It’s coming

Investors who’d shorted the loonie lately – making bets it would tank along with housing, for example – ended up taking it in the shorts. The dollar jumped on the news interest rates will be rising. The Bay Streeters were crushed. More crushing to come, this time on Main Street.

Yes, the American central bank upped the cost of money on Wednesday, as forecast, by a quarter point. So what? So it’s the third time in six months the most important rate in the world has grown, and the Fed says there’s more to come. The latest projection is one more uppity in 2017, then three in 2018. Thus a rate which was essentially zero will turn into almost 3%. Big deal.

The Bank of England would be pumping its rate as well this week, were it not for the damaging election result. In fact rates almost everywhere will be creeping their way higher over the next couple of years as global growth kills the last vestiges of deflation. Even in soggy Europe, home of negative bond yields and falling prices, inflation has gone from below zero to positive. Also a big deal. It’s taken almost a decade to get over the credit crisis of 2008 but, baby, we’re almost there.

Rate bloat is coming here, too. On Monday the Bank of Canada let that one rip, powering the dollar and sinking the shorts. After comments by that monetary cougar Carolyn Wilkins, the odds of a rate increase by the end of the year exploded from 22% to 72%. That was also fueled by boffo job numbers published Friday showing a huge number of new positions created. Meanwhile our economy is growing at three times the rate of a year ago, putting us at the top of the G7 heap. Go, beavers!

However, we’re also at the top of the debt heap. Any increase in the BoC rate will have consequences, immediately impacting variable-rate mortgages, demand loans, business borrowings and (especially) all personal lines of credit and HELOCs. Remember the dreary news this blog brought you last week – we’ve amassed about $200 billion in these lines, and 40% of people make no payments on them. Zilch. Nada. Another 25% pay only the interest accrued.

Also recall that surveys show half of all households say they’d be hard pressed to keep their heads above water if monthly interest payments increased a mere 10%. Worse, four in ten newbie homeowners, mostly Millennials, say they regret having bought because of the extreme monthly costs involved. So just wait until they renew their mortgages in 2020 or beyond. Ugly.

Deniers argue it’s exactly this killer debt load which will prevent Canadian rates from bobbing higher with those in the US. They tell each other on Twitter ‘the government’ would never allow it, cuz we’d all be pooched.

However, it’ll happen. The central bank has wanted to raise rates for years in order to stem the debt orgy by totally undisciplined borrowers, but a weak economy, tepid job growth, saggy commodity values and trade woes prevented it. No more. Hence Carolyn’s big shock. The climax approaches.

Won’t this have a negative impact on residential real estate, which now accounts for a fifth of the entire economy? And how about the banks who hold hundreds of billions in personal mortgages? Will they be impacted?

Yes, and yes. Some collateral damage is inevitable. But rates will not be spiking higher – slithering instead. Bank share prices may be impacted as profitability is trimmed in a rising rate environment, however no drama. Far more impacted will be property values as mortgage rates normalize, the appetite for new debt diminishes and as buyers can carry less. The main driver of bubble markets and obscene price increases has been the low cost of money, not Chinese dudes or empty houses. That will be evident to everyone in a few years after 2.5% mortgages turn into 5% obligations.

The good news? Your premium savings account rate might go from 0.55% to 1%. Awesome.

Finally, pity the Mills. These kids, now in their mid-twenties, were growing hormones the last time a mortgage cost over 4%. To a third of the entire population, borrowing money at little more than the inflation rate is entirely normal and most are utterly unprepared for what comes next.

Great. They already hate us. This could be epic.

 

 

201 comments ↓

#1 JustMe on 06.14.17 at 6:27 pm

FACTS: The Teranet–National Bank National Composite House Price Index rose 2.2% in May, the largest-ever increase for that month over the 19 years for which the index is available. Home prices rose in all the eleven metropolitan regions covered, a first in 12 months. Price gains were above the national average in Toronto (+3.6%, a record for any month)

https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf

#2 I'M NOT POLOZ on 06.14.17 at 6:32 pm

Moister fans of Stephen S. Poloz told me that several of the Big 6 banks in Canada have already changed/increased their interest rates on credit cards and lines of credit…One bank increased interest rates for credit card cash advances by 1%, and another is only increasing the fees (to offset the interest).

Poloz still wants a 50-cent Loonie IMO.

#3 TK on 06.14.17 at 6:34 pm

What follows? Two decades of stagnation?

#4 Vancouver Brit on 06.14.17 at 6:34 pm

Garth, a few weeks ago you mentioned (or maybe one of your other writers did) that for the time being holding unhedged USD ETF’s would be worthwhile as the USD would remain strong in 2017, but in 2018 the CAD is going to make a comeback.

Now the CAD seems to be on the up earlier than expected, do you envisage this is the beginning of the rebound for the CAD and it’s time to hedge those USD investments?

I have a large holding in VUN which will get crushed by a surging CAD, thinking it’s time to sell some of this and buy a hedged version instead.

#5 Lumpia on 06.14.17 at 6:35 pm

I understand the rate is inevitably going up, what about the immigration factor? Hundreds of thousands land in Ontario that needs a roof over their head. How big of an impact are they in the housing prices? A year from now, will the prices go up or down?

#6 Alice on 06.14.17 at 6:36 pm

Toronto saw a 64% increase in detached listings compared to last year. It’s not just coming, it’s going to be a tsunami

#7 Zee Hunn-ter on 06.14.17 at 6:40 pm

The herd is corralled.
Time to close the gate and start the slaughter.

#8 Harvey Burger on 06.14.17 at 6:40 pm

#20 Ace Goodheart on 06.08.17 at 7:36 pm

Been buying up shares in Aimia. This is going to generate flames. “what the f*ck are you buying that for, it is going to go to zero”. Maybe. As of today I get a 37% dividend from a company that is still capable of paying it (but maybe not in 2020?)…unless Aimia’s current CEO is a total doofus (which he isn’t, btw) then they will figure this out. And pay me my 37% dividend (but the share price will go back up again).

————————————

Ace, how did that all work out for you?

#9 crossbordershopper on 06.14.17 at 6:41 pm

still trying to get a credit card. td said no, royal said no, i took the advice from cibc they said get a bank account instead.
i am going to a credit union see if there ok with loaning me a $1000 credit card.
people talk about high debt, interest rate, i would gladly pay 25% a year if i could get a credit card.
what i dont understand about credit is simple. i dont have any debt but cant get any credit on any terms.
yes years ago i was always a slow payer, etc, but i never declared bankrupty or consumer proposal.
you people talk about hundreds of thousands of dollars of mortgage debt,
the cibc said if you give me 5000, we can give you a credit card and charge you 24% but my 5000 earns 1%.
i guess, i will live like my dad, cash, straight up. no concept of debt. he never had a credit card or a loan even a mortgage ever, never paid a penny in interest, perhaps i should just copy him and stop buying into this consumer society.

#10 Mark on 06.14.17 at 6:43 pm

Only problem with the theory that the Bank of Canada will raise rates is that the economy is already in dire straights. And with housing prices now clearly in freefall in Canada’s largest cities, after years of stagnation (only covered up by the sales mix), inflation numbers will likely trend down.

Of course, the Bank of Canada can make a policy mistake and raise the rates instead of lowering them. However, they run the risk of damaging very weak confidence and creating intractable deflation.

#11 Nonplused on 06.14.17 at 6:43 pm

Great commentary but you forgot all the other problems like the looming pension crisis (already upon us), government insolvency, declining wage power in the face of what appears to be unbounded automation, water shortages, and the fact that we only have 10 years of oil left at current consumption/discovery rates. Of course all those things will change so you can’t say forecast that we’ll be out of oil in 10 years but the price isn’t going to stay where it is.

Oh ya and rotting infrastructure, burning buildings, terrorism, wars, nuclear disasters, depleted fishing stocks, deforestation, contamination, global warming, global cooling, sun spots, satellites crashing in to each other, dogs and cats living together, and corruption at FIFA. Nothing is working right.

Oh ya and it’s now been 24 years since a Canadian team has won the Stanley Cup. If you need proof the world isn’t working right there it is. It’s statistically impossible. Sure, lots of Canadians have gotten their names on the cup, but no Canadian teams. Baseball and Basketball are equally disastrous but given the relatively few teams we have this might be statistically possible. With hockey it’s not, we have a fair number of well financed teams.

#12 conan on 06.14.17 at 6:52 pm

What is the total amount of Q.E. that was spent to get us, to where we are now? I think it is a big F-5 number, hurricane huge.

What is the plan to pay that back? Will higher interest rates lead to some kind of peace train, or an age of conquest? I think humanity is at an historical cross roads myself.

https://www.youtube.com/watch?v=qBaQ18WJoyg

#13 Don on 06.14.17 at 6:52 pm

Good article. I think you meant the credit crisis of 2008 instead of 2018. Who knows? Maybe we are due for one in 2018.

Thanks

#14 Karma on 06.14.17 at 6:54 pm

” After comments by that monetary cougar Carolyn Wilkins, the odds of a rate increase by the end of the year exploded from 22% to 72%. That was also fueled by boffo job numbers published Friday showing a huge number of new positions created.”

Combine that with the GreeNDP anti-housing policy and BOOM! Sanity will prevail

#15 InvestorsFriend on 06.14.17 at 6:58 pm

Aimia / AeroPlan

#147 Ace Goodheart on 06.14.17 at 2:42 pm said:

Re: Aimia shares: they’ll go down before they go up. I bought for $2.20 a share anyway which is less than book.

****************************************
I got book value as 61 cents per share $92.7 million equity divided by 152.3 million shares.

But in checking just now I see that there is a very poorly disclosed $315.8 million in preferred equity, so the common equity is NEGATIVE $223.1 million or NEGATIVE $1.46 per share.

The preferred equity amount is disclosed in the annual report but not in the Q1 report as far as I can see.

And if you deduct goodwill and similar intangibles the tangible value per share is deeply negative.

If liquidated Aimia’s common equity is almost certainly worthless, and the points will also not likely be worth full value.

For many years I have viewed Aimia / Aeroplan as a deeply unethical company. Recall they tried to expire points automatically after seven years. Do they still confiscate all points if no activity in one year? Now it appears it may also be a worthless company.

I would not buy these shares.

#16 J on 06.14.17 at 7:07 pm

A couple of typos…..I think you meant the financial crisis of 2008 instead of 2018….there will be one then but not yet. Not many households could handle a 10% increase….1% is what you meant? Correct me if I am wrong.

Correct on 2008, wrong on 10%. As stated. — Garth

#17 Dyslexic Smoking Man on 06.14.17 at 7:08 pm

#1 Zee Hunn-ter on 06.14.17 at 6:40 pm
The herd is corralled.
Time to close the gate and start the slaughter.
………………………….
Yeap

Agenda 2030

http://www.naturalnews.com/051058_2030_Agenda_United_Nations_global_enslavement.html

#18 Adrian on 06.14.17 at 7:08 pm

This:
“…our economy is growing at the top of the G7 heap.”

is because of this:
“…we’re also at the top of the debt heap.”

#19 Randy Belwood on 06.14.17 at 7:09 pm

I don’t expect my Bankrupt Provincial, Federal and Municipal Governments to take this rate increases lying down.
They are looking forward to raising income taxes, sales taxes and property taxes in a big way to make up for their shortfalls…haha

#20 AB Boxster on 06.14.17 at 7:10 pm

Still nothing about where this mysterious growth in Canada is supposed to come from.

Housing to tank so no growth there.
Personal debt high, and electrical costs through the roof in Ontario and soon to be Alberta, plus carbon taxes to take multiple thousands out of family pockets, so little money to spend our way to prosperity

Energy prices low, so nothing there.

Major projects more likely to be cancelled than not, so no jobs there.

The BOC did expound the benefits of ‘diversity’ of course, toeing the Liberal party line. Does being diverse somehow magiclly spur economic growth and reduce debt?

Governments are tapped out so no growth for more hiring there.

So where is the growth to come from?
Massive sales of mind altring drups perhaps?

I think the shorts will just bide their time, cuz they know that in the short term that the BOC can talk up the great growth to come.

But growth based upon debt, and selling each other overpriced real estate and tulip bulbs is not real.

#21 espressobob on 06.14.17 at 7:10 pm

Funny, just bought a load of ZPR today, way too much cash sitting around doing squat. Profit taking is a pain.

Gee, I wonder?

#22 Lee on 06.14.17 at 7:14 pm

#2 I’m not Poloz

Bmo raised my line of credit rate by one percent and I’ve never failed to make a monthly payment in twenty years.

