Insights

Remember when July was boring? Ha, you wish. When a full-bore housing correction envelopes us, just weeks after a bubbled frenzy, every day brings some riveting news. So here are a few things to know as the week begins…

Up she goes:
At last count four of the Big Five have pulled the trigger on long-term, fixed-rate mortgages. The cost of two, three and five-year loans with 25-year amortizations has risen an average of 20 beeps (a fifth of a point). This is notable because (as you know) the Bank of Canada will not be pulling its trigger until Wednesday morning – which will whoosh the cost of variable-rate home loans along with it.

The chartered banks are not jumping the gun, but rather reacting to surging yields in the bond market. The return on a five-year Justin Bond has catapulted from 0.9% up to almost 1.5% in recent weeks. In the debt world, that’s positively Kardashian in size, depth, breadth and width. And there’s probably more to come. Two BoC moves this year, one more Fed hike, then maybe three for each set of central bankers in 2018.

Here’s what it means:
Matt’s a GTA-area lawyer in the far eastern burbs where, he says, “there has been a noticeable influx of GTA refugees (retirees and near retirees) buying property in the area – they cash out and move up (with the only downside being everything here closes at 8 in the evening).”

“With all the talk of interest increases I thought I would run some scenarios,” he says, “through our handy dandy mortgage amortization tool at the office (likely not a better use of my time than seeing my family or tackling the mountain of paper on my desk, but curiosity got the better of me). The attached spreadsheet summarizes how much you’ll be paying if (and when) money starts costing more than 2.5%.  My highly inflated lawyer’s ego thought it might be of interest to you too.”

You bet. Matt’s calcs for an ‘affordable’ $500,000 mortgage with a 25-year am show monthly payments of $2,240 (or $26,878 a year) when the rate is the lowly 2.5% we’re all used to. If the central bank hikes five times between now and the end of next year, that home loan could well renew at 3.5%. While still cheap by historic standards, it would add 10.55% to the monthly and annual payments. If the renewal came in at 5% down the road (seems reasonably likely in a few years), then payments would be 24.15% higher.

So what? We can all afford that, right?

Oops. Not exactly. Remember this?….

Nearly three-quarters of Canadian homeowners say they would have difficulty paying their mortgage if their payments were to increase by more than 10 per cent, a new survey by Manulife Bank says. Thirty-eight per cent of those polled say their mortgage bills could rise between 1 per cent to 5 per cent before they would have financial difficulty; 20 per cent say they could sustain an increase in payments between 6 per cent and 10 per cent before having trouble; and 14 per cent say any hike would be a problem.

“What these people don’t realize is that we’re at record-low interest rates today,” said Rick Lunny, president and chief executive of Manulife Bank, adding that a 10-per-cent increase in mortgage payments could be the result of as little as a 1-per-cent interest hike.

By the way, Millennials as a group are shouldering the highest levels of mortgage debt, followed by GenXers and Boomers. The moisters are also those most likely to be whacked by any economic downturn that a crumbling housing market brings. First in, first out. Sorry, kids. But I warned ya.

The latest barks from an old dog:
He calls himself “Old Ron the Realtor” and is one of the many clandestine, secret GreaterFool operatives out there. His latest report – insightful as usual as to the latest GTA sales, reported Friday.

“July 6 (real estate board) reports indicate a further 1.35% decline from June numbers, or about $10,770 in less than a week. The trend is clearly downward. If this continues, I wonder if the Province will start to pump up the market first with words, then with actions ?  When 29% of the provincial economic store is wrapped up in real estate, a serious slump in GTA housing spells both economic and political disaster. Perhaps that is why The Liberal Star buried TREB’s bad news this week, and lead instead with an unsubstantiated TREB prediction of price nirvana for the current year. I was going to contact the Star real estate reporter to point out the obvious, but why bother.

