The consequences

Morose, pasty basement dwellers in Vancouver moan openly on this blog that what’s happening in the GTA isn’t being repeated in YVR. They believe it must be different there. So cute.

What the end of this bubble market will prove to everyone is simple. When prices get too high, assets inevitably correct. Unneeded is a sharp spike in mortgage rates, a recession, mounting unemployment or a tax discriminating against foreign dudes. Instead, markets are like water, eventually finding their own level, no matter how many channels or dams man builds.

As people perceive values are excessive, buying slows and price growth stalls. It’s a short trip from that point to more listings and supply outstripping demand. Eventually prices decline. The last time a boom turned into bust, residential real estate in the country’s largest market lost 33% of its value. If that happened today the average detached home in 416 would shed $521,000 and sell for just over $1 million. Maybe it will be the same, or less. Perhaps worse.

In the first two weeks of this month, as we’ve been telling you, a drought of listings turned into a flood. Across the GTA there were 47% more new properties on the market than a year earlier, at the same time sales fell 16%. The average selling price so far in May has fallen 3.3% from April. For a one-month move, that’s huge – and this is the height of Spring rutting season.

So, was it the new foreign buyers tax brought in on April 20th? That’s hard to believe when no data exists showing the offshore guys are responsible for more than 5% of deals. Besides, how can a tax on buyers suddenly result in 47% more people deciding to sell? Seems like the imposition of universal rent controls might have been more responsible. With reduced cash flow going forward, it gets harder to justify being an amateur landlord. With over half of all GTA pre-construction condos sold to investors and speckers in the last year, there’s a mad scramble now to get out.

Mostly, the real estate market runs on emotion and perception. People buy irrationally and sell impulsively. The fact properties have accelerated in value while interest rates remained low has convinced millions to borrow billions to jump in. Speculation has been a far greater factor in Toronto and Vancouver than Chinese guys as we witness the commoditization of homes. Now come the consequences.

Vancouver will follow the GTA’s lead. All the proof required may be found in the letter below – just received from Thomas.

Hey Garth, just thought you might find this interesting as it’s a nice example of your typical “investor” in Vancouver.

We rent a small place in the Westend of Vancouver. 670 sq. ft., 10 minute walk to work for my wife and I, nice little spot with a 300 sq. ft. patio for our Westie to enjoy. Anyway, last year in June our landlord told us she was selling, cursing our luck we knew the place would sell like hot cakes and we would likely be on our asses looking for a new place in the insanely competitive rental market here. But by the grace of God, a greater fool showed up, he wasn’t foreign, he was a local real estate investor who owns several properties here in Vancouver.

The asking price was $480,000 but the final selling price was $580,000 (we know this because the new owner told us all about how insane the housing market was and that he had to pay $100,000 over to get it, he was so happy with himself). Fortunately he had bought the place as an investment and was happy to keep us as tenants at the same rate we were paying for rent, $1,800.

Fast forward to about 6 weeks ago and the genius investor landlord texts me to tell us he is planning on selling now too! He’s only had it about 10 months and bought at quite possibly the worst possible time. I was intrigued as to what he would list the place at, so a week afterwards I find it online, $650,000.  I’m sure he was hoping for a bidding war, but what has proceeded has actually been quite eye opening. No wars, in fact, very little. In the month or so since it’s been listed we have had to vacate exactly 2 times for the realtor to show the place to individuals, neither of which has resulted in any interest. I haven’t heard a peep from the realtor in the past two weeks as units have flooded the market and there are many, many similar units for sale in the area now of a similar size for ~$550,000. I think he is dreaming if he thinks he is going to get anywhere near $650,000.

I decided now would be a good time to review his investment over the past year, since it’s coming up to a full year since he has owned it. Here’s what I figured his monthly expenses were: Mortgage $2,125 (20% down @ 2.7%), lost use of down payment (at 5%) $500; strata fees $275; property tax $175. Total: $3,075.

He earns $1,800 from us, so the monthly loss is $1,275, or $15,300 a year.

Now, since it’s clear there is zero interest in the apartment and there are similar units for sale for $550,000, let’s be generous and say he gets his $580,000 back, but he has to pay realtor fees of 5%. That would result in a loss of $44,300.

If he decides this isn’t worth it, he is going to have to keep the place and keep renting it to us for $1,800 (bar a maximum 3% increase per annum) and keep losing ~$1,300 every month he owns it. He had better cross his fingers there aren’t any major repairs needed in that time either as I haven’t included anything for that in his expenses.

Not looking like such a wise investment after all. Just thought you might be interested to see what it’s like for somebody who bought in the summer of 2016, it’s not too pretty, even in Vancouver.

174 comments ↓

#1 Steve on 05.21.17 at 6:11 pm

it’s all just crazy / like really crazy …… goodluck

#2 FNAiks on 05.21.17 at 6:20 pm

She’s going down like free beer at a keg party.

#3 Andrew Woburn on 05.21.17 at 6:24 pm

The other side of the Vancouver house price spiral?

– Population boom, business energizing downtown Victoria

http://www.timescolonist.com/business/population-boom-business-energizing-downtown-victoria-1.20086913

#4 Rexx Rock on 05.21.17 at 6:25 pm

I remember a East lindian lady telling me in 2004 she was buying a condo for $450,000 in downtown Vancouver and said I would be stupid not to buy one too.Boy was she right.Women make great investors and also no more then men about when to get in and out.Oh the money was so easy in B.C. for the last 15 years flipping real estate.

#5 Andrew Woburn on 05.21.17 at 6:28 pm

I’m from the government and I’m here to help you.

– States scoop up investment accounts as unclaimed property

http://www.investmentnews.com/article/20170512/FREE/170519958/states-scoop-up-investment-accounts-as-unclaimed-property?X-IgnoreUserAgent=1

#6 Penny Henny on 05.21.17 at 6:30 pm

Seems like the imposition of universal rent controls might have been more responsible. With reduced cash flow going forward, it gets harder to justify being an amateur landlord.-GT
///////////////////////////////////

That will all change next year when Wynne gets the boot.

#7 Understood by few on 05.21.17 at 6:34 pm

In before VREU copypasta.

#8 Andrew Woburn on 05.21.17 at 6:35 pm

“The price of offshore wind power has been dropping so quickly that it threatens to upend the electricity industry around the world.

Last month, Denmark’s Dong Energy, the world’s largest provider of offshore wind farms, won a German power auction without needing any subsidies. Dong is a rebranding from Danish Oil and Natural Gas, as the company sells off its fossil fuel businesses to become a clean energy leader.”

https://thinkprogress.org/offshore-wind-is-competitive-with-nuclear-c4218113f6fe

#9 I'm Not Poloz on 05.21.17 at 6:39 pm

I blame this on Poloz and his cronies who impose that 50% Gender Quota (though there is less than 3% African-Canadian women in Trudeau’s Cabinet, way to go for equality).

I predict that on May 24, 2017, Poloz will either cut interest rates as fast as a logger to 0.25% or 0.00%, or he will talk down the Loonie because there is no inflation on his 5-star Hyatt vacations around the planet.

In any case, Poloz will look forward to a 55-cent or 60-cent Loonie this year.

#10 Pure speculating on 05.21.17 at 6:40 pm

That owner bought knowing he’d be cash flow negative . Rolling the dice . I own two properties that are cash flow positive – would never do it any other way

#11 Omer Mallhi on 05.21.17 at 6:51 pm

Things are not looking very rosy for owners. I was renting a fully furnished house for 2600 and told the owner that its too much for me and i am leaving and he dropped it to 2000……just like that. Fully furnished.

#12 Musty Basement Dweller on 05.21.17 at 6:54 pm

Interesting about the rent controls in Toronto area getting some credit for cooling the market.
Does anyone know the current status of rent controls in Vancouver?
With the left leaning city council one would think Vancouver would be doing similar rent control initiatives too?
Maybe we could use a dose of that too here in Vancouver to cool the insanity.

#13 Eating quinoa in Vancouver on 05.21.17 at 6:56 pm

Just returned from a Vancouver/Alaska cruise.
We’re a continent of aging baby boomers and I think this cruise was a pretty good cross-section of this demographic. We’re in big trouble. The number of people on board who were moderately or otherwise incapacitated due to obesity related issues was astounding. At two of the ports of call, there were ambulances waiting to take patients away. All I could think was what a strain (no pun intended) this will be on our health care systems as masses of us hit the 65 plus years.

#14 Happy Housing Crash Everyone! on 05.21.17 at 6:58 pm

Speculators are suffering financial pain as they borrow from their HELOC to pay the difference on their cash flow negative condo as condos prices crash. Many need to sell before they lose all their properties as the domino effect can be knocked down by one condo . Happy Housing Crash Everyone! :-)

#15 akashic record on 05.21.17 at 7:00 pm

“Political platform”, 2017, USA

Outgoing @ca_dem chair @Johnburton gets standing O w final words to his party, finger upraised: “[email protected] Donald Trump!”

https://twitter.com/cmarinucci/status/866000013700116485/video/1

#16 Entrepreneur on 05.21.17 at 7:01 pm

You think that a realtor investor would have common sense with logical thinking in place. But logical thinking has gone out the door for awhile now and low interest rates have $ signs in people’s eyes. And with easy credit (we should outlaw credit, make a better, truer economy).

Logical thinking has gone out the door our great leaders too. This is off topic but have to before fire season.The flooding in Quebec and B.C. and the great leaders are mentioning that with climate change one should not build by the river. Most would agree and shake their heads yes.

But that logical thinking is out the door when it comes to having oil tankers on our oceans and an increase amount. Where is that logical thinking? And what about the environment (it not if but when)? Is it something to do with that $ sign in their eyes before logic?

With logical thinking along comes respect for the environment and people. Yes!

#17 From the trenches on 05.21.17 at 7:01 pm

I went to a few open houses yesterday in the prime Mt. Pleasant and Davisville area in Toronto and they were shockingly empty. No raffle tickets to get inside. No mysterious foreign buyers. And in one case the real-estate agent was busy playing brick breaker on her phone as she was visibly bored.

Just a month ago any open house in the area was a complete circus.

The crest may finally have been reached in this speculative mania.

#18 Freedom First on 05.21.17 at 7:02 pm

Thanks Garth. Enjoyed the Post.

And thank you Thomas. Good example of greed. Borrowing money to lose money.

I prefer to live debt free and only own assets that pay me, with no labor involved, of course.

Freedom First
Master of Freedomonics

#19 common sense on 05.21.17 at 7:15 pm

Just remember stock markets can keep full of air as long as the FED, BOJ, SWISS, etc print money and buy anything that moves…..

#20 Joe on 05.21.17 at 7:17 pm

Hmm. That is a bit different from what I’m seeing in vancouver where I live. Prices in coquitlam were selling for at or below assessment back in jan but suddenly in the past 2 months I see single family homes under 1.4m being sold for 20% above their assessed value

#21 Brian on 05.21.17 at 7:25 pm

Taxes, strata fees, repairs and interest are expenses. Mortgage payments towards the principal amount are not expenses. Neither is the downpayment’s future value. The principal anount is subject to a gain or loss when the property is sold. Expenses are closer to $1500/month in posted example.