#23 SandyM on 06.14.17 at 7:15 pm

Before the younger end of your readers wade in (again, like #12, Howard, yesterday) claiming that Boomers were (are) materialistic and all about “… a never-ending materialistic competition with their neighbours…), look at what the baby boom generation faced: a 9% mortgage was a ‘good’ rate. The rates soared north of 20%. They survived.
A history lesson here, the baby boom generation spawned counter-culture ‘back to the land’ philosophy, political activism that favoured taking care of the environment and eating whole foods. materialism and suits were antithesis, communal living and sharing resources were prevalent, at least on the west coast.
Boomers learned to save and conserve. At least, many did and perhaps many were enticed into big business as a way to change the world.
What I’m saying is, the boomers were raised on stories of the depression and rock-bottom poverty. So what I think Garth is trying to do here is herald a wake up call about the negative financing practices of a GenX crowd. Blaming the hippie generation for the mess facing debt-ridden households is off the mark. And sharing in the 60’s and 70’s was not about buying a house together or taking out HELOCs. That’s why the ‘Bank of Mom/Dad’ is available, poor as that strategy is.

#24 Josh Thompson on 06.14.17 at 7:19 pm

So why is the 5, 10, 20 and 30 year Canada bond yield at so low levels of 1.1%, 1.49%, 1.98%, 2.05%.

It is because future growth is faltering and there are more fears and expectation of low to lower GDP, inflation in coming months, years.

Since the Fed raised 75 basis points in 6 months these rates are always going lower.

This is with an almost 8% to 10% increase in stock values in U.S..

The Fed is increasing rates because it knows it has to cut them in the future and have some wiggle room.

#25 Dyslexic Smoking Man on 06.14.17 at 7:20 pm

As started before USDCAD has been range bound between 1.31 and 1.35 for 7 months. Will remain that way for next 6 months

#26 Kris Charyna on 06.14.17 at 7:26 pm

Here in BC burbs surrounding Vancouver Everything is sold, everywhere!! Like a day after sign goes up! I don’t understand. I thought this was over!!

#27 Pete on 06.14.17 at 7:32 pm

Good post, Garth. But keeping a balance portfolio does not work either. TSX rose only 1% from 2008 to 2017. Up 1% in 9 years. That does not beat anything.

Stupid comment. That is neither balanced nor diversified. — Garth

#28 Howard on 06.14.17 at 7:34 pm

Garth, the eldest Mills are actually now 36. Yup not far off from middle-age.

#29 Lulu on 06.14.17 at 7:35 pm

Investors and speckers unloading their eggs left right and center…lol you can see in the York Region, for sale sign are like flowers, they are everywhere, especially in Markham and Richmond Hill, and they are not selling…..lol

They are too slow to the exit, well….. if they lower their price 10-20%, they are still making a profit, the thing is, they think they make less than the comparable two three months ago, it’s the mentality and greed, this can swallow you and make you drop to the bottom, be a smart investor, you are still gaining a profit even after a 20% cut of your delusional asking price… will they listen? Nope, then sit pretty there, Good Boy!!! lol

#30 Howard on 06.14.17 at 7:39 pm

#5 Lumpia on 06.14.17 at 6:35 pm
I understand the rate is inevitably going up, what about the immigration factor? Hundreds of thousands land in Ontario that needs a roof over their head. How big of an impact are they in the housing prices? A year from now, will the prices go up or down?

————————

John McCallum stated last year that he wanted to increase immigration by 50% to 450,000 per annum. Of those, at least 150K would settle in the GTA and likely closer to 200K.

He did not say that. — Garth

#31 RentYVR on 06.14.17 at 7:39 pm

I’m still an denier and proud to be one. Rates will not rise, not just because the gov’t won’t want it to, but because the natural rate given the current growth rate and the low level of inflation dictate that it should remain low.

#32 The Great Gazoo on 06.14.17 at 7:46 pm

Garth, here’s a real retirement plan – get with the program eh.

Sarah, 33, has a retirement plan. Buy houses. So far she has six: Teitel

https://www.thestar.com/news/canada/2017/06/14/big-sacrifices-and-a-plan-can-pay-off-for-younger-real-estate-shoppers-teitel.html

At least she says to avoid buying property in Toronto.

#33 Cto on 06.14.17 at 7:47 pm

JustMe
Teranet 2 percent rise house prices may.
Sales mix my friend, sales mix. The realtors,…i mean teranet….doesn’t want you to believe that this is just move up buyers buying more expensive houses. that’s all it is.
Doesn’t it seem a tiny bit odd that sales are way down but house prices are going up???

#34 Eating quinoa in Vancouver on 06.14.17 at 7:48 pm

Hi Garth,
Why don’t you start your own bank? I think a lot of people would be happy to move their money over to someone who will be more diligent in lending it out and managing it. Just don’t call it “Greater Fools Bank of Canada”

OK, how about ‘Bandit Financial’? — Garth

#35 AGuyInVancouver on 06.14.17 at 7:49 pm

#10 Mark on 06.14.17 at 6:43 pm
Only problem with the theory that the Bank of Canada will raise rates is that the economy is already in dire straights. And with housing prices now clearly in freefall in Canada’s largest cities, after years of stagnation (only covered up by the sales mix), inflation numbers will likely trend down.

Of course, the Bank of Canada can make a policy mistake and raise the rates instead of lowering them. However, they run the risk of damaging very weak confidence and creating intractable deflation.
__________________________________
Nonsense. Housing prices are not in freefall, as you well know. However I can see how real estate fluffers like yourself are terrified of higher interest rates.

#36 TSX carnage on 06.14.17 at 7:50 pm

On its way . At a support level . Real
Estate is toast , sorry Canada . Oil can save the day? At a one-yr tenuous suppprt level .

Last year was silly . Time for the bears to have fun

:)

#37 Policy Error on 06.14.17 at 7:52 pm

Gumbi says I stretch…interest rates won’t…..another false flag lapped up by the dogs of finance LOL

#38 HPI on 06.14.17 at 7:52 pm

#1 JustMe

Yep, TO real estate still sizzling hot (prices, not volume.)
If you ask me, it’s doing an exact copy of YVR:
Volume down, but the stuff that is still selling (lower end) is doing so at record prices.

Every so often Happy Housing Crash Everyone dances of joy about the crash.
Yet it never seems to happen.

Instead, the exact same home is selling for 3.6% more than last month.

#39 Fake News on 06.14.17 at 7:54 pm

The same shorters must have sold their houses in Vancouver 8 years ago because of the coming housing crash as well.

#40 Newcomer on 06.14.17 at 7:54 pm

The main driver of bubble markets and obscene price increases has been the low cost of money, not Chinese dudes or empty houses.
——————————————

This observation confounds empty houses and bubble drivers. Empty houses are being taxed because they drive up rents, not because they drive up purchase prices. Or course, empty houses are brought about by the low cost of money. You don’t grab yourself a six-pack of condos unless mortgages are on sale. So higher rates will ultimately solve the empty houses problem, but it’s just confusing to suggest that there were people out there who wanted an empty house tax in order to lower sale prices.

#41 Andrew Woburn on 06.14.17 at 7:58 pm

#5 Lumpia on 06.14.17 at 6:35 pm
I understand the rate is inevitably going up, what about the immigration factor? Hundreds of thousands land in Ontario that needs a roof over their head.
=======================

“Hundreds of thousands” have been landing in Ontario for years. They obviously have an effect on housing prices and rentals but it’s already baked into overall price levels. Unless there is a surge in immigration, I can’t see it supporting otherwise unaffordable prices.

#42 Vit on 06.14.17 at 8:02 pm

FAKE NEWS -Toronto saw a 64% increase in detached listings compared to last year. It’s not just coming, it’s going to be a tsunami.

Actually we are well below lust 10 years average listings . Lust year has a record low number of listing http://www.trebhome.com/market_news/release_market_updates/news2017/nr_market_watch_0517.htm

#43 Underwriting on 06.14.17 at 8:07 pm

Hey Garth, ladies n gents,
I’m a confessed millennial, sitting on the sidelines, with a decent down payment, worried about losing it (and maybe more) buying into this market. We are on the brink of losing a second rental in 2 years because of the house being sold and about to start a young family. Fighting the FOMO. Come here nightly for some reassurance that we are doing the right thing, and usually a laugh.
The question is in regards to the new teranet report. Makes me wonder why this report runs contrary to others in terms of price gains and/or loses. Is this a flawed report? If so, how? Maybe some blog dogs could help?

Buy if you can afford it. Don’t if you can’t. Ignore meaningless reports. — Garth

#44 Ex-Cowtown on 06.14.17 at 8:12 pm

#9 crossbordershopper on 06.14.17 at 6:41 pm
still trying to get a credit card. td said no, royal said no, i took the advice from cibc they said get a bank account instead…….
i guess, i will live like my dad, cash, straight up. no concept of debt. he never had a credit card or a loan even a mortgage ever, never paid a penny in interest, perhaps i should just copy him and stop buying into this consumer society.
==================================

There’s nothing inherently bad about debt. Used properly and responsibly it’s just another financial instrument. Using debt to grow your business is an example of a good use of debt. Leasing a car for your kid as a graduation gift is a dumb-a$$ one.

#45 unbalanced on 06.14.17 at 8:13 pm

How respectful is it to call Carolyn a cougar?

She bites. — Garth

#46 Millenial905er on 06.14.17 at 8:14 pm

“increased a mere 10%”

Is that number a typo?

No. Increasing monthly payments by 10% takes but a 1% or smaller rate increase for most. — Garth

#47 Goldilocks on 06.14.17 at 8:15 pm

“It’s taken almost a decade to get over the credit crisis of 2008 but, baby, we’re almost there”

With all due respect sir but….bollocks !

Since 2008 all we have done is double down on all of our bad decisions, exponentially increased the debt pile, re-created housing and asset bubbles all over the globe, goosed stocks beyond all fundamentals, omnipotent central banks buying up everything in sight, yet somehow we are just emerging from the wood – or is that escape velocity we are heading for ?

Sorry, not swallowing it at all….

We put off the day of reckoning but eventually lessons must be learnt. Rising interest rates will not save us, the debt burden now ensures a prolific bust as debtors go to the wall unable to service their obligations in the face of higher debt servicing obligations.

Thanks to the low cost of money and the unprecedented piles of debt we must first go through some very painful lessons before we can retire to some wonderful fairy tale ending….where everything is just right.

#48 Andrew Woburn on 06.14.17 at 8:15 pm

#9 crossbordershopper on 06.14.17 at 6:41 pm

i guess, i will live like my dad, cash, straight up. no concept of debt. he never had a credit card or a loan even a mortgage ever, never paid a penny in interest, perhaps i should just copy him and stop buying into this consumer society.
==========================

Just imagine how much more cash we would all have to spend on consumer stuff if we didn’t fritter away our scarce earnings on renting money so we can buy today what we could have paid cash for tomorrow. Think of all that redirected interest cash being spent on actual goods and creating jobs for other Canadians instead of bank profits.

This is what your Dad and older generations knew. Business does not like savers because they are not impulse buyers. They think about what they spend and demand value, not instant gratification. Paying cash doesn’t mean you’ve left the consumer society. It just means you choose not to be a debt slave.

#49 SimplyPut7 on 06.14.17 at 8:17 pm

Home Capital settled, are we supposed to pretend everything is fine now?

#50 Oh, sure sure on 06.14.17 at 8:17 pm

#22 SandyM on 06.14.17 at 7:15 pm

Before the younger end of your readers wade in (again, like #12, Howard, yesterday) claiming that Boomers were (are) materialistic and all about “… a never-ending materialistic competition with their neighbours…), look at what the baby boom generation faced: a 9% mortgage was a ‘good’ rate. The rates soared north of 20%. They survived.
A history lesson here, the baby boom generation spawned counter-culture ‘back to the land’ philosophy, political activism that favoured taking care of the environment and eating whole foods. materialism and suits were antithesis, communal living and sharing resources were prevalent, at least on the west coast.

>>>>>>>>>>>

Garth gives away ice cream now?

#51 Dominoes Lining Up on 06.14.17 at 8:21 pm

I reported the following here Feb 1:

“Most GTA municipalities start collecting taxes in March or April. They are girding for a serious shortfall this year, hence why politicians like John Tory are starting to seriously sweat how they can afford local costs now that road tolls appear to have been killed.

Most of the delinquent accounts relate to multiple property owners, mostly of condos, but all categories are rising.

Most cities are trying to keep a lid on this news, but are freaking out behind closed doors.

I consider my sources of information about this trustworthy and impeccable, people who have worked in this area for many years.They are saying this is worse than the start of the meltdown in the 1990s.”

