentage basis than T.O over same period and more than percentage gain in closer 905 proximities like Markham, Thornhill and Richmond Hill.

I think the proclivity of RE owners to exaggerate gains is also alive and well in the GTA.

#36 Jimbo on 03.17.17 at 8:21 pm

Albertans won’t be playing this song anymore.

https://m.youtube.com/watch?v=_CF65H7j5Os

#37 conan on 03.17.17 at 8:25 pm

RE #9 OnlyTheBankersLaugh on 03.17.17 at 7:02 pm

“Bring on someone with some financial acumen from the Conservatives”

Warn me next time that you are going say something so funny.

Seriously, what did your Party do in the last 10 years?

All, I see is getting rid of the penny. Lots of dancing with the SCOC , and no wins. Justice must have been getting a sore arm flaying off Harper with the Charter of Rights.

The Con legacy is a phone book of people thrown under the bus for crossing paths with Harper. How many people got accused of whatever, had their careers destroyed, only to be found innocent of all charges.

The answer is too many.

#38 Dazed and Confused on 03.17.17 at 8:26 pm

I’m truly at a loss understanding the GTA RE market. Where are people getting the funding to drive the irrational behaviours we are seeing?

I received the note below in the mail yesterday (mass mailing not specifically to me).

Dear Home Owner,
We are dropping off this letter on behalf of our clients because they are very interested in purchasing a home in your area. If you are thinking of selling this year, this may be an opportunity for a quick and easy sale without numerous showings, open houses, readying the home, etc.
Please call us if you are thinking of selling. Buyers are ready and willing to bring an offer for the right property.
– We are not looking for a buyer, we have the buyer!
– No need for lawn sign
– You can decide on the closing date
– We assist you in a free home evaluation
– We have a “sell now and stay in the home as a renter” option if you prefer

Buy low sell high doesn’t seem to be an investment strategy that is working anymore. Why would anyone want to buy my house and let me rent it back? If an investor has capital to invest, why would they buy in this market (near the peak)?? Seems like easy money for me…..yet – I feel l’m missing something.

#39 Joes rentals on 03.17.17 at 8:31 pm

Seen a huge jump in the resale price of townhouses in ancaster. Now they are hovering 600k and rent for $1850-1950. Some of these have $200/m maintenance fees. Even the downtown Hamilton properties are negative cash flow rentals now. Glad I scooped a couple in 2013. Now I’m ballin’

#40 bellend on 03.17.17 at 8:32 pm

yeah i’m terrified of losing money when taking a profit, Murk….

#41 Gy on 03.17.17 at 8:33 pm

When all the suckers are in, even those from offshore…..
Guest what will happen next….

Born to lose,
Live to win!!!!

#42 Doghouse Dweller on 03.17.17 at 8:34 pm

Induced crazyness a global phenomenon ?
Resistance is futile ! The globalist control grid tightens around our collective necks.
Sears Scotiabank master card ,the only Canadian card to not charging a 2.5% FX fee on every US transaction has reneged on their commitment. Any escape to Monterey now carries a toll of 2.5% of every survival dollar plus the crushing Polozed CAD at .74 USD. Any T2 regime migrants cash will be seized by the Deep State Asset Forfeiture Troopers.
The sophistication of the AI at the Visa card center is amazing. Many humans will no longer be aware that they are talking to an artificial intelligence.. Interacting with it gave me the impression that the strange lights witnessed in the skies of Belfoutain General Store in Caladen East are an omen of something more sinister than just a cashless society.

https://www.caledonenterprise.com/news-story/3255175-strange-lights-in-the-sky-reported-in-caledon-east/

http://www.bramptonguardian.com/news-story/5452596-strange-lights-spotted-in-sky-over-caledon-east/

http://www.insurancebusinessmag.com/ca/news/digital-age/trudeau-and-insurers-lose-genetic-discrimination-battle-62388.aspx

#43 Londoner on 03.17.17 at 8:42 pm

“Even in uncommutable London, the locals are watching Toronto “investors” moving in to snap up $225,000 houses so they can convert them into student rentals. Well, there goes the neighbourhood…”
***
As a Londoner, I have to object to this great city being labeled as incommutable. Plenty of professionals commute to GTA by train daily. It takes little less than 2hrs one way with a train leaving at 7.30am putting you into your Bay Street office by 9am. There is also a 6.30am train. The train service is hassle free, reliable, affordable and you get plenty of work done instead of being stuck in traffic. Or you just recline the seat and catch up on sleep. By 6 or 7pm your are back home. You should see what houses you can buy here for 400-500k. And if you want to splash just a little more, you live like a royal. There are plenty of great public schools as well. No traffic jams to speak of by the way. Great golfing. A skiing hill within the city perfect for kids to master the sport and even go competitive if they want to. Sailing club 20mins away. Detroit airport 2hrs away. Now the conversion of some traditionally family oriented neighbourhoods into student rental slumps is real, especially around the campus.

Four hours a day, 20 hours a week, 80 a month – that’s equal to 24 working weeks a year. You can borrow money. Not time. — Garth

#44 Rexx Rock on 03.17.17 at 8:46 pm

Truly amazing,how families can afford in GTA.Obviously wages must support this just like Vancouver and Victoria.Avg families making over $125,000 is the norm living in these cities.Many people are raking up debt and will deliberately declare bankruptcy because they don’t care about owning a home.I know 2 persons who declared bankruptcy with unbelievable debt and got a credit card 3 years later.They lived like kings for a few years.

#45 MouldyinYVR on 03.17.17 at 8:52 pm

https://issuu.com/wall2wall/docs/vancouver_magazine__april_2017

online copy of VANCOUVER magazine – April edition devoted to renters…see page 38/39…………
also entertaining p. 48/49 ‘The nightmare Next Door’ – strata hell for condo owners!

#46 mousey on 03.17.17 at 9:06 pm

I bet the dog in the picture would work another nine years if they let him. And Mark? Yes my friend, it is time to sell if you are thinking of relocating anyway. If you have cash in hand when you are looking at your new digs, you will be in the driver seat.

#47 WUL on 03.17.17 at 9:08 pm

Tonight I throw the reins over the buckboard and plunge headlong into a bucket of Guiness. Recent family DNA testing disclosed my 24% Irish heart. Happy March 17.

Yom Kippur is too far sedate (48% Ashkenazi).

No idea how to throw it down on the .5% Finnish or the .1% Sub-Saharan African.

Slainte from this 100% Alberta mutt.

