How bad?

Some people wonder if housing could take down the economy, chew up the stock market and blow up people’s RRSPs. Maybe even start a run on deposits, especially those of the smaller credit unions and trusts with big exposure to residential real estate.

On Friday the federal finance minister said a government bailout of troubled Home Capital Group was unlikely, but not out of the question. No contagion that we can see, he said. This meltdown is isolated.

Of course, it’s not. Moody’s, the big US ratings agency, nailed that one this week when it downgraded the long-term debt of all six big Canadian banks – TD, CIBC, Royal, Scotia, BMO and National. The reason was clearly set out: “Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.” That’s all true. And while the market is changing quickly, as this blog has been chronicling for a few weeks, the insanity continues.

Bloomberg’s regular consumer sentiment survey found that, for the first time ever, more than 50% of people think house prices will continue to rise from record levels. Only 10% believe a decline is possible. On Friday the Teranet-National Bank index recorded the sharpest 12-month rise on record for Toronto and Hamilton in April.

“This monthly advance takes the composite index to an all-time high for the 15th consecutive month. The April rise exceeded the countrywide average in four of the 11 metropolitan markets surveyed: Toronto (2.6%), Hamilton (2.1%), Victoria (1.5%) and Halifax (1.4%), leaving the indexes for the first three of these markets at all-time highs.”

Meanwhile we also know from the Bank of Canada and other sources that almost 40% of current economic growth is coming from residential real estate and related activities, like lending. That’s a record. And overall, somewhere between 15% and 30% of the entire GDP is housing. Also historic.

Finally, by now everybody probably knows personal debt has achieved an unheard-of pinnacle in Canada. Households owe $2.08 trillion, of which 65% is mortgages. That’s bigger than the entire economy, at $2.07 trillion. And every economist alive will tell you most of the debt will mature and roll over in the years to come at higher interest rates – given the expansion of the US and accelerating global growth. This is truly scary in light of the survey mentioned here days ago which claims most people could not find an extra $200 a month to handle any additional expense – which is a direct legacy of paying (and borrowing) too much for real estate.

Put all of this together, and the economic risks of a real estate correction could be substantial. Alarmists see the meltdown of the country’s largest non-bank mortgage lender, Home Capital, as the catalyst for a systemic financial failure of the kind that followed the bursting of the American housing bubble. In that country when about 8% of borrowers got into trouble, dominoes started falling fast. The result was a 32% drop in national prices, a 70% crash in places like Florida and Phoenix, the implosion of several venerable Wall Street investment houses plus a global credit crisis that came within  inches of causing a new depression. The stock market lost almost 60% of its value and people who panicked and sold at the bottom likely ruined their lives. In a perverse way, the fear of financial assets which resulted led millions of Canadians to embrace real estate, which has now been inflated into a straining, explosive, debt-filled dirigible of risk.

So what could happen? Is it time for tinned tuna, bumwad hoarding and gold bars buried under the garage floor? Could a housing correction/crash here cause bring a rerun of 2008?

No. That’s the simple answer. Nobody anywhere except here cares about the Canadian housing market, so it could drop by 50% and have zero impact on financial markets in New York, London or Beijing. There will be no credit crisis because of tears in Leslieville or woes in White Rock. But Canada could certainly be thrust into a recession if housing activity were to cave. The dollar would weaken, especially if the Bank of Canada responded by cutting its key rate, and inflation would jump with the cost of imported goods.

Canadian banks would see profitability diminished and share values would likely reflect it. Consumer spending would be curtailed, hurting the retail sector, car sales and employment levels. The consequences would be real and last a long time. Some losses on the TSX, a jump in the jobless ranks, a massive drop in middle class net worth as home equity dipped and the mother of all deficits in Ottawa as Liberal spending collided with falling tax revenues. Hardest hit would be the young and the leveraged.

But there’d be no run on the banks, no financial system collapse, no big bail-ins or bail-outs, no massive spike in the default rate, no federal mortgage forgiveness or adjustment program and tens of thousands of people leaving their jobs as realtors. Highly unpleasant. Not lethal. A lot of Boomers planning to retire on their house proceeds would be forced to stay working. Tons of moisters who bought condos and slanty semis would see all their equity erased. Recovery might take a decade – fairly quick for a housing cycle.

The best defence against being crushed is to have a balanced life. It’s the theme here. Always has been.

Don’t put all your net worth in one single thing at one address in one city. With investments, ensure you have stable income-producers as well as growth assets. Hedge against the Canadian dollar with a 20% weighting in US$-denominated investments. Keep about twice as much exposure to American and international assets as Canadian ones. Diversify – don’t buy individual stocks as you have no idea what the exact outcome will be. Maintain a 5% cash reserve. Eschew illiquid, low-yield, high-taxed GICs. Don’t panic, over-react or sell/buy based on emotion. If you’re a worrier, stay within the $100,000 CDIC limits. If you’re an investor, remember you have more than $1 million in coverage. Put together the correct portfolio now, then let it ride. Keep your hands off.

Housing will not do to Canada what it did to America. But you still won’t like it.

157 comments ↓

#1 Dave on 05.12.17 at 6:22 pm

More bad news for Toronto. You guys might be worse off than Australia.

“Toronto Real Estate Agents Are Losing Their S**T Over These Charts”

https://betterdwelling.com/city/toronto/toronto-real-estate-agents-losing-st-charts/

#2 k on 05.12.17 at 6:26 pm

Toronto housing market will fall on it’s face hard and fast

#3 Pulp Faction on 05.12.17 at 6:27 pm

People are delirious everywhere.
They won’t even entertain the idea that RE won’t keep rising infinitely.
I wonder where they see the stop line on everything ?

#4 Blacksheep on 05.12.17 at 6:30 pm

Flop # 161,

Flop, not trolling, honest questions for you:

How much has the house you own, in East Van gone up in value (or %) in the last 5 Years?

Why don’t you sell and secure your windfall, as Garth promotes if you believe the market to be correcting?

Do you not plan on using said equity in your retirement plans?

#5 YVR Update on 05.12.17 at 6:36 pm

Here in BC, ElectionsBC have mysteriously ‘found’ an extra additional 3000 absentee ballots.

Now if this isn’t voter fraud to turn an election in favour of the elites, i don’t know what is. Now the question is will the people allow this to happen.

This is the most important election in BC history bar none. Could change provincial system to a Proportional Representative one.

Multi-Billions $$$$ at stake.

#6 Chaddywack on 05.12.17 at 6:38 pm

Any risk having a mortgage with a small credit union? I can see deposits being at risk, but if all you have is debt with them is there any real concern?

#7 2008 Again - Canadian Style on 05.12.17 at 6:43 pm

Canada provided a $114 billion bailout to the banks and took the riskiest mortgages off their books in 2008.

http://www.cbc.ca/news/business/banks-got-114b-from-governments-during-recession-1.1145997

When the risk to the market is home grown not foreign, why would they not bailout the banks? Surely, its more pressing to bail them out when the collateral damage hits your own doorstep…

#8 Linda on 05.12.17 at 6:43 pm

Florida and Phoenix 70% whoa. Did both recover? It’s almost 10 years.

#9 Mark on 05.12.17 at 6:44 pm

Teranet’s methodology has almost no credibility once you take a few minutes to understand how they calculate their number. Basically they average gains over a number of years on their samples evenly. So gains that might have happened in, 2005-2016, are computed as though they happened evenly distributed amongst those years. The net effect is that the Teranet index severely lags behind reality, and for all we know, could only now be registering what happened in 2012-2013 in the lead-up to Flaherty’s crackdown on CMHC subprime. As evidence is abundant that there has been no appreciation in GTA/GVR real estate on identical properties since.

As far as the Canadian banking system, the lynchpin is what the federal government does (or proposes to do) in the face of CMHC’s capital being wiped out. If the federal government is prepared to keep shoveling money into the CMHC, potentially in the range of $100-$300B (their ultimate liability can run as high as $800-$900B or so), then the banks will “make bank”, and will be very profitable on account of the spread expansion they’ll be able to push through to their retail mortgage customers.

But if the federal government doesn’t just blindly give the CMHC additional funding, or if there’s some retroactive changes to CMHC subprime insurance in some manner or another, that will likely be deadly to the banks. But the federal government knows it must tread carefully or else they precipitate a systemic crisis of confidence in the banks.

I personally think a middle ground will be found, where the banks are allowed to be highly profitable, and the CMHC is bailed out. But some sort of windfall surtax will be applied to bank profits. The reaction in the bank stocks being something like what happened when (then Finance Minister) Paul Martin came out and prohibited bank mergers circa 1998 or so.

Hopefully in the midst of all of this, the very cheap BoC funding (the BoC is likely to run ZIRP/NIRP for the next decade with the potential of a policy rate cut as early as the 24th in response to the declining RE market) will revive another sector of the Canadian economy. Or global macro trends, whatever the case may be. Once that sector gets hot enough, the RE slump will be over. But if the 1990s are a template, it took a good number of years until tech stockholders and employees with options, flush with gains, started to convert into GTA-area real estate. So families with RE-backed loans at this point need to be prepared for much higher actual interest rates, as well as the likelihood of much lower prices. The highly influential “landlord families” will mostly be foreclosed upon (and many will expatriate, putting immigration numbers into reverse). But for everyone else leveraged into RE as single unit owners, it will be a much lower lifestyle for quite a while to come.

#10 Investx on 05.12.17 at 6:46 pm

“Housing will not do to Canada what it did to America. ”

It’s different here.
Phew!

#11 Leon Sam on 05.12.17 at 6:49 pm

Hey Garth,

Could you do a piece on getting an investment property via reverse RRSP mortgage?

Possibly pros and cons,
Market timing (if you wait for the crash)

Thanks

#12 Mark on 05.12.17 at 6:50 pm

“Any risk having a mortgage with a small credit union? I can see deposits being at risk, but if all you have is debt with them is there any real concern?”

Depends on your LTV. If you have a relatively low LTV, then you probably will still have a reasonably acceptable LTV after RE prices fall, and thus shouldn’t have a lot of trouble shopping around and finding replacement financing if your CU goes belly up or wants its money back.

If you have a high LTV, and no CMHC subprime mortgage insurance (CU’s, being provincially regulated, are allowed to write subprime loans without CMHC subprime insurance), then you could have a real problem as your loan would be vulnerable to being called by an insolvent CU, or having its rate escalated severely.

If you read the fine print on most Canadian mortgages, banks have some pretty extraordinary powers under the contracts to deem loans in default. In a situation of distress, they might not hesitate to use some of those powers.

#13 Nonplused on 05.12.17 at 6:53 pm

One thing I always wonder about these so called insurances like CDIC, CMHC, etc., is where the money comes from if things were to go really south.