An update:

My contacts say this week that things are really spiking with desperate homeowners unable to pay property taxes in growing numbers in the GTA lining up at civic centres and jamming the phone lines.

In Toronto, Revenue Services has apparently had staff pulling overtime shifts for the last few weeks due to a huge increase in visits and calls about tax accounts. Internal discussions are pointing to a drop of 10-20% in property tax revenue already this year, assuming the rate of accounts going into arrears does not increase more.

Cities may now need to accelerate the rate at which they can seize and sell properties for delinquent accounts to assuage the losses they are now expecting in 2017-2020.

“Tax sales” – just imagine the impact that will have on the market.

#52 Adam on 06.14.17 at 8:24 pm

so “undisciplined borrowers” have wreaked havoc and prevented our central bank from being able to raise interest rates (I agree with that statement).

Sounds like Canada has a regulatory problem if they let the tail (e.g. undisciplined borrowers) wag the dog on monetary policy, wouldn’t you say?

#53 JCM on 06.14.17 at 8:26 pm

The Teranet numbers are from sales that have closed. They represent a 2 month lag or so behind actual sales (ie they’re March numbers from the peak)

#54 SilentReader on 06.14.17 at 8:26 pm

To all guys referencing latest Teranet data. Teranet index is based on actual sale prices taken from government land registry databases. Thus the data lags approximately 2 months after the deal. In short this is probably March/April price rise.

#55 Frank on 06.14.17 at 8:27 pm

Explain this to me: If our economy is overly dependant on housing and raising rates kills housing why would the BoC continue to rise rates?

If there’s a huge housing melt over the next 3 years then predictably our economy would melt with it. Home builders, trades people, housing pimps, marketers, Rona workers, truck drivers for Home Depot, gardeners, home security salespeople etc they’ll all be unemployed. Tax revenues will fall, Unemployment will rise and millions will blame everyone but themselves for letting our nation turn into a house-based economy. So why on earth would the BoC not lower rates at that point?

Because cheap money caused it. Duh. — Garth

#56 Pete from St. Cesaire on 06.14.17 at 8:28 pm

i guess, i will live like my dad, cash, straight up. no concept of debt. he never had a credit card or a loan even a mortgage ever, never paid a penny in interest, perhaps i should just copy him and stop buying into this consumer society.
——————————————————-
That’s the way I do it. And I laugh till my ribs hurt thinking of all those fools who pay interest through the nose.
P.S. For people with jobs. Quit buying things that other people can see; it really makes them mad when they imagine you hoarding-up all of your salary while theirs is spent on iPhones, etc.

#57 TCContrarian on 06.14.17 at 8:32 pm

“The good news? Your premium savings account rate might go from 0.55% to 1%. Awesome.” -GT
________________________________________________

Who said that 100% gains weren’t possible in a bank account?

On another note, I see my Nigeria exposure (via NGE, US listed ETF), has started to surge.
For anyone looking for geographic diversification…still lots of upside!

TCC

#58 april on 06.14.17 at 8:34 pm

#24 – Christy Clarks foolish % free loan perhaps. How long did the buyers get to close on their property, 60/90/120 days?

#59 JCM on 06.14.17 at 8:36 pm

I’ll say it again: the Teranet numbers are from March sales that closed in May.

#60 Capt. Serious on 06.14.17 at 8:40 pm

Everyone commenting “but, but, but…” needs to understand two things:
1. Things are always a mess. We just think our present mess is unique. Any reading of history will tell you this. Tech bubble? Happened in the late 1950s too.
2. Interest rates vary. They have been low and high over decades. They will be high(er) again, though of course demographics is likely to cap GDP growth in the developed countries, so perhaps we will not see over 10% again. Perhaps.

To pretend rates will not go up, or that we’ve not always faced challenges is to be ignorant of financial and human history. Nothing is new.

I think the fun part about to unfold will be finding out who has been swimming naked as the tide rolls away. That neighbour who bought 3 condos. That amateur landlord who bought a second house in the burbs who will be forced to eat a loss one way or another. It’ll be interesting times.

#61 Percentage Point on 06.14.17 at 8:42 pm

#44 Millenial905er

The technical term for that is a “percentage point.”
If rates go from 2.5% to 3% then it is a 0.5 percentage point increase, yet a 20% increase.

Even main stream media rarely gets this correct.

I blame the Canadian educational system.

#62 vatodeth on 06.14.17 at 8:43 pm

A huge feeling of relief, as the wait has paid off. There’s still a ways to go, but the writing is on the wall. Patience will pay off, as the dealt hand was played the best it could be. Thank you for the insight and encouragement on this journey.

#63 conan on 06.14.17 at 8:44 pm

OK, how about ‘Bandit Financial’? — Garth

The Bank of Suck and Blow has a familiar ring to it. Everyone will know its your bank, Garth. Maybe make an app? Surprised you never came out with a TV reality show,called Suck and Blow. Trump would have bought you out. Easy dollars.

#64 mike from mtl on 06.14.17 at 8:50 pm

#4 Vancouver Brit on 06.14.17 at 6:34 pm
Garth, a few weeks ago you mentioned (or maybe one of your other writers did) that for the time being holding unhedged USD ETF’s would be worthwhile as the USD would remain strong in 2017, but in 2018 the CAD is going to make a comeback.

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

Guessing on future exchanges is nearly impossible – remember months back the knuckleheads proclaiming 60c dollar?

Personally I always go unhedged, and in an RSP account , purchase US funds directly (no IRS withholding tax).

Non-US it’s pretty clear to never hedge on Ca$ as other currencies react much the same as ours. Au$ for example has the same problems as we do. JPY is fairly stable, Eu is also quite commodity related. UkP was a total surprise. eeh..

US$ is more complicated for us as CAD/USD can have massive swings, unfortunately for us that’s our base currency. Still I am of the opinion not not get caught up, overreact and just not hedge either. Anyway/

If you’re in a registered account then don’t worry, you can always sell half and buy hedged version with two trades. Just that gets real tough in non-reg as you have to eat cap gains in doing so.

My 2c.

#65 White Crock BC on 06.14.17 at 8:52 pm

crossbordershopper on 06.14.17 at 6:41 pm

still trying to get a credit card. td said no, royal said no.

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

Have you tried CapitalOne? Seriously.

Get a card. Even if it’s only a $300 limit. Use it. Pay it. Establish a credit rating.

#66 VBA on 06.14.17 at 8:54 pm

Garth is Smokey a real Alien. All his posts vanished again. How does he do that.

#67 Mark on 06.14.17 at 9:03 pm

“The Teranet numbers are from sales that have closed. They represent a 2 month lag or so behind actual sales (ie they’re March numbers from the peak)”

As I’ve pointed out, many, many times, Teranet’s methodology causes their “numbers” to lag literally years behind reality. So not exactly that useful for assessing recent changes. If someone claims that the housing market is up (or down) month over month because of Teranet’s numbers, based on their flawed methodology, be suspicious. Very suspicious.

#68 Stock Picker on 06.14.17 at 9:04 pm

#16 J . What the original quote from NP like two weeks ago said was that ‘most couldn’t handle a rate increase of 10% from current rates “…….ie: a .25% increase from the current low…..variable rate at 2.5%……1/4 POINT. It wasn’t 10%…….. Hope that helps. But right …..10% rates would be a freak in’ real eye opener for the newbies. In my day as a builder I borrowed millions at 16 +……that took big balls compared to Peter Pan mills of today…….men were men.

#69 Smoking Man on 06.14.17 at 9:05 pm

And now there back.

I think. Test

#70 Mark on 06.14.17 at 9:11 pm

“Good post, Garth. But keeping a balance portfolio does not work either. TSX rose only 1% from 2008 to 2017. Up 1% in 9 years. That does not beat anything.”

True, but the lengthy consolidation phase in the TSX just means that once speculative enthusiasm is lost in housing, and moves towards the stock market, the moves higher could be quite explosive.

Recall the 1990s where, after considerable stagnation after the 1987 crash, the TSX went on to nearly triple. In the midst of a resource sector depression no less, with gold and oil hitting record inflation-adjusted lows.

Having said that, Garth is right, people in portfolios more balanced than just what the TSX60 index represents, have done considerably better. Not as good as the Canadian housing market until its peak in 2013, but certainly better than the TSX’s abysmal performance.

#71 Dee on 06.14.17 at 9:15 pm

understand the rate is inevitably going up, what about the immigration factor? Hundreds of thousands land in Ontario that needs a roof over their head. How big of an impact are they in the housing prices? A year from now, will the prices go up or down?
—————–

By your argument Mexico City should have the highest property value in all of North America. It’s not the number of people but what those people earn in relation to house prices

#72 Dee on 06.14.17 at 9:16 pm

More confirmation today that credit is drying up in the sub prime market. B lenders looking for investors on the street to finance mortgages. Party is over

#73 45north on 06.14.17 at 9:18 pm

TK: What follows? Two decades of stagnation?

look at the Teranet-National Bank House Price Index, then the chart “GTA and Golden Horseshoe Regions – Home Price Growth”

https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf

basically it’s saying that houses in the GTA have gone up 28% year-over-year. In the last 16 months prices have risen every single month. It’s basically the same story in Southern Ontario.

In other words people have no clue. The banks on-the-other-hand do. four in ten newbie homeowners, mostly Millennials, say they regret having bought because of the extreme monthly costs involved. So just wait until they renew their mortgages in 2020 or beyond. That’s today, wait until next year – their monthly costs will be rising but the price on their houses will be dropping!

people are going to get a clue but they’re not going to like it

#74 FreeBird on 06.14.17 at 9:24 pm

#63
crossbordershopper on 06.14.17 at 6:41 pm

still trying to get a credit card. td said no, royal said no.

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

Have you tried CapitalOne? Seriously.

Get a card. Even if it’s only a $300 limit. Use it. Pay it. Establish a credit rating.
——————————
Agreed. Get a secured Visa card. I think credit limit with is tied to one time security deposit. Deposit is returned once a certain time has passed and you’ve earned a regular Visa. Maybe a year. It’s a really easy way to help build good credit history. Be diligent and pay off each month. Also having different types of proven credit is good, i.e. revolving, loans with set payments etc. Stability with income and home address are also factors.

#75 Sultan of Sudbury on 06.14.17 at 9:28 pm

Garth,

I just modelled 15 years of renewals based on Fed rate expectations (out to 2020) on a $553,000 mortgage. It seems payments keep increasing as the amortization schedule becomes shorter and balance reduces?

http://imgur.com/a/k8eNz

Is there a better way of modelling changing rates and the affects on amortization schedule than above? Seeing is believing.

#76 FreeBird on 06.14.17 at 9:30 pm

#63
On building credit…
Good idea to check your credit report/ score once a year and or before applying for large amounts of credit (car, house etc). We check both Equifax and Trans U every Jan and prior to our last mortgage. Have caught some errors and had them fixed.

#77 Smoking Man on 06.14.17 at 9:32 pm

Two best Journalists in the USA. Deserving of a Pulitzer price. Won’t happen, that award is given to the best sucks ups to the New World Order.

@JackPosobiec
@Cernovich

Best In Canada
@99freemind
@StefanMolyneux
@ontarioisproud
@Smoking Man

I would be higher on the list if I didn’t drink so much and actually gave a shit

#78 crowdedelevatorfartz on 06.14.17 at 9:34 pm

@#5 Lumpia
“A year from now, will the prices go up or down?…..
*******
Your doctor called about the headaches.
The lumpia was benign.
Apparently you dont have a brain.

#79 GIC linked to index on 06.14.17 at 9:35 pm

Can anyone explain to me what the downside of this type of investment would be?

http://www.rbcroyalbank.com/products/gic/canadian-utilities-marketsmart-gic.html

#80 Keith on 06.14.17 at 9:49 pm

Things the millenials haven’t experienced:

-double digit returns on cash
-pay rises for working people above the cost of living
-paying off a mortgage in less than ten years with deflated dollars
-buying a house for five figures
-paying for a years tuition at a top flight university with 200 hours of work at minimum wage

It’s a lot tougher these days, have a heart.

#81 Smoking Man on 06.14.17 at 9:50 pm

As I Said on here for the last 7 months USDCAD has been range bound 1.35 to 1.31 hard to make a home run.

Will be like that for another few more months, around Sept 6th I’m thinking. Then the CAD will get destroyed. Print this put on the fridge.

That’s the last free Market Call. Why should I help out all my former colleagues who

No Job for me. you’re on your own.

If I don’t get a gig, I guess I should be applying for stuff, your paying for this drunken sack of shits opinion.

Sorry to upstage you, George Davis, you are good. Nowhere near as good as me.

You are just missing the Herdonomics bit.