#48 Londoner on 03.17.17 at 9:10 pm

correction: the 6.30am train puts you into the Bay Street office by 9.00am. But then again, when do car commuters from let’s stay Burlington have get up to be on Bay Street by 9.00am risking their lives daily on some of the busiest highways in North America and how many times do they arrive late?

#49 Better to be lucky than good.... on 03.17.17 at 9:14 pm

Often .

Got chaps that have doubled their home value with little down on the investment. Boom – $500,000 clear after 4 yrs. lol

Keep in mind many pundits were saying real estate was a bad investment 4 yrs ago. Lol ….so much for ‘expert’ opinion ….eh? :)

In some places, it was. All markets are local. — Garth

#50 The Wet Coast on 03.17.17 at 9:15 pm

Why would people who don’t see debt as bad, worry about government debt? The great awakening will happen when folks suddenly realize debt matters.

#51 ANON on 03.17.17 at 9:16 pm

Somehow or another we’ve ruined everything.

Did “we”? I mean it was nice for you, was it not? My parents also got to live the good times in Eastern Europe. Shockingly, even the “commies” had their own bubble and huge prosperity (while some parts of Europe which are now “different” were still punching each other in the noses), and it was nice living in it. I can still remember some of the good years during my childhood, before it all went downhill. However, the commies got to blame the same guy who was cheered for industrializing, for starving them. It seems he went mad and wanted everyone to suffer, or something. Makes perfect sense…a single guy starving a nation, does it not? Sure, if you’re into mythology.
Anyway, good advice on children, probably, but about ruining everything? Wasn’t anyone’s fault, really. Bubbles are like life, and they end the same way. In civilization, we are the cells which give it life.

#52 Smoking Man on 03.17.17 at 9:21 pm

Looking for an 80 ft sea ray. Who’s selling.

#53 Nero on 03.17.17 at 9:24 pm

I’ve done a lot of research
(don’t ask for links …don’t care.)
Select real estate is an investment grade asset,
The unimaginably large pools of money, some created by QE and much created by shifts in global economies is searching for alpha.
This massive inflation in RE is not local, regional, or national….it is global.
Muppets better circle the wagons soon or you are toast.

Happy Saint Pat’s day.

#54 AK on 03.17.17 at 9:24 pm

#42 Londoner on 03.17.17 at 8:42 pm
” It takes little less than 2hrs one way with a train leaving at 7.30am putting you into your Bay Street office by 9am.”
——————————————————————
According to Viarail, It takes 2 hours and 34 minutes from London to Toronto. Which train are you taking?

http://www.viarail.ca/en/explore-our-destinations/trains/ontario-and-quebec/toronto-london

#55 Londoner on 03.17.17 at 9:25 pm

“Four hours a day, 20 hours a week, 80 a month – that’s equal to 24 working weeks a year. You can borrow money. Not time. — Garth”
***
I do not dispute that commuting from London to GTA daily is not ideal. In our circle of friends it is mostly done by people who can work on the train and who do not have to be in GTA necessarily every day of the week. It is quite a recent trend actually reflecting the real estate valuation gap between hot and not so hot Canadian RE markets. In London, prices have been increasing by inflation for decades, even though there has been a bit of an uptick recently, yet still from a very low valuation base relative to other Canadian RE markets. When you get the same or better life style for 4-5 times less in terms of RE prices, I guess the incentive to commute increases considerably. As mentioned, it is a new trend…

Actually London is a top place to live. I have done it twice. — Garth

#56 Smoking Man on 03.17.17 at 9:32 pm

Waiting for the go go dancers to mount the stage before I go to bed. My man urges long gone.

Why I ask myself? To many years on the trade looking at curves, that shit wears off.

Now, I’m a old drunk looking for adventures.
But I can’t beat this depression to get off the couch.

It happens. But it wears off too.

Trying to be human is difficult. I’ll get it one day.

#57 Network Admin on 03.17.17 at 9:41 pm

#41 Doghouse Dweller
Sears Scotiabank master card ,the only Canadian card to not charging a 2.5% FX fee on every US transaction has reneged on their commitment
I thought the only card is Amazon Visa – https://www.amazon.ca/gp/cobrandcard/marketing.html

#58 Short term thinking on 03.17.17 at 9:48 pm

Same reason why canada let r/e go bonkers?

http://www.zerohedge.com/news/2017-03-17/why-fate-world-economy-hands-chinas-housing-bubble

But why would the government tolerate the bubble – knowing its bursting could have dire consequences on the economy if not contained – instead of seeking to deflate it gradually? There are three reasons:

The property and construction sectors accounted for 33% and 15% of local government tax revenue growth between 2010 and 2015. They contributed 43% of local government tax revenue in 2015, compared to 11% from manufacturing (Figure C3). Besides taxes, local governments also heavily rely on land sales to finance infrastructure projects.

Banks, developers, urban property owners, and government all benefited tremendously from the property sector so far. This makes it difficult for the government to tighten monetary policy or roll out straightforward measures such as property tax to contain the bubble. The reluctance to prick the bubble only makes it larger.
The government may have the confidence that they can avoid a property bubble burst. It does appear that China has a stronger control over property prices than other countries, because it has a closed capital account, high saving rate, low CPI inflation, high level of reserves, a current account surplus, monopolized land supply, and a financial system largely controlled by the government. Some may argue “why can’t Beijing and Shanghai become Hong Kong?”

#59 Millenial on 03.17.17 at 9:49 pm

#49 The Wet Coast on 03.17.17 at 9:15 pm

The great awakening will happen when folks suddenly realize debt matters.

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

Yes. And when it happens it will happen very quickly, and many will be crushed. When it happens though I have no idea: maybe this summer, maybe in 8 years.

I’m a 1%er in midtown Toronto and I’ve given a middle finger to real estate. I don’t even talk about this shiz anymore even amongst polite company. Enough already.

#60 Wrk.dover on 03.17.17 at 9:51 pm

The other day someone called the subway the slave train.

I have been chuckling on that every hour since.

Now Londoner raises the bar….on slavery and trains!

It’s like the blogger at Ponzi World freaking out about driving his kid ninety minutes to soccer practice in an expensive SUV, burning expensive fuel into the atmosphere all while passing empty fields.

Because Canada!

#61 Smoking Man on 03.17.17 at 9:51 pm

DELETED

#62 When the whip comes down on 03.17.17 at 9:58 pm

#23 Don – LMFAO bahahahaha

#63 Londoner on 03.17.17 at 10:05 pm

#53 AK
According to Viarail, It takes 2 hours and 34 minutes from London to Toronto. Which train are you taking?

***
I typically take the first train. It takes 2hrs 10mins and is usually ahead of schedule, very rarely late:
06:25 AM, 08:35 AM, 2 hrs 10 m

There many later options which take the same time.