We don’t account financial market investments this way, so why real estate?

I thought this blog wanted to promote financial literacy?

#22 D on 05.21.17 at 7:28 pm

I will say this, people that are not Italian underestimate how important real estate is for Italians. Also, people underestimate how well older Italians (65 years old plus) can budget. OAS is more than enough for the majority of them and that’s while owning a house. Culturally, vacations are a waste. They are inherently fearful (maybe growing up during and after WWII did that). They won’t eat cat food as the joke goes, but they are always looking for deals. They hoard goods. They live in fear. They tend to grow their own food. I have a pretty good grasp of the culture and can say the ones in the St. Clair area and up to all the older neighbourhoods built up in the 70’s in North York have a lot of these Italians.

I’m not saying all of them and I apologize if this comes across as a sweeping generalization but I’ve been exposed to a lot of them and can say the above with confidence.

#23 rainclouds on 05.21.17 at 7:30 pm

I think Realtor fee is probably closer to 15k not 55k
price to rent= 26

To Thomas point, perhaps we are gonna find out who has their pants down when the tide recedes.If spekkers are driving the gains and sales are weakening ugliness could be visited upon them with a great vengeance.

#24 Bank of Millenial on 05.21.17 at 7:34 pm

I hope not a lot of honest and unsuspecting people get caught up in this but I fear historically they are usually the ultimate bag holders.

I think it is sad how long the charade was allowd to last.

#25 Linda on 05.21.17 at 7:39 pm

Interesting story from Thomas – I don’t know the Vancouver rental scene but perhaps if lots of units are coming onto the market rental prices will remain as is or even go lower? Because logically if someone wants to sell but no offers, the next move is to rent out the unit to offset at least some of the carrying costs. This of course presuming one can rent (does that empty residence tax apply?) & that there is someone willing to rent it from the owner if renting is allowed.

#26 So glad I sold on 05.21.17 at 7:41 pm

Sold last year in March 2016 and have been renting and investing ever since.
I still see the same listings month after month for sale in Richmond BC, with the odd one selling.
It seems like most won’t drop their price because a neighbor sold for more last year. A good friend of mine, now former neighbor listed at a fair price this year in February and sold within a week. They sold a house and did buy a condo, but at a great price. Now the’re happy, retired and so happy they sold too and invested the rest.

#27 InvestorsFriend on 05.21.17 at 7:46 pm

The Great Pumpkin Arriveth?

THIS TIME, the great pumpkin is FINALLY going to arrive and punish the house horny?

#28 Johnny Boy on 05.21.17 at 7:50 pm

Every one on this blog knows atleast one person who owns atleast one investment property but there is no way that person can manage to afford these multiple mortgages based on his salary. Where do they get their financing? Is it because the mortgage fraud is so common that all the regulators have turned their backs on it?
Watched ‘The Big Short’ again last week. Crazy movie. Totally felt like the movie is based on the wild and crazy real estate world of GTA. Market is cratering in real time in front of our eyes and morons here in GTA swear that real estate here never goes down because we are special.

#29 Keith in Calgary on 05.21.17 at 7:55 pm

Sitting in Monks Bar in YVR airport waiting to fly back to YYC. Spent the weekend here with my better half to get a break from Cowtown.

Is YVR the best city in Canada ? Yes
…….but only when it’s not raining……..and we had 3 days of sun in a row. Might be a recent record…….heh.

All the staff I met in the Fairmont Waterfront hotel rent in YVR and pay $1500-1800 a month to live in Kits or downtown…….etc. All the restaurant and bar workers said the same thing. So from my little unscientific survey, rents seem to be stable and in this band.

Is YVR the best place on earth or a world class city ? Far from it.

Gonna be a bloodbath put here for the leveraged folks.

#30 S.Bby on 05.21.17 at 8:00 pm

Thomas can also include BC PPT ($9,600), lawyer’s fees both in and out and GST to go with that.

I drove downtown and back to Burnaby today and noticed there are a TON of houses for sale in East Van with not many SOLD signs to see.

#31 Stretch Much on 05.21.17 at 8:00 pm

Oh my, one anecdote for a tiny condo – it must be the end in Vancouver!

You have no idea whether there are comparables, what makes his unit different if any (could be a ground floor on a busy street), or whether comparables will dry up making his the only available listing.

Sorry, but this is really stretching it to think this is indicative of the overall market.

Meanwhile, in my hood in a bedroom community of Vancouver Island, houses are selling for 800 and 900k now in a week when 1.5 years ago it was 600k and a couple of months. The domino effect from Vancouver in full force. What is worse, half of them have been sitting empty for several months….

2 years ago, and again this year, I was advised not to buy. I was smug thinking that I had saved 200k from a great rental for a few years, and that the Vancouver contagion would not spread, and that prices certainly could not go up 25-30% in my sleepy community. Boy, was I wrong….

Now I have to patiently wait and rent at inflated priced because rentals are scarce – from everybody selling to Metro Vancouverites.

#32 ponnaps on 05.21.17 at 8:05 pm

offshore guys responsible for more than 5% of deals are the ones setting the insane prices…that’s all it takes for the foreign guys to influence the market.. not just by volumes..
the 95% then sustain the prices and that’s how it rolls..

#33 AACI Homedog on 05.21.17 at 8:05 pm

And don’t forget fire insurance expense. Plus, does the landlord pay water sewer and garbage like in my area ?

#34 rental property math on 05.21.17 at 8:12 pm

This is how rental property math is actually calculated..

21600 total rent (1800*12)
-12372 (mortgage interest 25yr amort @ 2.7%)
-2100 property tax
-3300 strata fee

$3828 yearly positive cash flow (1st year)

$125000 (down payment and closing costs)

3.06% yearly yield.

so the yearly loss isn’t $15,300 it’s a gain of $3828 and it would be taxed as income.

so this condo would be a less than ideal rental property… if it was going up in value 20K a year then it would make your 6% yearly earnings look weak..

enough of this nonsense. idiot landlords who don’t know how to do the math don’t do well.

ask anyone who’s purchased freehold rental properties in Hamilton how they are doing.

Principal payments are also cash flow. You cannot count rental income as revenue without counting principal repayments as an expense. — Garth

#35 smallcapsteve on 05.21.17 at 8:23 pm

I know many people who own multiple properties and none of the pay close to 2.7%….

The fact there are people who are buying three + properties and still getting the residential rate of close to 2% is major reason why we are where we are….

No lender is financing investment properties at 2%. — Garth

#36 t Alice on 05.21.17 at 8:24 pm

What most people don’t realize is just because houses are up 30%, doesn’t mean *your* houses is up 30%. You’ll have a hard time convincing anyone with such a recent sales history that you should be paying that much more than they did just 10 months before.

Most people don’t realize when this was happening last year, it wasn’t because houses were hot in Vancouver. It’s because that’s what’s required in order to help a bank transfer your money into Canada.

A lot of people that don’t understand the game jump in and lose a lot of money. Real estate is now like the OTC market. Anyone can jump in, but there’s few that take home profits.

#37 S.Bby on 05.21.17 at 8:25 pm

When in DT Van today I also saw lots of Condo towers under construction and lots of holes in the ground.

#38 Lefty on 05.21.17 at 8:32 pm

#13 Eating quinoa

I posted these 2 charts a few days ago about Canada’s demographics trends for next 10 and 20 years. Probably worth a re-post as they are so significant for real estate.

http://cdn.ceo.ca.s3-us-west-2.amazonaws.com/1ch6g8t-Aging_Canada.png

#39 Tony on 05.21.17 at 8:38 pm

https://twitter.com/BloombergCA/status/866436307744047104

#40 rental property math on 05.21.17 at 9:00 pm

34 rental property math on 05.21.17 at 8:12 pm
This is how rental property math is actually calculated..

21600 total rent (1800*12)
-12372 (mortgage interest 25yr amort @ 2.7%)
-2100 property tax
-3300 strata fee

$3828 yearly positive cash flow (1st year)

$125000 (down payment and closing costs)

3.06% yearly yield.

so the yearly loss isn’t $15,300 it’s a gain of $3828 and it would be taxed as income.

so this condo would be a less than ideal rental property… if it was going up in value 20K a year then it would make your 6% yearly earnings look weak..

enough of this nonsense. idiot landlords who don’t know how to do the math don’t do well.

ask anyone who’s purchased freehold rental properties in Hamilton how they are doing.

Principal payments are also cash flow. You cannot count rental income as revenue without counting principal repayments as an expense. — Garth

————————-
http://www.cra-arc.gc.ca/E/pbg/tf/t776/t776-16e.pdf

principal payments aren’t an expense. all the list of expenses can be found on the CRA form on the above link.
yes my calculation is slim, but you won’t have much to spend in maintenance when renting a condo if you know how to use a paint roller between tenants.

Not referring to what the CRA allows as deductions from taxable income, but rather cash flow and true ROI. Landlord math is amusing. — Garth

#41 Chaddywack on 05.21.17 at 9:07 pm

Great analysis by Thomas. The problem is that people don’t break down the costs like that, or the lost opportunity of money. The average person would analyze it like this:

Bought for $580,000

Sold for $580,000

“Whoo hoo I got ALL my money back, Vancouver really is the Best Place on Earth!”

#42 Hiding On the Backstreets on 05.21.17 at 9:18 pm

I should be painting and doing some minor repairs this weekend to get my one-and-a-half story crib in Olde Stoney Creek (East end of Greater Hamilton) ready for sale. But I’m taking a page out of Smokey’s book and drinking instead.
Put an “e” at the end of Old, makes it look quaint, classy, sophisticated, desirable, don’t ya know.

Nothing for sale in my neck ‘o the woods. I want to beat the rush. At the rate I work, that means Christmas rush. All ridiculous offers accepted and encouraged.

A house on my street was up for sale a couple weeks ago for 600 large on a Friday, open house on the Sunday. Signs down after a week – didn’t say sold, just empty lawn now. Don’t know if they sold or are holding out for more. Newer (love that adjective in R.E.) house, 8 yrs. old, in a quiet ‘hood of 1950s houses like mine. Of course that’s because the original house burnt to a crisp one lovely autumn evening in ’09 or so.

I’ll keep blog dogs posted. Dandelions popping on lawns here but no For Sale signs yet.

#43 zee on 05.21.17 at 9:26 pm

All this slow down in GTA, is just a pause in the market. By end of summer, it will be back to how it was at the start of the year.

#44 Re: rental property math on 05.21.17 at 9:27 pm

Taxable income does not equal return on investment.