Sure they have a reserve, and thus can cover the loss of 1 or 2 lenders, CMHC can certainly cover a significant number of defaults before they get in trouble, etc., but in a worst case scenario where does the money come from? The government? That means us tax payers and we are mostly all broke according to the statistics. We can’t even bail ourselves out as it is. So the money would have to be borrowed.

#14 PE on 05.12.17 at 6:53 pm

Thanks Garth for your articles. Big fan here.

Question is would Canadian ETFs which mainly hold US assets count towards that 20%, or should we directly buy from US exchanges?

#15 TurnerNation on 05.12.17 at 6:56 pm

Doesn’t sounds like rate hike planning: Green bank sent me email, mail: pre-approved personal loan of $28,000 for up to 7 years (4-year amort. example) at only 4.99% – if you move over other debt then close it out.

4.99% on unsecured debt is quite low these days. Needless to say I don’t need this offer.

#16 The Arctic Gringo: Qalunaaq on 05.12.17 at 6:57 pm

Some pref ETFs are down ~2.5% since mid-April and are back at mid-February levels. Is there an explanation for this recent dip considering the ~12% increase YTD?

Correction: 1-year, not YTD.

#17 JSS on 05.12.17 at 7:11 pm

If things get ugly here in Canada, will any of the big six Canadian banks be forced to cut dividends?

They did not in 2008. — Garth

#18 TSX on 05.12.17 at 7:14 pm

desperately needs OIL to save the day, It’s CLEAR to the naysayers that the major banks are indeed collateral damage to this housing mess, and any etf index is heavily weighted in the financials. Passive investing sometimes is yucky, :)

#19 Blacksheep on 05.12.17 at 7:16 pm

Flop,

I, will answer my own questions, first:

“How much has the house you own, in ——— gone up in value (or %) in the last 5 Years?”

Been 3 years since buying, about 425K or about 50%.

“Why don’t you sell and secure your windfall, as Garth promotes if you believe the market to be correcting?”

With out getting into why, I don’t see much risk of the Fraser Valley correcting at this time.

“Do you not plan on using said equity in your retirement plans?”

Yes, my wife have had serious convo’s about listing, but I think 5 years from now when I plan to retire, it will be worth more than its is today.

Fair is fair…

#20 Pookie on 05.12.17 at 7:16 pm

“no massive spike in the default rate” . I’m not convinced about that one. How can more than half of the country be $200 from not paying their monthly bills yet avoid this outcome when the SHTF? Jobs will be lost. Many of the indebted will be underwater. The rot of fraudulent lending is much harder to spot in the euphoria phase. Anyone in trouble can dump a property on the way up fairly easily. This becomes impossible once underwater, then add rising rates…

#21 crowdedelevatorfartz on 05.12.17 at 7:23 pm

@#5 YVR Update

Nah, 3000 “discovered” absentee ballots spread out over 87 ridings and mixed together with 176,000 other absentee ballots isnt a game changer.
BUT
Today on the radio I heard Bill Good, Liberal lickspittle extrodinaire, actually say, “Its time Christy Clark moves on…”
Bill Good critisizing the Liberal leadership? WTF?
THATS a game changer.

#22 Matt on 05.12.17 at 7:23 pm

“If you’re an investor, remember you have more than $1 million in coverage”
Can anyone provide or direct me to more information on this please?

#23 Le Nanaimo on 05.12.17 at 7:28 pm

Listings are coming fast in Nanaimo between $400 and $600K. Some are selling over asking as horny mainlanders sail the Salish into Spring. Prices are up 25% yoy and likely higher by end of the 2017 rutting season.

#24 Andrew Woburn on 05.12.17 at 7:31 pm

– ‘A very disheartening day’: Most of Canada’s regulators abandon plan to put your financial interests first

“Most of Canada’s financial regulators are walking away from a proposal that would have legally required people giving financial advice to put their clients’ “best interest” ahead of their own financial benefit and their employer’s bottom line.”

http://www.cbc.ca/news/business/financial-best-interest-standard-financial-regulators-1.4110767

#25 Ret on 05.12.17 at 7:33 pm

#8 “Florida and Phoenix 70% whoa. Did both recover? It’s almost 10 years.”

Sister-in law and her Floridian husband purchased a 23 year old home in the “Cars” survey in Sebring Fl. in 2007.

It was a great buy as it had peaked on Zillow at $274,000 previously. After the crash, it dropped down on Zillow to $105,000 at one point about 4 years ago.

Current Zillow estimate is now $184,000. I guess that she will be back to even in 2019-2020. The home is 1800 sf, 1984 built, oversize 2 car garage, 10,000 sf municipally serviced lot, pool. No basement as with most houses in Florida, so the area hasn’t been blighted with basement mortgage helper suites.

HOA of $75 month but that keeps the grass cut too. Property taxes for Floridians on SIL’s property are $1900 per year.

After seeing what a RE bubble did to the US, how did we get into an eerily similar RE bubble ourselves?

#26 JSS on 05.12.17 at 7:37 pm

Almost forgot to remind all husband fathers that there’s a nine piece bucket sale for Mother’s Day for $11.99 at KFC

#27 Brian Ripley on 05.12.17 at 7:37 pm

Only 10% believe a decline is possible. Bloomberg Poll via Garth

Check out my 6 biggest city chart on SF detached prices.
http://www.chpc.biz/6-canadian-metros.html

Clearly prices will drop when sentiment changes as it has in Calgary and Edmonton.

What is exceptional now is that the combined average sum price of a Vancouver, Calgary & Toronto condo is currently 51% (no typo) more expensive than a median priced Montreal SFD.(also plotted on the chart).

#28 Mark on 05.12.17 at 7:38 pm

“If things get ugly here in Canada, will any of the big six Canadian banks be forced to cut dividends?”

Not only will they probably not be forced to cut dividends, but they may actually *raise* dividends because the banks will likely be earning a lot more in the environment of spread expansion (ie: increased risk premia collected from RE-backed and consumer borrowers). And have few re-investment opportunities. Until the economy, ex-RE, picks up again.

Currently banks pay out between 30% and 50% of their earnings as dividends to shareholders. The other 50%-70% being retained to backstop ever-increasing portfolio sizes.

As RE prices fall, so will the need for balance sheet expansion. Hence, payout ratios will be able to trend towards 100% and even beyond as additional capital in the form of retained earnings is no longer required.

Look at the charts of the Canadian banks in the 1990s. The quadrupled in a decade despite the RE stagnation.

#29 Joe2.0 on 05.12.17 at 7:39 pm

The bubble on the wet coast may burst but people have been saying that for many years now.
Vancouvers a desired destination for many foreigners hence the taxes.
Vancouvers got loads of baby boomers who are going to cash out and flood other markets getting a big bang for their buck.

Or downsize in the city hence the booming condo market.
Vancouver and area has presold unbuilt developments going up like wild fire.
Spinoff economy’s like Gibsons has huge developments in the works 100s of housing units coming.

The only way BC housing will dump is if rates go way up or foreigners are excluded.
And that’s not going to happen.

We need the new immigrants to have kids and pay the taxes or else it will be a geriatric nightmare.

The government and banks will continue to do what ever it takes to fuel the RE industry.

The unfortunate byproduct is the devaluation of physical cash being held by people hoping the markets would correct.
It’s not going to matter, it’s too late.

#30 M on 05.12.17 at 7:43 pm

“Some people wonder if housing could take down the economy, chew up the stock market and blow up people’s RRSPs. Maybe even start a run on deposits, especially those of the smaller credit unions and trusts with big exposure to residential real estate.”

Yes Gartho baby, it will. Banks= Housing. Housing = 50++% of the GDP. it did in Spain, it did in Ireland, it did in US. In 2009 canadian banks were bailed out to the tune of 120 bil $ or so.
…and we already see pension funds bailing out subprime hedge funds like HCG (yes, by its philosophy of structured investment HCG is a ponzi scheme)

This is a nation of money lenders and tim horton workers and as such, ANY liquidity crisis will bring down the entire house. Roof will stop in the basement.
If T2 will decide to go printing, then canadian pesso will go “china syndrome” and a watermelon will go to 20 bucks.

..however , much like in the afterlife, in the business of investing , redemption is individual. A lot of money can be made by the ones with straigh and common sensical thinking, unabated by “lingo” “political correct” language and spinoff main stream media.

Unfortunately or fortunately, depending on one’s take on the social structure, the world parts between a smart few 1-3% and the rest of 97%. The world is a beautiful place for gives one the freedom to chose where to place oneself.

#31 Macduff on 05.12.17 at 7:44 pm

Garth, do you think that all real estate markets will be affected at least to some degree?

#32 1% Doomer on 05.12.17 at 7:47 pm

I grew up in Vancouver. It’s become a real estate cult. No one can converse for 5 minuets without bringing up real estate. No appreciation of the arts, politics, travel, international events…etc. I’m glad I left and am never moving back

#33 bigtowne on 05.12.17 at 7:55 pm

Is there an etf that holds Visa; Mc and AmEX? These would be a long term hold. One must hold one’s nose on occasion and buy individual equities.

#34 M on 05.12.17 at 7:57 pm

“But there’d be no run on the banks, no financial system collapse, no big bail-ins or bail-outs, no massive spike in the default rate, no federal mortgage forgiveness or adjustment program and tens of thousands of people leaving their jobs as realtors. Highly unpleasant. Not lethal.”

..I am afraid that WILL be a run on the banks (though only not paying the credit cards will be enough to sink them). We all saw the run on HCG despite the fact that deposits (under 100K) were just as well protected as in a bank.

..It WILL be a financial system collapse for the international intricacies between bankrupt institutions
are still to be revealed (MIC and Genworth comes to mind).

There WILL be massive bailouts (devaluing the pesso) leading to surge in unemployment (and as such mortgage defaults)

Thousands of babes ex-realtors are already out there on online dating ( I KNOW !!! :) ) and the trend is only picking up.

Not “unpleasant”..but LETHAL.

..Other than that….I like your optimism Garth :)

#35 Pete from St. Cesaire on 05.12.17 at 8:02 pm

where does the money come from? The government? That means us tax payers and we are mostly all broke according to the statistics. We can’t even bail ourselves out as it is. So the money would have to be borrowed.
—————————————————
All money is borrowed. Money starts its life as a debt to those who printed it, the central banks and their secretive controllers. Money is borrowed into existence. The interest is repaid in the form of taxes. Did you ever notice that your cheque for taxes owing is to be made out to the ‘Receiver General FOR Canada’, not OF Canada but FOR Canada. The government doesn’t print its own money and the tax collection people are not a branch of the government (some muddying of the waters was done here by Mackenzie King so be ready for someone to disagree with my statement, they will however be mistaken).