As Garth mentioned, London is a great place to live. It is especially true for families with children of any age really (the Western University has many great programs)and obviously for retired people as well given the top medical facilities and low living costs. For people who absolutely need to own a detached house with a big garden in a nice neighbourhood and can’t afford it in GTA, London could be an interesting alternative, which is often overlooked / dismissed. BTW, it used to be the serial killer capital of the world…

http://www.cbc.ca/news/canada/toronto/london-ont-was-world-s-serial-killer-capital-uwo-prof-1.3207957

…but the situation has apparently calmed down a bit since then :-)

To give you an idea of the valuation gap between GTA and London, here 850k (negotiable) buys you this (park included):
https://www.realtor.ca/Residential/Single-Family/17904552/1385-CORLEY-DR-LONDON-Ontario-N6G2K5

#64 Smoking Man on 03.17.17 at 10:06 pm

Go go dancers moving hips at Seneca tonight. And I’m gogiggling cool words, there meaning. For the next book.

I have issues..

#65 Contrarian Coyote on 03.17.17 at 10:08 pm

#24 TurnerNation on 03.17.17 at 7:43 pm
Hey I partied a few times in Omemee. It’s located halfway between Peterborough and pestilence.
Back in the day.

As the other Garth sang: “Cause I’ve got friends in low places Where the whiskey drowns And the beer chases… my blues away ”

M41ON

Props for the mention to Omemee! Haha, where’d you party? At the legion hall?

Seriously though, out here in the wilds of the Kawarthas it is still RE madness. Family source at the red, white, and blue RE office dishes the latest dirt on crazy GTA bids on local houses. Family source is clean though – an admin and most definitely NOT an agent. Some smarter GTA-ers are cashing out and buying houses in the Kawarthas for all cash.

I know a few locals here in Peterpatch that have drastically over-paid on smallish WII-era detached shacks in the upper 200K to 300K range. This is nuts to me. These ‘houses’ were originally built for the once massive labour force working at the dying GE Plant here in Ptbo.

A decade abroad, a year renting in Calgary, and the wife and I come back to this situation. We’re happily renting though, and she is fully on-board. I can’t wait for this bubble to deflate.

#66 NOTHING SURPRISES on 03.17.17 at 10:18 pm

I have always been curious why the largest corporations such as the major Canadian banks and insurance companies as examples, build their corporate headquarters only in the very crowded metropolitan
cities?

Is it too simplistic to believe there would be greater benefits for all parties…….. employer, employees, families and society in general, by locating in smaller centres?

#67 AfterTheHouseSold on 03.17.17 at 10:19 pm

#30 Smoking Man
“Smoking Man’s Shakey Sea Adventures”

Hey Smoking Man, we’re winding up our winter here in Florida, looking for our next adventure. Is this a ‘3 Hour Cruise’?
The Howells

#68 Smoking Man on 03.17.17 at 10:22 pm

Chicks on the dance floor trying to out hip the go go dancers that their men’s eyes are fixated on.

Humans is all I’m saying.. not reporting this to the Nicotine council.

I sort like these weirdos

#69 home flopping ROI 10 yr high in US on 03.17.17 at 10:23 pm

Home flipping profits hit 10 years high in the US:

http://www.zerohedge.com/news/2017-03-17/home-flipping-profits-just-hit-all-time-high-these-10-states-offer-highest-return-po

Top 10 flipping home flipping ROI (2016 Gross ROI)

Pennsylvania 108.3%
Ohio 90%
Louisiana 81.2%
Maryland 80.2%
Illinois 78%
Oklahoma 75.3%
Connecticut 74.9%
Tennessee 72.5%
Kentucky 72.5%
New Jersey 72.5%

#70 Bottoms_Up on 03.17.17 at 10:24 pm

Mark–sell. Move to Ottawa. Buy an identical home as the one you live in now (with your cash winnings). Never make a mortgage payment ever again, for the rest of your life.

#71 Adam on 03.17.17 at 10:31 pm

Friends bought a house on the West side of Vancouver in 2001 for $525,000. They sold in 2011, almost exactly 10 years later for $1.55 million with most of their mortgage paid off and pocketed $1 million tax free gain. The house tripled in value in 10 years. 200% increase and no capital gains tax.
Awesome move I thought at the time. Today that house has a tax assessed value of $2.8 million. Market value last July would have been $3.5 million. The house more than doubled again. An almost 600% gain in 15 years over their original purchase price. 13.5% per year compounded annually for 15 years tax free! They left $2million on the table. The problem with bubbles is they can go on longer and farther than anyone thinks possible. Defying all logic and reason.
Even market residential rents in Vancouver have increased 20% year over year recently. It cost 100% of the average workers before tax income to own in Vancouver in 2015 and then prices went up 27% in a year! Yet somehow inflation is just over 1% and interest rates need to be kept artificially low? It makes no sense. I keep thinking it will all end in tears but I have felt that way for years. Bubbles can go on longer than anyone thinks possible.

#72 TurnerNation on 03.17.17 at 10:33 pm

Yup a Scotch in time saves nine.

#73 michael on 03.17.17 at 10:50 pm

Hey @SmokingMan re: “Move to Saint Marttan buy a big ass boat. Live on it and do charters. ”

Ha! I know something of that biz. If you don’t like hard work forget it. Big-ass boat = big-ass staff.

80’sea Ray = combination waiter and boat slave (its too small).

Good luck.

#74 Nonplused on 03.17.17 at 10:52 pm

#50 ANON

I guess the jist of what I was trying to say is that I don’t think my kids have the same nearly guaranteed chance at success that I did, or my parents before me. They are being asked to carry huge debt loads at all levels both personal, governmental, and the pension ponzi scheme, but with much less relative value attributed to their labour on an inflation adjusted basis. In short they are screwed.

2008 really did change everything.

#75 Leslie on 03.17.17 at 11:01 pm

Maybe house boom is the reason why all stocks are up

House boom means home owners can heloc.. More goods are bought or more stocks are bought .. At least banks get more mortgages out .. My friend is a mortgage broker made over 250k

#76 Brian on 03.17.17 at 11:10 pm

I don’t think coming to this blog is good for me anymore. Just gets me mad and upset about the future. Don’t forsee anything changing. I’m out

#77 Karma on 03.17.17 at 11:37 pm

#141 TRT on 03.16.17 at 11:41 pm
“So who are the real 1% ers?

The top 1% of income earners in Canada? Nope.

The real 1% are those with the most wealth. And they are not Doctors. they are on the yachts, own the mega towers in Toronto, etc. They call the shots and they happily direct your anger at the top 1% of income earners.”