#45 yorkville renter on 05.21.17 at 9:27 pm

insert whistling here…
https://m.youtube.com/watch?v=n4RjJKxsamQ

#46 Soviet Capitalist on 05.21.17 at 9:28 pm

It appears to me the game is not about real estate, it’s about the devaluation of the Canadian dollar.
RE will have a couple of soft months (it happened before), then will stay at ~ same level, before jumping higher again. It wouldn’t be the first time.
This time it will be different, in the sense that RE speculators will get their way and houses will cost billions of CAD. The only trouble will be that it will take 10 000 CAD to buy a loaf of bread.
The reason it will be different it’s because the speculators are in cahoots with the government and the banks. The entire system is crooked. The government is happy about rising prices because property tax is tied to the evaluated value. The banks don’t care about the risks because they know they will get bailed out. No CEOs will loose their bonuses.
If you’re asking who will be paying for all this, go look in the mirror.

#47 Wrk.dover on 05.21.17 at 9:29 pm

Garth! I cracked the code! TAX FREE INCOME!
you just borrow money and put it on the income side of the ledger.
you’re welcome…

#48 Dr. Wayne on 05.21.17 at 9:29 pm

#6 Penny Henny on 05.21.17 at 6:30 pm
Seems like the imposition of universal rent controls might have been more responsible. With reduced cash flow going forward, it gets harder to justify being an amateur landlord.-GT
///////////////////////////////////
That will all change next year when Wynne gets the boot.
——————————————————————
Did you manage to sell your house ?

#49 oncebittwiceshy on 05.21.17 at 9:35 pm

Stretch Much on 05.21.17 at 8:00 pm
Oh my, one anecdote for a tiny condo – it must be the end in Vancouver!

Sorry, Stretch Much, but you sound like you are stretching the truth …. you’re a realtor….developer….investor….mortgage broker….etc.

You are anything but a poor sap that missed an opportunity. Most of those people cheer the news this blog brings. They don’t try to counter it with their own arguments for continuing price rises.

It’s quite the change from the past few years where bulls came on to brag about their rising equity or multiple properties.

Now, the bulls come on to try and counter the bad news that is heralding the end of the stupidity.

Oh, by the way, if you are trying to get into the market (not likely) on the Island, next spring should be an ideal time for you. Once the bear market takes hold of a real estate market, not too many things can stand in the way.

10 or 20% off isn’t a deal anywhere if you are expecting the prices to be lower still the next month.

FOMO might drive the market up but FOGI (fear of getting in) will ride it down. Good luck.

#50 AK on 05.21.17 at 9:36 pm

#6 Penny Henny on 05.21.17 at 6:30 pm
“That will all change next year when Wynne gets the boot.”
——————————————————————
June 2018 can’t come soon enough.

#51 Smoking Man on 05.21.17 at 9:37 pm

My millenial kids are going to be the death of me.

All I want to do is go to ST Marteen buy an ice cream shop. Have the wife run it. I just drink all day and hammer out truths as a writer.

Nope the teet suckers are not done. Dollar signes in theor eyes. 950 for Shlong Branch. Can you imagine if they new about my trading account in an island that’s close.

Where did that entitlement come from. Wasent watching me in my ups and downs as a cowboy entrupenuer enough.

I hate teachers. This war.

#52 Shawn on 05.21.17 at 9:41 pm

It’s quite possible that 2017 is 1989 all over again for the GTA housing market. However, the bubble is much bigger this time and has reached far outside of the region. In addition, Canada’s economy is considerably weaker this time around while consumer debt is much greater. No matter how I try to view the situation I can’t see a silver lining. All arrows point to a Canadian recession in 2018-19.

#53 Smoking Man on 05.21.17 at 9:48 pm

My kids are busting my balls for down payments for house lust. That feeling I’ve made it, they so want to capture, it’s a grand illustion . They haven’t made it. And I’m not competing with other stupid parents.

Look my boy is better than your boy. I want then to grow a brain and figure shit out with out help.

Not this cowboy. I see the future.

Only reason mass listings. Everyone followes smoking man on greater fool. The day I said I was listing in feb is the day that they started taking off.

This pathetic stupid blog has reach. Now by my book you bastards.

#54 The booms booms on 05.21.17 at 9:48 pm

Take the jobs and the homes

http://www.businessinsider.com/millennials-vs-baby-boomers-in-real-estate-2017-5

#55 Smoking Man on 05.21.17 at 9:56 pm

To my kids and any other teacher mind milenial idiots.

https://youtu.be/7U2E-In0DDg

#56 Ronaldo on 05.21.17 at 10:04 pm

If Thomas actually does manage to sell and gets away with a loss of only $44,300, he will be one of the more lucky ones. Lots of bloodshed to come. Bankruptcy and divorce lawyers going to be very busy indeed.

#57 Smoking Man on 05.21.17 at 10:15 pm

DELETED

#58 Tony on 05.21.17 at 10:17 pm

Re: #54 The booms booms on 05.21.17 at 9:48 pm

The millennials in America can’t even afford a used car. How are they supposed to buy a house earning $9.70 an hour?

#59 Brian on 05.21.17 at 10:19 pm

Garth,

Regarding landlord math:

Accouting for the equity in the house as being worthless in the future is just as amusing.

Would you want me to assume that if I gave Turner investments $1000/month to put into ETFs that the principal amount be written off immediatley? I will only ever get the 4-5% dividend less advisor fee and income taxes?

It’s a simple balance sheet matter. If you do not include principal repayment as a cash flow expense then don’t include that portion of the rent applied to it as revenue. Suck, blow. — Garth

#60 ...and your point? on 05.21.17 at 10:28 pm

#22 D

So what’s your point ?
You know a few old timer Italians – we’re all impressed.
Sounds like you’re describing 99% of post war boomers, could be Jewish, Irish, Scottish, etc
What a waste of 10 seconds reading your post.

#61 Smoking Man on 05.21.17 at 10:33 pm

Bay street, wall street. sorry for the interpretation in maskoka long week end.

This is why Trump won.

https://m.youtube.com/watch?v=CDM6v1XhWEg

And there is a hell of alot more of them than you think. Hope you live in canada we don’t like guns.

But if you are a libtard hoping George Soros summer of fight is going to help. Just saying.

#62 John in Mtl on 05.21.17 at 10:37 pm

@ #46 Soviet Capitalist on 05.21.17 at 9:28 pm

Yep, sounds about right.

#63 Magneto Man on 05.21.17 at 10:37 pm

#8 Andrew Woburn on 05.21.17 at 6:35 pm
“The price of offshore wind power has been dropping so quickly that it threatens to upend the electricity industry around the world.

Last month, Denmark’s Dong Energy, the world’s largest provider of offshore wind farms, won a German power auction without needing any subsidies. Dong is a rebranding from Danish Oil and Natural Gas, as the company sells off its fossil fuel businesses to become a clean energy leader.”
—————————————————————-

Germany’s seen the same “success” in green power first hand: During sporadic peak wind generation events, power is so cheap that it must be sold at negative rates to other countries to stop their grid from collapsing. Negative rates means that the Germans a PAYING other people to take the power while the German TAXPAYERS are PAYING the green blob 4X the going rate to keep generating electricity. It’s a massive debacle and disaster. And the more they do of it the worse it gets.

http://notrickszone.com/2017/05/19/germanys-energiewende-an-economic-social-and-ecological-disaster-writes-top-german-socialist/#sthash.5yVwPCic.dpbs

And then when the wind stops blowing, the taxpayers get hosed again as they have to buy coal fired electricity to backfill all the windmills going offline again. So, in summary, Germany’s investment in green energy has been a disaster for taxpayers, power consumers, and industry. Only a few elites have made fortunes gorging themselves on taxpayer subsidies and ripping euros from impoverished Germans. Nothing more than a massive transfer of $$$ from poor people to rich people.

And their CO2 emissions have gone up due to the reliance on coal for back up. A complete and utter backfire by some of the best engineers on the planet. And Ontario, BC, Alberta and the Fed’s think that they can do better?

This is going to leave a mark.

#64 Stretch Much on 05.21.17 at 10:38 pm

#49 oncebittwiceshy

Sorry, Stretch Much, but you sound like you are stretching the truth …. you’re a realtor….developer….investor….mortgage broker….etc.

You are anything but a poor sap that missed an opportunity. Most of those people cheer the news this blog brings. They don’t try to counter it with their own arguments for continuing price rises.
——–

Oncebitten, you remind me of a social justice warrior who calls everyone that disagrees with them a racist, sexist homophobe – except here, any dissenting view gets you called realtor, developer, broker.

Sorry to disappoint, but I am that poor sap. My financial advisor advised against purchasing and while I have enjoyed a bounce back in my balanced portfolio following the Trump rally, my growth does not equal the 200-300k that house prices are up in my neighbourhood. And since prices are sticky on the way down,

Personally, I benefited from a reluctant landlord for several years as his family had bought the house for 650k and put 70K into renovations in 2007, only to have his house value cut in half the next few years. He has finally listed it for 625k following a 1.3% return in his money for many years.

The sad thing is the house was bought for 200k in 2001, 235 in 2003, and then sold for 650k in 2007. So I can see the danger buying at a peak in my neighbourhood. That aside, prices have gone up 30% and I will know have to ride it down for numerous years. Not the best thing when you have kids.

And no offence, but this market top has been called in Vancouver sine 2012 – ( I left in 2013 thinking that the Island was immune to the price speculation). So forgive me if it takes more than a random anecdote to assume the market is correcting.

So take a breather next time, and don’t act like an SJW…

So take a breather next

#65 Cottingham a bargain on 05.21.17 at 10:47 pm

#59 Brian on 05.21.17 at 10:19 pm
Garth,

Regarding landlord math:

Accouting for the equity in the house as being worthless in the future is just as amusing.

Would you want me to assume that if I gave Turner investments $1000/month to put into ETFs that the principal amount be written off immediatley? I will only ever get the 4-5% dividend less advisor fee and income taxes?

It’s a simple balance sheet matter. If you do not include principal repayment as a cash flow expense then don’t include that portion of the rent applied to it as revenue. Suck, blow. — Garth
—–

Got to chime in on this one. The suck and blow is the symmantics. The fact that principle owing is being discharged at the rate that it is , is material to the total return of the RE investor. Rental property math is correct in that ” net gain” of the property made example of is what it is regardless of CRA tax treatment.

Negative cash flow is negative cash flow. — Garth

#66 -=jwk=- on 05.21.17 at 10:51 pm

@34. This is how rental property math is actually calculated..

21600 total rent (1800*12)
-12372 (mortgage interest 25yr amort @ 2.7%)
-2100 property tax
-3300 strata fee

$3828 yearly positive cash flow (1st year)

———————-

So if it is not my cash being used to pay the mortgage, whose is it?

#67 Cottingham a bargain on 05.21.17 at 10:52 pm

#22 D on 05.21.17 at 7:28 pm
I will say this, people that are not Italian underestimate how important real estate is for Italians. Also, people underestimate how well older Italians (65 years old plus) can budget. OAS is more than enough for the majority of them and that’s while owning a house. Culturally, vacations are a waste. They are inherently fearful (maybe growing up during and after WWII did that). They won’t eat cat food as the joke goes, but they are always looking for deals. They hoard goods. They live in fear. They tend to grow their own food. I have a pretty good grasp of the culture and can say the ones in the St. Clair area and up to all the older neighbourhoods built up in the 70’s in North York have a lot of these Italians.