#82 White Crock BC on 06.14.17 at 9:50 pm

Smoking Man on 06.14.17 at 9:32 pm

Two best Journalists in the USA. Deserving of a Pulitzer price. Won’t happen, that award is given to the best sucks ups to the New World Order.

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

You must be wasted. You forgot Alex Jones.

#83 Renter's Revenge! on 06.14.17 at 9:51 pm

Is anyone here a doctor? Ace Goodheart just caught a falling knife on Aimia and it looks pretty bad!

#84 Bond Junkie on 06.14.17 at 9:52 pm

HOME CAPITAL pays 30mm and they’re in the clear!! What a fcking JOKE. This whole country is a joke. OSC no backbone. The Feds and OSFI governing behind the scenes. big 6 ready to syndicate a loan with similar terms to equitable and take H00p out of the equation. Omg the what a JOKE. How is this even believable?!!!? Cartel wins again. Risk on. HCG will close north of 20$ tomorrow and the banks will scream higher. Sorry Garth nothing to see here.. RE party is back on, wait and watch.

-Bj

#85 crowdedelevatorfartz on 06.14.17 at 9:52 pm

@#43 Unbalanced
“How respectful is it to call Carolyn a cougar?”
*******

Wrong blog if you’re looking for PC decriptions of public figures….good luck………shoulda been here when we were talking about The bloated Bank of Canada letting one rip………….

#86 Lumpia on 06.14.17 at 9:55 pm

@#5 Lumpia
“A year from now, will the prices go up or down?…..
*******
Your doctor called about the headaches.
The lumpia was benign.
Apparently you dont have a brain.
*********

Well… atleast I’m a gentleman. I don’t fart in the elevator

#87 The Reel Me on 06.14.17 at 10:00 pm

@#49 Dominoes

I believe that you are correct, and it’s too bad that property tax arrears stats are not more readily available.

For GTA properties, the numbers haven’t worked for many years. Rising MPAC assessments and property tax will squeeze a large percentage of the current ‘owners’ that never should have qualified for a jumbo mortgage to begin with.

Many, along with the specuvestors will learn that businesses don’t go broke because of a lack of assets: they go broke because of a lack of cash flow.

In a rising market, sell some properties or draw down the HELOC to stay current, which masks the real financial conditions. In a stagnant or declining market, look out.

#88 Ryan on 06.14.17 at 10:01 pm

#9 crossbordershopper

Just go with capital one MasterCard. You just register online and its cheaper than 25%.

#89 TurnerNation on 06.14.17 at 10:04 pm

#7 exactly. The last have been herded; the gate has clicked.

Some say our elites have a saying: let the cattle brand themselves.

So what will it be Nike logos or tattoos.
Debt stamp either way.

Toronto has
http://banditbrewery.ca

#90 cheap money on 06.14.17 at 10:08 pm

Because cheap money caused it. Duh. — Garth

How does interest free “Sharia banking” work and not cause similar effect?

#91 Damifino on 06.14.17 at 10:09 pm

It’s taken almost a decade to get over the credit crisis of 2008 but, baby, we’re almost there.
——————————–

And what a long, strange trip it’s been.

#92 GFD on 06.14.17 at 10:10 pm

Home Capital to pay $30.5M to settle OSC and class-action matters http://www.winnipegfreepress.com/canada/home-capital-to-pay-295m-to-settle-osc-and-class-action-matters–428519493.html

#93 Wrk.dover on 06.14.17 at 10:17 pm

Cross Border Shopper: get a zero limit card and give them money before you spend it.

80-90% of our spending is on the card for the points. We pay it in full before the statement is printed every month.

You just have to pay one month sooner than me.

You have no money, buy I guess you do have cigarettes, don’t you? Thought so.

#94 Wrk.dover on 06.14.17 at 10:18 pm

But not buy

#95 Smoking Man on 06.14.17 at 10:20 pm

It’s Coming.

No shit.

Choose a side, make a bet, close your eyes and let’s hope you rolled right.

#96 Adrian on 06.14.17 at 10:23 pm

Regarding rising interest rates in the USA, may I point you to the following graph from the St. Louis Fed’s FRED database on “Commercial & Industrial Loans, All Commercial Banks” (the shaded areas are recessions):

https://fred.stlouisfed.org/series/TOTCI

I suspect, as some other commenters here have also suggested, that they are raising rates in anticipation of having to drop them again fairly soon.

#97 Smoking Man on 06.14.17 at 10:23 pm

#82 Bond Junkie on 06.14.17 at 9:52 pm
HOME CAPITAL pays 30mm and they’re in the clear!! What a fcking JOKE. This whole country is a joke. OSC no backbone. The Feds and OSFI governing behind the scenes. big 6 ready to syndicate a loan with similar terms to equitable and take H00p out of the equation. Omg the what a JOKE. How is this even believable?!!!? Cartel wins again. Risk on. HCG will close north of 20$ tomorrow and the banks will scream higher. Sorry Garth nothing to see here.. RE party is back on, wait and watch.

-Bj
….

Am I too off side lately for a beer, got some dogs at TD and Scotia that what some wisdom, let’s meet up. I’m downtown next week, paper cup in hand, just want to see what it’s like, I see the future.

#98 Hans on 06.14.17 at 10:24 pm

Where are all the HCG haters tonight? After this announced settlement finalizes…..and the rumoured $2bill loan courtesy of the big 6 (like with Equitable) is done…..regardless of people think of the company, it’s going up. Back in the mortgage market again, competing to replace the mortgages they’ve had to send away during the run on deposits. I didn’t see it coming, but could tell something was up when Equitable got the $2bill at sweetheart terms from the Big 6. It’s stinks of regulator interference and a finger on the scale, but at the same time – why not? Too many people have too much to lose in this housing market. IMO there’s still more to come and I don’t think all the bearish speculation here accounts for the “stupid” factor. Gov’t, banks, realtors, the entire renovation industry….that’s a lot of influence over decisions that affect the housing market. Millennials can cry all they want, they don’t have the co-ordinated vote that these other groups have….so interventions will continue to be smokescreens and ineffective in reining the market in IMO.

#99 akashic records on 06.14.17 at 10:26 pm

#64 VBA [http://www.bestinvoice.biz/] on 06.14.17 at 8:54 pm
Garth is Smokey a real Alien. All his posts vanished again. How does he do that.

#67 Smoking Man [http://www.bestinvoice.biz/] on 06.14.17 at 9:05 pm
And now there back.

I think. Test

#75 Smoking Man [http://dyslexicsmokingman.blogspot.com/] on 06.14.17 at 9:32 pm
Two best Journalists in the USA. Deserving of a Pulitzer price. Won’t happen, that award is given to the best sucks ups to the New World Order.

@JackPosobiec
@Cernovich

Best In Canada
@99freemind
@StefanMolyneux
@ontarioisproud
@Smoking Man

————

Simple.

Smoking Man has a WordPress user account on Greaterfool.

#100 Balmuto on 06.14.17 at 10:41 pm

#65 Mark on 06.14.17 at 9:03 pm

“As I’ve pointed out, many, many times, Teranet’s methodology causes their “numbers” to lag literally years behind reality.”

If you’ve got better “numbers” please share them. Thanks in advance.

#101 Smoking Man on 06.14.17 at 10:44 pm

Back on November 4th when I deicided to take on Shlong Zumanga, he thought it was his. Global world with out mind reading technology.

The power of the UCC. That power comes from a empty bottle and electro magnetic waves.

So l’m in Isaacs dog house now, no worries he’s an out law too. Its all in my book. Black mail.

130 blog dogs that wondered into my world.

You have an edge. Go get them.

#102 People are Strange on 06.14.17 at 10:45 pm

I find it crazy that some people still think things are going to keep moving up in this bizarre RE market.
Just look at the numbers and then read some historical data. A lot can be learned from history. That’s why we’re taught to learn it so we don’t repeat our mistakes. Too late…once again. I guess we need better teachers (like Garth).
I just feel bad for those who bought in the past 6-12 months as their 1st home. They can be the teachers for the next craze 25 yrs from now.
Btw….Toronto and Vancouver are not NYC or Paris or London. So get a grip!
Breathe……someday, maybe.

#103 TOrenter on 06.14.17 at 10:45 pm

long time lurker but had to comment today because of the crazy situation.
I got two stories for you that represent the situation in Toronto:
1. A friend wanted to “downgrade” her digs so bought a house before she sold hers. Listed her house several weeks ago hoping to get enough to live in the smaller house with no mortgage. However, timing not so good and now she’s stuck with 2 houses / 2 mortgages.
2. A friend’s marriage is on the rocks so he decides to rent a condo downtown, pretend he is 30 years younger. looked for a condo to rent for a few months but rent was too high so he just bought a condo in one of those overpriced buildings with a rooftop pool because “why throw the money on rent”

Don’t know who’s the crazy one here.
probably both

#104 People are Strange on 06.14.17 at 10:48 pm

I have to leave now and put an offer in on a nice bungalow in Mount Royal.

#105 Karma on 06.14.17 at 10:49 pm

“#21 Lee on 06.14.17 at 7:14 pm
#2 I’m not Poloz

Bmo raised my line of credit rate by one percent and I’ve never failed to make a monthly payment in twenty years.”

I chatted with a friend at BMO today on their discretionary mortgage rates. Looks like they are adding premiums on 30-year amorts over 25-year amorts. On 5-year fixed rates, it was 5 bps. For the 4-year fixed rates, it was 10 bps!!

And their discretion got cut back this morning by 5 bps, but the face rates (i.e. what’s advertised) stayed the same.

#106 Ken from BC on 06.14.17 at 10:51 pm

#74 Freebird

I like it. You check your credit score once a year so you probably don’t have debt. There is an app out there called Credit Karma that updates your credit score weekly. Imagine being so obsessed with and driven to borrow more that you need a weekly update on your ability to borrow more money. The talk around the water cooler is no longer about what your house is worth but how much you can borrow. “My credit score is higher than yours”. The deeper you go, the richer you are. Bizarro world.

#107 data on 06.14.17 at 10:52 pm

Garth “we’ve amassed about $200 billion in these lines, and 40% of people make no payments on them. Zilch. Nada.”

You are saying that 40% are not making a payment, what does that mean? They borrowed and ran away? In default, arrears????? That seems to be a crazy number of folks defaulting on loans linked to homes???

No payments means accrued interest expands the line until the ceiling is met. — Garth

#108 viorelli on 06.14.17 at 11:01 pm

Everyone is in debt up to their ears, even well paid professionals. I know a Greek guy who owns a whole block in Lonsdale in North Vancouver, one of his tenants is a new dentist who bought over an existing practice over a year ago. She missed her rent for the second time in 3 months now, bit still drives a new Range Rover to work to keep up her image of success. The building owner drives a 2003 Toyota camry and wears repaired shoes. Keeping up with the Joneses even though you can’t pay your rent, insanity at its best!

#109 Dominoes Lining Up on 06.14.17 at 11:01 pm

#85 The Reel Me

@#49 Dominoes

I believe that you are correct, and it’s too bad that property tax arrears stats are not more readily available.

For GTA properties, the numbers haven’t worked for many years. Rising MPAC assessments and property tax will squeeze a large percentage of the current ‘owners’ that never should have qualified for a jumbo mortgage to begin with.

Many, along with the specuvestors will learn that businesses don’t go broke because of a lack of assets: they go broke because of a lack of cash flow.

In a rising market, sell some properties or draw down the HELOC to stay current, which masks the real financial conditions. In a stagnant or declining market, look out.
———————————————

Apparently MPAC assessments are a big factor with defaults and arrears this year, as you suggest. MPAC has caught up with the bubble, raising valuations big time this year, so lots of residential and commercial owners in the GTA are being hit with massive tax increases in 2017, catching up on years of price inflation. If you are a landlord, you just cannot recover those costs from your tenants. One example:

http://www.cbc.ca/news/canada/toronto/property-tax-realestate-toronto-businesses-1.4157679

#110 The Real Deal on 06.14.17 at 11:03 pm

Rates are going up, and not for reasons anybody stated in the comments to date. Real, organic growth? Forget about it, the world is mired in demographic induced deflation. Its global and no country will fully escape what is it to come. Rates are going up for the same reason they are going up on long (or short) dated Illinois State bonds. Whether you blame it on collapse in revenues (tax fatigue), population decrease, a three way fight for revenues between govt pensions, Medicaid and basic govt services, it all leads to one thing. Collapse in confidence. As soon as investors get a whiff of the hopeless situation Municipalities, States, and National Govts find themselves in after a twenty year debt binge and the complete lack of revenues to pay for it, that’s when rates move up. Bigly.