Nearly all of the large office towers in Toronto are owned by pension funds for public sector employees.

#78 AisA on 03.17.17 at 11:42 pm

Just call it what it is already, all roads lead to a big ole subprime coverup.

#79 Rates vs Capital on 03.17.17 at 11:47 pm

Peak housing? Unsustainable prices? Heard the same memes in Vancouver since 2012…..GTAers have another half decade run at least…

Oh boy, our first test with determining the major driver of prices – low interest rates vs foreign capital.

BC just loosened the foreign buyer’s tax that will let the 120k students get work permits and hence avoid the tax. Of course, it is not like the doubling of international student spaces in BC was intended as a cheaper backdoor to residency or anything to keep that money flowing into BC. Its not like those ‘students’ are buying $31 million mansions in Point Grey or anything. Nope, noting to see.

With rising interest rates, and the flood gates opened again to foreign capital, we will know shortly if foreign capital is the driver (again) in Vancouver. I think most bears here know that prices are going up and the oft called ‘bull trap’ the last few months was actually a buying opportunity. I suspect as prices go back up in a few months it will be for some reason other than foreign capital….

What everyone ignores is T2’s own words – Canada has no core national identity and will be the first post-national state. While an oxymoron, it has been laid clear that global residents and global capital will have free reign over Canada. Our politicians actively solicit foreign capital and care not if it is legal or illicit – and care even less if they contribute to local economies, tax bases, or community ties.

The gap between the rich and the poor will only grow in Canada. Vancouver is already a playground resort community for the global wealthy. That transformation of cities will continue over the years until Vancouver gets replicated in other cities – we are already seeing the Vancouverization of the GTA.

Remember, a house is apparently not a right. It should not be protected in Canada like it is in China, Australia, Singapore, Hong Kong, Mexico, or any other number of countries that put the needs of their domestic citizens against that of foreign capital.

Apparently, it does not matter that high priced housing due in part to foreign capital increases income stratification; increases homelessness; undermines the local population to afford to have kids; erodes local economies; indebts the nation; creates intergenerational angst; or destroys community and family linkages.

Oh Canada – the first post-national state – where every effort to accommodate the foreign dollar will undermine and weaken its native citizens. Where every effort to take in more immigrants than the US amidst a stagnant economy and overblown housing market will lead to social harmony.

Gee, what could possible go wrong when you deprive people of shelter they can own and or even rent with some semblance of stability?

#80 Fed-up on 03.18.17 at 12:14 am

#70 Bottoms_Up on 03.17.17 at 10:24 pm
Mark–sell. Move to Ottawa. Buy an identical home as the one you live in now (with your cash winnings). Never make a mortgage payment ever again, for the rest of your life.

————————————————————————
Don’t forget to freeze your ass off and die of boredom.

#81 Karma on 03.18.17 at 12:25 am

#221 awshux on 03.17.17 at 6:04 pm
“#100 Wrk.dover on 03.16.17 at 9:34 pm

I am the only one that knows Garth is moving to Monterey Mexico”

Best watch “Sicario” first before settlin’ in!”

Two different places with different spelling…

https://en.wikipedia.org/wiki/Monterey,_California
https://en.wikipedia.org/wiki/Monterrey

#82 Self Directed on 03.18.17 at 1:09 am

I once had a dream I was deep sea diving with a friend. Each of us had oxygen tanks, wet suits, and flippers. We were lost in very deep waters, and our oxygen supply was running low. The water was dark and we could barely see anything in front of us. We just knew to keep kicking upwards. I kept thinking we would be OK… just GET TO THE SURFACE! It must have been very deep because it felt very difficult kicking. Suddenly, in the distance we could faintly see the surface of a massive wall, like a continental shelf. A hopeful sign! As we approached the wall, it finally gave us a reference point to our surroundings. We kicked harder towards the wall. But something was not right. Our hope quickly turned to fear as the wall deceived our eyes. The wall was moving up, and my heart sank knowing that we had been slowly descending the entire time.

This is how I feel about our economy and real estate today. There is no reference point to measure success. No fundamentals. So many of us are in the water kicking, and while it feels like progress, many of us will not surface. Some prefer to stay in the boat where it is safe.

#83 Newcomer on 03.18.17 at 1:10 am

This is a bear blog and yet half the comments, on a post pointing out that the whole world sees how unsustainable this situation is, say that prices will go up like this for decades to come. Imagine what people must be saying outside of bear blogs. This is beyond exuberance. We are dealing without outright delirium.

#84 WUL on 03.18.17 at 1:15 am

#79 Rates vs Capital

Nicely written. A tip of the cap.

#85 Self Directed on 03.18.17 at 1:29 am

#71 Adam on 03.17.17 at 10:31 pm
Bubbles can go on longer than anyone thinks possible.
……
That is an interesting thought.

Garth, looking at the 5 stages of a bubble, what if we are actually coming out of a Bear trap and not a Bull trap? What if the young hairdressers are right and your fundamentals are just old and not working anymore?

#86 mousey on 03.18.17 at 2:11 am

Dear Smokey,
On that whole selling the branch and buying a boat and going to St. Martins and not knowing what to do with that extra million – don’t worry…the boat will take of all of your extra pennies. Get going on plan B. And what exactly is this coding thing anyway. Please use small words to explain.

#87 Dosouth on 03.18.17 at 2:22 am

I must say that the whining in this blog over high income earners paying more in taxes. They earn more so in a country like ours that seems to want to help every other country but our own, this tax group can afford the tax certainly easier than “Joe or Josephine ” the plumber who scrapes by. Education or not they rose to the top through hard work and more than likely loans and grants supplied from our taxes. Good for them to help continue to build their chosen country. Guess payback is truly a b*+c# :)

#88 millenial82 on 03.18.17 at 3:04 am

Whatever you want to call this situation, if the free market were to rule the survival of the fittest law should have applied by now. Unfortunately that’s not the case as everything is operating beyond any market fundamentals. Nothing makes any sense even to a dummy. Just remember you property seeking morons in the GTA, a Janitor can afford to buy a Lamborghini for the price of a Chevette in other habitable areas of the province with a 10 minute commute to work.