I’m not saying all of them and I apologize if this comes across as a sweeping generalization but I’ve been exposed to a lot of them and can say the above with confidence.
——

Yes D , you understand the culture completely. I would add that the tremendous wealth that this cultural group seems to have and control in this city has almost exclusively come from real estate in one form or another , through passive or active investment and supplying thereof.

#68 Smoking Man on 05.21.17 at 10:57 pm

To my wife. My power. The best bitch in the world.

I’m sure a few dogs can relate. The others, word Nazis

Happy 34 aniversity. Babe.

https://youtu.be/uR4if4ble1A

#69 Cottingham a bargain on 05.21.17 at 10:58 pm

#60 …and your point? on 05.21.17 at 10:28 pm
#22 D

So what’s your point ?
You know a few old timer Italians – we’re all impressed.
Sounds like you’re describing 99% of post war boomers, could be Jewish, Irish, Scottish, etc
What a waste of 10 seconds reading your post.
——-/

Nah no way and your point. No way any other cultural group had benefitted from the real estate industry as much as Italians , Jews maybe a close second.

Do your own survey of all the construction and development companies in the gta as well as material suppliers and find out for yourself how many are owned by Italian families .

#70 chrisgo on 05.21.17 at 11:13 pm

Homes are being abandoned in Alberta, (check you tube folks). If people are walking away fro them there, how long till this happens in Toronto. Soon I would bet. A $1mil slanty semi in Leslieville will be worth what is in dirt.

#71 Smoking Man on 05.21.17 at 11:16 pm

DELETED

#72 mike from mtl on 05.21.17 at 11:18 pm

No lender is financing investment properties at 2%. — Garth

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

Not true, I know lots of amateur ‘investors’ who renewed their 5 years at <2% even big five. Low rates are here to stay.

Link? No big bank has offered a five-year fixed under 2%. Prove me wrong. — Garth

#73 DON on 05.21.17 at 11:26 pm

#49 oncebittwiceshy on 05.21.17 at 9:35 pm

Stretch Much on 05.21.17 at 8:00 pm
Oh my, one anecdote for a tiny condo – it must be the end in Vancouver!

Sorry, Stretch Much, but you sound like you are stretching the truth …. you’re a realtor….developer….investor….mortgage broker….etc.

You are anything but a poor sap that missed an opportunity. Most of those people cheer the news this blog brings. They don’t try to counter it with their own arguments for continuing price rises.

It’s quite the change from the past few years where bulls came on to brag about their rising equity or multiple properties.

Now, the bulls come on to try and counter the bad news that is heralding the end of the stupidity.

Oh, by the way, if you are trying to get into the market (not likely) on the Island, next spring should be an ideal time for you. Once the bear market takes hold of a real estate market, not too many things can stand in the way.

10 or 20% off isn’t a deal anywhere if you are expecting the prices to be lower still the next month.

FOMO might drive the market up but FOGI (fear of getting in) will ride it down. Good luck.

*************
Agree with #49 oncebittwiceshy.

@ Stretch Much – What island bedroom community are you referring to – remembering that luxury always sells (Oak Bay). Where else is property hot? Where are the stats? If it is hot…why not advertise the hot spots? No data eh?

#74 DON on 05.21.17 at 11:34 pm

#3 Andrew Woburn on 05.21.17 at 6:24 pm

The other side of the Vancouver house price spiral?

– Population boom, business energizing downtown Victoria

http://www.timescolonist.com/business/population-boom-business-energizing-downtown-victoria-1.20086913

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

Not sure Andrew…after the 4-5 downtown condo developments and mall face lift are completed Victoria may not be booming. In the late 80’s bubble Victoria boomed and then the tap turned off and some developments were left uncompleted. But they are building a lot of condo’s though. CMHC’s report about the BC Free Money Home give away is very telling.

The TC is a real estate pumper paper, gone are the days of investigative journalism.

#75 smallcapsteve on 05.21.17 at 11:43 pm

Link? No big bank has offered a five-year fixed under 2%. Prove me wrong. — Garth

=======

Most people I know that are taking on rental properties are going variable and are getting around 2%….

I don’t understand why they are able to get this rate when it isn’t a primary residence…

They are getting this from the big banks…

I havent asked anyone in the last 6 months or so… Perhaps they aren’t handing them out as much?

#76 Smoking Man on 05.21.17 at 11:48 pm

One of my kids dog siting tonight.

He’s a libral. Damb the teachers.

https://youtu.be/rE5RMGX9HZc

#77 Pete on 05.21.17 at 11:50 pm

Welcome back, Garth.

To #21 Brian:

Mortgage $2,125 (20% down @ 2.7%), lost use of down payment (at 5%) $500; strata fees $275; property tax $175. Total: $3,075.

$1044 interest, $145 in lost interest on the 20% down payment assuming a 1.5% risk free return rate, strata fee and tax $450, insurance $50, repair $50, so it is about the same as the rent of $1800.

However, if he sells it, usually the cost of selling is about 8% of the selling price. so for a $580k property, he will not be making a dime if sold less than $630k.

for one thing, don’t forget the cost of breaking a mortgage (early prepayment penalty, at least $10k), moving, overlapping period, etc.

#78 Pete on 05.21.17 at 11:53 pm

For those who don’t even understand the difference between variable rate and fixed rate mortgage, the current fixed rate mortgage is about 2.7%; variable rate probably 2.1%. So Garth is right, no bank will offer fixed rate mortgage under 2.7%.

#79 Smoking Man on 05.21.17 at 11:54 pm

When you see a bet and you want to be the greatest fool.

https://youtu.be/6aWDxuhD0FI

Long crazy.. it works for me.

#80 Pete on 05.21.17 at 11:56 pm

Besides, in Canada, fixed rate mortgage is not that FIXED. it is only for 5 years. In the U.S., they have 10 years even 30 years mortgage. that is really fixed.

#81 Smoking Man on 05.22.17 at 12:00 am

To my teacher this song made me

https://youtu.be/9gkbsOywVxU

#82 Pulp Faction on 05.22.17 at 12:07 am

People are tripping over each other to overbid on homes in Vancouver, same as everyone else.

They complain the prices are too high, then bid above asking in order to ensure they are enslaved with an enormous mortgage that will cripple them for their whole life.

#83 Fish on 05.22.17 at 12:18 am

I guess when u are waiting motel not so bad, just time

#84 Welcome to Slurrey on 05.22.17 at 12:21 am

Nice …….anecdotal story . One case means nothing. Ive preached cases to other people around here about losses in real estate. They can show me the same number if- not more of people who have still made money from our so called ” start of a correction” . Still dont want to be a debt slave, but ignorance is bliss and the ignorant continue to make money in this market. Lets hope 2018 the line is clearer …….

#85 Smoking Man on 05.22.17 at 12:22 am

DELETED

#86 Smoking Man on 05.22.17 at 12:29 am

When you care.

https://youtu.be/eJlN9jdQFSc

#87 conan on 05.22.17 at 12:30 am

Hats off to all of the people that sold during the summer of 2016. I bet many are away, right now, on a vacation of a life time.

Me, I would sail away….. somewhere warm. Has to have dolphins though, and minimal sharks, meaning none.

https://www.youtube.com/watch?v=mn0xUiO2BD4

#88 Long-Time Lurker on 05.22.17 at 12:41 am

#39 Tony on 05.21.17 at 8:38 pm
https://twitter.com/BloombergCA/status/866436307744047104

Bloomberg Canada‏
Home Capital’s perilous turnaround will only get harder.

It sounds like Home Capital is on it’s last legs.

#89 kc on 05.22.17 at 12:45 am

I haven’t posted in here in ages, (used to be a regular from way back).

No idea if any will wecall my story a few years ago about my mother selling one place and moving to another (into age limited style appt in summerland BC) and i said that she should rent and bank (save and invest the windfall) which she and hubby didn’t do. they refi’ed a new digs from a paid off house before moving. ok their world … not mine…. well the move into the mature living in Summerlandf wasn’t as good as they thought it would be… sold at a small loss and moved to the Fraser valley BC. with a new mortgage and paid off the bills of credit from the banks allowing the housing AMT…

USA style spend your housing as we will loan you all you want….

Jump ahead to the spring…. the phone rings… I am getting divorced and what should I do…I say “declare bankruptcy and screw them all”

She will walk away with nothing @ 70… bank has taken it all by allowing a person who “owns” refinance everything and live high off the hog for years on the housing ATM…

When the phone rings again… it will be… cry on some one else’s shoulders but not mine mom…. I am cold as hell ….

#90 Newcomer on 05.22.17 at 12:49 am

Thomas’ story is not a new development. People have been happily losing tens of thousands per year on their rental investments in Vancouver for nearly a decade. People have long forgotten the fabled cash-flow-positive play. Their calculation is based on total equity, and as long as prices go up they are ahead. Even if prices go down for a while, they don’t mind, as they are looking at it with a multiyear perspective.

I’m not saying this is sensible. It’s lunacy. But it’s not new, and it’s certainly not something that would result in a change in the market. It’s the long-standing norm here.

#91 Doug t on 05.22.17 at 1:17 am

Live and learn – just as we all did – most of us sit on our high horse and espouse what and when to do this that or the other thing – they will learn just like most of us have and live through it.

RATM

#92 IKnow on 05.22.17 at 1:58 am

Principal repayments are the forced-saving part of a real estate investment.
That’s how so many financially unsophisticated people got to be so wealthy in Vancouver, Toronto, Sydney, Hong Kong etc etc.

Of course this hugely leveraged form of investment will easily backfire and destroy the initial downpayments and monthly contributions should the market reverse. But in the last 20 years or so the gains have been humongous.

#93 Mark on 05.22.17 at 2:13 am

“What most people don’t realize is just because houses are up 30%, doesn’t mean *your* houses is up 30%. “

See some of my earlier comments about the sales mix. Toronto/Vancouver have seen a lot of brand new supply come to market, at top dollar. The fact that these new properties (as well as higher end property in general) represent an overwhelming chunk of the sales mix, is, in and of itself, responsible for the higher Realtor averages claimed. So an individual who owned a property would not have experienced those alleged gains. For the most part, in the GTA and GVR, real estate peaked in 2013 and hasn’t grown in price since. Changes in sales averages alleged by the Realtors are almost entirely attributable to the mix.

The usual sort of riff-raff protesting high house prices couldn’t even afford prices at 2013 levels (similar to today). Its not like they’ve been priced out today, but weren’t also priced out in 2013. Especially with tightening standards insofar as obtaining subprime mortgages. First, through tightening of the CMHC subprime mortgage insurance program initiated by the Minister of Finance Flaherty in Budget 2013 (marking the peak of the market) — but also through the recent activity implosion of subprime mortgage lenders such as HCG and similar outfits due to well publicized “funding problems” (which are mostly solvency problems in disguise I would suggest, but not absolutely assert!).