#36 the Jaguar on 05.12.17 at 8:06 pm

Garth, I thought you had reached a new low when you coined ‘positively Kardashian’ the other day, however the term ‘buttwad hoarding’ is equally hysterical. You could do stand up in Vegas.
One reads in the media that Banks are well protected by insurers like CMHC, Genworth, etc. No Home Capital shadows being cast on the big 5. Pretty sure they (the insurers) only pay up once they are satisfied the underwriting was sound and all the facts provided to them on approval check out. I imagine all kinds of errors & omissions show up. Would love to know what percentage of claims are denied. These problems only see the light of day when things go south. Media also seem to have forgotten that many seniors have been enticed to leverage their homes to use as ATM machines to supplement their retirement years. Do those numbers report as mortgages? Maybe not, since they are really big lines of credit. Hope the kids are not counting on a big inheritance to rescue themselves from buying bloated real estate instead of investing wisely. And just ask any finance guy at any car dealership what the average lien pay out is on most of their financing contracts. A 40 thousand dollar new car purchase will need a loan for 65 thousand to drive the new car off the lot. And that would be an economy car. Ratchet up those numbers for the big SUV’s and trucks. We live in unrealistic times. Societal pressure to ‘live big’ in every sense is like a cancer. Most are running so fast that the world is passing them by. The Jaguar likes living the tiny world life where things of modest proportions might be owned, but they don’t own the Jaguar. Maintaining a strategic equalibrium is the only game in town.

#37 45north on 05.12.17 at 8:08 pm

Housing will not do to Canada what it did to America.

not exactly. I mean the differences are significant: banks in the US are fundamentally different:

http://www.aei.org/publication/due-north-canadas-marvelous-mortgage-and-banking-system/

Ross Kay says what he thinks a lot: the back stop for Canadian banks is the Canadian mortgagor:

https://www.merriam-webster.com/dictionary/mortgagor

before the share price of Canadian banks drops, the banks will raise their variable rate loans including mortgages, they will call non performing loans. The first thing that will happen is that recent investors are going to be squeezed hard. The ones that borrowed the down payment and the ones that loaned the down payment.

The first real information that we’re going to get is delinquent property tax payments. Banks are not going to make any announcements. Real estate agencies aren’t either.

#38 Still A Lot of Dummies Around on 05.12.17 at 8:08 pm

People are still gobbling up mortgage debt at epic levels. As an insider, learned about a couple (first time buyers) just bought today an old house were Mattamy worshippers go to die and took on a $900,000 mortgage. First time buyers, minimum down payment, CMHC approved. How they got approved, is anyone’s guess. Don’t think there is mortgage fraud going on everywhere – guess again. This thing is going to be so ugly when it blows, you’ll never want to watch HGTV again. Imagine a young couple taking on a lifetime of debt, that in reality will never be paid off.

#39 dakkie on 05.12.17 at 8:14 pm

Danielle Park – Canadian Real Estate Bubble Popping

http://investmentwatchblog.com/danielle-park-canadian-real-estate-bubble-popping/

#40 Mark on 05.12.17 at 8:15 pm

“Well since prices – actual sale prices at all levels of the housing system – have appreciated greatly in Vancouver and TO since 2013, that CMHC cap sure ain’t working right? “

No they haven’t. Actual sale prices on individual identical units have not appreciated in GVR/GTA since the 2013 apex. What has changed is the sales mix. The result of low-end properties dropping out of the mix due to tighter credit, and an onslaught of brand new supply that has come to market.

This combination has caused the sales averages to greatly exaggerate changes in individual house prices. Flaherty’s 2013 CMHC changes worked as intended.

#41 For those about to flop... on 05.12.17 at 8:19 pm

Pink Pollen falling in West Vancouver.

These guys only waited a month to get serious about selling this house after paying 2.3m for it last February.

It has an assessment to support their original ask, but the market has spoken and now they are approaching break even territory after expenses.

West Van average price is down 7.4% which I’m sure their aware of.

The assessment states that it is 3bed /2bath but the zolo listing has it as a 1 bed/ 2 bath.

Sounds perfect for Bert and Ernie…

M42BC

1427 19th Street, West Vancouver

Apr 10:$2,588,000
May 11: $2,499,000
Change 89,000 -3%

https://www.zolo.ca/index.php?sarea=1427%2019th%20Street,%20West%20Vancouver&filter=1

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAyOTlGWA==

#42 IM in C on 05.12.17 at 8:19 pm

Have to disagree with you Mr. Turner. If the SHTF regarding the housing market, the present government WILL
1. drive /keep interest rates down, with the end result of a 50 cent dollar
2. Pressure the banks to do mortgage deferrals, ie allow debtors to pay interest, or even a portion of the interest owing

Nope. Not a chance. — Garth

#43 x-moose on 05.12.17 at 8:21 pm

“…But there’d be no run on the banks, no financial system collapse, no big bail-ins or bail-outs, no massive spike in the default rate…”

And you know and predict this exactly how? Yes, all these things may and will happen. Have you heard of Nassim Taleb: he has this mathematically rigid premise that knowing something in the future with any certainty that is higher than pure randomness would require progressively higher prediction accuracy than random proselytizing.

#44 Andrew Woburn on 05.12.17 at 8:27 pm

Why can’t Matt Drudge grasp that even if you dress a turkey in eagle feathers, you can’t make him fly?

“Still, the unusually detailed accounts of inner turmoil frustrated Trump’s allies in the media, like Matt Drudge, who runs the enormously influential conservative aggregation website Drudge Report.

“We never got 1 damaging leak out of Obama White House staff in 8 yrs. Under Trump, they appear hourly. BIG DANGER: Small leaks sink ships!!” Drudge said in a flurry of tweets.

“Trump advisers leaking to media are now deliberately sabotaging presidency. Major house cleaning needed for survival. Leaks on hour, every hour, will destroy Trump presidency. There’s a Trojan horse plotting within the inner circle!”

There’s only one “major house cleaning” that will actually work here, Mr. Drudge. Also has it ever occurred to you that Obama’s people didn’t leak because they respected him as an effective leader?

http://thehill.com/homenews/administration/333031-trumps-comey-firing-sets-off-new-round-of-leaks

#45 cramar on 05.12.17 at 8:27 pm

#1 Dave on 05.12.17 at 6:22 pm

More bad news for Toronto. You guys might be worse off than Australia.

“Toronto Real Estate Agents Are Losing Their S**T Over These Charts”

https://betterdwelling.com/city/toronto/toronto-real-estate-agents-losing-st-charts/

——-

Thanks for this link. Noted there:

“Overheated markets like Toronto are often said to be operating on greater fool theory.”

Did he say, “GREATER FOOL”??

Perhaps this pathetic blog will yet be fabulously famous.

#46 Willy H on 05.12.17 at 8:27 pm

Our chartered banks won’t collapse seems to be a common refrain of this blog.

Aren’t we stating the obvious? They are benefiting from nanny-state regulation (CMHA) and that typical “too big to fail” mantra.

This has allowed them to continue to milk this mortgage market for all it’s worth peddling low interest rates with negligible risk. Never ending bonuses for executives and predictable dividends for Bay Street.

If this housing debacle was equated with a war on drugs – our blessed banks would be the dealers and the BoC the Kingpin.

We are well beyond a plateau (soft-landing) or even a modest correction. Anything less than a violent and sizable correction would imply decades of unaffordability and it would ultimately destroy the economic prospects of an entire generation.

Why would any young couple settle in the GTA or GVA? So much more opportunity can be found south of the border and even, to some extent, smaller urban centres in Canada (London, Ottawa, Halifax, Sudbury, Winnipeg, Moncton). Recent graduates need to earn close to $75-$100K each to make a real go of it in the GVA or GTA. Most of these folks cannot even find a decent entry-level position in their respective fields.

The GTA is a gridlocked soulless urban sprawl peppered with ubiquitous big box warehouses from Niagara Falls to Oshawa. Even what remains of quaint red-bricked small town Ontario that surrounds the GTA has been over-developed* into sprawling bedroom communities up to 100kms from the centre of what was once The Emerald City of North America.

*Who needs Grade A farmland anyway!

#47 Gaston on 05.12.17 at 8:31 pm

#26 JSS on 05.12.17 at 7:37 pm

Almost forgot to remind all husband fathers that there’s a nine piece bucket sale for Mother’s Day for $11.99 at KFC
– – – – – – – – – –

Maybe garth shoulda had a Sunday ice cream thing instead.

#48 bumwad hoarding? on 05.12.17 at 8:34 pm

typo:

Not exactly sure, what bumwad hoarding is…but it has a nice ring to it

#49 Royal City Dweller on 05.12.17 at 8:37 pm

News from Guelph (The Royal City)

Cashed out in Mississauga, bought in Guelph last year.
Guelph caught on fire this year. Mar and Apr.
Nasty bidding wars came to Guelph, while last year I was able to sift, pick and choose, 25 DOM was not unusual, conditions were included with my offer: inspection and financing (just needed bridge loan, I’m mortgage free and debt free etc.);
So Guelph RE market was on fire too.
WAS. Because suddenly it started to change some 2 weeks ago and now median price is substantially lower this week compared to week prior.

Here (citation from the local respectable RE Broker):

“Of the 74 homes sold 25 of the sales were at or below list price. The market is still in strong seller’s territory but the trend is showing that more and more listings are not selling above list. The number of new listings pouring into the market is clearly helping.

The median sales price dipped again this week from $551,000 to $509,000. The previous week had the sales price to list price ratio at 109.1% of list price. This week its down to 104.68% a substantial reduction in selling prices. $20-$25,000 difference in the median prices from the previous week. That’s huge!”

There you go.

#50 John B on 05.12.17 at 8:41 pm

Can someone elaborate on the $100,000 vs $1,000,000 of deposit protection for presumably individual bank accounts vs investment accounts? Does the latter protect cash balances held in brokerage accounts, wether these be RRSP TFSA of margin accounts?

Many thanks
John

Canadian Investor Protection Fund. — Garth

#51 Mark on 05.12.17 at 8:41 pm

“Ross Kay says what he thinks a lot: the back stop for Canadian banks is the Canadian mortgagor:”

Yup. The Canadian banking system is amazingly fluid and can adjust rates applicable to mortgage borrowers with relative ease. 40% of Canadian mortgage loans are adjustable rate on an ‘overnight’ basis at the discretion of the banks themselves. The other 60%, “fixed” rate loans, have terms mostly up to 5 years, with an average term to maturity in the 2-3 year range. Mortgage loan contracts offered by the Canadian big-5 also give the banks some extraordinary powers to declare a mortgage in default even if all payments have been made.

For instance, many Canadian banks’ mortgage loan contracts allow them to declare a loan in default if, in the bank’s opinion, the value of the property has declined. If, in the bank’s opinion, the property has not been fully maintained. If, in the bank’s opinion, Criminal Code offenses have been committed in the property (marihuana possession being one example!). The fine print of the mortgages even allows banks to enter a property under mortgage, at the expense of the borrower, to make inspections. Anyone who actually bothered to read the fine print of their mortgage would be astonished at the sort of powers lenders have in Canada.