The collapse won’t be stock market related or even real estate. This is the end of socialism.

Illinois is the canary in the coal mine. And the poster child for western hemisphere government financial profligacy.

#111 Wack on 06.14.17 at 11:07 pm

#78 Keith
I’m 50, I remember complaining to my F.I.L when I was 25 about how tough it was to make a go of it.
His reply: “it’s always been tough!”
Lol, words I never forgot!

#112 crowdedelevatorfartz on 06.14.17 at 11:10 pm

@#84 Lumpia
“at least I’m a gentleman. I don’t fart in the elevator…”
*******
True.
But I’m an elderly gentleman…….I cant help it…..and it brings so much joy to the other riders.
They get to play a guessing game as they hold their breath!
THEN….they get to tell all their friends, co workers, significant others…….about the game they got to play!

I should be thanked for what I bring into people’s uneventful lives…..horror, danger, drama, mystery all wrapped into one silly elevator ride……..

No need to thank me.

#113 TurnerNation on 06.14.17 at 11:26 pm

@#49 Dominoes just today in Toronto I heard someone talking about their cash flow and the shock of a property tax bill. They “own” a slanty semi.

#114 Dan.t on 06.14.17 at 11:30 pm

Seriously, are people such financial morons…

actually, in BC yes, (sorry answered that question alone), that they can’t see that when you give 4 million people access to a sh*t load of free money that can be leveraged 95-100% and they all chase 1 single asset that it will turn into a bubble of massive proportions.

Awesome public (government) policy in action. Make housing unaffordable. Great economic plan.

..and that at some point, if you buy near the top, you are in for a world of hurt. And yet, still going on in BC.

Always the greater fools get the message late. Higher prices on the only thing the average person can barely afford (1 bedroom condos), on thin volume, means trouble but who cares, maybe in a few years people can talk about politics or how to better the country or, friggen Beanie Babies or anything other than f##kin houses.

Man is it annoying. Something in this country has gone seriously wrong. Do people think for themselves anymore?

#115 crdt on 06.15.17 at 12:10 am

#111 Dan.t on 06.14.17 at 11:30 pm
Seriously, are people such financial morons…

Amen…

“maybe in a few years people can talk about politics or how to better the country or, friggen Beanie Babies or anything other than f##kin houses.”

Double AMEN!!

On a side note, does this seem like hyper inflation? Sure seems houses are being bought by monopoly money these days, sure as sugar the locals aren’t pulling in YouTube money…

#116 JustMe on 06.15.17 at 12:15 am

200 years of US interest rates in one chart

http://www.cnbc.com/2016/11/17/200-years-of-us-interest-rates-on-one-chart.html

#117 Vancouver in the Rearview on 06.15.17 at 12:34 am

So I asked TNLB for an investment loan a few weeks back – I said I wanted 19:1 leverage on the loan and would invest everything into the stock market in a balanced and diversified way. She laughed. I said your bank is happily giving out mortgages at this ratio, why not an investment loan? Too risky, she said.

Of course, blog dogs, I knew that this was almost assuredly the reaction I was going to get, but I wanted to run the experiment anyway.

We are so screwed.

#118 Munny on 06.15.17 at 12:42 am

We all got it comin’ kid.

#119 Property tax on 06.15.17 at 12:59 am

#49 Dominoes Lining Up

If your source is right will spell alot of trouble ahead for RE. I know of a couple of people who can not pay but I had no idea it is that wide spread. This housing bubble created a huge problem.

#120 Mark on 06.15.17 at 3:06 am

“How does interest free “Sharia banking” work and not cause similar effect?”

Sharia banking just capitalizes the interest, ie: if you borrow $1 for repayment in 5 years, they only give you, say, $0.80. The $0.20 is not called ‘interest’, it is basically termed as a set-up fee on a loan, or similar.

Alternatively, Islamic banking heavily encourages the funding of purchases with equity, not debt. So if you obtain an Islamic mortgage, you ‘own’ a chunk of your house, and the “lenders” own the rest. You pay rent on the portion you don’t own, but the goal over the long term is to acquire 100% of the equity. The lenders, who are often members of the community, share in the risk associated with the housing, so they’re quite willing to offer assistance/advice that may maximize the value of upkeep, renovations, etc., which is of particularly special relevance to newer/younger homeowners.

Its actually not that bad of a system. Even if one rejects Islam and Sharia for religious reasons, conceptually people who adhere to Islamic investing principles will do quite well going forward, minimizing their exposure to the pitfalls of debt and asset deflation. Investment into gold features prominently in Sharia investing practice, and there’s certainly reason to believe that gold would do well in a widespread credit deflation as well.

#121 Anne Wilson on 06.15.17 at 3:09 am

My heart is broken, I have 1 nephew who is 25 and doing great financially as an eletctrican and living with mommy for the past 25 yrs paying barely anything in support to his mommie and making about 50 to 60K. Here is the issue. 2 Weeks ago he just bought the house 2 doors away from him mom in Bramalea, J section for 475,000. Seriously!!!!!!
If you are blind you can read braille what the fu?

#122 Tony on 06.15.17 at 3:51 am

Re: #90 GFD on 06.14.17 at 10:10 pm

I sized that one up right all but gave the nominal fine amount. Like I said all you had to do was buy the shares “right before” the OSC handed down their decision.

#123 Mark on 06.15.17 at 4:57 am

“If you’ve got better “numbers” please share them. Thanks in advance.”

There isn’t a lot of good data in the public domain. Basically the proprietary datasets have to be adjusted in a process that I’d call ‘distribution-normalization’ to account for changes in the sales mix that heavily influence Realtor report average house prices. This requires knowledge of the actual distribution of sales, and comparison of such actual distribution against such in the past.

Even then, a very serious problem that arises is that a mere 20-30% of the overall housing stock, represents 80-90% of the sales. In other words, only a subset of the housing inventory actually turns over, and turns over relatively frequently, renovated, flipped, etc. But to really have an accurate view of the overall ‘housing market’, you need to significantly down-weight those observations, and up-weight relatively sparse observations of price changes from a very limited subset of “the majority” of houses that do not transact often. These houses, with long-term ownership (20-50 years of ownership), I believe are actually more representative of actual house price changes, rather than just the small chunk of houses that experience frequent transactions.

So in a nutshell, there isn’t a lot of good data, because RE isn’t a homogenous asset class.

Teranet’s methodology is fundamentally flawed for the simple reason that they geometrically average price changes over the entire period of ownership. So if a house was transacted in 2007 and 2017, for example, they just assume, for the purposes of their calculation, that the house appreciated at 7.2%/year (rule of 72!), and, after applying some sort of statistical adjustment for the impact of renovations/re-investment, add it to an overall average. This creates output data that has an obvious lag and low-pass filtering, ie: not very useful for assessing near-term change.

There are some other technical problems with numbers that are out there as well. For instance, in Vancouver over the past few years, a lot of transactions were reported to the RE board’s datasets which were not really arms-length, conducted between and amongst various “landlord families” to prop up valuations to obtain additional credit against otherwise cash-flow-negative RE holdings. This practice was known as “assignment flipping”. Hilliard MacBeth argued on a recent TalkDigitalNetwork interview that Land Titles-derived data can lag considerably due to registration issues. Indices or averages are only as good as the quality of the data going into them, so where there’s obvious problems with data quality, its pretty difficult to come to proper conclusions based on such. Canada’s RE sell side, unfortunately, is notoriously resistant of having comprehensive datasets available to the general public, and has threatened individuals legally to protect themselves from critical analysis.

#124 Futures look ugly on 06.15.17 at 6:49 am

TSX is on the cliff …a nice push from south of the border would be nice ! Nasdaq finally take a well deserved breather

Ugly ugly

#125 Cottingham a bargain on 06.15.17 at 7:05 am

Amazing how lightning fast financial markets decline on change in investor sentiment and equally amazing how sticky RE prices are on the way down only (move equally fast on the way up) on same change in sentiment.

That reason alone makes me a better RE investor than financial one .

#126 A Reply to #120 Mark on 06.15.17 at 7:11 am

“Teranet’s methodology is fundamentally flawed for the simple reason that they geometrically average price changes over the entire period of ownership.”

No, their methodology is correct. “The geometric mean is more appropriate than the arithmetic mean for describing proportional growth, both exponential growth (constant proportional growth) and varying growth; in business the geometric mean of growth rates is known as the compound annual growth rate (CAGR). The geometric mean of growth over periods yields the equivalent constant growth rate that would yield the same final amount.”

https://en.m.wikipedia.org/wiki/Geometric_mean

https://en.m.wikipedia.org/wiki/Compound_annual_growth_rate

#127 maxx on 06.15.17 at 7:19 am

#3 TK on 06.14.17 at 6:34 pm

“What follows? Two decades of stagnation?”

For those with debt, yes.

As for the business sectors, they will mostly all survive and thrive. Always have. Fake people, aka corporations, have the most robust survival DNA known to man. In all probability, they will only become stronger and adapt to changing economic conditions. This is what they do. All day long. Every day.

Sheeple hop about, excited that they can graze on greener pastures because the cost of money has been squashed beyond levels that are anywhere near remotely healthy for the economy. Sheeple believe that daddy government will protect them and that status quo will prevail.

There are few things in life as serious as debt. Its repayment is a constant and however it is done will cost sheeple, one way or another. Payment in full, forfeiture of assets, bankruptcy, relationship stress, illness…you name it.

Hear that howling outside? It’s not the wind, it’s a very hungry wolf.

Get out of debt.

#128 GFD on 06.15.17 at 7:56 am

#120 Mark on 06.15.17 at 4:57 am
Indices or averages are only as good as the quality of the data going into them, so where there’s obvious problems with data quality, its. . . . . AKA garbage in, garbage out.

#129 maxx on 06.15.17 at 8:26 am

“……They already hate us. This could be epic.”

Indeed. Not only will they hate us, they’ll hate their banks, the BOC, the bank of mom (putziest source of re funding) and daddy gubbmint. Everybody else is to blame for getting themselves into debt.

They already hate their jobs after years of being insanely spoiled and being programmed to believe that they’re entitled to the lifestyle of the rich and famous. ………….NOW!

Way wrong sort of indoctrination.

The whole point of working, imho, is to move the heck away from enslavement. Yesterday. Now the opposite has happened. For many, we’re not talking months or years of debt repayment – we’re talking decades. Many who have good or even great jobs could easily have ended up rich. Very rich, with a dream retirement guaranteed.

Smokie makes a very good point about herd behaviour. Is there a gene for independent thought and action?

Looks like the bank of mom may need to make yet another instalment payment to prop up the “home” junior and the little princess so deserve. Unless they contract yet another case of re ennui, at which point yet another instalment will need to be forthcoming.

After all, renting is just “throwing money away”.

I see a future where the turtle will see the hare yet again scratching its head. The stunned pecker will never figure out how the turtle did so well.

#130 maxx on 06.15.17 at 8:33 am

#18 Randy Belwood on 06.14.17 at 7:09 pm

“I don’t expect my Bankrupt Provincial, Federal and Municipal Governments to take this rate increases lying down.
They are looking forward to raising income taxes, sales taxes and property taxes in a big way to make up for their shortfalls…haha”

…or they could simply inflate it away. Either way, debtors lose.

#131 Q2 Class 2-B-C-2 Duplex Drive on 06.15.17 at 8:39 am

‘Great. They already hate us. This could be epic.’

Poor millennials. This’ll look good on them.

Their music sucks, too.

Signed – Born in 1953 and proud of it!

#132 GFD on 06.15.17 at 8:55 am

#76 crowdedelevatorfartz on 06.14.17 at 9:34 pm
I’ve heard that brain cancer cells were detected in his rectum.

#133 Stan Broock on 06.15.17 at 9:04 am

There will be no meaningful rate increase by BOC in near to mid term future – 3-5 years.

This is just lip service to confuse the pubic, specially the savers and bond holders, in the light of the Home Capital fiasco.

You willing to bet on that? If you lose, you must read 6 months of SM’s deleted drivel. — Garth

#134 Shawn on 06.15.17 at 9:06 am

Can you spend some time in your next post explaining how the Realtor #s can be worse than the Teranet #s?

Zolo < Realtor < Teranet

The numbers shouldn't vary to this degree. Ridiculous.

Thanks!

TREB is fresh. Zolo is fresher. Teranet is stale. — Garth

#135 Xbox Economist on 06.15.17 at 9:11 am

“The Bank of England would be pumping its rate as well this week, were it not for the damaging election result.”

Indeed, the FTSE is reacting very negatively to the surprise 3-5 vote for raising rates at the BoE. Here we have 2 central banks with the same mandate but different policy decisions. Is the Fed the only bank in the world that can pull off a “dovish” rate hike? Lol.