#94 Mark on 05.22.17 at 4:47 am

I know many people who own multiple properties and none of the pay close to 2.7%….

Actually a lot of those types, the “landlord families” are paying considerably more than 2.7%. That’s why lenders like Home Capital have had, until quite recently, absolutely awesome earnings and capital appreciation in their equity obligations. While paying their sources of funding above-average rates of interest.

In any case, Poloz will look forward to a 55-cent or 60-cent Loonie this year.

Extremely unlikely that he’ll achieve that, especially with all the deflation in the pipeline as Canadian RE crashes. So much discretionary spending on imported stuff, particularly vacations, is predicated on stability of housing prices. In fact, with the stagnation of Canadian RE since 2013, consumer consumption of Canadians is down so much that a 30% depreciation in the CAD$/USD$ pair over the past few years made almost no difference to consumer prices. With CPI not even being able to meet the BoC’s target of 2%.

The BoC is likely on hold on the 24th, but pressures are building for additional cuts as the RE market turns down in a most profound way after plateauing for the past 3-4 years post-Budget 2013.

#95 Mark on 05.22.17 at 4:52 am

If people are walking away fro them there, how long till this happens in Toronto.

Probably won’t take that long. The “landlord families” generally aren’t even cashflow-positive these days, so without the ability to do more serial refinancing through the likes of subprime lenders such as HCG, they’re as good as dead meat. The CBSA should be, in the interests of Canada, at this point, stepping up their enforcement of outbound currency rules and performing additional inspections (over and above what is already taking place) at YYZ and YVR to keep money and monetary equivalents such as gold from being secreted out of Canada as the “landlord families” seek to become judgement and bankruptcy proof.

It doesn’t take a rocket scientist to know what’s going on out there.

#96 I'm stupid on 05.22.17 at 5:41 am

#10 pure speculating

Your comment is a very common defence to justify staying in an illogical housing market. Anyone could be cash flow positive with enough capital. Buying an investment home with no financing will make you cash flow positive. You’re basically saying, I’m smart and everyone else is dumb because I’m cash flow positive. I’m saying you’re a moron just like everyone else.

#97 neo on 05.22.17 at 7:18 am

I’ll say this much. Overall it may be 3.3% but in the 905 it is double that right now. The 416 is actually keeping it at 3.3%. Oakville, Markham and Newmarket are all down almost 10%. Richmond Hill is down over 12%,

#98 neo on 05.22.17 at 7:26 am

Aside from the parabolic move since 2016 in prices the final nail in the coffin for me anecdotally was the number of friends and family taking out HELOC’s in their bloated homes to become amateur landlords buying rental properties. Nobody even sees how it is possible that prices can come down. I knew many of these sales were not organic family formation growth but speccers, flippers and investment properties but the number of people running in at the end of this bubble is staggering. The real demand has completely been skewed by this.

#99 Cottingham a bargain on 05.22.17 at 7:36 am

#65 Cottingham a bargain on 05.21.17 at 10:47 pm
#59 Brian on 05.21.17 at 10:19 pm
Garth,

Regarding landlord math:

Accouting for the equity in the house as being worthless in the future is just as amusing.

Would you want me to assume that if I gave Turner investments $1000/month to put into ETFs that the principal amount be written off immediatley? I will only ever get the 4-5% dividend less advisor fee and income taxes?

It’s a simple balance sheet matter. If you do not include principal repayment as a cash flow expense then don’t include that portion of the rent applied to it as revenue. Suck, blow. — Garth
—–

Got to chime in on this one. The suck and blow is the symmantics. The fact that principle owing is being discharged at the rate that it is , is material to the total return of the RE investor. Rental property math is correct in that ” net gain” of the property made example of is what it is regardless of CRA tax treatment.

Negative cash flow is negative cash flow. — Garth
———

I guess that’s the fundamental difference between an Italian RE investor like myself ” brick licker” and you Garth. I’m happy to be ‘ negative cash flow’ provided the asset I own becomes free and clear to me at a future date and yes , dare I say it in this blog, at a higher market value than today.

#100 Bytor the Snow Dog on 05.22.17 at 7:53 am

@63 Magneto Man-

That story sounds vaguely familiar. Just change “Germany” to “Ontario”…well, except for the coal plant thingy.

#101 maxx on 05.22.17 at 8:06 am

#11 Omer Mallhi on 05.21.17 at 6:51 pm

“Things are not looking very rosy for owners. I was renting a fully furnished house for 2600 and told the owner that its too much for me and i am leaving and he dropped it to 2000……just like that. Fully furnished.”

Great job. 600 bucks, grossed up by your marginal rate is many more bucks than that. Times twelve is yummy indeed. At any rate, that’s 65% of a TFSA contribution – for two! Excellent.

We haven’t seen an increase in 6 years.
Great tenants who are never late with rent are always in demand.

#102 Penny Henny on 05.22.17 at 8:20 am

#48 Dr. Wayne on 05.21.17 at 9:29 pm
#6 Penny Henny on 05.21.17 at 6:30 pm
Seems like the imposition of universal rent controls might have been more responsible. With reduced cash flow going forward, it gets harder to justify being an amateur landlord.-GT
///////////////////////////////////
That will all change next year when Wynne gets the boot.
——————————————————————
Did you manage to sell your house ?
———————————————

Nope not yet. I did have a couple of low ball offers that were turned down. What I have been noticing is the really nice stuff (renovated) is still going for good money. There has also been some movement of some original homes which were sitting empty, these have been sold to the low ballers.
Most everything else has gone to offer night, then not sold and repriced higher (think somewhere in between Jan and Feb prices).
Very few showings though and that is going to break out at some point. I would be worried about my situation if I had a ton of showings and no interest.
But from what I see the market is starting to see some improvement over the start of May. Inventory in my hood (Etobicoke W08)is slowly starting to drop.

#103 Dharma Bum on 05.22.17 at 8:31 am

#95 I’m Stupid

“I’m saying you’re a moron just like everyone else.”
——————————————————————–

https://www.youtube.com/watch?v=Y8GGpYFmkYI

#104 TurnerNation on 05.22.17 at 8:48 am

In case of rapture this trading desk will be manned.
(Also on public holidays. P.s. Got gold?)

Kanadians willingly enter into debt slavery.
$100k over ask. Let’s say one had an extra $1000 cash each month (who does?). (That’s at least $1300 before tax.)
Dumped monthly would take what 10 years of P&I to pay it off? Buyer made a 10-year 100k mistake.

#105 dogman01 on 05.22.17 at 9:07 am

For those of you understanding the demographic situation, think about CSH.UN and SIA.

I don’t normally own individual equities, but when I do I prefer Senior Care facilities.

#106 WUL on 05.22.17 at 9:10 am

Here’s a reason why the future of oil sands production has a questionable future. The oil sands are a massive energy sinkhole.

“Nearly one-third of the natural gas burned in Canada last year was used to produce crude from the oil sands, the country’s energy regulator said Wednesday, something environmentalists called a “waste” of a cleaner burning resource.

According to a National Energy Board report, nearly 2.38 billion cubic feet per day or a record 29% of purchased natural gas was used for oil sands production in Alberta in 2016. That’s up from the 730 million cf/d or 12% of total demand in 2005.”

Calgary Herald April 20, 2017

#107 WUL on 05.22.17 at 9:16 am

I should have mention, for comparison purposes, the following:

“Blake Shaffer, an energy researcher at the University of Calgary, did the rough math, assuming most of that natural gas use was for heating, and figured that Ontario uses roughly one billion cubic feet of natural gas a day to heat residences.”

So on a daily basis, the oil sands burn roughly 2.38 times the amount of natural gas that all Ontario homes use each day.

http://www.cbc.ca/news/canada/calgary/ontario-climate-hits-alberta-1.3586216

#108 maxx on 05.22.17 at 9:25 am

#16 Entrepreneur on 05.21.17 at 7:01 pm

…..”Logical thinking has gone out the door our great leaders too.”…..

…..”With logical thinking along comes respect for the environment and people. Yes!”

It’s always about money. It’s always about dollar signs in the eyes. Money rules. It’s a magnet for most everything. It makes people feel secure, special, separate from struggle and immune to most of the ills that come along with being dependent on a job provided by another. It also confers the confidence to speak your mind pretty well as you wish.

It’s more influential than just about anything. Unfortunately so, in some cases.

Low rates are like the pied piper, playing the dulcet promise of riches and brighter futures. But we all know where this ends. Most of our indebted don’t have enough runway left to pay off the bills…..and that has consequences that reach far beyond their sorry worlds.

You can thank your leaders and dumb central bank for that.

They only now seem to be realizing the $hit storm they’ve created.

#109 WUL on 05.22.17 at 9:30 am

As a single family detached dwelling owner in Calgary, I’ll take these improving numbers. Year to date, YOY:

Sales up 13.86%

Average price up 3.96%

Days on market down 14.29%

We’ll take what we can get. Linked entirely to the price of oil rising from ~ $30 in Jan ’16 to ~ $50 today. That and the crocuses that appeared last week with the disappearance of the snow. Spring in the Rockies.

#110 Rocky Mountain on 05.22.17 at 9:42 am

Thanks for writing about Vancouver Market. Reading about Toronto market really gets boring.
For majority of the middle income or single income families I think the dream of owning a detached house in North or West Vancouver is no longer a reality. Even with 50% market crash detached properties (which doesn’t need a bulldozer and rebuild) there would cost upwards of 700K. How will such a crash affect places like Squamish/Britannia Beach/Lions bay/Bowen Island? I suppose when properties get cheaper in Vancouver then these areas will be worst hit since why anyone would buy there if they can get better home closer to work.
I am waiting for that day to come. I can probably buy that 700K house but why? I would rather buy 400K house and still have some cash flow left to live life :)

#111 maxx on 05.22.17 at 9:55 am

#21 Brian on 05.21.17 at 7:25 pm

“Neither is the downpayment’s future value.”

It ought to be. That sum rakes in returns as long as it’s not spent.
Perhaps the GAAP ought to be tweaked a wee bit. That way, when the sausage machine finalizes values at the time of sale, a more accurate picture will emerge.

#112 Doug in London on 05.22.17 at 9:57 am

The letter from Thomas clearly shows the folly of buying rather than renting when you could rent, pocket the difference and invest it. Speculators have been partly blamed for driving up prices so high in the first place. Wouldn’t it be great if these speculators gave back to society what they’ve taken away by driving house prices so high in the first place? That’s exactly what’s happening with Thomas, and could happen to YOU if you wisely choose to rent rather than buy in grossly overpriced housing markets.

#113 maxx on 05.22.17 at 10:01 am

#26 So glad I sold on 05.21.17 at 7:41 pm

“Sold last year in March 2016 and have been renting and investing ever since.”