“This was all predicted by George the Greek in an animated conversation last March on the Danforth. Always dapper, the Re/Max veteran said the market officially turned south on February 22, 2017. My Bro and I both Brokers with about 80 combined years under our belts in this business, looked skeptical, but our guts both knew that the when markets get slap happy it always ends in tears.  As the venerable Sir John Mark Templeton once opined: ” Bull markets are born in Pessimism, grow on Skepticism, mature on Optimism and die on Euphoria” We both knew we were long into the “Euphoric” stage of the party, as a 25 x100 foot East York building lot was just sold for $1.4 million. How the oracle of Greek-town knew the exact time and date remains a mystery, but four months later few can argue that he nailed it.”

Mid-AirBnB collision warning:
First it was Toronto bringing down the hammer on AirBnB – another nail in the condo coffin – and now can’t-leave-anything-alone Vancouver is following suit. Soon it will be plain illegal for people to rent out secondary suites, laneway houses and any investment property (like a condo) for short-term guests. It gets worse, too: citizens will have to apply for and obtain a business license in order to provide rooms in principal residences plus pay a 3% tax on revenues – as well as reporting the cash flow as income to the CRA.

Vancouver currently has more than 5,000 short-term rental units on the market, including a ton of condos which are leased out (to people too cheap to stay in hotels) in order to get around that insane 1% vacant house tax. In Toronto it’s estimated there are 3,000 investment condos solely dedicated to AirBnB usage – which are now also being gelded.

Well, come April (when the new regs click in) it will be a little harder for several thousand families to make their mortgage payments. Well done, YVR.

165 comments ↓

#1 nick on 07.09.17 at 4:03 pm

firsT

#2 Victoria Real Estate Update on 07.09.17 at 4:05 pm

YEAR-OVER-YEAR DEMAND FOR DETACHED HOMES TANKS IN JUNE

Sales of detached homes across Greater Victoria fell 19% from year-ago levels in June.

Other important detached sales comparisons:
* June sales were lower than in 2015 for the third straight month.
* June sales were lower than an average year for Victoria (2007) for the third straight month (even without adjusting the 2007 numbers for population increases).

Simple fact: tanking year-over-year demand has been the case each and every month in 2017.

Detached sales in 2017 compared to the same month in 2016 (year-over-year):

January: -18%
February: – 25%
March: – 25%
April: – 43%
May: – 27%
June: – 19%

IN THE BAG

It’s in the bag – the realtors at Victoria’s real estate board were 100% wrong with their prediction: “Demand Likely To Continue In 2017”. – January 3, 2017.

And now realtors are predicting that house prices in Victoria will never fall. The reason behind their prediction: prices are rising now so they will keep rising – forever.

Is that a logical reason based on economic fundamentals, or is it simply just another pathetic FOMO sales tactic by salespeople hungry for commission money? If the answer isn’t obvious to you, then go ahead and buy now and learn the answer the hard way.

The bottom line here is that realtors in every bubble housing market in the history of the world (and there have been many) predicted the exact same thing – that, since prices were rising, they would keep rising forever.

So, has any realtor who has made this prediction in the past been proven right by the market? Of course not. Every housing bubble that has existed in the history of the world has experienced a severe, multi-year price downturn. It’s simply inevitable. All housing bubbles in existence now will meet this same fate.

A simple concept is worth noting here: the recent direction of house prices can’t be used to predict the future direction of house prices. Just ask recent buyers (and sellers) in Toronto.

UNHEALTHY

Victoria’s housing market has been extremely unhealthy for an extended period of time. The current extreme supply/demand imbalance is 100% abnormal and 100% temporary.

As is the case with all housing bubbles that are peaking, it’s only a matter of time before the extreme supply/demand imbalance and direction of prices turn in the opposite direction. As Toronto’s experience has shown, the herd backs off from buying when it senses the peak is in.

TORONTO MELTDOWN (CRASH?) – MY HOW THINGS HAVE CHANGED

It wasn’t supposed to happen.

A mere two months ago Toronto’s housing market was similar to what Victoria’s is now – supply/demand conditions heavily favoured sellers and prices were rising as a result. Realtors bragged about how it was different there.

That was two months ago. Now the situation is exactly the opposite. Not only have sellers lost the advantage (the advantage is moving toward buyers), but prices have turned south and are already 14% lower.

Of course, like many (but not all, I’m sure) Victoria realtors now, many Toronto realtors had used the (unsubstantiated and false) sales pitch that rising prices now guaranteed rising prices in the future.