#136 milleniallmoose on 06.15.17 at 9:18 am

Have you guys seen this? Is this what mills are aspiring to? What they see as the only path to wealth (borrowing)? And how did this girl even get all these mortgages on a retail managers salary? When I saw this on facebook most young people were commenting that they did the same thing and are in debt up to their eyeballs….scary times coming.

https://www.thestar.com/news/canada/2017/06/14/big-sacrifices-and-a-plan-can-pay-off-for-younger-real-estate-shoppers-teitel.html

#137 Tater on 06.15.17 at 9:29 am

JustMe on 06.14.17 at 6:27 pm
FACTS: The Teranet–National Bank National Composite House Price Index rose 2.2% in May, the largest-ever increase for that month over the 19 years for which the index is available. Home prices rose in all the eleven metropolitan regions covered, a first in 12 months. Price gains were above the national average in Toronto (+3.6%, a record for any month)

https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf
——————————————————————–

That index is for deals that CLOSED in May. With a typical 60 day close, it means the deals were struck in March, at the peak of prices. TREB data of deals done in May, shows prices weakening. My fave was Richmond Hill going from 1.4m to 1.1m. In a month.

#138 Space Dust on 06.15.17 at 9:33 am

#98 Smoking Man on 06.14.17 at 10:44 pm

Back on November 4th when I deicided to take on Shlong Zumanga, he thought it was his. Global world with out mind reading technology.

The power of the UCC. That power comes from a empty bottle and electro magnetic waves.

So l’m in Isaacs dog house now, no worries he’s an out law too. Its all in my book. Black mail.

130 blog dogs that wondered into my world.

You have an edge. Go get them.
..

No way you sold 130!
Retirement is gonna kill you…. you should get a job.

#139 n1tro on 06.15.17 at 9:34 am

@crossbordershopper

Credit is for poor people. Cash is always king.

#140 FLHTK on 06.15.17 at 9:58 am

#108-Whack, #78-Keith
Whack and Keith your right i’m at the beginning of the millennium scale and it’s tough. I moved to fort mcmurray and made big bucks to pay my school debt and all my debt off about 9 years ago…. Mining towns are full of hard working people. I move back to Onteribble 6 years ago and the taxes we pay are awful here. Slave to a mortgage and associated bills that chew 70% of my paycheque or more..and i’m one of the lucky ones I have a gov job that pays well….I have a specialty that I do and is legislated by law that certified people do the job….I’m lucky! I see younger generations like my niece and nephew forgoing post secondary and hoping right into the work force for a little over min. wage….buying brand new cars living on their own and getting themselves into debt…..scary to think of where the future is headed….if it isn’t tough yet it sure as sh*t will be for them

#141 Figure it out on 06.15.17 at 10:06 am

#73 Sultan of Sudbury — “I just modelled 15 years of renewals based on Fed rate expectations (out to 2020) on a $553,000 mortgage. It seems payments keep increasing as the amortization schedule becomes shorter and balance reduces?”

That’s why your friendly neighbourhood mortgage broker will help you refinance into another 25 (or even 30) year term every five years, as long as you’ve got 20%+ equity. Of course, you’ll never pay off the house that way, but YOLO, right?

#142 Pete on 06.15.17 at 10:10 am

On June 18, 2008, TSX closed at 15,073.

Now June 15, 2017, it is trading at 15,115, up 0.3% for 9 years.

#143 Figure it out on 06.15.17 at 10:19 am

#77 GIC linked to index — “Can anyone explain to me what the downside of this type of investment would be?”

The downside is that the bank that sells it to you keeps most of the upside. They pay based on the change in the TSX utilities index — which mirrors the change in the share prices, but ignores the dividends, which would be a major component of your returns if you actually owned the stocks. And I think it’s smarmy of them to quote possible total returns of “25%” but not annualized, when every other financial product you’d be comparing it to (except maybe syndicated mortgages) quotes annualized returns. And do you really want to take a flyer on utility stock prices in what Garth swears will be a rising rate environment?

Oh well, could be worse. RBC also sells a Banks index linked GIC… which includes Home Capital in the index. Nyuk nyuk nyuk.

#144 Chaddywack on 06.15.17 at 10:26 am

More Vancouver real estate board propaganda.

First headline on Global BC this morning…..go figure!

http://globalnews.ca/news/3529481/vancouver-home-prices-foreign-buyers-tax/

I guess prices have no where to go but up!!!!!

#145 Doug in London on 06.15.17 at 10:31 am

@Futures look ugly, post #121:
TSX is on the cliff you say? I must be dyslexic, as the first time I read that sentence I thought it said TSX buying opportunity. Speaking of which, ENB, IPL, and XEG are on sale right now.

#146 Method on 06.15.17 at 10:37 am

#131 Shawn
Can you spend some time in your next post explaining how the Realtor #s can be worse than the Teranet #s?

Teranet’s methodology is by far the best.
It uses re-sale values of the exact same property.

So if 123 Main St sells for X in jan 2010 and it sells for Y in may 2017, then you know the exact appreciation over those years.

If 123 Main St had a renovation in between, Teranet will not use it for their calculation of the HPI.

Teranet’s HPI does not lag. It uses May 2017 transactions.
Although they do a 3 month low pass filter I believe, so it softens the signal a little.

Check out the 2008 dip in HPI graph . It is not “years later.”
Last, stop listening to Mark, he is full of it. Waste of time.

PS: Teranet is the only indicator of the 3 that actually fully publishes their methodology.
Get it from their website if you want.

#147 Stan Broock on 06.15.17 at 10:38 am

You willing to bet on that? If you lose, you must read 6 months of SM’s deleted drivel. — Garth

———————
Yes.

In my humble estimates, on average for the next 5 years the BOC overnight interest rate will not exceed current rate by more than 0.5 %.

IMHO the ‘economy’ will not be able to handle higher rates than that.

As 5 years is long time to wait to see who is correct, I would go for reading the SM’s deleted drivel.

He/SM has some interesting views on the future of the CAD aka ‘the loonie’ which I share as well but with slightly different timeline.
(The proverbial 50 or even 35 (euro) cents CAD.)

#148 Real Estate Associatin Needs New Commercial on 06.15.17 at 10:39 am

Everyone seen the Real Estate Association commercial about the couple who bought a house without an agent and later found out that the backyard wasn’t really theirs?

https://www.youtube.com/watch?v=pl7rNCmQHiM

Well that happened in Nova Scotia……and yes the buyer did use a real estate agent.

http://www.cbc.ca/news/canada/nova-scotia/buyer-beware-home-purchase-realtors-1.416024S8

Always get a survey as well as title insurance. This is a story of lawyer incompetence. — Garth

#149 Sam the Man on 06.15.17 at 10:40 am

To anyone needs credit card, no credit check or the need to have a job.
http://www.capitalone.ca/credit-cards/guaranteed-mastercard/?Log=1&EventType=Link&ComponentType=T&LOB=MTS%3A%3ALCTMMBESH&PageName=Compare+Credit+Cards&ComponentName=Guaranteed+Mastercard%3B&ContentElement=1%3BGuaranteed+MasterCard%3Csup%3E%26reg%3B%3C%2Fsup%3E&TargetLob=MTS%3A%3ALCTMMBESH&TargetPageName=Guaranteed+Credit+Cards&referer=https%3A%2F%2Fwww.capitalone.ca%2Fcredit-cards%2Fcompare

#150 NEVER GIVE UP on 06.15.17 at 10:43 am

#9 crossbordershopper on 06.14.17 at 6:41 pm
====================================

Forget about Big Banks for most things except basic banking.

They do a lousy job in almost everything else.
Capital one is all over them in every way.

Independent foreign exchange providers are far cheaper and more efficient and usually a day or two faster.

Foreign exchange rates are better at small CUs and at independent FX companies.

Even Bank Drafts cannot be trusted from Big Banks. They don’t trust them from other banks! You may have to wait while they phone to verify and that takes an hour in the bank.

Shop around.

#151 Rainclouds on 06.15.17 at 11:03 am

#78 Keith Things the millenials haven’t experienced:

-double digit returns on cash
-pay rises for working people above the cost of living
-paying off a mortgage in less than ten years with deflated dollars
-buying a house for five figures
-paying for a years tuition at a top flight university with 200 hours of work at minimum wage

It’s a lot tougher these days, have a heart.

They also haven’t missed :
-Double digit inflation and mortgages
-conscription in the USA
-unemployment rates at 15%
-property valuations dropping by 50%
– perhaps if they weren’t tripping over themselves and each other to “get into the market” prices would be a lot lower.
-Perhaps CHOOSE a career path that points to employment and good wages without crippling debt

While every generation has its advantages and disadvantages we are all responsible for the decisions we make and must either change the thinking or actions to adjust to whatever reality presents itself. Nothing is static, it never was.

I think of my friends 26 yr old son who is a ticketed read seal carpenter and he is banking coin for the day when or IF RE is a sensible purchase. Choices and actions guided by common sense with a healthy dose of delayed gratification…………

#152 Don't Remember Betting on 06.15.17 at 11:03 am

You willing to bet on that? If you lose, you must read 6 months of SM’s deleted drivel. — Garth

Too late! I already read 6 months of SM’s deleted drivel, and I didn’t even make the bet! Rats!

#153 Puppet Master on 06.15.17 at 11:26 am

The Smoking Man has not cashed out at all and his joint now has a market value of 750,000. His closing date is in late July for 950,000. Good luck with that as his buyers may have a change of heart.

#154 Ole Doberman on 06.15.17 at 11:33 am

#148 Don’t Remember Betting on 06.15.17 at 11:03 am

You willing to bet on that? If you lose, you must read 6 months of SM’s deleted drivel. — Garth

Too late! I already read 6 months of SM’s deleted drivel, and I didn’t even make the bet! Rats!
——————————————————-
Only Garth has seen what SM deleted drivel holds – and I for one would be interested.

SM is a prolific individual who can think outside the box.

Maybe a blog post can dedicated to that

#155 Balmuto on 06.15.17 at 11:36 am

_#120 Mark on 06.15.17 at 4:57 am

“There isn’t a lot of good data in the public domain.”

I didn’t ask if you there was good data “in the public domain”. I asked you if you had any better numbers of your own. Obviously you don’t have any. Pointing out perceived weaknesses in a data source is not the same thing as providing alternate and better data yourself. How can you fail to understand this?

#156 Ole Doberman on 06.15.17 at 11:48 am

#113 JustMe on 06.15.17 at 12:15 am

200 years of US interest rates in one chart

http://www.cnbc.com/2016/11/17/200-years-of-us-interest-rates-on-one-chart.html
———————————————————-
thx, that is a really interesting chart.

Wonder why the big rise from 1946 to 1981? And better yet how did homes prices fair during this time.

This would make a great blog post all on it own.

#157 Davie on 06.15.17 at 11:48 am

No crash in YVR or surrounding hoods.

Interest rates will take years and years to normalize. At that point inflation will eat away at most of the debt that has been accumulated, and what isn’t eaten away by inflation will be paid off as prudent borrowers take advantage of ultra low interest rates to build equity. Prices will remain high, affordability has permanently eroded.

Here in YVR the impact of foreign money is a reality to anyone that lives and works here, to anyone with a pulse who keeps their eye on real estate, or knows someone who sells it. There is no end to this money, just as there is no end to the vast populations overseas that all want a spot in one of the greatest countries in the world. People don’t care how much stable politics cost (i.e., Canada). Wise money overseas know that their money finds a safe haven here.

Add to this the population projections for YVR and surrounding areas, tight rental markets, high rents. . .if you have some money you won’t go wrong buying even now. Ear mark this thread and come back in 5 years and see if I am wrong.

#158 Calgary Rip Off on 06.15.17 at 11:52 am

And this is exactly why I acquired the mortgage in 2011. Already the principal is reduced almost $100K. That’s money not towards rent. If I had waited that money would be gone. Yes the value of the property is at around $500k, whereas when the mortgage was acquired was around $420K. So not much in gains. With interest rates up and oil still down, not likely much increase. Will the value of the mortgage go negative as to the purchase cost? Seems unlikely long term. Now if the interest rates went from 1-2% to 15%, it would be Calgary 1984 all over again. For those that are subsisting on ramen noodles with current low interest rates and are maxed out on their monthly mortgage payments, good luck on renewal. Was I approved for $800K in 2011? Yes. Did I act on that? No!! And it is greed precisely why people are in trouble. There is a difference between needs and wants. I need a place to live in. Given that the mortgage and the rent is almost the same, not hard to calculate what to do. However if the job were unsteady, I were almost to retire, entirely different variables. Calgary remains a rip off not likely to reach the reasonableness of costs in 2000-2005.