Crystallizing your gains- like a bright and sparkling diamond. Don’t it feel good!

#114 Keith on 05.22.17 at 10:41 am

Interesting story; but poor timing. Vancouver condo market is routinely in multiple offer situations, hotter than a pistol.

http://vancitycondoguide.com/40-percent-of-vancouver-condos-sold-over-ask-price-april/

#115 pennypinchaz on 05.22.17 at 10:50 am

Hey Garth, yesterday Dougie said, “the market that Turner Investments focuses on: Exchange traded funds, or ETFs”

Why do people need advisors for these products as they are pretty much self-explanatory and can be purchased for a few bucks on a discount broker…..

So go ahead. Good luck. — Garth

#116 pennypinchaz on 05.22.17 at 10:54 am

#22 D on 05.21.17 at 7:28 pm

I will say this, people that are not Italian underestimate how important real estate is for Italians. Also, people underestimate how well older Italians (65 years old plus) can budget. OAS is more than enough for the majority of them and that’s while ”

You’ll never go hungry as long as there is a good Italian restaurant in the ‘hood!

#117 pennypinchaz on 05.22.17 at 10:59 am

#29 Keith in Calgary on 05.21.17 at 7:55 pm

” Is YVR the best city in Canada ? Yes
…….but only when it’s not raining…….”

Not a fair comparison….after all not hard to be better than places like the Peg, Regina, or Tuktoyuktuk(sorry too lazy to check spelling).

On a world class level, it does not rate due to limited job opportunities, lack of culture, shortage of land, lousy food (except for sushi) etc.
The occasional sunny day or outing to Whistler does not compensate for all these deficiencies.

#118 pennypinchaz on 05.22.17 at 11:02 am

#95 I’m stupid on 05.22.17 at 5:41 am

#10 pure speculating

Your comment is a very common defence to justify staying in an illogical housing market. Anyone could be cash flow positive with enough capital. Buying an investment home with no financing will make you cash flow positive. You’re basically saying, I’m smart and everyone else is dumb because I’m cash flow positive. I’m saying you’re a moron just like everyone else.”

Sorry but you are a bit to simplistic….you need a slightly more complex formula including the rates of interest, cost of capital , inflation, opportunity cost of not buying other investments, etcetc to calculate the IRR.

#119 NoName on 05.22.17 at 11:04 am

Of topic but interesting read

I wonder what he is thinking now…

http://m.ndtv.com/world-news/as-trump-prepared-for-riyadh-visit-saudis-block-us-on-terrorist-sanctions-1696255

#120 Catalyst on 05.22.17 at 11:09 am

While I no doubt believe that he is losing money, everyone loses money flipping R/E in one year, its the long term hold that matters to offset the transaction costs. Secondly, you didnt factor in mortgage paydown, and third you dont know how much they put down.

A crappy investment no doubt, but I know people with 10+ properties and they use equity in others to buy with 50% down.

#121 Damifino on 05.22.17 at 11:09 am

#74 DON

The TC is a real estate pumper paper, gone are the days of investigative journalism.
——————————————–

I’ll say. But what choice does the Times Colonist or any other small-time daily have? RE is now the only revenue generator. It’s the same problem we have as a nation.

#122 Brian on 05.22.17 at 11:35 am

Garth,

Regarding landlord math:

What I’d love to see on this blog is an apples-to-apples forecast comparing 580k invested in a Vancouver Westend condo versus 580k invested in a balanced and diversified portfolio. There is no denying that the amatuer landlord is going in betting on an increase in their capital, but so is the stock investor.

If you are going to apply levearge to one investment you might as well assume it with the other too.

We’ve been seeing these example analysis posted from the renter’s POV for years. They are full of bias. Simply the renter trying to justify their position.

No investor with a financial portfolio would endure negative cash flow during the entire time of ownership, for a potential future capital gain. It’s a non-valid comparison. Besides, it’s cheaper to rent and have a $580,000 balanced portfolio at the same time. — Garth

#123 Tony on 05.22.17 at 11:36 am

#109 WUL on 05.22.17 at 9:30 am
The same Calgary as this one?

http://www.ovlix.com/ca/for-sale/Alberta/Calgary?price=1

#124 Ronaldo on 05.22.17 at 11:38 am

We’re different here.

https://twitter.com/mortgagemark?lang=en

#125 SimplyPut7 on 05.22.17 at 11:41 am

“Seems like the imposition of universal rent controls might have been more responsible. With reduced cash flow going forward, it gets harder to justify being an amateur landlord. With over half of all GTA pre-construction condos sold to investors and speckers in the last year, there’s a mad scramble now to get out.”
—————————————————————–
Maybe not, Garth. The number of empty condos listed for sale is low compared to the number of flipped and/or vacant townhouses and detached homes. I don’t know if it is the fear of having to pay capital gains tax on the property (Ontario FM Charles Sousa did state he would go after speculators and assignment sales) or the belief that they can still become a landlord with a positive monthly cash flow, when the unit is complete, is causing people to hold on to the property.

I honestly didn’t know the amount of vacant townhouses and detached houses in the GTA was this high, I thought the condo market was way worst. The number of condos completed in the last 5 years as well as the ones under construction, should mean there should be more panicked speculators trying to sell.

And investors outside of Canada can clearly see the mess we made. They won’t be back for awhile.

http://www.bnn.ca/video/home-capital-recovering-but-still-unstable-money-manager~1128840

#126 InvestorsFriend on 05.22.17 at 11:43 am

Rent versus Own

Are principal payments on debt a negative cash flow just like interest payments and rent payments?

As illustrated here, the answer seems to depend on what answer you want. People will torture the numbers until they confess to whatever answer they desire. The scary part is that people also believe the answer they want even when it is nonsense.

My view is that home owners and landlords should also consider that properties need major maintenance and upgrades over the years. Depreciation expense is real even though it is very lumpy as far as cash outflow. Property appreciation is real when it occurs even though it is non cash. But it does not necessarily occur. And it can be negative.

#127 jas on 05.22.17 at 11:47 am

Thomas’ experience is not quite what we have in Surrey.
single family homes are selling over asking price and realtors stick this note of ‘sold over asking’ on the sale signs.

In extreme times of real estate activity as we are witnessing now, real estate prices too become an extremely local phenomenon. For example, Richmond is cooling but Surrey and Langley are ripping.
Not sure how much an of it is due to a sizeable population of any ethnic group being in a given city. For example Richmond has Chinese and Surrey has us, the Indo Canadians. My guess is that the ‘community herd following’ is a big factor. Regardless, we want a correction and need it now. Idiots in Ottawa, please give us the bitter now.

#128 jas on 05.22.17 at 11:49 am

Correction:
…Idiots in Ottawa, please give us the bitter pill now.

#129 El Presidente Trump on 05.22.17 at 11:51 am

#119 NoName on 05.22.17 at 11:04 am

Of topic but interesting read

I wonder what he is thinking now…

http://m.ndtv.com/world-news/as-trump-prepared-for-riyadh-visit-saudis-block-us-on-terrorist-sanctions-1696255
..
hey they gave me a nice chunk of gold medal, not sure why but hey its gold, I got to sword dance.. and then touch the glowing orb.. tremendous, tremendous.

#130 D on 05.22.17 at 12:18 pm

I guess that’s the fundamental difference between an Italian RE investor like myself ” brick licker” and you Garth. I’m happy to be ‘ negative cash flow’ provided the asset I own becomes free and clear to me at a future date and yes , dare I say it in this blog, at a higher market value than today.

———-

the Italian mentality is to then look at those that are working into their 70’s which then reassures them that their negative cash flow properties were a brilliant idea.

My original comment was in regards to the principal residence. At no point, for the majority of older Italian- Torontonians, will they have to sell their home to finance anything. You’re talking about people that have been preparing for the absolute worst for decades. It’s a very sad way of living. What’s the saying, sometimes you’re so far behind you think you’re in first?

#131 AGuyInVancouver on 05.22.17 at 12:25 pm

#12 Musty Basement Dweller – Vancouver has no rent control in the Ontario sense, that would be up to the province and as long a Christy Clark clings to power it’ll never happen. There is theoretically a cap on rent increases (above inflation) but it is scary easy to renovict tenants.

While I’m happy one Vancouver renter wasn’t turfed from his condo, the doesn’t support what I’m seeing. Some might recall I took Garth’s advice and sold my Vancouver house in Spring 2015, coudl have waited a few months to get max price, but condo prices were escalating fast. Bought a 2 bedroom in condo with a good reputation, and will hope for the best. However everything that comes up for sale here now goes withing a week or two, Whether it went over ask, I don’t know.

The Vancouverites who haven;t taken their money and fled to teh Island and the Okanagan seem frozen in place. Unwilling or unable to move due to prices and lack of inventory. There is something unusual that hasn’t been a factor in housing busts before this. We should have seen more inventory and/or lower prices but it hasn’t happened in most of the market. SFH are still way out of reach for local earners in Vancouver, Richmond, Burnaby and the North Shore.

#132 Mike in Toronto on 05.22.17 at 12:32 pm

‘With reduced cash flow going forward…’

I’m pretty sure it never had much to do with cash flow, but it was about control and hassle-free eviction.

Now Tenants can pour bacon fat on the broadloom, use the granite to butt out their joints, urinate in the pool and you’ll have to spend forever in the tribunal trying to convince them that they’re bad tenants.

Previously, one whiff of bad behaviour and your rent could be tripled.

#133 TurnerNation on 05.22.17 at 12:35 pm

Toronto’s downtown ghostown? I heard also that even SBUX closed two Queen W. area locations.
We are not Detroit….yes no.

Taxes will rise due to Unionista and Public job elites too.

– The Keg’s burger + fries went from $16 up to $18. All $8 for a “pint” (not really) of beer + tips and consumption taxes and you’re looking at $35 for a burger and beer. Richer than we think.
Public sector elite will rule this city.

http://www.cbc.ca/news/canada/toronto/high-commercial-rents-stripping-queen-street-west-of-its-heart-merchants-warn-1.4124802

Last month the Queen Street West BIA took an inventory cataloguing 40 vacant storefronts in its catchment along Queen Street West from University Avenue to Bathurst Street:

Four storefronts with construction boarding.
Eight small and medium storefronts for lease.
Five big storefronts for lease.
16 empty storefronts with no lease sign.
Two empty lots with fire damage.
Five storefronts opening soon.

#134 Triplenet on 05.22.17 at 12:49 pm

The mathematics of real estate.
You are all partially right but mostly wrong.
And who prepares an ‘ investment’ pro-forma for a strata titled property (condominium) in the first place? Fools.

#135 Figure it out on 05.22.17 at 1:22 pm

This comment section REALLY shows why real estate is (thought to be?) such a great investment!