#89 DON on 03.18.17 at 3:05 am

#44 Rexx Rock on 03.17.17 at 8:46 pm

Truly amazing,how families can afford in GTA.Obviously wages must support this just like Vancouver and Victoria.Avg families making over $125,000 is the norm living in these cities.Many people are raking up debt and will deliberately declare bankruptcy because they don’t care about owning a home.I know 2 persons who declared bankruptcy with unbelievable debt and got a credit card 3 years later.They lived like kings for a few years.
*********************

You pump the sunny side at all expense…realtor or lots of skin in the game? Even you should know that even in these markets a combined $125K can not buy you a good house or any detached house. You assume only the best case scenario, that both husband/wife have good jobs, no illnesses and have their houses paid off. As prices increase 20% in one year you appear to assume wages also increased by the same amount. Ever increasing prices..basically prices everyone out, except for all the millionaire foreigners crowding the few available listings.

I know of multiple people who have multiple houses/condos. One lady at work owns her house, brought a new condo and is building a new house. Another lady’s husband have brought at least two or three more condos to rent out. Yet another lady with 3 properties. One or two realtors I know with 4 or 5 properties. Everyone seems to have a tenant or rental suite in a time when most young people are launching from the nest much later then life. No need to travel to Uni – due to the rising amount of on-line courses. You can count on one thing, things change…this is not sustainable. The music can stop at anytime as we have already reached a stage of nuttiness.

Raising interest rates are not needed, just plain greed and stupidity are required to crash a market. Explain to me how houses can go up indefinitely?

#90 Stock Picker on 03.18.17 at 3:30 am

It’s a beautiful afternoon in Bangkok. I just had a one dollar bowl of the best noodle soup in the world. I read two articles about Canadians so greedy that even three million won’t make them budge from their hovels. You people are really sick with greed and an ignorance of life that’s staggering. My ice tea has arrived. Good luck with your misery. And…..no GST to leave a bad taste in my mouth.

#91 Sierts on 03.18.17 at 5:22 am

@ -31- smoking man

Oh Gartho…I need to know. Who’s better. Doug or Ryan?

look it up for yourself.
one of them is always hiding behind the word: “we”.

i don’t trust people, that do that frequently.
when TSHTF they don’t even get brown.

#92 DoomandGloomer on 03.18.17 at 7:37 am

#22 Nonplused

“Somehow or another we’ve ruined everything.”
——————————————————————–

You got that right, buddy boy!

#93 Renter's Revenge! on 03.18.17 at 8:12 am

#77 Karma on 03.17.17 at 11:37 pm
#141 TRT on 03.16.17 at 11:41 pm
“So who are the real 1% ers?
The top 1% of income earners in Canada? Nope.
The real 1% are those with the most wealth. And they are not Doctors. they are on the yachts, own the mega towers in Toronto, etc. They call the shots and they happily direct your anger at the top 1% of income earners.”
Nearly all of the large office towers in Toronto are owned by pension funds for public sector employees.

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

Which begs the question: Where are the public sector employees’ yachts?

#94 Brian on 03.18.17 at 8:25 am

Sincere question: whether the bubble bursts like a cholesterol laden artery or simply “corrects” the debt infused will find themselves needing to adjust their spending.

That will have significant effects on investors. Surely a drop in consumer spending will bring significant changes to the markets in Canada. Diversified into the USA to a degree, but most Canadians are invested mostly in Maple.

So what about our exposure to Canadian financial assets? How will a downturn in the real estate market affect Canadian Financial assets?

Likely not in a major way, since our markets are more weighted to commodities than financials, and our banks have diversified into the US, while having CHMC insurance on their high-ratio mortgages. In any case, this is why a balanced portfolio with twice the exposure to US and international markets (as I have suggested) is an excellent defence against domestic delirium. — Garth

#95 Tudval on 03.18.17 at 8:27 am

The problem with this kind of advice is that it’s been dished out freely for at least 10. Realtors were knocking on my door 10 years ago telling me it’s the best time to sell.. My friend in Los Angeles called me 4 years ago saying he heard it on TV that selling a house in Toronto was ‘once in a lifetime opportunity’..

All that free advice was worth exactly what I paid for it. In the meantime people found that the city that regularly makes it in the Top 5 of Best Cities to Live in The World, provides plenty of reasons to stay.

And after looking around a bit, you find comparable places are not cheaper at all. “But Toronto is expensive for Canada” my friend in L.A. says. Sure, you have 2X better chance to get a job in Toronto than you have in LA or San Diego, but hey, it’s California man, it’s cool, you can be happy being a bum sleeping on a bench next to a sunny beach..

Curiously, the same friend doesn’t want to sell his condo in Toronto, which he purchased to make sure he has a place to go to if things get really scary down there. And I seem to remember he even came later with an offer on my house. Below the market price, of course. Because, well, it’s Canada.

#96 Renter's Revenge! on 03.18.17 at 8:35 am

#66 NOTHING SURPRISES on 03.17.17 at 10:18 pm
I have always been curious why the largest corporations such as the major Canadian banks and insurance companies as examples, build their corporate headquarters only in the very crowded metropolitan
cities?
Is it too simplistic to believe there would be greater benefits for all parties…….. employer, employees, families and society in general, by locating in smaller centres?

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

I’ve wondered about that too, but I figure it’s because:

a) They don’t care (because they don’t have emotions) about the cost of living for their employees,

b) When they locate in large centers, they can pick the cream of the crop for who they hire (because there are more people competing for their jobs),

c) If they relocated to smaller centers, those centers would grow and become unaffordable because of the jobs they offer anyways,

d) Large cities make large corporations good offers or “offers they can’t refuse” (j/k) to locate there. Toronto lured the banks away from Montreal in the 1960’s. I don’t know how, but it must have been attractive enough for the banks to make the move,

e) Large corporations rely on a lot of auxiliary (ancillary?) services like law and accounting firms, and infrastructure (water, sewer, electric, etc.) that may not meet their needs in smaller centers.

#97 I'm stupid on 03.18.17 at 8:44 am

How are people able to afford homes in the Gta?

That’s a simple question to answer. You own a home that you bought 10+ years ago and it’s paid off and worth 3 times what you paid for it. Now you feel amazing since you tripled your money and decide to take half the equity out and buy 2 more since houses always go up. You can’t do basic math nor do you care that your new income properties are cash flow negative since the only thing you care about is the capital gain of your new homes.

The banks have been lending because there is no way that they lose money since you have 33% equity within the 3 properties. (50% in principle residence and 25% in each of the 2 new properties) They know if things go sideways they’ll be able to recoup their money one way or another.

The problem that the Gta is facing right now is that everyone has figured out this trick so they’re all chasing the same supply and it’s adding extra demand.

Now the supply side is resistant to sell for 3 reasons.
1. Too expensive to move
2. Where to move
3. Fear of missing out on future gains

So you have a market where buyers are overly confident and sellers are scared to lock in gains.