As we’ve seen examples of recently, the banks can even set “Prime” to anything they want. The banks have used this to increase the effective rate on borrowers who negotiated contracts linked to bank-set “Prime”. A lot of people unfortunately are under the misconception that “Prime” is set by the Bank of Canada. Nothing could be further from the truth.

#52 What do I know? on 05.12.17 at 8:42 pm

A 32% drop in national prices would take us back to where we were a year ago. Not a big deal. That will not hurt those that were smart enough to invest in Canadian RE eight years ago.

Another reader who can’t do math. — Garth

#53 What do I know? on 05.12.17 at 8:46 pm

#42 IM in C on 05.12.17 at 8:19 pm

Have to disagree with you Mr. Turner. If the SHTF regarding the housing market, the present government WILL
1. drive /keep interest rates down, with the end result of a 50 cent dollar
2. Pressure the banks to do mortgage deferrals, ie allow debtors to pay interest, or even a portion of the interest owing

———————————————————

You are spot on that the Feds will do some things, like possibly those two that you’ve listed. Or maybe much more direct. Who knows exactly what will happen, but there will be bailouts.

Not a chance. The U.S., for all its wealth, could not reverse the real estate decline. Ottawa is already in a financial hole. There is no white knight. — Garth

#54 Smoking Man on 05.12.17 at 8:49 pm

Mind Made Up.

Maxime Bernier

#55 Travis on 05.12.17 at 8:50 pm

8 Linda on 05.12.17 at 6:43 pm
Florida and Phoenix 70% whoa. Did both recover? It’s almost 10 years.

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

No. According to Zillow the average home price was around $240k in April 2007, it dipped to $125k in Dec 2011, and is now at $205k.

I have a in-law who bought in Florida “years and years” ago. She can’t use her winter home down there anymore, and needs the equity out now to move into a retirement home. They were trying to sell for ~$160 at a “big loss”, someone was going to vultch at $100k but backed out when they visited the neighbourhood.

It’s a hard lesson in how there is no “average home” in real estate. Sure, parts of Florida (and America really) are doing great, but those in Trump country lost their equity and their children will never live to see it back. At $3-4k/month that equity won’t pay for the retirement home very long anyway.

#56 Medic on 05.12.17 at 8:51 pm

A note to realtors:
The “Coming Soon” notations on the For Sale signs have lost their effect with so many listings around. Bring it back when the listings dry up again.

#57 45north on 05.12.17 at 8:53 pm

Dave: from your link: Toronto is seeing detached listings rise at a massive rate, while sales drop. especially look at the five year chart: Toronto Detached Homes Listings Vs. Sales. I think Garth has already commented on this: according to the chart sales are supposed to increase from March to April. I figure by 23%. But this year they’re down 3%!

The bank already knows this. So for instance if you own two houses, the bank already knows the odds of your selling one. This is where it’s way better to be renting.

#58 MORTGAGE FRAUD on 05.12.17 at 8:53 pm

The house of cards is falling apart in Toronto. Listings popping up everyday and NO ONE is buying. Speculators are trapped and looking to vet out before they default. Yes speculators will be defaulting in months

#59 Hugh Janus on 05.12.17 at 9:00 pm

First time buyers dominate re sales in a sane market. When the house horny, bank of mom, bidding war winners elevate prices to nosebleed levels and blame Chinese dudes, the outcome becomes sketchy.

A large portion of the crusty, depends wearing, wrinkled love children of war brides will need to ditch their “special” homes to have a snowballs chance in hell of eating quarter pounders and buying made in China goods from wallyworld. Had they started out with a balanced porfolio instead of a 76′ Pinto with mooncaps, there would be no need for garth’s incessant carry ings on with this pathetic blog. But then what would we do?

When creeping interest rates cause the boomers to crap themselves and phone the realturd to ditch the cashcow it will be epic. Surely a glut of boomer specials in a rising interest rate environment will intimidate values.

By this point the boomers want out so they will have to resist the temptation of greed and move on. As the run up of prices displaced the first timers, who then is left? The nice lady making $10 an hour at walmart or the engineering millenial who is buttering bagels at Tims for $9.50 an hour? We will find out.

#60 akashic record on 05.12.17 at 9:03 pm

#43 x-moose on 05.12.17 at 8:21 pm

“…But there’d be no run on the banks, no financial system collapse, no big bail-ins or bail-outs, no massive spike in the default rate…”

And you know and predict this exactly how? Yes, all these things may and will happen. Have you heard of Nassim Taleb: he has this mathematically rigid premise that knowing something in the future with any certainty that is higher than pure randomness would require progressively higher prediction accuracy than random proselytizing.

Virtue signalling to project authority on an issue as (self-declared) insider for an outsider audience.

Common marketing tool for various professional services.

Nah. Just correct. — Garth

#61 TCContrarian on 05.12.17 at 9:04 pm

“So what could happen? Is it time for tinned tuna, bumwad hoarding and gold bars buried under the garage floor? Could a housing correction/crash here cause bring a rerun of 2008?

No. That’s the simple answer. Nobody anywhere except here cares about the Canadian housing market, so it could drop by 50% and have zero impact on financial markets in New York, London or Beijing. ” – GT
*********************************************

I don’t know Garth. You’re not taking into account that the RE over-valuations presently exist not only in Canada, but also Australia, UK, China, and yes, the good ol’ US of A again! In fact, the current situation, in sheer numbers, dwarfs the 2008 version, globally.
So, during the deflationary part of the cycle, it may very well be even more catastrophic than in 2008 – the main difference being that banks/governments are better capitalized and ‘prepared’.

I’m just glad to have stepped aside and renting…waiting for things to get ugly. And ugly the will get! Not different this time folks!

TCC

#62 When Will They Raise Rates? on 05.12.17 at 9:14 pm

#40 Mark on 05.12.17 at 8:15 pm

“Well since prices – actual sale prices at all levels of the housing system – have appreciated greatly in Vancouver and TO since 2013, that CMHC cap sure ain’t working right? “

No they haven’t. Actual sale prices on individual identical units have not appreciated in GVR/GTA since the 2013 apex. What has changed is the sales mix. The result of low-end properties dropping out of the mix due to tighter credit, and an onslaught of brand new supply that has come to market.

This combination has caused the sales averages to greatly exaggerate changes in individual house prices. Flaherty’s 2013 CMHC changes worked as intended.
——————————

Source?

#63 traderjim on 05.12.17 at 9:18 pm

Unless they are serving iodine laced ice cream in Belfountain on Saturday then I am not going.

Already a big risk that some guy wearing a pink hat will try to punch me.

#64 Smoking Man on 05.12.17 at 9:19 pm

All you need to know about the long game.

When Trump cuts corp and income tax. The usa economy and stock market will go orbital, bonds will get crushed. Inflation and much higher rates leaving the in bread communist globalists like george soros and his minions T2 reeling.

Toronto Real Estate will hold value be it confused till that moment happens.

If you haven’t sold before Trump goes full on entrupenurs rock. You will get crushed.

You still have time. Don’t drop your paints if you need to sell.

MSM has your back. For now.

#65 Drunken Stupor on 05.12.17 at 9:25 pm

Bit of a challenge to balanced portfolios and Risk Parity crowd by this ex-Tudor hedge fund chap….

https://ellerstoncapital.com/wp-content/uploads/Global-Macro-Newsletter-April-2017.pdf

#66 Dr. Talc on 05.12.17 at 9:31 pm

When did Real estate become day trading?

#67 Smoking Man on 05.12.17 at 9:33 pm

#63 traderjim on 05.12.17 at 9:18 pm
Unless they are serving iodine laced ice cream in Belfountain on Saturday then I am not going.

Already a big risk that some guy wearing a pink hat will try to punch me.

..
You’re already tanked. Can’t speel your name right. I got your back jimbo.

I won’t be any good but my heart will be in it. I’ll sic my 4 lbs poodles on your rivals.

I bought some shades today. Cant see worth a shit out of them. Their big enough so I can have my glasses under them. Dont think anyone will notice.

They will be fixated on my designer flip flops.

#68 Willy H on 05.12.17 at 9:37 pm

Smoking Man on 05.12.17 at 9:19 pm
All you need to know about the long game.

When Trump cuts corp and income tax. The usa economy and stock market will go orbital, bonds will get crushed. ….

__ __ __ __

If corporate tax cuts spurred economic growth and created jobs then Canada should be nearing full employment by now! As it stands our unemployment rate is almost 2% higher than Trumpland’s!

If the “Trump Administration” survives long enough to pass significant corporate tax cuts you can rest assured that the benefiting corporations will end up sitting on vast amounts of cash (as they have for years now). There is no point investing in capital when consumers are stretched and stock markets are vastly over-valued as P/E ratios bloat.

These folks are not interested in creating jobs, they are interested in generating wealth for their own.

#69 Wrk.dover on 05.12.17 at 9:38 pm

I hear that there is a love in going on in Belfountain Tomorrow!

I bet it will end up being a droll conversation about R E.

How GTA….

#70 Ace Goodheart on 05.12.17 at 9:39 pm

The great Canadian housing bubble has ended the way Canadian things usually end. Americans always blow sh$t up in style. In Canada it’s more like a wet firecracker. A bit of a pop and a fizz and maybe some smoke that blows away in the wind.

If the govt really does bail out HCG I will laugh so hard. The Canadian way. Stop the parade because some kid dropped their ice cream cone.

Oh well Gartho. After dog fest at the ranch you’ll have to find something else to blog about. The great Canadian housing bubble has ended the way all Canadian things seem to. Maybe now we can all go back to wondering why the Leafs can’t win a cup and why we have to swear allegiance to another country’s Queen.

Cheers!

#71 Robert White on 05.12.17 at 9:43 pm

Gloom & doom does not exactly sell ice cream cones to dogs in fair weather, but with debt to GDP leverage being as high as it is in CANADA we can expect full on contagion to take hold when the SHTF. Moreover, HCG just forced a ratings downgrade on our BIG six chartered banks due to systemic risk on a national market. And within two weeks we will see the BIG six backstopping the non-bank subprime industry wholesale. Frankly, when oil per barrel tanks CANADA’s energy industry the BIG six will take a major hit & haircut which will force them to raise interest rates across the board forcing continued escalation of the subprime unwind on non-bank lending, and chartered bank lending. Furthermore, oil is going to tank further and everyone knows it all too well by now. I, for one, cannot fathom how anyone could speculate that a subprime unwind in CANADA will not create a system wide implosion across the board especially when we have the extremes of costs impinging on Vancouver & Toronto housing markets with almost no let up in the speculation fueling the excesses? Of course CANADA’s chartered banks will suffer catastrophic destruction on their books, bets, and long bonds. At minimum our bond markets will implode, and the BoC Interest Rate will most assuredly be forced up along with insurance rates across the board.