Victoria’s bubble market will turn south as well. It will likely happen quickly just as it has with so many other bubble markets throughout history.

(continued)

#3 Victoria Real Estate Update on 07.09.17 at 4:07 pm

TANKING DEMAND MEANS THE BEGINNING OF THE PRICE BUST ISN’T FAR AWAY

Demand for detached homes has tanked year-over-year in Victoria, signalling the beginning of the end as the market prepares to move from the free lunch years of the boom to the inevitably destructive and brutal years of the bust.

Demand has tanked year-over-year, even before the beginning of the many rate hikes that will be happening in Canada and the rest of the world. And demand has tanked y/y before the newly elected BC government brings in measures to stop all of the out-of-control, highly-leveraged speculation (primarily by locals) – the thing that has been responsible for much of the price appreciation in the last two years in Victoria.

Demand has tanked from 2016 levels, yet some realtors are still flapping about how “foreign buyers” and “Vancouver refugees” have permanently upped the demand for homes in Victoria, claiming that these groups have changed Victoria and that 2016 sales levels are the new normal for Victoria. On and on they flap about it, even after 2017’s sales numbers have obviously proven them wrong (see above stats).

RISING RATES NOT NECESSARY (BUT ARE WELCOME)

Victoria’s bubble housing market would have experienced a severe price bust even without rising rates or the coming policy changes, but those things will certainly speed the process as they become reality.

THE DIRTY ARGUMENT

To make sales happen, realtors need potential buyers to think that rising rates are a necessary condition for falling prices (which is 100% false). Second, they need buyers to think that rates won’t rise (which is also 100% false). If you buy their first two lies, then the conclusion of their argument might sound logical to you – that it would be a waste of time to wait for lower prices. Again, 100% false.

IN BAD COMPANY

Canadian policymakers began lowering mortgage lending standards after 2000. Since that time, house prices in Victoria have more than tripled while gains in incomes have added up to only a fraction of that amount over the same period. Toronto, Vancouver and Victoria are Canada’s three most severely overvalued bubble markets.

History has repeatedly shown that once a housing bubble has inflated and is in place, there is a 0% chance of a soft landing, despite the efforts of policy makers.

Toronto’s experience, which isn’t atypical of the bubble experience, has shown that bubble markets often turn in a flash. Those who were following Toronto’s market closely as it peaked probably noticed that prices were rising one week, then falling the next. The party in Toronto ended abruptly.

That prices there have fallen 14% in two months likely isn’t surprising to those who know housing bubbles.

Those who know housing bubbles know that the end of Victoria’s price run-up party will likely also end abruptly and to the astonishment of those who think it’s different here.

The boom part of the housing bubble boom-bust cycle is ending in Victoria.

Up next: the bust years.

#4 Loquat on 07.09.17 at 4:17 pm

It looks like a correction is finally here. I hope when it’s finish it bring some sanity back to the Vancouver market.

#5 American on 07.09.17 at 4:17 pm

Rates will not go up to 5% in Canada…even the fed is close to done…

I’m locked in for 30 years on all my properties here in Olympia, WA so it’s not like I care…but let’s not get carried away.

I do have a rule of thumb that Canadians might be interested in…

If you have a rental property, don’t keep it unless it still makes sense as an investment at 7% interest and 85% of current market value rent. Remember that when things crash and you pick a few up.

Peace.

#6 crowdedelevatorfartz on 07.09.17 at 4:18 pm

Not to worry blogdogs.
The Mayor of Vancouver faces re-election this Fall and with his stupifying blunders in commonsense…..one hopes he’ll be punted down the road…. but dont hold your breath.
Vancouver voters know more about the price of ice cha at Starbucks than the issues facing the city

#7 Howard on 07.09.17 at 4:36 pm

MSM starting to get the message?

https://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/brace-yourself-a-perfect-storm-is-brewing-in-the-housing-market/article35579591/

#8 TurnerNation on 07.09.17 at 4:42 pm

“clandestine, secret GreaterFool operatives out there.”