This is classic euphoria. Denial is next, and it will happen when the market stalls out. It’s difficult to predict a collapse of a bubble but I wouldn’t want to be overly extended in one. Investing is like a scale where you weight the odds of an investment going up or down. Right now the odds are in favour of depreciating values in housing. With that being said housing could very well reach new highs in the Gta but that doesn’t mean you should invest because there are other much more better investments based on potential odds of returns. That’s what most don’t get.

#98 Herb on 03.18.17 at 8:48 am

Couple of days ago the wife brought her laptop over to me at the PC and asked “Do you recognize this house?” The MLS picture of the non-descript bungalow did not ring my bell, but the address did: 46 Walwyn Ave. in Weston. We had rented the house across the street from there.

The listing price was a hair under 800 K. That’s Toronto, I thought. Two hours later, I called up the listing to check the details. The house had been renovated, including the mortgage helper in the basement, and the listing price was a hair under 1 M. Price appreciation of 200 K in two hours! Guess that, too, is Toronto.

To-day the listing was gone, obviously a quick sale. Let us now blame the victim who bought it. The real estate cartel that “suggests” prices and propagandizes gains to a fare-thee-well cannot be blamed, nor can the banks that rent out piles of cash for profit, nor the government that massages interest rates and mortgage regulations but backstops the banks banks through CMHC.

Naw, it’s all the fault of the victim, the consumer who is “king” by declaration but whose wallet no longer controls the manipulated marketplace. It’s all supply and demand, except that the consumer’s demands are unreasonable.

#99 mathman on 03.18.17 at 9:05 am

This may be the ATLAS Shrugged moment for succesfull people in Canada

Instead of imposing more tax on the people that actually contribute to the economy, create jobs, innovate and generally improve the standard of living in this country here are a few suggestions that will drive more revenue than this new tax grab ten fold;

1. Abolish the Senate – today – waste of everyones time and money
2. Take all elected officials at the federal and provincial level – increase their salaries by 15%. – move them to a dc pension model and only contribute for the years they are actually in office – wow what a thought having to actually earn your pensions!!
3. Move all federal and provincial public servants to a DC model – like most people in the private sector
4. create a wellness tax credit – once a year if you elect to do so, your doctor can run a series of basic tests with a low hurdle to certify that you are a non-smoker and generally healthy – this will accomplish two things – people will quit smoking if it hits them in the wallet and generally this wll encourage and or nudge those to be more heathly. Make the credit worth at least $500 so it is worth peoples time. this will save billions in future health care costs and is not mandatory
5. Step up enforcement of people not declaring rental income, cap gains, AIR BNB etc. Make it very uncomfortable for these people, offer an amnesty of some sort for back taxes and drive immediate revenue.

Just some food for thought for my fellow dogs to chew on.

#100 X on 03.18.17 at 9:14 am

Garth, do one of your wiz kids have info on how much money becomes unclaimed (non-reported income) when taxes rise a certain amount? Same for when investment taxes are increased, how much money statistically gets driven into other forms of investment (real estate, coins, art, etc)

Although with this budget is sounds like real estate will be clamped down on further….but just what the real estate industry needs here, more investment dollars plowed into it, at the worst possible moment.

#101 TurnerNation on 03.18.17 at 9:38 am

Hello Kanadians. Here is this week’s mandated Toronto house floor prices. As set to the banking cartel’s up-selling targets.
(Remember that you are free to leave at any time.)

Slanty semis on godawful streets, sht Schlong Branch bungees: 1.2-1.5million.

SFH:1.5-3mill.

That is all.

#102 TurnerNation on 03.18.17 at 9:42 am

A further reminder that goods price inflation is 2-5%, GICs pay 1.5% and taxed.

Your 2-4% yearly COLA raise works out to 0% after taxes and inflation.

Hard work brings freedom.

#103 Brian on 03.18.17 at 10:03 am

“this is why a balanced portfolio with twice the exposure to US and international markets (as I have suggested) is an excellent defence against domestic delirium. — Garth”

But what about the complications of holding foreign investments? The reporting requirements and subsequent tax implications seem to pose a bit of a minefield.

Perhaps a blog dissertation would be appropriate?

All I am saying is that some may be reluctant to “go foreign” without this information.

It’s seems quite complex (big surprise eh?)

#104 Bytor the Snow Dog on 03.18.17 at 10:10 am

Hey Smokey! You wanna know how to make a small fortune?

Take a large fortune and buy a boat!

#105 Penny Henny on 03.18.17 at 10:15 am

#20 Mark on 03.17.17 at 7:19 pm
The guy, like many others in the GTA, will probably go to list, but be told that ‘his’ house didn’t appreciate like the ‘averages’ may imply.
++++++++++++++++++++++++++++++

So Mark finally concedes that prices in Toronto have been appreciating.

#106 MF on 03.18.17 at 10:18 am

#96 Renter’s Revenge! on 03.18.17 at 8:

A big reason why tons of businesses left Montreal in the 70’s was the political tension/racism present at the time there too (FLQ crisis).

MF

#107 Victor V on 03.18.17 at 10:22 am

Paul Foggia had to move back in with his grandparents after being unable to afford condo maintenance fee increases.

http://www.cbc.ca/news/canada/toronto/condo-fee-increases-1.4019723

#108 crowdedelevatorfartz on 03.18.17 at 10:27 am

@#28 Smoking Mensch
“And go where? Bidding wars west of London. …”
********************************************
Gee. I dunno….rent?
For a few years?
Buying in now after realizing huge profits is insanity .

This housing market only has one place to go and according to more and more experts with far more time on their hands than mine to study Cnada’s looming housing implosion……
It aint going up.

#109 Joe on 03.18.17 at 10:28 am

This bubble will keep on bubbling for as long as central banks keep their key interest rates extremely low. And these 0.25% increases once in a while won’t change much at all. Even increasing taxes like they did on Van hasn’t brought a correction, in fact prices are still increasing.

#110 crowdedelevatorfartz on 03.18.17 at 10:33 am

@#83 Newcomer
“This is a bear blog and yet half the comments, on a post pointing out that the whole world sees how unsustainable this situation is, say that prices will go up like this for decades to come. Imagine what people must be saying outside of bear blogs. This is beyond exuberance. We are dealing without outright delirium.”
*******************************************

Total 100% agreement and it deserved repeating.

#111 Canadian bank HQs on 03.18.17 at 10:44 am

#66 NOTHING SURPRISES on 03.17.17 at 10:18 pm
I have always been curious why the largest corporations such as the major Canadian banks and insurance companies as examples, build their corporate headquarters only in the very crowded metropolitan cities?

Because having a Canadian bank headquarter in Manhattan (where the CEO’s would rather be) would be considered too arrogant, it would trigger the public.