#159 S. Poloz on 06.15.17 at 11:57 am

– Disagree. I think canadian rates have only one way to go and that’s lower. Unless Canada is going down the drain (financially). Along with sharply rising long term yields.
-No, short term rates going higher in the US doesn’t mean the US economy is improving. More and more signs suggest that the US economy is weakening.

#160 S. Poloz on 06.15.17 at 11:58 am

– My bet is that the next rate move will be a rate cut.

#161 Ole Doberman on 06.15.17 at 12:10 pm

#113 JustMe on 06.15.17 at 12:15 am

200 years of US interest rates in one chart

http://www.cnbc.com/2016/11/17/200-years-of-us-interest-rates-on-one-chart.html
———————————————————-
wow mind blowing, as rates raised substantially from 1946-1981 house prices actually went up!

100 years of house prices
http://observationsandnotes.blogspot.ca/2011/06/us-housing-prices-since-1900.html

Can anyone shed some light on this?

#162 Smartalox on 06.15.17 at 12:26 pm

An unscientific, anecdotal observation: living in a south-Vancouver postal code, we receive a lot of ad-mail from Realtors, usually two or three pieces a day.

Usually, these ads trumpet local properties, and the prices the agents allegedly managed to get for them, ‘trolling’ for new listings.

Yesterday’s count of 5(!) pieces of ad mail shifted the message from ‘looking for listings’ to ‘Looking for buyers!’

I sense that the worm has turned: not only are listings in south Vancouver (V5_) stale enough that they need to be advertised, they’re stale enough that they can remain un-touched long enough to allow the listing agents time to produce ad mail and have it distributed.

Not to mention have the Realtor take the risk of having their name associated with listings that they can’t sell, and are desperate to move.

The only way that makes sense is if the realtor’s ads are for property that they themselves own, or that they may have a stake in owning.

Caveat emptor though: I wouldn’t want to list with a Realtor who has their own properties to sell – only to have them under-cut me by lowering the price on any comparable property that they own, and may be trying to sell at the same time.

#163 Figure it out on 06.15.17 at 12:28 pm

#144 Real Estate Associatin Needs New Commercial — “Everyone seen the Real Estate Association commercial about the couple who bought a house without an agent and later found out that the backyard wasn’t really theirs?

Well that happened in Nova Scotia……and yes the buyer did use a real estate agent.”

That guy is so stupid that he still hasn’t figured out it was a fraud. There’s a reason the owner of “his” backyard waited 25 months to say anything. Hoping to run out the statute of limitations and protect all involved… Small town crooks. And this guy thinks asking nicely will get him anything except a PFO letter? Not even smart enough to sue.

You don’t need a survey to discover that crap, just a plan of subdivision from the land office would have showed it clear enough. And this guy’s lawyer ought to have noticed that the property on title was 1/2 the size of the MLS listing.

#164 InvestorsFriend on 06.15.17 at 12:42 pm

Teranet Index criticisms

There appear to be two criticisms. First it is based on closed deals and so lags two months for that reason. MOST of the time that is not a big deal but it does mean it will be late noticing the turn in the market. I believe the Case Shiller index is also somewhat lagged that way. Be patient two months will go by and then you can see how Ternanet looks based on July closings (May sales agreements)

Second, the index assumes that the price change on a given house occurred evenly over the time since its last sale. Well, what else would one assume? Would we rather that they massaged the data in some way? Is Case Shiller not done that way?

It seems to me that the Teranet index is about as a good an index as can be done when we are looking at houses which sell infrequently and where each house is unique. It’s not perfect but it’s at least objective. It’s FACTUAL as our first commenter today pointed out. It’s not predicting anything and it is a bit lagged. But it presents history as accurately as possible, does it not?

#165 Sonny on 06.15.17 at 12:49 pm

Home sales across Canada register biggest monthly decline in nearly 5 years

http://www.ctvnews.ca/business/home-sales-across-canada-register-biggest-monthly-decline-in-nearly-5-years-1.3460634

#166 isuckless on 06.15.17 at 12:54 pm

These days there is a confusion related to “education” and “degree” (in whatever area you want). Education system is still one based in 19th century where flow of information was restricted to places of “higher” learning and if you wanted to get educated you will have to go there and pay the price. Now, if you want to study mid-13 century France you DON’T have to go to the university and spend years doing it. Information (related to this kind of stuff) is available outside schools and universities. You still need money to survive so you can practice any profitable enterprise for that. However this is not something you can boast on Facebook as we look at educated carpenter as something that does not exists (it does and those guys are lever and educated while doing the job that brings them money).
Millenials are misled by the society and education system sadly.

#167 cephalopods on 06.15.17 at 12:58 pm

Can anyone explain to me what the downside of this type of investment would be?

http://www.rbcroyalbank.com/products/gic/canadian-utilities-marketsmart-gic.html

——————————————————————
Not tax efficient as any cap gains will be taxed as income.

Linked to the price returns of the index, so no benefits from dividends which tend to be a sizeable driver of returns in utilities.

Return may also be capped or limited to a % of the index return.

Return is highly dependent when bought and when it matures. More flexibility in timing your sell with an utility focused ETF or mutual fund.

Garth wrote about it
http://www.greaterfool.ca/2014/03/23/money-for-nothing-2/

#168 Stan Broock on 06.15.17 at 12:58 pm

The oligopolies want their due fees as the real owners of this herd.

https://ca.finance.yahoo.com/news/heritage-committee-recommend-5-per-030753216.html

#169 YVR is crashing on 06.15.17 at 1:08 pm

YRV is in trouble. If that wasn’t the case you wouldn’t have realtors post again and again in a desperate attempt to convince others. How are sales guys? How many of you shysters are falling behind on payments? Lol as happy housing crash guy would say “Happy Housing Crash Everyone!”

#170 Capt. Serious on 06.15.17 at 1:22 pm

#162 isuckless on 06.15.17 at 12:54 pm

Now, if you want to study mid-13 century France you DON’T have to go to the university and spend years doing it. Information (related to this kind of stuff) is available outside schools and universities.

Knowing information is not the same thing as being able to use information to write about a topic. You don’t go to university just to get information.

#171 InvestorsFriend on 06.15.17 at 1:26 pm

When house prices rose despite higher interest rates

#157 Ole Doberman on 06.15.17 at 12:10 pm asked:
wow mind blowing, as rates raised substantially from 1946-1981 house prices actually went up!

Can anyone shed some light on this?

***************************************
Well, there was massive inflation especially in the 1970’s and so you might need to see if REAL interest rates went up. Everything went up as the value of a dollar plummeted.

Also the house price chart you linked to is garbage because it fails to use a log scale for a 100 years of data. Yes it does show house prices up and that is true. But the trend in percentage can only be properly viewed on a log scale.

Also houses changed radically from 1946 to 1981. The average square footage went up a lot and the number of bathrooms about doubled. Outhouses became extinct. (Believe me, the two-holer was not rare in 1946)

Then there were demographics and the baby boom. All those soldiers returning and moving to the suburbs.

One lesson here. Simple rules like houses always go down when interest rates rise are just that: Simple. (But this time it will likely be true)

#172 InvestorsFriend on 06.15.17 at 1:28 pm

Okay the Ole Doberman chart DOES correct for house size and improvements (like indoor plumbing) biggest reason for the increase is inflation, devalutation of a dollar.

#173 n1tro on 06.15.17 at 1:38 pm

“Will be like that for another few more months, around Sept 6th I’m thinking. Then the CAD will get destroyed. Print this put on the fridge.”

I have Aug 20ish, there will be a turn in USDCAD, which way, not sure. Will confirm then.

#174 Alien on 06.15.17 at 1:39 pm

Somebody tell me please:

Am I living on a different planet? Or what.

http://news.buzzbuzzhome.com/2017/06/toronto-home-prices-foreign-buyer-tax-may.html

#175 Value in oil, doug? on 06.15.17 at 1:59 pm

Guess you’re not a fan of technical analysis

#176 RentYVR on 06.15.17 at 2:01 pm

“The central bank has wanted to raise rates for years in order to stem the debt orgy by totally undisciplined borrowers, but a weak economy, tepid job growth, saggy commodity values and trade woes prevented it.”

Where are you getting this, Garth? All I hear from the central bank is concerns about the strength of our dollar, the fragility of our economy and the need for consumers spending to remain “robust” in order to support what little growth we’re generating.

As with housing methinks you’re celebrating the confirmation of your longstanding view on rates a bit too early….

#177 choptstix on 06.15.17 at 2:07 pm

Home sales across Canada register biggest monthly decline in nearly 5 years

http://www.ctvnews.ca/business/home-sales-across-canada-register-biggest-monthly-decline-in-nearly-5-years-1.3460634
———————————————-
not so fast, however, in ‘it’s different here’ Scamcouver:
…from that same report towards the end:
”In the closely watched Vancouver market, sales were up by 22.8 per cent month-over-month. There are concerns that the city may be returning to bubble territory less than a year after the British Columbia government instituted a tax on foreign buyers of properties in the Vancouver area.”

#178 Smoking Man on 06.15.17 at 2:08 pm

#150 Ole Doberman on 06.15.17 at 11:33 am
#148 Don’t Remember Betting on 06.15.17 at 11:03 am

You willing to bet on that? If you lose, you must read 6 months of SM’s deleted drivel. — Garth

Too late! I already read 6 months of SM’s deleted drivel, and I didn’t even make the bet! Rats!
——————————————————-
Only Garth has seen what SM deleted drivel holds – and I for one would be interested.

SM is a prolific individual who can think outside the box.

Maybe a blog post can dedicated to that
…….

Trust me, the deleted posts are not meant for human consumption. would be like a 5-year-old watching the exorcist for the first time.

You don’t want to go there.

#179 SilverSon on 06.15.17 at 2:21 pm

#154 Calgary Rip Off on 06.15.17 at 11:52 am
“And this is exactly why I acquired the mortgage in 2011. Already the principal is reduced almost $100K. That’s money not towards rent. If I had waited that money would be gone. ”

Sorry to burst your bubble here, but that money IS gone. Maintenance, property taxes, homeowners insurance (as opposed to renters insurance), and interest on a $430k mortgage over 6 years would add up to around $100k. Sure your principal owing has gone down by $100k, but you’ve given another $100k to your contractors, township, insurance company, and financial institution in the meantime. So you spent $200k and only have $100k gain in equity to show for it. If you sold today for $500k and backed out your closing & moving costs, there’s a good chance you could have rented for the past 6 years cheaper than what it has cost you to own. And then you could have taken the $100k that went towards your principal and put it in more diverse, liquid investments returning you 5-6% with less risk.

The only way owning a house can truly make you money all comes down to owning it for as short a time as possible and being lucky on your timing. When you own a house the maintenance, property taxes, insurance and mortgage interest makes you bleed money. As such, the longer you own it the more capital gain you’re going to require recover those costs. Then, of course, you need to be lucky enough to buy it just prior to a fast and dramatic increase in price and then sell it just before the downturn. All the homeowners I know that sold recently and walked away with their financial windfall acknowledge that they were lucky more than smart.

But to your credit, I applaud you for buying sensibly and not borrowing the full amount for which you were approved. As Garth has said so many times, buy it if you want it and can afford it, and that sounds like what you did. There’s nothing wrong with paying a premium for something you like if you can afford it.

#180 Wrk.dover on 06.15.17 at 2:38 pm

#126 maxx on 06.15.17 at 8:26 am

The whole point of working, imho, is to move the heck away from enslavement. Yesterday. Now the opposite has happened. For many, we’re not talking months or years of debt repayment – we’re talking decades. Many who have good or even great jobs could easily have ended up rich. Very rich, with a dream retirement guaranteed.

—————————————-

The whole story right there folks.

#181 captain obvious on 06.15.17 at 2:39 pm

#174 Smoking Man on 06.15.17 at 2:08 pm

#150 Ole Doberman on 06.15.17 at 11:33 am
#148 Don’t Remember Betting on 06.15.17 at 11:03 am
You willing to bet on that? If you lose, you must read 6 months of SM’s deleted drivel. — Garth

Too late! I already read 6 months of SM’s deleted drivel, and I didn’t even make the bet! Rats!
——————————————————-
Only Garth has seen what SM deleted drivel holds – and I for one would be interested.
SM is a prolific individual who can think outside the box.
Maybe a blog post can dedicated to that
………………………………………………………………
Trust me, the deleted posts are not meant for human consumption. would be like a 5-year-old watching the exorcist for the first time.
You don’t want to go there.
………………………………………………………………….
Prolific individual? Outside the box, there is no box with him! The only box for Smokie is a litter box.