And just this week I noted that the CBC headquarters is exactly across the road (Front St.) to ‘CSIS’ headquarters in Toronto.
Coincidence? The first thing an invading force does is secure and take over the press.

Media now is shrill clickbait. Making us feel like we have a voice all the while pushing us into 101 new and expensive laws against us each year.

Sample headline you see on CBC:
“It was horrific” – passenger on Air Canada flight delayed for 15 minutes. Someone needs to do something about this”

Solution: more govt control. You are free to leave at any time folks..no really……………..

#9 For those about to flop... on 07.09.17 at 4:43 pm

You want insights,I’ll give you insights…

Motivated Sellers Index Update

I just processed 29 listing from July 8th and a whopping 14 of the reduction of selling price houses had been purchased in the last 3 years or 46%

I then proceeded to do another session to try and process some more that I failed to catch up on yesterday from July 4/5th and total results from the he two combined sessions was 24 out of 62.

And so you can see it settled down a little bit but still come close to 40% after clocking in at 35% yesterday.

For some context when I stated to track the market in January the number was less likely than 15% and then as we got ready The Spring Fling I noticed a spike and stated watching and recording this state more closely and the past few months it was consistently around 25/30%

This latest rung on the ladder could be an anomaly or could be all the desperadoes taking to the next level as the vice slowly closes on them.

For the record, I will repeat this.
A small amount of these houses are new builds so the product put back on the market is not like for like.
( In this particular session the number of new builds was 3)

On the other side, some of these are also new condos that have yet to be assessed and therefore no public record of sales.

The two corrections between the GVA and the GTA appear to be quite different.

Toronto has much more volume but Vancouver remains on the top of the pile in my mind because of the dollar amounts involved,although GTA closed the gap.

The correction in GTA seems to be getting more press,but from what I have seen the one in Vancouver has been silent but just as violent…

M43BC

#10 crdt on 07.09.17 at 4:43 pm

Vancouver is still in the grip of an incredible housing shortage, locals are signing ever larger mortgages to obtain ever smaller patches of habitable terrain. Every “for sale” sign in Langley BC is sooner then later decorated with one and sometimes two “SOLD” signs letting the folks on the fringes know that real estate is no longer for the faint hearted. The show must go on, and does go on, Capital direct is constantly blasting the air waves with incessant ads offering virtually unlimited loans against real estate, the well runs deep here. Super cars, and very expensive cars are so thick that one now needs a super car just to stand out. Every conversation in public is about getting a mil and change for the moldy shacks, jewelry getting thicker, the owners have won.

#11 rainclouds on 07.09.17 at 4:45 pm

Mayor Moonbeam and his band of progressive commies (who are tied to the developers hip) have done their skirting thingy (keep developers happy, pretend to care about renters, spend the largesse on living wages for all …….taxpayer to find out later)

The Provincial Bolsheviks haven’t even been sworn in yet here in the BPOE. First order of biz ? Nuke the river of cash the Libs got from their RE masters….. THAT should make things interesting (like the Chinese Curse)

Damn Shame, BOOM isn’t here to see it ……….GO BOOM!

#12 Moses71 on 07.09.17 at 4:49 pm

Seems like there are going to be alot of dick slaps coming soon for the over leveraged greeds. As Clint E said, “A man must know his limitations”, doesn’t apply to them, eh? No sympathy…

#13 Spectacle on 07.09.17 at 4:53 pm

crowdedelevatorfartz on 07.09.17 at 4:18 pm
Not to worry blogdogs.
The Mayor of Vancouver faces re-election this Fall and with his stupifying blunders in commonsense…..but dont hold your breath.
Vancouver voters know more about the price of ice cha at Starbucks than the issues facing the city
—————- major agreement ——-

Crowded, actually look forward to your sensory input on this Blog, also major cudos to Victoria Update. ( Yes, I always knew you were correct. )

Reminds Me of a person I know of, just dropped $25 thousand deposit on a pre build, presale in Maple Ridge BC, which is really stupid of them. He also advised me of some “friend ” of his who can set me up with a RESP, or investment , which is secured by commercial real estate loans. Hey, it pays nearly 10% interest!mum, somehow through projections. ( Garth blogged about such folly recently) Whatever the hell that scam is!