Methinks Garth likes to whistle _Don’t worry be happy_ whilst he sells ice cream to hound dogs and their yuppified owners on sunny days in the spring after a long hard Canadian winter of snow shovelling in sub zero temps. ;)

Your second paragraph was far more accurate. — Garth

#72 Lee on 05.12.17 at 9:44 pm

I think there is a limit to investment fund protection in that there is limited fund to tap to cover losses. CDIC of course has its own limits but that $1000000 protection for investors assumes there is enough in the fund to cover everyone’s first million in losses. If enough people lose money you won’t be able to tap the whole million. I vaguely recall the total fund being around $400 Million but I could be off on this number. So if 490 people lose $1 Million each each guy will get less than $1M from the fund. If a few houses collapse you’d likely not have access to the whole million. But who has a million invested?

The fund covers cash balances. — Garth

#73 Smoking Man on 05.12.17 at 9:48 pm

#68 Willy H on 05.12.17 at 9:37 pm
Smoking Man on 05.12.17 at 9:19 pm
All you need to know about the long game.

When Trump cuts corp and income tax. The usa economy and stock market will go orbital, bonds will get crushed. ….

__ __ __ __

If corporate tax cuts spurred economic growth and created jobs then Canada should be nearing full employment by now! As it stands our unemployment rate is almost 2% higher than Trumpland’s!

If the “Trump Administration” survives long enough to pass significant corporate tax cuts you can rest assured that the benefiting corporations will end up sitting on vast amounts of cash (as they have for years now). There is no point investing in capital when consumers are stretched and stock markets are vastly over-valued as P/E ratios bloat.

These folks are not interested in creating jobs, they are interested in generating wealth for their own.

Is that a crime. Generating wealth for your family.

Taxation is theft thats all you need to know.

Govt are are filled with people that played intercity hockey as kids. Never made it to Triple A or Jr hockey.

And there is a shit load out there teet sucking the creatives and the risk takers that make taxation posable.

Grow up.

#74 VS on 05.12.17 at 10:09 pm

#17 JSS on 05.12.17 at 7:11 pm
If things get ugly here in Canada, will any of the big six Canadian banks be forced to cut dividends?

They did not in 2008. — Garth
——————————–
Did any agency lower Canadian Banks’ rate in 2008?

#75 jas on 05.12.17 at 10:10 pm

Garth, you said:
If you’re a worrier, stay within the $100,000 CDIC limits. If you’re an investor, remember you have more than $1 million in coverage.

—————————————–

Please explain it with examples if you can.
For example, if I have my Self directed RRSP, TSFA and non-reg acct. with same bank, what will be covered with $100k and what will come under $1mil.
Thanks

#76 mark on 05.12.17 at 10:14 pm

For all the henny penny stuff on the banks, get a grip people.

You should all know how this works by now. Give up the fantasy doom delusions and accept the doom reality.

You will be ones forced to endure the pain, suffering and a tin of Pedigree for supper when this goes wrong.

The banks will get a stern finger waving and will have their liquidity guaranteed.

#77 jas on 05.12.17 at 10:18 pm

#5 YVR Update on 05.12.17 at 6:36 pm

Here in BC, ElectionsBC have mysteriously ‘found’ an extra additional 3000 absentee ballots.

Now if this isn’t voter fraud to turn an election in favour of the elites, i don’t know what is.

Now the question is will the people allow this to happen.
———————————————————-

Yes, people will allow this to happen.
Why? Because just because their eyes are open, you thought they are awake?
Don’t just think voters in USA are dumb. We here are just as ignorant and idiots. We get what we deserve.
We all are being fleeced. Irony is, we are happy about it !!

#78 Pete on 05.12.17 at 10:19 pm

Garth is wrong about a few things though:

1. If Canadian RE bubble burst, it will probably drag down the bubbles in Australia and New Zealand too. Yes, it will have SOME impact on world/US economy. Besides, Beijing does not have a financial market. China’s markets are in Shanghai.

2. If Canadian RE bubble burst, it will NOT bring inflation, only deflation. Yes, the C$ will drop big time, but any import price rise will be outweighed by dramatic drop in domestic demand.

There is zero correlation between the Canadian and Australian real estate markets. Get serious. Kelowna and Moncton aren’t even related. As for prices, you can certainly have price inflation and demand deflation simultaneously. — Garth

#79 Bryn on 05.12.17 at 10:19 pm

UK homeowners desperate to sell raffle off homes:

http://www.dailymail.co.uk/news/article-4499062/Homeowners-turn-raffles-beat-housing-market.html

#80 Smoking Man on 05.12.17 at 10:21 pm

#69 Wrk.dover on 05.12.17 at 9:38 pm
I hear that there is a love in going on in Belfountain Tomorrow!

I bet it will end up being a droll conversation about R E.

How GTA….

Hardly , if Sherly Valintine says show me Mr happy. I’m there in comando paints. Hence the low work ethic comes to froishion for all to see.

I’m only good for a bit of effort. You dogs ever try and untangle a tee shirt tangled in a set of boxers when you have been drinking hard and think the mirror is the bathroom door.

Been there done that.

Lost my prescription sun glasses that night.

#81 No Worries on 05.12.17 at 10:27 pm

“A lot of Boomers planning to retire on their house proceeds would be forced to stay working.”

No Worries

#82 Tony on 05.12.17 at 10:34 pm

Re: #22 Matt on 05.12.17 at 7:23 pm

Brokerage account, when you hit one million you open another brokerage account somewhere else.

#83 WUL on 05.12.17 at 10:43 pm

I can see the headline in the Toronto Star tomorrow:

“LEAKED WYNNE CABINET MEMO ORDERS JOINT TASK FORCE STRIKE OF HUMANE SOCIETY, FOOD INSPECTORS AND OPP AT UNLICENSED GATHERING OF INVESTMENT CULT AT GENERAL STORE NEAR BELFOUNTAIN”

My E-card is attached if you need Charter rights advice. Have fun and send videos of authoritarian abuse.

#84 Pete from St. Cesaire on 05.12.17 at 10:54 pm

If the SHTF regarding the housing market, the present government WILL
1. drive /keep interest rates down, with the end result of a 50 cent dollar
2. Pressure the banks to do mortgage deferrals, ie allow debtors to pay interest, or even a portion of the interest owing.
Not a chance. The U.S., for all its wealth, could not reverse the real estate decline. Ottawa is already in a financial hole. There is no white knight. — Garth
——————————————————-
That guy didn’t say that it would work he just said that that is what the govt would do. I’m sure he’s right.

#85 Lee on 05.12.17 at 10:54 pm

#72,

I think the fund covers securities too.

#86 Smoking Man on 05.12.17 at 10:54 pm

I’ve diched Roger waters my hero of many years. He don’t see how a wired law puts people inside a wall.

Abba rocks

https://youtu.be/JGqP5wnK0Ao

#87 Guru on 05.12.17 at 11:01 pm

The shit has already hit the fan. Supply has exploded and only the few fools left are buying.

Prices will likely drop by at least 20% by end of the year. Then prices will likely be stagnate for the long term. Remember what happened in the US, it’s the outer suburbs that get killed the worst (IE: Queens Creek is 40 mins away from Phoenix and is still recovering). These suburbs with no real local economy will drop by over 50-60% without a doubt ….. the truth will hurt but these places will be Guelph, Waterloo, Milton, Stoufvillle, Hamilton, Stoney Creek, Oshawa, Barrie etc.

#88 Smoking Man on 05.12.17 at 11:03 pm

DM it’s all that’s left on me
https://youtu.be/92cwKCU8Z5c

You and George a divou suggestions. Lose the liser

#89 Gentle ,Loving Kindness on 05.12.17 at 11:08 pm

The U-Tube attached is from the 2016 Europe Technology Show. The presenter is Mr. Jen-Hsun Huang. He is the CEO and Co-Founder of the Nvidia Corporation, a Simi conductor chip maker that has been designed to specifically facilitate the next mega trend transformation, Artificial Intelligence(AI). I watched the 2 hr presentation, but you get the jest fairly quickly. I was very impressed with his presence, and more so by how he started laying the framework for the scalable AI computers as early as 10 years ago. As I watched this guy, I realized what an opportunity lost the election of Pres Trump has been. When you see a truly good/ great leader at work, it makes you sad that the “POTUS” turned out to be so shallow, so short sighted, such a waste of an opportunity. I used to believe Science, hard work, integrity would eventually win the day. Now, I am not so sure and I am becoming an isolationist, just looking after and defensively protecting myself -interests, and trying to stay out of the way of the populist “deplorables” (Hillary’s Words)

https://www.youtube.com/watch?v=npzRyTimcZo&feature=youtu.be

#90 Joe2.0 on 05.12.17 at 11:09 pm

So what happens to those big ole houses down the road that no one can afford.
It’s called rezoning, put up a tower or high density of another form.
Happens all the time.

#91 Capt. Serious on 05.12.17 at 11:11 pm

I interrupt this blog for a public service announcement to make sure your Windows based system has the most recent security updates. WannaCry is likely just the first attempt at using the exploits released by Shadow Brokers.
There is a rather scary list of vulnerabilities only patched since March.
Ok, now back to bitching about housing.

#92 DON on 05.12.17 at 11:15 pm

#19 Blacksheep on 05.12.17 at 7:16 pm

Flop,

I, will answer my own questions, first:

“How much has the house you own, in ——— gone up in value (or %) in the last 5 Years?”

Been 3 years since buying, about 425K or about 50%.

“Why don’t you sell and secure your windfall, as Garth promotes if you believe the market to be correcting?”

With out getting into why, I don’t see much risk of the Fraser Valley correcting at this time.

“Do you not plan on using said equity in your retirement plans?”

Yes, my wife have had serious convo’s about listing, but I think 5 years from now when I plan to retire, it will be worth more than its is today.

Fair is fair…
***************

Your assumptions are truly amazing…maybe he rents.

Go stick your head in your wool! I like the service he provides…prove him wrong. Stop playing happy asshole!

#93 original dave on 05.12.17 at 11:17 pm

where is the listing surges in the gta?

#94 Hans on 05.12.17 at 11:21 pm

“This is truly scary in light of the survey mentioned here days ago which claims most people could not find an extra $200 a month to handle any additional expense – which is a direct legacy of paying (and borrowing) too much for real estate.”

I would respectfully disagree….you’ve connected two dots which might not be as directly related as some might believe.