– you don’t need to understand the difference between a balance sheet, an income statement, and cash flows
– you don’t need to understand the difference between cash and noncash items (what noncash items???)
– you don’t need to worry about taxable income, actual income, and depreciation, because you’re probably doing your taxes wrong anyway, and that won’t be a problem
– vacancy allowance is that $1,000/month you’re giving your 27 year old son, because of that dumb look in his eyes
– if you own a property, your wife owns a property, your 27 year old, cash-flow-negative son owns a property, and you’ve got two paper units that aren’t built yet, you’re not speculators, because none of you owns more than one property [TREB’s definition]
– just get the mortgage paid every month, don’t be late, and your lender will HAVE to offer you a renewal at the end of your term
– GTA prices are still going up, year over year!

#136 oncebittwiceshy on 05.22.17 at 1:33 pm

Stretch Much: “That aside, prices have gone up 30% and I will know have to ride it down for numerous years. Not the best thing when you have kids.

And no offence, but this market top has been called in Vancouver sine 2012 – ( I left in 2013 thinking that the Island was immune to the price speculation). So forgive me if it takes more than a random anecdote to assume the market is correcting.”

You really can’t help it can you. Your story was almost interesting until you started pumping the market again.

I am really getting tired of these “buyers” that missed the market because of Garth or their “investment advisors” advice and then come on here to tell everyone how much they missed out on.

Let me help you out, it is a fairly obvious house pumping tactic and very few people believe it. You see, a slim microcosm of the world is interested in going on a blog read by millions, even anonymously, to advertise their mistakes.

Take your time, next time, to read the BCREA news that is sitting on your desk as you wait for a phone call from a desperate buyer. Lol.

http://www.bcrea.bc.ca/news-and-publications/news-room/news-releases/2017-04-statistical-release

Year-to-date, BC residential sales dollar volume was down 31.8 per cent to $21.3 billion, when compared with the same period in 2016. Residential unit sales declined 25.0 per cent to 30,757 units, while the average MLS® residential price was down 9.2 per cent to $692,220.

#137 WUL on 05.22.17 at 1:35 pm

# 123 Tony

It was not clear to me what I was supposed to glean from the website you provided the link for. I simply set out today’s numbers from Cowtown’s REB. Are those numbers suspect? I don’t know.

And Garth, thanks for your continued work and the platform you provide. Much appreciated by me from up in Athabasca.

#138 I'm stupid on 05.22.17 at 1:37 pm

#118 peenypinchaz

That’s the point… just because the rent collected is higher than the costs doesn’t make it a good investment. The realtors are very good at fooling amateurs into believing the voodoo math they use. My example was simply showing that a cash purchase would produce more income than expenses. Simply saying I’m making money doesn’t mean it’s a good rate of return.

At the current levels of rent/purchase price the only way to be cash flow positive would be to purchase cash flow with higher down payments and gamble on capital gains. Most don’t consider their time on the rates of returns calculations as landlords. If time was calculated the numbers would be dismal.

#139 paul on 05.22.17 at 1:44 pm

#81 Smoking Man on 05.22.17 at 12:00 am
To my teacher this song made me

https://youtu.be/9gkbsOywVxU
——————————————————————–More Like this !!

https://www.youtube.com/watch?v=YR5ApYxkU-U

#140 Ernest Scribbler on 05.22.17 at 1:54 pm

Dogs,
Is Valuation included in ROC?
Does the MER of any specific ETF include the MER of the underlying Security?
Thanks,

#141 MF on 05.22.17 at 2:02 pm

Just heard my new “landlord” wants me to pay for the minor damages sustained in my condo from the past three years (minor dent, cupboard door etc.)

Add to list of why renting is complete garbage.

-rent went up for the third time in three years when the unit sold
-miss out on capital gains
-detest the fact i am enriching the pocket of another human being. I would rather pay the bank (serious).

Still looking to buy in the GTA. The listing increase helps a bit but sellers are still 100% delusional.

MF

You leave a unit in the same condition in which you found it. How hard is that to understand? — Garth

#142 Stan Broock on 05.22.17 at 2:09 pm

Poor Mel Gibson.

http://www.cottages-gardens.com/Deeds-Donts/February-2017/Mel-Gibson-Sherman-Oaks-House-Sold/

Mel Gibson has found a buyer for his Sherman Oaks home, reports The LA Times, but he’ll take a loss on the place since he bought it for $2.405M in 2009 and the closing price was only $2.1M. The home’s Frank Lloyd Wright-inspired architecture features stone walls, custom Mahogany walls and built-ins and stained glass windows. Inside, the gourmet kitchen has been updated with Viking appliances and flows into the airy family room. A separate formal living room has French doors that access the patio and the master suite has a fireplace and custom dressing room.
————————

Such house in Vaughan or North York is ‘worth’ now at least twice that amount in USD.

Poor american suckers.
/sarcasm off
/idiocy on

#143 Stan Broock on 05.22.17 at 2:19 pm

#130 Stan Broock on 05.22.17 at 2:09 pm
Poor Mel Gibson.

http://www.cottages-gardens.com/Deeds-Donts/February-2017/Mel-Gibson-Sherman-Oaks-House-Sold/

basically the same price as this ‘beauty’

https://www.realtor.ca/Residential/Single-Family/18141680/69-GLENDORA-Avenue-Toronto-Ontario-M2N2V8-Willowdale-East

that sells for 2.688 mln. canukistan pesos (aka as the ‘Loonie’) that was worth more than 10 (ten) times less than it’s current price in 1999 (268 k CAD).

#144 Ace Goodheart on 05.22.17 at 2:31 pm

There’s another odd thing that Toronto has going for it in terms of ever increasing real estate prices for actual land, which is unique to this City.

Toronto to some extent still functions as a make-believe “colony” which is “governed” by an imaginary “absentee monarchy”. This goes back to when all decision making in Ontario was subject to review by an actual absentee monarchy that actually cared what happened here (back when we were “Upper Canada”.

We have something known as the “Ontario Municipal Board”. The boards and committees that used to be our over-seers, answering back to the UK, still exist today and one of them makes all final decisions as to what can and cannot be built in this Province, of which Toronto is the capital.

What has happened is that no one in the UK cares what goes on here, and we’re a country, not a colony. So the boards and committees now largely function as tools for industry and corporations to over rule elected governments, such as City counsellors who would oppose most of the crazy over building that is currently occurring in Toronto.

One only has to travel to other cities, such as New York for example, and examine how municipal planning decisions are made, to see the difference. It is very hard to remove an old building in most major cities, and replace it with a condo tower, regardless of who owns the land.

In Toronto, it is easy. Appeal any decision of City counsel to the OMB, which is staffed by people who used to work for the development industry, and you are in. Build anything you want, anywhere you like. Local elected officials cannot stop you.

The reason why this is so important to City of Toronto real estate prices, is that all of this is about to change. The Ontario government, which is being overwhelmed with complaints about how the OMB is planning our cities, is about to basically “cut its balls off”.

Once this happens, Toronto will no longer be an attractive place for international corporations to buy land, knock down historical buildings, and replace them with 40 storey condo towers. No city counsel would ever let these corporations do this, but in Toronto the City counsel has no power to stop them. This is all about to change.

This will have an as yet unknown effect on Toronto land prices. The land may become less valuable, or it may become more valuable. It is hard to tell what this will do. But it is certain to change how land is bought and sold in this City.

#145 MF on 05.22.17 at 2:54 pm

You leave a unit in the same condition in which you found it. How hard is that to understand? — Garth

It’s not hard to understand, but it doesn’t agree with the often touted logic on here that only owning has upkeep costs.

MF

Then don’t break stuff. — Garth

#146 HIGH RETAIL VACANCIES AND RENTS on 05.22.17 at 3:11 pm

@ TURNERNATION

INDEPENDENTS ARE HAVING A TOUGH TIME HERE AS WELL.

http://vancouversun.com/business/local-business/dan-fumano-vancouvers-independent-businesses-struggle-entangled-in-triple-net-leases

#147 InvestorsFriend on 05.22.17 at 3:12 pm

No normal wear and tear?

You leave a unit in the same condition in which you found it. How hard is that to understand? — Garth

***************************************
Paint, carpets, dishwashers, toilets, taps, counter tops, fridges and stoves and sinks all show their age with time and use. I doubt that there is any requirement to return the unit with all these in like-new condition.

Will same rule apply to return of a rental vehicle?

You bet it does. — Garth

#148 Deplorable Steerage on 05.22.17 at 3:36 pm

Hey smoker dude…

You can buy trump’s house in St martin.. should be pocket change for you

http://news.nationalpost.com/news/world/its-huuuuuge-trump-selling-le-chateau-des-palmiers-his-gold-hued-caribbean-mansion-for-us28m

#149 disagree on 05.22.17 at 3:48 pm

My original comment was in regards to the principal residence. At no point, for the majority of older Italian- Torontonians, will they have to sell their home to finance anything. You’re talking about people that have been preparing for the absolute worst for decades. It’s a very sad way of living. What’s the saying, sometimes you’re so far behind you think you’re in first?

…….

‘Preparing for the absolute worst? Sad way of living?’ huh? That is your opinion. Rather odd. I see it as a conservative way of living. And I may not be ‘in first’ as you likened the quote, but I feel good owning 3 properties. One of which I live in, the other 2 are cash flow positive.

#150 MF on 05.22.17 at 3:50 pm

Then don’t break stuff. — Garth

After 3 years living anywhere, there will be normal upkeep.

When deciding whether to rent vs own, these renting costs should be taken into account as well.

MF

Ah yes, a damaged cupboard door. You might as well buy a house! — Garth

#151 al on 05.22.17 at 3:53 pm

Good time for Wynne to kiss and make up with Landlords

#152 re.118 pennypinchaz on 05.22.17 at 3:56 pm

Sorry but you are a bit to simplistic….you need a slightly more complex formula including the rates of interest, cost of capital , inflation, opportunity cost of not buying other investments, etcetc to calculate the IRR.

…..

i’m not ‘justifying’ any illogical housing market. As you called it. You’re interpreting my post based on your position of bias.

And my real estate holdings are PART OF of an investments portfolio which includes equities and fixed products.

‘opportunity cost of not buying other investments’

lol, yeah I should have had it all in real estate and sold in Jan. You mean that kind of talk?

#153 Tony on 05.22.17 at 4:16 pm

Than Merrill is on every day this week from 2:30am to 7:00am on WPCHD. This must be the top of the American real estate market. The same was true with Ed Beckley he was on TV every night when the market peaked in the 1980’s.

#154 Rental Losses on 05.22.17 at 4:24 pm

Rental losses are tax deductible against other sources of income, resulting in offsetting positive cash flow.

It’s ironic that wise investment decisions (with profit and positive cash flow) are punished with taxes, but absurd investment decisions (with tax losses and negative cash flow) are rewarded with tax refunds.