So they just have to put up with Bay street, imagining it’s Wall Street.

Relocating headquarters to the Canadian outposts is for the government.

#112 Ret on 03.18.17 at 10:47 am

#43 Londoner -student housing around universities.
So where are all these tens of thousands of students coming from? So much for Canada’s declining birthrate.

I bet the students mostly come from same place that many of McMaster’s students are coming from.

The Canada Student Loan program combined with the millions of dollars going into every Ontario university to endlessly expand, are just two huge quantitative easing programs that are not benefiting students, employers or the community. Universities and college funding are untouchables for all levels of politicians.

Once student housing gets a foothold (10-15%) in an area, get out fast while the slumlord “investors” are still looking for fresh meat and they are willing to pay.

In 10 years the “investors” will own the street and the local councillor. Places of worship, local schools, businesses and restaurants will leave or close up. The neighbours that you have known for years will be gone. Your area will have lost its soul. It will look like it is on life support and have traffic, parking, garbage and crime issues.

Don’t ever pretend yourself that the area will turn around and that young families will move back in. Won’t happen. Get out.

#113 crowdedelevatorfartz on 03.18.17 at 10:52 am

@#90 Nose Picker
“It’s a beautiful afternoon in Bangkok. ….”
********************************************
How’s the air pollution this time of year?

https://www.google.ca/url?url=https://www.numbeo.com/pollution/rankings.jsp&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjx4e3UpeDSAhVD9GMKHcZXDpcQFggUMAA&usg=AFQjCNHEj9TLZ6TkKj3lEeSQyky530JAiw

Got a runny nose from the excess carbon monoxide?

Try blowing your nose with a 100 bhat note with the Kings’ picture on it and see how long before you’re beaten and dragged off to jail.
Pray the military junta there doesnt decide to start shooting foriegners with bad “lese majeste” manners.

http://www.google.ca/url?url=http://www.usatoday.com/story/news/world/2016/05/21/promised-elections-remain-distant-2-years-after-thai-military-coup/84704610/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjD5ZijpuDSAhUO7mMKHT9TAu4QFgglMAI&usg=AFQjCNHm5MwaxAurjdLKS0Ord6cr_fKKxg

Nah.
I’d take Canada’s 1st world probs with an idiot for a Prime Minister over a 3rd world military dictatorship that bows to a Playboy partying King (dressing his pet dog ‘Foo Foo” as a military officer ) ….any day thanks

http://www.google.ca/url?url=http://www.cnn.com/2016/10/20/asia/thailand-lese-majeste-explainer/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiO0qG9puDSAhUFLmMKHWabAVEQFggfMAE&usg=AFQjCNFTuZ8aybyY7HmclrHuuiUu5QHTbA

http://www.google.ca/url?url=http://people.com/royals/thailands-new-playboy-king-vajiralongkorn/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiAlrPZpuDSAhUM4mMKHeMTB7gQFggWMAA&usg=AFQjCNFDaJifgWlt0rHO2CI66VOlyYIWqA

#114 Ponzius Pilatus on 03.18.17 at 10:56 am

#84 WUL on 03.18.17 at 1:15 am
#79 Rates vs Capital

Nicely written. A tip of the cap.
—————————
Amen.

#115 NoName on 03.18.17 at 11:10 am

#65 Contrarian Coyote on 03.17.17 at 10:08 pm

…where’d you party? At the legion hall?

—-

Legion hall partyeeing rules, at least in my case, i can drink my face off for less than 20, walk home and sent wife to bring car back.

but on a side note daughter was there last night serving food, she came home earlier than usual, so i asked her why home so early, se sad “they kind of finished food quick, probably because they are probably thirsty…”

PRESS PLAY

https://youtu.be/L6dzUOYTQtQ

#116 Ponzius Pilatus on 03.18.17 at 11:13 am

Gotta see the pictures of Merkel and Trump sitting on the Sofa.
And how she looked at Ivanka at a press conference.
I predict Mutti will win in a landslide.

#117 TurnerNation on 03.18.17 at 11:13 am

We Are Slaves Inc.:

IBD weekend edition reporting USA looking to hike Defense spending in 2018 – by $54 Billion!
Other agencies would see cuts of 15-25% in their budgets. Obamacare being taken away.
Rumors of war?

– Meanwhile in Kanada, Financial post today reporting on a B.C. retiree with a $3 million paid up house, fretting about cash flow.
“The house might go to 4 million”. 3 million to live in this tax slave camp?? Really.

We are living in a giant ponzi scheme.

#118 Doghouse Dweller on 03.18.17 at 11:15 am

#57 Network Admin
Canadian card not charging a 2.5% FX fee on every US transaction
====================================

Amazon Visa from Chase , Yes, thanks I found it yesterday , got approved by an online AI in 2 minutes and an extra $20 bonus to spend at Amazon.ca

There was also Rogers Bank which wanted direct access to my Bank account in lieu of a $29 annual fee.
Imaging that paying up front to get bilked by the Banksters.

#119 crowdedelevatorfartz on 03.18.17 at 11:16 am

@#229 meslippery
“So if you make $1,000,000.00
And only keep $ 450, 000. 00 in your pocket.
$8700.00 per week cash in your jeans per week.
Whats on your mind ?? cut every ones pay.
********************************************
What….in God’s name….. are you mathmatically babbling about?

#120 dogman01 on 03.18.17 at 11:33 am

22 Nonplused on 03.17.17 at 7:28 pm

I sometimes wonder, am I the only one that sees the implications of what is going on.

I too caught the tail end of the Baby Boom employment world, and could not agree with you more of what I am seeing.

An economy should serve the needs of the society…..not the other way around.

Watch this from 1996 pretty much sums up what has occurred:

https://www.youtube.com/watch?v=4PQrz8F0dBI

#121 dr. talc on 03.18.17 at 11:37 am

DELETED

#122 dogman01 on 03.18.17 at 11:38 am

Similar to Doug’s posting last weekend;

“When the paycheques stop is when the anxiety hits”

http://business.financialpost.com/personal-finance/retirement/dont-let-the-fear-of-spending-ruin-your-retirement

#123 dr. talc on 03.18.17 at 11:38 am

DELETED

#124 Ronaldo on 03.18.17 at 11:41 am

If the banks are so darn scared, why do they keep lending to these fools. Been hearing the same stuff from them since the fall of 2010 when prices were 50% less than they are today. What gives?