Most people would be in trouble with $200 more in expenses…no one has parsed out those individuals who have always been in this position – think social assistance, disability programs, and those that have opted out of the job market (who for some absurd reason aren’t included in the employment rate). To tie these two factors assumes that most people have purchased at very recent “bubble” prices….which really isn’t the case. Yes, those that purchased in last 3 years are most at risk. I’d be curious to know how much of Toronto’s housing stock has changed hands in say, the last 5 years. That would give us a better idea of how many people are truly living on the edge.

#95 };-) aka Devil's Advocate on 05.12.17 at 11:22 pm

All legitimate concerns when we let housing become the number 1 driver of GDP.

#96 WUL on 05.12.17 at 11:25 pm

Oh no, another premonition on the content of tomorrow’s article in the Toronto Star:

Chief Caledon Dog Catcher, Doug Beagle said, “It was a sedate affair in the fine tradition of Upper Canada civic affairs until an aging leftie from Fort McMurray showed up in a pink shirt praising the Notley government and pointed out the no smoking sign to a reputed former Junior B hockey player. Mayhem ensued. The Alberta provocateur was threatening to sue the proprietor.”

#97 Happy Housing Crash Everyone! on 05.12.17 at 11:29 pm

Coming to Alberta.Think oil instead of mining. Happy Housing Crash Everyone! :-)
https://www.theguardian.com/australia-news/2017/may/12/theyve-lost-the-lot-how-the-australian-mining-boom-blew-up-in-property-owners-faces

#98 MORTGAGE FRAUD on 05.12.17 at 11:32 pm

Take a look at these numbers.
https://twitter.com/Silver_Watchdog/status/862501806676606976

#99 Long-Time Lurker on 05.13.17 at 12:13 am

#22 Matt on 05.12.17 at 7:23 pm
“If you’re an investor, remember you have more than $1 million in coverage” Can anyone provide or direct me to more information on this please?

#75 jas on 05.12.17 at 10:10 pm
Garth, you said:
If you’re a worrier, stay within the $100,000 CDIC limits. If you’re an investor, remember you have more than $1 million in coverage.

—————————————–

Please explain it with examples if you can.
For example, if I have my Self directed RRSP, TSFA and non-reg acct. with same bank, what will be covered with $100k and what will come under $1mil.
Thanks

Try these:

http://www.milliondollarjourney.com/protect-your-deposits-cdic-and-cipf-explained.htm

Canadian Investor Protection Fund
http://www.cipf.ca

Garth did a write-up sometime after last summer, I think. Also, his comments here.

#100 DOM on 05.13.17 at 12:57 am

#53 What do I know? on 05.12.17 at 8:46 pm

#42 IM in C on 05.12.17 at 8:19 pm

Have to disagree with you Mr. Turner. If the SHTF regarding the housing market, the present government WILL
1. drive /keep interest rates down, with the end result of a 50 cent dollar
2. Pressure the banks to do mortgage deferrals, ie allow debtors to pay interest, or even a portion of the interest owing

———————————————————

You are spot on that the Feds will do some things, like possibly those two that you’ve listed. Or maybe much more direct. Who knows exactly what will happen, but there will be bailouts.

Not a chance. The U.S., for all its wealth, could not reverse the real estate decline. Ottawa is already in a financial hole. There is no white knight. — Garth
*******************

Dial 1 800 Government Help Me…..and let me know if you get an answer. If you are lucky Junior might send you a couple of joints and an autographed selfie.

#101 Victor V on 05.13.17 at 1:17 am

#54 Smoking Man on 05.12.17 at 8:49 pm
Mind Made Up.

Maxime Bernier

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

+1

#102 Learner on 05.13.17 at 1:32 am

#17 JSS on 05.12.17 at 7:11 pm
If things get ugly here in Canada, will any of the big six Canadian banks be forced to cut dividends?

They did not in 2008. — Garth

—————————————–

Does the actual dividend amount change with the share price? For example, today the TD is $63.1 a share with dividend rate 3.8%. That is about $2.4 a year per share. Let’s say somehow things go bad next year, TD share drops to $31.5 (half), will the dividend become $1.2 (31.5 X 3.8%) or still $2.4?

#103 Wishful Thinking on 05.13.17 at 1:46 am

As an investment firm I understand why you would want to pour water over the flames rather than fan them.

However, everything you have written today portends to a recession waiting in the wings and an ugly one.

When I read your reminders about CDIC and Investment insurance amounts and to not worry, I worry.

If indeed the 416 et. al. RE party is over, there goes ALL RECENT growth in GDP and add to that the uncertainty due to S. of the border…this cannot and nor will it, end well.

Canada is ripe for the picking…one external economic shock away from recession.

I disagree with your “soft landing” hypothesis, it is unlikely when compared to past extremities and wishful thinking…BUT I admire your verve in trying to calm the “psychology” of what is to come.

#104 acdel on 05.13.17 at 1:47 am

For those stating that interests rates will or should go up in Canada; how is it possible??? As Garth mentioned that the personal debt is higher then our GDP! Never mind the federal, provincial and municipal debts.

What pisses me off about all this are the responsible ones will be made to pay for all this one way or another.

The stupidity and greed deserves a complete breakdown of the whole system; so many do not know or do not care what the previous generations have gone through. They are as much to blame as the current generation, it is just sickening!

Cash is king people, yes, a responsible portfolio is crucial but for god’s sake make sure one has cash at hand!!

#105 Read on 05.13.17 at 1:50 am

Who could imagine oil price plunge below 30 dollars, then what… housing pricing soar 30% in a year? Who could imagine Trump win the election, then what… stock market soar? Point? It is so hard to figure out the rational. Then what, people follow the trend only not to look like a idiot. I do think Emperor’s New Groove can actually happen.

#106 jas on 05.13.17 at 1:56 am

#27 Brian Ripley

What is exceptional now is that the combined average sum price of a Vancouver, Calgary & Toronto condo is currently 51% …..
——————————————————

Mr. Ripley, what is the meaning of stringing together the useless and pointless words as:
‘combined average sum price of …..’ ?
What are you trying to say?

Secondly, don’t forget that real estate market is very much a local phenomenon. You may get hot and cold spots of RE in different parts of a single city alone.

#107 Too funny Ace Goodheart... on 05.13.17 at 1:57 am

Burst out laughing when I read what you wrote:

“Americans always blow sh$t up in style. In Canada it’s more like a wet firecracker.”

I hope you are correct about the wet firecracker. I think we will go full American instead.

Good one Goodheart.

#108 fishman on 05.13.17 at 2:30 am

Ok, time for a reality readjustment on tinned tuna. Albacore tuna caught off the coast of B.C( IQF) Individually Quick Frozen on a good boat, usually averaged $1.40lb offloaded Vancouver. Last year was $4lb.
We get the good stuff,jig caught, later in the year in colder water & high high fat content. Thats what the Japanese pay the big money for. It all goes into the sushi market. Nothing is canned.Besides, the last B.C. commercial cannery just shut down up in Rupert.

If I were you guys I wouldn’t bother with canned tuna unless you can source. Some U.S. stuff is not bad. Anything that is real will cost $8 for 200 grams & do your homework.

Basically your getting fish that has all the essential oils boiled out, if there was any there in the first place. The tuna is cooked twice to get higher recovery & the fish oils are taken or destroyed. Their replaced by sunflower or olive oil or whatever. If your going to store essential oils for the collapse buy the real thing,seeds, freeze dried. Don’t rely on Tuna canned in China or Vietnam or anything concerning fish from over there.

No more derogatory insinuations about canned Tuna. In the fall, & with a break from weather you can get out for a few 150- 200 albacore days. 15lb. average. That Japanese buyer is giving you $12000 for a days worth of fish. He ain’t putting it in a can.

#109 Dan.t on 05.13.17 at 2:34 am

Real estate is religion in Canada.

Fundamentals don’t matter.

If it falls people will just buy more and live on bread and water since all their money in “invested” in housing, actually, they don’t have to because the can now take out a line of credit at the bank and borrow more- all they have to say is it’s for a kitchen reno that will increase the value by 10X.

And when money runs out, just get more debt using credit cards. Simple.

Poloz must be one of the 60% surveyed who doesn’t understand how interest rates and debt are correlated. Glad he has things under control and that free money hasn’t distorted things too much.

#110 marc vernon on 05.13.17 at 5:27 am

When people start saying that bank X cannot fail because of Y, that is when you get your money out. You will not get another chance and you will not get a personal notification of pending bank failure. It will just happen and too quickly to respond.

#111 A Reply to #89 Gentle, Loving on 05.13.17 at 7:01 am

“I watched the 2 hr presentation, but you get the gist (not jest) fairly quickly.” (Unless, of course, you found a joke in there somewhere.)

#112 Jerry on 05.13.17 at 7:03 am

Is it better to use a personal LOC in place of redeeming portfolio”principle” amounts , where by redeeming a portion of principle you are effectively removing money that may be generating a good return?

Could a LOC at prime rate rate be used more strategically and leave main principle amount working in higher interets investments?

#113 A Reply to #52 What do I know? on 05.13.17 at 7:29 am

Prices need to rise 47% after a 32% drop, to break even.

#114 Freedom First on 05.13.17 at 7:36 am

I like cash, cash flow, world wide diversified assets, balance, liquidity, and 0 debt at all times.

And, at this moment, since Nov. Dec. & Jan., a gradual movement to being overweight cash. Noted on this Blog by me.

With all of the $$$$$$$$$$ worldwide invested in overvalued assets presently, we are not far away from seeing tremendous bargains coming soon. That could mean as long as 2 years, or much shorter. I don’t care. I just know that I am right. Time is on my side. As always.

Freedom First
Master of Freedomonics

#115 Dharma Bum on 05.13.17 at 8:03 am

When visiting The Belfountain Store, try some of the new sweets and pastries they have on offer this season!
Yummy!!! Awesome! Scrumptiously delicious!
A sure fire way to end your real estate woes and put a smile on your face.
Namaste y’all.

#116 meslippery on 05.13.17 at 8:17 am

How will this skew over asking stats?
I”ll pay 100% over ask and flip.

https://www.realtor.ca/Residential/Single-Family/18125680/16-POPLAR-PLAINS-Crescent-Toronto-Ontario-M4V1E8-Casa-Loma

#117 my, my.... on 05.13.17 at 8:19 am

wow, good candidate for a zero hedge submission, lol
your readership would then bloat like a good post-poutine emission….

#118 Victor V on 05.13.17 at 8:35 am

A realtor I know posted this blurb on Facebook:

===========

In pulling new listing data, you have to factor in that re-listed properties are also increasing, so the increase in inventory is not as dramatic as the charts imply. Why are properties re-listing in increasing numbers? Most of these homes start out with a low teaser price and a specified offer date. When that date comes, there have been instances of either 1-2 offers or none at all (this is the buyer pull-back that was expected to come from the news of the foreign buyer tax). Sellers, unsatisfied with what has been offered, choose to reject the offers and re-list their property at their full asking price. Hence a double-posting of the same property.