#182 Fake News on 06.15.17 at 2:40 pm

In the news today in Greater Vancouver – house prices are as high as they have ever been.

#183 Mark on 06.15.17 at 2:51 pm

“No, their methodology is correct. “The geometric mean ”

Its not a geometric mean versus arithmetic mean issue. Its the fact that the methodology attempts to fit an exponential curve to a process that is not exponential.

For example, in that 10-year interval where prices went up 100%, Teranet’s methodology posits that each year, prices went up an even 7.2%/annum. In essence, they ‘fit’ an exponential curve to the price increases.

In reality, prices most likely went up significantly in excess of 7.2% in one year, and may have actually fallen in 2008/2009.

Its the assumption of that ‘perfect’ geometric growth by way of averaging growth over the entire period of ownership that makes the Teranet methodology useless for predicting near-term changes. Not the use of an arithmetic versus a geometric average.

Ross Kay argues that the Teranet index is flawed for other reasons in a recent TalkDigitalNetwork interview. He’s a bit less coherent than he should be though, but worth a listen nevertheless:

https://www.youtube.com/watch?v=UK6XBWmDuFw

#184 IHCTD9 on 06.15.17 at 3:29 pm

#126 maxx on 06.15.17 at 8:26 am

Is there a gene for independent thought and action?

__________________________________________

Nope, it’s learned. Starts with truly not giving a crap about what anyone else thinks, says, or does. Crystalizes when you realize you are wining amongst a sea of losers.

IMHO, gaining this independence should be a primary goal in life coveted by all.

#185 Lillooet, BC on 06.15.17 at 3:34 pm

If technical analysis is so important in investment, why Buffett has never talked about it?

Often wonder if technical analysis only for small guys?

#186 MORTGAGE FRAUD on 06.15.17 at 3:50 pm

Here is perfect example
Have you guys seen this? Is this what mills are aspiring to? What they see as the only path to wealth (borrowing)? And how did this girl even get all these mortgages on a retail managers salary? When I saw this on facebook most young people were commenting that they did the same thing and are in debt up to their eyeballs….scary times coming.

https://www.thestar.com/news/canada/2017/06/14/big-sacrifices-and-a-plan-can-pay-off-for-younger-real-estate-shoppers-teitel.html

#187 Doug in London on 06.15.17 at 4:01 pm

Well, so much for all these “experts” commenting here who say that interest rates will NEVER rise.

#188 TurnerNation on 06.15.17 at 4:03 pm

Where are all the CPD whiners? See y’all at $15.

#189 Stock picker on 06.15.17 at 4:26 pm

#88 Cheap Money, Islamic Banking…. is a sham….a disguise….in order to call what the Hebrew bankers did historically ….collect interest…by another name…..Islam differs by collecting the interest in an up front fee….and a set term mortgage….where….like today’s mortgage brokers you borrow 20 thousand less a 2000 fee and you get 18 in hand……whereas the Jews extended the loans and collected perpetually at the agreement of both parties. The added difference in Islamic lending is the fixed term expiry where all money owed is repaid immediately on demand or collateral is confiscated and a debtor of even an insignificant amount can be imprisoned and his estate confiscated. The Jewish lenders were more flexible and took risk for profit…..enlightened banking. Can you imagine if we had Sharia banking here? You’d have mass poverty, jails full, lots of rich lenders relying on hoarding gold for lack of borrowers ..just like the Middle East.

#190 45north on 06.15.17 at 4:29 pm

Dominoes: talking about property tax arrears:

In Toronto, Revenue Services has apparently had staff pulling overtime shifts for the last few weeks due to a huge increase in visits and calls about tax accounts. Internal discussions are pointing to a drop of 10-20% in property tax revenue already this year, assuming the rate of accounts going into arrears does not increase more.

drop of 10-20% in property tax revenue: I don’t see how the City can hide that!

#191 reply to #163 cephalopods on 06.15.17 at 4:37 pm

Thank you for the reply and the link. :)

#192 Mattl on 06.15.17 at 4:42 pm

#175 welcome to the club of people that have no clue how easy it is to maintain a house. You guys act like homeowners have a contractor on speed dial. I am in year 11 of home ownership and on my second house and I have done one roof, and one hotwater tank. Roof was on a townhome and was 6k, tank was 1200 bucks including install. All other maintenance we did ourselves.

If a wall needs touching up, the lawn needs topping or the deck needs to be stained we hit Home Depot. Staining the deck next weekend which will take 2 hours and cost 50 bucks in supplies. A painter would charge ten times that but we are not useless tits.

And you have the house ownership math wrong. Owning a home makes sense if buy what you can afford, you stay in it for 10-20 years and you pay it off. Run the numbers on what it would cost to rent a sfh in a major market for 60 years and get back to me. For your typical middle class Canadian eventual home ownership, as in home paid off, is the part of the path to financial freedom.

For Canadians that can’t manage a budget, buy more then they can afford, can’t do simple home maintenance or have transient jobs and lives, by all means renting is the way to go. And prices now are so stupid in some markets that I wouldn’t recommend anyone dives in. Now is a great time to wait it out. 2008-2015, not so much.

#193 Ole Doberman on 06.15.17 at 4:58 pm

#174 Smoking Man on 06.15.17 at 2:08 pm

Trust me, the deleted posts are not meant for human consumption. would be like a 5-year-old watching the exorcist for the first time.

You don’t want to go there.
——————————————————–
Ya but smokey we’re all adults here, we want the truth and can handle it.

#194 Newcomer on 06.15.17 at 5:33 pm

@crossbordershopper

Using debt to feel rich is like using drugs to feel relaxed. It works well in the short term, but the payback is a bitch.

If you get a card with a thousand dollar limit, you’ll feel like a guy with a thousand bucks to spend. Once you use it, you’ll feel like a guy with less than no money.

If you save a thousand bucks, you’ll feel like a guy with a thousand bucks to spend, and if you spend that, you’ll still be free and clear.

Either way on, you have to earn and put aside the thousand bucks. With the card, you also have to pay interest and fees and feel like somebody’s bitch. Go for the savings. It’s easier and way more satisfying.

#195 Dan.t on 06.15.17 at 5:45 pm

#139 Pete
How did the TSX do from 2009 until today? Cherry pick a few more stats.

Buy a house today in BC and let me know your rate of return after buying costs, taxes and so on in 10 years time.

I hope this housing gasbag and lust blows sky high, but still too much vested interest from policy makers to keep it going. Everyone wants to keep their equity but agrees it is totally stupid…but, don’t mess with my equity.

Same cycle, yeah housing prices are out of control, and stupid, but again, don’t mess with my equity.

Christy Clarks famous words summarised… “Prices are high but all good, so we give a grant so first time buyers can just take out more debt to pay for overpriced real estate because, well, we can’t have people who worked hard for their equity, lose that equity”.

Messed up world, nothing like working hard for equity…just leverage a few grand, buy a place, do nothing then flip it to the next fool who gladly gives your 200 thousand more because you bought 18 months before… people are messed up. But then again, when money is free and you devalue the sh*t out of it…there you go. Debt and money seem to be meaningless in Canada.

#196 SilverSon on 06.15.17 at 5:55 pm

#188 – you speak like someone that has a lot invested in a house and is afraid that home ownership might not be the panacea that everyone makes it out to be. Many homeowners can’t turn a screwdriver but you can. Congratulations. Ever change out an electrical service? Did you re-roof your house yourself? Ever have foundation or drainage problems? Ever have to change the sewer pipe out to the street? Ever had to change a furnace? I do my own plumbing, HVAC, architectural drawings, door & window installation, etc., but sooner or later you have to hire someone a licensed contractor to do certain things or you can kiss your insurance coverage goodbye if you have a problem.

Contrary to how it might look by my post, I have owned many houses over the years and I know from experience that the above things can easily happen. The house I currently own I’ve had for 17 years and while owning that I also rented a 3-bedroom 2-bathroom semi not too far from Belfountain General Store in fact as it was closer to work. I gave up that rental semi in June 2016 because I can work from home now, but the rent I was paying when I left was definitely less than the unrecoverable costs that I am paying at my house even with the mortgage balance down at $140k. When I do the math on my current house (north of the GTA), back out what I paid in property tax for 17 years, mortgage interest for 17 years, 60% of my homeowners insurance for 17 years, and maintenance paid to outside contractors over (which was just shy of $19,500 over 17 years) my annual rate of return is a whopping 5%. Whooppeee. And this WAS during the highest increase in house values in the history of the GTA. In my case what makes the rate of return low is the 17-years of having to pay property taxes, interest, and higher insurance. None of those costs increase the value of my house whatsoever – I get nothing for having paid them so it’s just like rent that way.

Trust me, I’ve done the math left, right, and sideways. If you rent a house you’re paying your landlord to rent the house, but if you buy a house (with a mortgage) you’re paying the bank to rent their money and the township to rent their roads/garbage collection/schools, etc. Either way you’re paying rent to someone for something.

#197 espressobob on 06.15.17 at 6:18 pm

GICs linked to index

Read the fine print. No bargain there.

Having your money managed by a pro would probably have more upside potential.

#198 Howard on 06.15.17 at 7:11 pm

192 SilverSon – great post, you should perhaps repost it in a fresh thread

#199 Mattl on 06.15.17 at 8:09 pm

SilverSon – I don’t have a big investment at all, mortage to gross income of one to one point five. We would benefit immensely from a lare RE correction. I’ve never had to do the big jobs you describe and I don’t know anyone that has, at least as a part of regular maintenance. I do know guys that have completed major reno’s and made a bucketload tax free by taking on problems like you describe but I don’t consider those regular maintenance items. An oil change and brakes are wear and tear, a blown engine is bad luck or a bad buy. Same goes for houses, those issues you describe are not common issues and most of us don’t live in 100 year old homes.

#200 Lahdeedah on 06.18.17 at 11:18 am

My parents are boomers. Immigrant refugees from eastern europe communism, to be exact. I’m a millennial. I still don’t understand how they were able to pay down a mortgage on their $60,000 house in ‘sauga, bought some time in the early 70s?, in roughly 5 or 8 years, at those interest rates? They came from nothing and they scrimped and saved and paid off that mortgage like a boss. But my generation, we’re used to being in debt and having higher cost of living to boot. I mean, back then, you didn’t have $100 cable packages, you had free bunny ears (still do, but you get my point). You didn’t have a $700 iphone and a $50+ monthly cell phone bill. No fast fashion, and I think food was cheaper. Of course, the ‘rents didn’t vacation anywhere exotic, they took cheap camping trips in Canada, and they didn’t eat out at fancy restaurants. Millennials, with the wealth of online reviews and social media pics showing off everyone’s fancy food, everyone thinks that’s normal. They think its normal to buy 10 pairs of heels, cause they were on sale at Winners. Haha. The boomers oiled the wheels of the consumerism machine of today, and we’re just here for the ride. I recently heard a friend of mine say she and her SO were giving up meat, going more veggie, and that they’re “reducitarians”…a play on “vegetarians”. So all you guys slagging this “sharing economy” and saying its Millennials who are silly to buy into it…we had a poster point out that this is rather profitable at the end of the day, nevermind the associated risks.

Guys…mutual funds are a sharing economy of sorts. Private equity funds with Limited Partners are a sharing economy. A bunch of rich dudes pool their money to buy a company, juice it up with injected capital, re-arrange the management, tweak the numbers and then flip it for a profit. I know cause i used to work for a PE company. So really, its the same thing as sharing the title to a house, another financial entity, both have associated risks, and then they all sell for a profit, hopefully. One depends on managing a living company, the other depends on sitting on an asset and timing the housing market. The latter is clearly the easier one. You don’t really need that much brains to do real estate. I mean, look at Donald Trump. Anyone with the intelligence of a wooden chair can “do” real estate.

#201 EmmEmm on 06.18.17 at 4:30 pm

the more I am reading this blog the more I am getting perplexed with the fearlessness the young Canadians are borrowing crazy amount of money to fuel their desires for luxury cars and showing off the stamp of home ownership in the society.

never borrowed a single cent so far and we save almost CAD 7k every month after paying our rent and living a decent and comfortable life. plan is to build a huge sum of money so that we can easily pay off at least 75% down once the market cools off and the homes come down to 300k to 400k range in GTA.

following an old adage for almost 10 years now.. “Every time you are borrowing money, you are robbing your future self”

not sure if that’s the right thing to do or if the RE will ever come down to the levels we want, still we are content and happy continuing on rent and building a fortune to support our retirements.. Peace !!