#125 Ronaldo on 03.18.17 at 12:26 pm

Four hours a day, 20 hours a week, 80 a month – that’s equal to 24 working weeks a year. You can borrow money. Not time. — Garth
——————————————————————-
Total waste of life. Why I moved out of Vancouver to the great white north 40 years ago when at that time I was spending 2.5 hours a day in traffic. Afterwards was never more than 20 minutes to work. Don’t know how people do it day after day.

#126 Another Deckchair on 03.18.17 at 12:40 pm

Risks and rewards.

Read Jim Balsillie’s article in today’s G&M Business section
(http://www.theglobeandmail.com/report-on-business/rob-commentary/empty-talk-on-innovation-is-killing-canadas-economic-prosperity/article34339612/)

If we agree that half of the population are below average “smarts”, and half of the population are on the “lazy” side (and, there is no corelation between these divisions) it means that 25% of the people are smart and agressive.

Ok, so we have 25% of the population who are the ones who (maybe) can be successful business people, or government leaders, or running charities, or what have you. Not all of the 25% care much about money; it’s the personal challenge that counts for many; so, if we squint a little bit, we can see where quartile the 10% top Canadian money earners come from.

With risk can come great monetary rewards, but more importantly, comes success. (see ref, below)

If the monetary reward diminishes, what do those smart and agressive business people do? If success is defined as “the favorable or prosperous termination of attempts or endeavors; the accomplishment of one’s goals” do? Focus less on monetary profit, that’s what.

Or, leave and go places where the monetary reward maintains ones’ level of income.

No matter what, the smart and agressive will achieve success, but the tax system may not reap the expected rewards if taxes on the successful increase.

(note: I am very successful at what I do, but the money is not the overarching goal, by a long shot. Money does help my focus of direction, of course, but should the money diminish because of taxation, my focus will naturally tend elsewhere)

(ref: definition of success: bullet 1 of http://www.dictionary.com/browse/success)

#127 ancodia on 03.18.17 at 1:10 pm

Good read.

http://www.ryerson.ca/content/dam/citybuilding/pdfs/2017/CBI%20POLICY%20PAPER-In%20High%20Demand-March20171.pdf

#128 IngoranceIsBliss on 03.18.17 at 1:20 pm

There are actually people owning in London, ON and commuting to Toronto. Madness. Does OHIP cover head examinations for nut jobs that want to spend that much time on the road or train commuting to TO?

#129 Terrence on 03.18.17 at 1:33 pm

Our $CDN dollar is slowly turning into monopoly money, inflation is about to sky rocket, banks are giving you zilch on your savings, intrest rates are at all time lows * projected to go lower & u wonder why housing is booming? Its the best inflation hedge & people feel comfortable with investing & getting a return on TANGIBLE ASSETS Garth! Another laughable blog thanx Garth

#130 G on 03.18.17 at 2:08 pm

#97 “I’m stupid” made the best post I have ever seen on this blog. The lack of basic math skills in Canada is what is propelling this bubble to crazy levels. They will go bankrupt.

#131 Bank of Millenial on 03.18.17 at 2:16 pm

The year is 2017, and liabilities have started to matter again.

The credit market is no longer in suspended animation and there isn’t much in the way of stopping what comes next.

#132 Jgg123 on 03.18.17 at 2:49 pm

When the bears turn into bulls, it’s time to run. Mark, when Garth starts writing about specing a prebuild, that’s your sign to get out.

Or yesterday.

#133 LP on 03.18.17 at 2:58 pm

#112 Ret on 03.18.17 at 10:47 am
Your area will have lost its soul. It will look like it is on life support and have traffic, parking, garbage and crime issues.

*******************************
Case in point…google Ezra Avenue in Kitchener, Ontario yesterday.

F69ON

#134 bdwy sktrn on 03.18.17 at 3:22 pm

#52 Smoking Man on 03.17.17 at 9:21 pm
Looking for an 80 ft sea ray. Who’s selling.
—————————
cure your 2-foot-itis before it hits.
nice 95 footer
https://vancouver.craigslist.ca/van/bod/6023617174.html

#135 Bob But Not Doug on 03.18.17 at 3:26 pm

If I had a nickle for every time someone told me the Toronto real estate market was about to crash, I could actually afford a house here.

#136 The Dude on 03.18.17 at 4:07 pm

#129 Terrence

Our $CDN dollar is slowly turning into monopoly money, inflation is about to sky rocket, banks are giving you zilch on your savings, intrest rates are at all time lows * projected to go lower & u wonder why housing is booming? Its the best inflation hedge & people feel comfortable with investing & getting a return on TANGIBLE ASSETS Garth! Another laughable blog thanx Garth

—————————————

Exactly. Not to mention a wave of millennials looking for a home they can live in or rent out while they travel, and most new jobs being located in city centers. That isn’t talked about here. Plus, Canada ranks in the highest livability surveys, is an attractive tourist destination, and hedge against climate change. Add in the encouragement of house ownership through government intervention. The worst investment strategy was preached here unless you already had a huge nest egg. He just doesn’t get it. Take a look at the cost of new condos in Vancouver and Toronto to get a sense of what young people are up against and can expect for their lives. Their expectations have been lowered immensely. It is a condo economy now much like the big cities around the world. Land is coveted no matter what. Garth can’t see this for whatever reason. It’s laughable. He preached the wrong advice as a lead gen for his business over the last 8 years. Owners are much further ahead of renters just in the last 2 years alone, let alone the last 8 since this blog started. Renters are stuck with increasing payments and the opposite has been true of owners. While it looked responsible, the advice here was just the opposite!

#137 The Dude on 03.18.17 at 4:31 pm

“If that doesn’t tell you something about where we’re headed, nothing will.”- Garth

————–

Hmmm… how many times have we heard that one before? Or, “This won’t end well”.

WRONG. Just plain wrong, and of course, sensational fear mongering.

#138 Herb on 03.18.17 at 4:58 pm

#120 dogman1,

thanks for the Goldsmith link – haven’t watched it in a couple of years.

And 23 years later we’ve seen the results and know that Sir James was right. GO TRUMP, GO!

#139 Bat Flipper on 03.18.17 at 6:42 pm

Newmarket gained about 15% for the last 2 years, so this is quite the BS story. There are some areas that are more plausible than Newmarket. Try again.

#140 45north on 03.18.17 at 9:41 pm

Short term thinking: This makes it difficult for the government to tighten monetary policy or roll out straightforward measures such as property tax to contain the bubble. The reluctance to prick the bubble only makes it larger.

here’s my edit: This makes it difficult for the government to tighten monetary policy to contain the bubble. The reluctance to prick the bubble only makes it larger.

property tax is the domain of municipalities who are not responsible for the bubble

monetary policy means interest rates but if the US raises rates, reluctant or not Canada will follow