The market is in a period where there is a bit of a stand-off between buyers and sellers. Sellers don’t want to concede in price compared to recent sales and buyers are expecting prices to soften from the record prices obtained less than a month ago. This is why sales are declining.. for now. The media has done a very effective job of creating the perception that waiting for prices to drop is the right call. This can lead to pent up demand in the near future (recall early 2009) where any semblance of a minor correction or balanced market can bring buyers to the table and ready to buy.

I am working with new buyers who see the current state of the market as a way to not compete with buyers who have been in the market in the past several months or more and taking a breather. Are there deals to be had? Yes… I have seen them. However, there are still multiple offers happening on quality homes and condos. The bag is quite mixed right now!

#119 Tony on 05.13.17 at 8:57 am

Happy Housing Crash Everyone! on 05.12.17 at 11:29 pm
Coming to Alberta.Think oil instead of mining. Happy Housing Crash Everyone! :-)
https://www.theguardian.com/australia-news/2017/may/12/theyve-lost-the-lot-how-the-australian-mining-boom-blew-up-in-property-owners-faces

The median priced houses were over $800000 and now its $180000. An eye opener to those who think prices can’t crash. lol Happy housing crash to You!

#120 Pete on 05.13.17 at 9:02 am

Americans always blow up in style. Yes, because they let the market rather than government to decide. the end result is all favorable.

US housing market crashed in 2008, the US government could have rescued the subprime lenders and let the bubble last longer. Instead, they let Lehman go bankrupt and set up a TARP of $700 billion. TARP did not lose one cent, in fact, it made some money.

Oil price was at $147 per barrel in 2008 and over $100 most of post 2008. The market again was at play. Boy, shale oil emerged. US crude oil production doubled and crashed the price to below $50.

the lesson: LET THE BUBBLE BURST. IT IS GOOD FOR ALL.

#121 maxx on 05.13.17 at 9:07 am

#37 45north on 05.12.17 at 8:08 pm

“The first real information that we’re going to get is delinquent property tax payments. Banks are not going to make any announcements. Real estate agencies aren’t either.”

Too darned right. Not publicly, via msm at any rate.
One of my realtor friends told me Thursday that serious cracks are beginning to show- banks repos, ruined credit forcing borrowing at higher rates……..and getting worse.
So it’s not just that Canuckleheads have torrid debt which now exceeds our entire economy- repayment is not smooth either.

I would advise that anyone with actual cash start taking it far more seriously. As disrespected as it is by central banks and businesses, it is hard to get, harder to hang onto and increasingly RARE. This, of course, makes it easier to vote with your wallets.

Savers and investors rule.

#122 Renter's Revenge! on 05.13.17 at 9:20 am

#102 Learner on 05.13.17 at 1:32 am
#17 JSS on 05.12.17 at 7:11 pm
If things get ugly here in Canada, will any of the big six Canadian banks be forced to cut dividends?

They did not in 2008. — Garth

—————————————–

Does the actual dividend amount change with the share price? For example, today the TD is $63.1 a share with dividend rate 3.8%. That is about $2.4 a year per share. Let’s say somehow things go bad next year, TD share drops to $31.5 (half), will the dividend become $1.2 (31.5 X 3.8%) or still $2.4?

==========

The dividend does not necessarily change with the share price. Companies declare cash dividends. The yield is calculated as the last dividend declared divided by the current share price.

https://www.td.com/investor-relations/ir-homepage/share-information/dividend-reinvestment-plan/drip.jsp

If the price of TD drops by half, in all likelihood the yield will double as TD will probably continue declaring the same cash dividend as before. They did this for a few years after the 2008 financial crisis, before resuming their annual dividend increases.

http://www.td.com/about-tdbfg/corporate-information/corporate-profile/profile.jsp

Let all ye doubters be warned: TD is a juggernaut that cannot be stopped!

This is not a recommendation to buy their shares.

#123 Trumpocalypse2017 on 05.13.17 at 9:23 am

It was really good to meet with some of you blog dogs yesterday at Belfountain for the 4:20 Alternative Preparedness Meetup. I enjoyed our chat and the laughs (perhaps some of our last) and the survival tips shared. And the ice cream was good too, Garth!

Sadly, I won’t be there today. Things are just too risky, Trump is far too unstable and the probability of a nuclear event this weekend is now over 78%.

“Isolated and agitated”, with his finger on the nuclear trigger.

Worst combination possible.

http://www.cnn.com/2017/05/12/politics/trump-comey-white-house-morale-fallout/

I am heading north, and encourage you all to follow.

Head east from Belfountain, and take Hwy 89 to Hwy 11 north. Stay off the 400, it will be at a standstill once things erupt. Get far north of the Bruce county area, as the nuclear fallout from the detonation of those reactors will sweep east as far north as Huntsville.

There are WalMarts and Costcos as you head to Belfountain from Mississauga, make good use of them. Extra fuel containers are on sale this weekend for $9.99. I am taking ten with me to my cabin. Buy batteries as well.

Those of you planning to stay and “relax” at the ice cream parlour, good luck and godspeed.

Hug your kids.

Give your wives their mother’s day flowers today.

#124 Shawn on 05.13.17 at 9:36 am

Garth,

Your blog is great. I look forward to reading it daily. I agree with you on Canadian real estate almost completely. Where I disagree with you is on your recommended portfolio allocation.

1. Canadian equity allocation is too high. Historically the TSX has lagged the S&P500. The TSX is not a diversified index. Now that we are post commodity boom but have yet still to see the effect of a bear market in housing on the consumer and on bank earnings, a prudent investor would reduce Canada. If I recall correctly, you indicated that you increased Canadian exposure earlier in 2017. Why?

2. CPD carries Canadian equity exposure risk and doesn’t belong in a bond portfolio. If you look under the hood of this ETF, it basically looks like the TSX in terms of sector weighing. The dividends are fine but the share price behaves more like XFN (or XIU) than it does XBB. 20%. Your recommended Canadian preferred weight is basically bringing your Canadian equity exposure to 38%.

Why would you increase Canadian equity exposure recently?

#125 Koshy Alex on 05.13.17 at 9:44 am

StoreDot demos EV battery that reaches a full charge in 5 minutes

When fully charged, it can apparently keep the car running for 300 miles.

https://www.engadget.com/2017/05/12/storedot-ev-battery-demo/

#126 Livin Large on 05.13.17 at 9:50 am

Jerry @ 112…in a word yes. Proviso: bring the LOC debt down via cash flow ASAP or compounding will sneak up on you right quick.

#127 TurnerNation on 05.13.17 at 10:07 am

A worrisome trend – of course 101 new laws passed against us each year.
No debate on ‘Agenda 21’ “densification”. You will live in 450 sq foot condos or else.
Will it be long they’ll begin expropriating houses for condos near subway lines?

We have no rights. We own nothing. An open air tax slave farm (Hard work brings freedom; you are free to leave at any time…)

http://www.theglobeandmail.com/news/toronto/omb-challenges-to-be-barred-within-500-metres-of-transit-stations/article34979676/

“Residents would be blocked from challenging developments within 500 metres of transit stations under sweeping reforms to the Ontario Municipal Board to be unveiled next week.

The provision, revealed to The Globe and Mail by government sources, would allow municipalities to bar challenges to approved developments near GO Transit, subway or light-rail stations in order to support the goal of boosting density near transit lines.”

#128 Livin Large on 05.13.17 at 10:09 am

Learner, in a word…no. Divs are fixed cash distributions from a company to its shareholders. Divs are a method of distributing the profit in a company to its owners (share holders).

What does change with the change in share price is the “yield” those divs deliver. When a share price drops by say 50% (god forbid but it happened to the banks in 08-10) then the effective “yield” doubles i.e. a bank paying 3% div yield (div$/share price purchased at) will have a dividend yield of 6% for someone purchasing the shares new at the lower share price.

Remember, your yield is based on the price the shares were purchased at only, not the varying daily share price.

So, this goes for a dump if the issuing company cuts or suspends the div at any time.

Most if not all CDN major banks did not reduce nor suspend any divs in the 2008-13 period…just kept the same div amount quarter after quarter while the daily share price tanked to 1/2 of their early 2008 value.

It is very uncommon for a Canadian bank to ever cut or suspend their dividend. BMO for example has been paying a quarterly dividend for well over 100 years and have never suspended or cut their dividend so if you had purchased a bank like BMO or RBC in say 2010 when their share price was 1/2 then your real yield would be something like 10% give or take a %. Oh, and if you held the bank shares to present then you would also have a huge capital gain on the shares too.

#129 TurnerNation on 05.13.17 at 10:13 am

Not sure I’ll drop by the Gen Store. Do I feel like a 2 hour round trip drive in crappy weather on my weekend time..and pay for rented car.

#130 Rich Young on 05.13.17 at 10:17 am

ONE THING IS FOR SURE. Calgary homebuyers on glue.

#131 NoName on 05.13.17 at 10:24 am

@ #89 Gentle ,Loving Kindness on 05.12.17 at 11:08 pm

Now, I am not so sure and I am becoming an isolationist, just looking after and defensively protecting myself -interests, and trying to stay out of the way of the populist “deplorables” (Hillary’s Words)

——

Interesting video, i started watching it last night but didn’t finished ill get the rest of it on a way to store today.

So i was thinking where more money for nvidia comes from, from sales of those super comp. or from sales of video cards. As i think more about nvidia only one question that i would like to ask that dude why most popular pc or console they make cards, majority of games palyed now days involve lots of destruction and violence… he never mentions that, talks only sunshine and lolipoops…

whats funny year later same guy same place he talks and there is screenshot from some game where some dude is holding sword..

Than i got thinking us elections and behavioural economic. only thing that i can come cum up with all that dip learning is how to get consumers to give more of their money away.

Some years ago i was running protein folding on 2 of my computers because some univercity was doing study about alserhimers or some similar disise.
So basicly “kids” used idle computing power around the world to simulate whatever hey did, yes they did used gpu on gamng consoles or graphich cards in pc, this was at least 2007 or 2008 if i remember. where i was going with this dont know, but its about same time frame when they “invented” their frame work for AI. i tould be interesting topic for conversation, honestly i would look forward talking to you, if stop by icecream store later today.

It will be easy to spot me i am morbidly obist middle age white male who writes and speeks with accent, questionable hygiene habits, extreemely bad breath, easily distracted, have dificulty to maintain​ eye contact, often interupts in middle of the sentence, speaks incoherently and switches to completely unrelated topics half way through conversations. I am sure after this description noone will have any problems “recognizeing” me from the distance as far as 15-20ft.

if i am you would not worry about becoming isolesonist or deplorables at this point, what concerns me are lunatik lepht and religiuos fanatiks.
http://www.politico.com/magazine/story/2017/05/09/why-liberals-arent-as-tolerant-as-they-think-215114

huh, that was all over the place and long….