A loss is a loss. Negative cash flow is still negative. Without consistent capital gains, being a landlord is currently a losing game. — Garth

#155 Nero on 05.22.17 at 5:16 pm

#150 MF…Here you go for BC….
“The
tenant is not responsible for reasonable wear and tear to the rental unit or site (the
premises)2, or for cleaning to bring the premises to a higher standard than that set
out in the Residential Tenancy Act or Manufactured Home Park Tenancy Act (the
Legislation).
Reasonable wear and tear refers to natural deterioration that occurs due to aging
and other natural forces, where the tenant has used the premises in a reasonable
fashion. An arbitrator may determine whether or not repairs or maintenance are
required due to reasonable wear and tear or due to deliberate damage or neglect by
the tenant. An arbitrator may also determine whether or not the condition of
premises meets reasonable health, cleanliness and sanitary standards, which…..”

Cheers.

#156 SimplyPut7 on 05.22.17 at 5:19 pm

#143 Stan Broock on 05.22.17 at 2:19 pm

The market has changed, I think most people who bought in the last few years, are starting to realize they paid too much for their houses. The frenzy and the buyers are gone.

That house from realtor has been on the market 13 days (not including how many times it may have listed and delisted to look like a newer listing).

There’s a house on the same street a few doors down that want almost 500k less and has been on the market 27 days. And it’s a lot nicer and looks bigger.

#157 Entrepreneur on 05.22.17 at 5:46 pm

When a leader talks about the environment and jobs on issues like oil tankers etc. where is the logical thinking in that? Short term or what? And not for the environment either. People want jobs but come on, not to destroy our oceans, our land, our wells.

And what about the debt in housing that everyone is in? Kristy boost about the economy here in B.C. but yet when we hit a certain debt level it all comes crumbling down. So where is the logical thinking there? Where is the economy heading now? People will be in crises but is that where we want consumers to be?

The TPP leaders are concerned about our forestry workers getting laid off here in B.C. but what about the forestry workers that were laid off before this. Did the TPP leaders apply logical thinking to B.C. forestry workers before our mills were shut down? The raw logs are more important than the people of your province/country?

Apply logical thinking at the correct time not when a leader sounds good in front of a camera. When apply that logical thinking then environment and people/jobs follow.

Let us not “beat around the bush” and start applying logical thinking to the people that live within the boundaries. If not then this is the mess we are in.

#158 Smartalox on 05.22.17 at 6:09 pm

Keith #114 wrote:

Interesting story; but poor timing. Vancouver condo market is routinely in multiple offer situations, hotter than a pistol.

http://vancitycondoguide.com/40-percent-of-vancouver-condos-sold-over-ask-price-april/

%%%%%%%%%%%%%%%%%%%%%%%

Yes, but that means that 60% of condos (i.e.: the MAJORITY) sell for LESS than asking, in April.

Likely will be more in May.

#159 espressobob on 05.22.17 at 6:17 pm

Standing at the corner of Bay and College is enough to make most wonder how the hell this is supposed to work out?

All those structures painted to the sky, sterile and overpowering.

People are content to live like this?

‘Technicians of space ship earth this is your captain speaking, your captain is dead.’

#160 Julian on 05.22.17 at 6:30 pm

To #141 MF, I’m not sure where you are but in Ontario (and I suspect most places), no adjudicator is going to side with the landlord for normal wear and tear. Of course some subjectivity comes into play due to the definition of ‘normal’, which likely means the natural wear and tear of items due to a ‘reasonable’ person living in the unit. If you put holes in the wall or break a window, that’s would not seem normal. Obviously it is likely impossible to ‘return’ a carpet in the same condition you got it in if say you lived in a unit for several years. Similarly, over times walls may get minor blemishes and such. That type of maintenance is no doubt within the landlord’s scope. It would provide more context if you indicated what sorts of costs the landlord wants you to pay for this ‘minor’ damage. If it’s that minor, then it shouldn’t be a deal for you to address it yourself.

To #126 InvestorsFriend and others re what counts for/against cash flow, I am surprised there is this debate on here. Perhaps some accountants can chime in? I understand that ROI and other metrics may be subject to debate due to the potential differences in treatment of items but I always thought that cash flow, as least in the sense most people understand it, was black-and-white, i.e., what is net cash after considering all disbursements and receipts, in which case repayment of a debt (portion of mortgage payment against principal) is most certainly a cash outflow. Now, from an overall investment assessment perspective, I’m still curious about the treatment of debt repayment…because at the end of the day, discharge of mortgage debt does not necessarily translate to an equal increase in equity (relative to pre-purchase state) due to the fact that the market value could decrease over the time period in question, notwithstanding the common premise that real estate can only go up. Hopefully I got that part right.

#161 jess on 05.22.17 at 6:32 pm

magnisky

“The US attorney’s office of New York said the organised Russian crime group, along with corrupt Russian government officials, “engaged in a broad pattern of money laundering in order to conceal the proceeds of the fraud scheme”.bbc

========
A three-year US case against Francis has severely and consistently rattled the US military. Rear Adm. Robert Gilbeau, the first US admiral ever convicted of a federal crime while on active duty, was sentenced on Wednesday to 18 months in prison for lying to investigators.

Francis, who was lured to the US and arrested in a 2013 sting, pleaded guilty in January 2015 and faces a maximum of two decades in prison.

Twenty current and former Navy officials have been charged so far, while ten have pleaded guilty, mostly for bribes of lavish trips and sex workers in return for routing ships to ports where Francis could overcharge for ship husbandry services.

One US indictment said Francis once rented the MacArthur Suite at a hotel in the Philippines, where memorabilia of former American five-star General Douglas MacArthur was used for sex acts with prostitutes.

Police are investigating how £6.6m from a Russian organised crime group has been allegedly traced to a banking firm in the UK, the BBC has learned.

#162 Brian on 05.22.17 at 6:33 pm

Speaking of renter bias coming through in the example. I checked the market stats for Vancouver Westend, and it is far from the gloomy market Thomas describes. Listing are not exploding, but sales and prices are. Perhaps Captain Negative Cashflow is not trying very hard to sell the place.

#163 Howard on 05.22.17 at 6:42 pm

#143 Stan Broock

https://www.realtor.ca/Residential/Single-Family/18141680/69-GLENDORA-Avenue-Toronto-Ontario-M2N2V8-Willowdale-East

that sells for 2.688 mln. canukistan pesos (aka as the ‘Loonie’) that was worth more than 10 (ten) times less than it’s current price in 1999 (268 k CAD).

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$2.7 million for that dump?? I damn nearly fell off my chair.

There’s a premium for proximity to Sheppard station, but come on!

#164 Howard on 05.22.17 at 6:50 pm

#93 Mark on 05.22.17 at 2:13 am

See some of my earlier comments about the sales mix. Toronto/Vancouver have seen a lot of brand new supply come to market, at top dollar. The fact that these new properties (as well as higher end property in general) represent an overwhelming chunk of the sales mix, is, in and of itself, responsible for the higher Realtor averages claimed. So an individual who owned a property would not have experienced those alleged gains. For the most part, in the GTA and GVR, real estate peaked in 2013 and hasn’t grown in price since.

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I take your point about new builds jacking up the price averages, but are you seriously arguing that someone who bought a house in the GTA or GVR in 2013 wouldn’t be in the money if he/she sold today?

#165 Fish on 05.22.17 at 7:00 pm

You really have to watch those realitor ca listing I see some that have been on there seems forever and they show different pictures of the same place and their prices have come down, they can still come down, because I don’t see anything I like

#166 TurnerNation on 05.22.17 at 7:17 pm

Sounds like MF hotboxed his box in the sky :-(

#167 espressobob on 05.22.17 at 7:28 pm

Sometimes it’s worth the thought as to why we bother to educate ourselves on investing or economic views when it all is about self?

Greed has a price. It seems we are starting to live in that world. It sucks!

#168 Leo Trollstoy on 05.22.17 at 7:43 pm

Prices of Canadian real estate are largely flat. Except Toronto and Vancouver where prices have increased on individual properties. I wonder when it will end…

#169 Ronaldo on 05.22.17 at 9:41 pm

#164 Howard on 05.22.17 at 6:50 pm

#93 Mark on 05.22.17 at 2:13 am

See some of my earlier comments about the sales mix. Toronto/Vancouver have seen a lot of brand new supply come to market, at top dollar. The fact that these new properties (as well as higher end property in general) represent an overwhelming chunk of the sales mix, is, in and of itself, responsible for the higher Realtor averages claimed. So an individual who owned a property would not have experienced those alleged gains. For the most part, in the GTA and GVR, real estate peaked in 2013 and hasn’t grown in price since.

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I take your point about new builds jacking up the price averages, but are you seriously arguing that someone who bought a house in the GTA or GVR in 2013 wouldn’t be in the money if he/she sold today?
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They would absolutely be in the money. A young couple I know personally sold their Mt. Pleasant ‘tear down’ which they bought in summer of 2008 for $850,000. They got $1,750,000 (100,000 below assessment). They did nothing to it. Most of the value is in the lot which has increased threefold in that time. Assessments for most lots in the Mt. Pleasant area for the lots themselves has increased by $600 to $700 thousand. A neighbour behind them who bought a similar ‘tear down’ in 2014 for $975,000 did a complete reno from foundation to roof. Basically was just a shell jacked up on beams. Complete new foundation and lower level. Sold 1 1/2 years later for $1.9 million. Today that house would sell for $2.9 million. Lot prices in this area have gone from around $700 to $800 thousand in 2008 to $2 to 2.4 million. The value is in the land.

#170 wab on 05.23.17 at 8:41 am

This post’s photo broke my heart! Was the guy in the neck brace OK?

#171 RentYVR on 05.23.17 at 12:55 pm

This story is fake news. I rent in YVR and regularly scan the listings to see whether the rental rates are increasing, decreasing or staying flat. I rented a condo on the westside until last year when we moved to Yaletown. Rents for a 1 bed are closer to 2k, so he is being undercharged $400. Lucky him. Anyone new trying to rent the same thing in the area will of course not be so lucky.

‘Fake news’ = what you don’t agree with. — Garth

#172 raisemyrent on 05.23.17 at 2:09 pm

A bit late to the party here. Found what I think to be the realtor posting online. You’re overpaying. $1,800 for an old one bedroom in the west end, ground level? New owner is laughing at you.

#173 Financial Samurai on 05.23.17 at 9:08 pm

Man, can’t believe you guys have to pay a 5% selling commission as well!

We must kill this oligopoly pricing gosh darnit!

Sam

#174 i.see.debt.people on 05.24.17 at 9:20 pm

“http://www.cra-arc.gc.ca/E/pbg/tf/t776/t776-16e.pdf

principal payments aren’t an expense. all the list of expenses can be found on the CRA form on the above link.
yes my calculation is slim, but you won’t have much to spend in maintenance when renting a condo if you know how to use a paint roller between tenants.

Not referring to what the CRA allows as deductions from taxable income, but rather cash flow and true ROI. Landlord math is amusing. — Garth”

lol. landlord math! totally agree what counts is cashflow –> how much cash do I have in my ppocket at the end of the month?