#132 NoName on 05.13.17 at 10:28 am

now i wonder what is AI carbon foot print.

#133 Dominoes Lining Up on 05.13.17 at 10:30 am

Ahh, what an interesting insight into the aspirational delusions of the herds who have created the real estate bubble.

People in Toronto are petitioning because a grocery store is offering prices that are TOO LOW. reducing the ‘gentrification value’ of their neighbourhood.

Lol.

https://www.thestar.com/news/gta/2017/05/12/grocery-store-snobbery-provides-food-for-thought-keenan.html

My oh my this will not end well…..

#134 Doug in London on 05.13.17 at 10:36 am

Canadian banks would see profitability diminished and share values would likely reflect it.
———————————————————-
Look on the bright side, it could be that long awaited time to buy bank stocks or XFN on sale.

#135 D.D. Corkum on 05.13.17 at 11:08 am

#9 Mark on 05.12.17 at 6:44 pm

Teranet’s methodology […] averages gains over a number of years […so the] index severely lags behind reality.

—-

I can see how it lags MLS-based statistics because it relies on publicly-available closing data. However, I don’t get your point about averaging over several years. It considers actual sale prices as point estimates, which is arguably a “strength” for having plenty of data to support the model.

#136 jess on 05.13.17 at 11:14 am

update what was once isn’t but have more sprung up

interesting triumph
buildings 3years old rational to keep bare worth more no decoration

GHOST CITY – Inside the Chinese Housing Bubble GHOST
https://www.youtube.com/watch?v=BcyYyyaPz84

#137 tkid on 05.13.17 at 11:26 am

PSA for Windows Users. With the WINCRY ransomware worm currently making the news in Europe, it’s important to run your Updates for your Windows machines.

This includes XP, Server2003, etc. I know Microsoft discontinued support for the older OSes, but they’ve made an exception because of the worm.

For anyone who is afraid the Update will cause your Windows7/8 box to start nagging you to upgrade to Windows 10 (or auto-update you to Windows 10) I’ve just updated and there is no sign of Windows 10.

The worm is halted right now with a temporary workaround, but the industry expects that workaround will only last for 24 to 48 hours. You have a window to get the updates done.

#138 Coopoiler on 05.13.17 at 11:58 am

In regards to CIPF ( Canadian investor protection fund).
I looked at their website and am unclear about coverage.
The site mentions aggragating different accounts into one when determining coverage. The question is! Can you have a number of accounts in your name, a number of accounts in your spouses name and joint accounts, all in the same member company and be covered for 3 million? Three accounts at 1 million each.

#139 Fiendish Thingy on 05.13.17 at 12:01 pm

#19 Black Sheep-

Thanks for your honesty; my sympathies to your wife, as your home will almost certainly be worth less in 5 years, especially if you live in one of the Greater Fool hubs like Maple Ridge, Mission, or Chilliwack.

The illusion of “it’s different here” in these enclaves of RE resilience is likely caused by an influx of Vancouverites cashing out and paying cash for SFH in the Fraser Valley for what seems like bargain prices to them, and windfalls to the FV sellers; condos and townhouse in the FV are being propped up by the inflation in SFH, and the reality for lusty first time buyers that this region is the only place west of Boston Bar they can afford. This illusion will crumble like a house of cards as interest rates rise over the next 2-3 years…

#140 yup on 05.13.17 at 12:21 pm

Virtue signalling to project authority on an issue as (self-declared) insider for an outsider audience.

Common marketing tool for various professional services.
……..

and lets keep in mind;

a) garth called clinton to win and id trump won a market corection. NOT even cloose

b) called the top for real estate in 2010-2011 ish

why he continues to prognosticate? helps kill the time and he has no shame, so why not?

#141 Herb on 05.13.17 at 12:24 pm

We have reached the limit!

Smoking Man at #73 telling someone else to “Grow up.”

#142 Trumpocalypse2017 on 05.13.17 at 12:27 pm

Trump has just finished his commencement address early, been rushed off to the Situation Room. Cyber attacks with Russian implications this morning. The afternoon is looking grim.

On my way north of Parry Sound.

http://www.telegraph.co.uk/news/2017/05/13/nhs-cyber-attack-everything-need-know-biggest-ransomware-offensive/

#143 jess on 05.13.17 at 1:05 pm

janus-faced

foreclosure auction business / charity

desperation and shame on one side /embarrassment for becoming victims

…” factors that led to his criminal activity. Among them: the 2007 collapse of the economy and the resulting burst of the housing bubble; the burden of private school tuition for his five children; “a wife who was accustomed to being a stay-at-home mother”; and the stress of running a business with more than 50 employees.”

https://www.bostonglobe.com/business/2017/05/09/south-shore-auctioneer-sentenced-four-years-prison-for-real-estate-fraud/Zcj1MLeN6QwsUAAuc5rQUL/story.html

#144 choptstix on 05.13.17 at 1:16 pm

http://www.cbc.ca/news/canada/british-columbia/vancouver-condo-market-high-1.4111631
NEW
Supply scarce for condos as prices climb in Metro Vancouver
‘It’s very hard. It’s not an obtainable goal anymore,’ says would-be buyer

#145 crowdedelevatorfartz on 05.13.17 at 1:23 pm

@#142 pox 2017
“On my way north of Parry Sound….”
******

Keep going until you lose a wiFi signal then go another 250 miles north of that…..
Pull the spark plugs out of your car . Throw them in the mosquito infested bog. Smash the battery. Burn the car.

Sit and wait.
We’ll get back to you.

#146 InvestorsFriend on 05.13.17 at 1:59 pm

Many Households Must be very Rich in CASH

“Households owe $2.08 trillion, of which 65% is mortgages.”

*****************************************
Yes, but only some households have any mortgage debt. Almost all mortgages in Canada are funded by bank deposits owned by corporations and households.

If there is massive mortgage debt (and there is) then there must be massive wealth of savers.

One man’s debt is another man’s savings. And savings as in bank deposits are cash money to the depositor.

This concept is well illustrated by the Home Capital situation wherein depositors are moving their deposits to other banks causing Home Capital to have to borrow the cash to make good on the transfers to those other banks.

To a good degree, young people owe mortgages and these are funded by the massive savings of a portion of the older people. Not all older people have savings but a large percentage such as perhaps 30% of seniors are very well off indeed and have large savings.

#147 InvestorsFriend on 05.13.17 at 2:06 pm

Supply and Demand of Money

Due to demographis there are now more older people with money and fewer younger people needing to borrow.

Larger supply of savings (held by old) people and smaller number of borrowers leads automatically to low interest rates.

In order for the fewer young borrowers to borrow all the savings hoards of the hordes of boomers, house prices HAD to rise so that the debt could sop up the massive savings.

Simple supply and demand at work. I have posted same observation several times over the years.

#148 InvestorsFriend on 05.13.17 at 2:17 pm

Which Came First the Savings or the Debt?

Yes, it is true that the debt creates the savings. Senior with a house and no savings sells to moister and senior ends up with cash savings and the moister with debt.

Nevertheless the savings of the senior is now funding the mortgage of the moister and it really does not matter which came first.

Money is debt of someone. So what? Money is also money. I like having it. Thank you moisters!

#149 saskatoon on 05.13.17 at 2:18 pm

going back to 2001 prices across the board, boys.

#150 Gentle ,Loving Kindness on 05.13.17 at 3:15 pm

#111 A Reply to #89 Gentle, Loving
“I watched the 2 hr presentation, but you get the gist (not jest) fairly quickly.” (Unless, of course, you found a joke in there somewhere.)………

I have found through my limited experience, that someone who criticizes a small error that is obviously out of context is someone lacking in general overall confidence. They are reduced to taking the only shot they perceive is available to them. This comment reveals more that it illuminates.

#151 Editrix on 05.13.17 at 3:46 pm

You also forgot “A lot of Boomers who borrowed against their houses to provide their spawn with down payments for their slanty semis would be forced to stay working.”

#152 YVR on 05.13.17 at 4:00 pm

Condo prices in Vancouver now out of reach of average income buyer.

Foreign $, Foreign Students, and 10 year visitor visas.

If locals are buying, then they’re using fudged mortgage docs aka $HCG

#153 Tony on 05.13.17 at 4:17 pm

Re: #147 InvestorsFriend on 05.13.17 at 2:06 pm

What about the entire rest of Canada where real estate has been flat to down since March 2012? So much for that theory.

#154 45north on 05.13.17 at 7:17 pm

Trumpocalypse: Head east from Belfountain, and take Hwy 89 to Hwy 11 north. Stay off the 400, it will be at a standstill once things erupt. Get far north of the Bruce county area, as the nuclear fallout from the detonation of those reactors will sweep east as far north as Huntsville.

the reactors will not detonate. Arny Gunderson says the Candu reactors are an evolutionary dead end. Maybe so but they won’t detonate.

http://www.fairewinds.org

survivalist retreats don’t have internet so your contact with the world is constrained. They don’t have natural gas so it’s very difficult to heat your house, I’d say 6 months of the year. Which brings to mind, the huge investment the province has made in Highway 11. It’s way over $1 million a mile. I guess the province decided to build infrastructure where it could so it did. Internet connection still sucks.

https://en.wikipedia.org/wiki/Ontario_Highway_11

TurnerNation: from your link: The provision, revealed to The Globe and Mail by government sources, would allow municipalities to bar challenges to approved developments near GO Transit, subway or light-rail stations in order to support the goal of boosting density near transit lines.

about time! CBC’s documentary The Condo Game makes the point that it is the Ontario Municipal Board that frustrates the efforts of Toronto City Council to regulate the massive development of condos resulting in poor quality construction and poor city planning. Basically the province is condescending towards Toronto City Council: the province says you can decide on road tariffs until we say you cannot. You can decide to tax empty houses until we say you cannot. Toronto City Council is perpetually in an inferior position.

The coming housing crash is going to put this political mismatch into perspective: the Greater Toronto Area is the economic heart of Ontario, it generates the wealth that supports the rest of the province. A housing crash in the GTA, threatens the Federal Liberals and the Provincial Liberals. Threatens them to the core.

#155 paulo on 05.13.17 at 11:44 pm

ok dogs how many showed up at the pound in belfountain
to day? surly there must be an aspiring reporter in the gang!
would loved to have been there, defiantly next time around

Full report tomorrow. — Garth

#156 paulo on 05.14.17 at 12:44 am

cheers having one for the gang,catch up tomorrow (2 for smokie)

#157 Jimbo on 05.14.17 at 9:13 pm

Can you clarify the “as an investor you have a million in coverage” & the cdic 100k guarantees? Government guarantees proved themselves useless most recently in Cyprus and at several times in the past.