Regards M

#14 FNAiks on 07.09.17 at 4:58 pm

Just back from a Sunday bbq with a large group in Etobicoke. Conversations focused on real estate, word is nothing is selling. Two guys almost came to blows when one suggested to the other he drop his price. Glad my wife took me by the elbow and said to stay out of it. I too often quote from this site, realizing now that could get dangerous (I need this face to stay beautiful), as more people grow desperate. Advice for the blog dogs, keep a low profile going forward. Certainly made for an interesting afternoon.

#15 Sidera on 07.09.17 at 5:09 pm

Please stop pandering about rising interest rates in Canada. It is not happening any time soon for the simple facts brought up in your article regarding the debt servicing costs increasing. The country cannot with stand a rate hike at this time, especially with the central bank targeting inflation. If inflation was on the books at a much higher rate, in the banks eyes this would be a good time to raise the rates. With out inflation, poloz has the signal to keep them where they are. Raising rates would also be a bullish sign for the Canadian dollar, putting more pressure on oil and gas exports who cannot break even at this time. A low dollar will spur on oil and gas jobs without a rebound in price.

#16 Chaddywack on 07.09.17 at 5:17 pm

@#6

Actually the next Vancouver election isn’t until October 2018. The terms were extended to 4 years.

Over a year more of His Worship Gregor Robertson!!!!!

#17 InvestorsFriend on 07.09.17 at 5:24 pm

#93 Spaccone on 07.09.17 at 3:43 pm responded to me about
#88 InvestorsFriend on 07.09.17 at 2:00 pm
Calculation of Capital Gain on U.S. dollar transfers to Canada

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

I’ve been tracking my portfolio and tax in Excel for many, many years now. I will never use any program. I was forced to track ACB myself as for many years I had my portfolio split between two different brokers. I recently moved it from Excel to Google Sheets as it’s easier to see portfolio value in real time and you have a backup in the “cloud”.

You have to treat/calculate USD like you would a stock. The USD amount is the “shares”, and the CAD amount is your cost.

*************************************
Agreed, and that would be simple if the only transactions were Canadian dollars moved to U.S. and then back again and even with multiple movements.

My situation is with U.S. cash in an investment account whereby purchases and sales of U.S. stocks. as well as receipt of dividends, change the cost base of the U.S. dollars as measured in Canadian dollars.

If I make money on selling a U.S. stock simply due to exchange gain, I don’t then get a further exchange gain on bringing the money back to Canada. To avoid that I need to have an accurate cost base on those U.S. dollars.

I just finished my calculations and have a column for unrealized gains on the U.S. dollars and a column for the adjusted cost base of the U.S. dollars as calculated in Canadian dollars. Do you have that?

I found that almost all my exchange gains were made while holding stocks and there was never much unrealised gain on the cash itself. This was because I was (somewhat to my surprise) seldom holding much U.S. cash as such and when I did it was for very short time periods.)

It took me about 5 hours to calculate this as I was going back to 2012. The time was due to data entry and looking up exchange fees. I had to look at every monthly statement back to early 2012. This was with only one or two U.S. stocks most of the time but with dividends and some buys and sells there were a half dozen or more transactions per year and a dozen in 2016 as I added another dividend stock and then sold most of the stocks in several different lots. A template would have helped but doing it myself leads to far better understanding.

Even with a good template I doubt the ability of most retail investors to figure this out.

Mark responds with a claim the template does it all. Does it in fact keep a column for the adjusted cost base of the Canadian dollar or does it just deal with the Canadian dollar capital gain on the U.S. stocks which is a separate matter? He then complicates matters by talking about a situation that adds in loan repayments on a margin loan, not part of my scenario!

#18 Mickey McMunster on 07.09.17 at 5:28 pm

Note to self: Sell that condo, flip into preferred shares.

#19 rainclouds on 07.09.17 at 5:33 pm

Moonbeams work may be complete now that homelessness is fixed and the city runs like a fine swiss watch. (rumour has it he will bail for a Fed appointment) .

This group isn’t in his fan club tho…

http://wakeupvan.com/

#20 Happy Housing Crash Everyone! on 07.09.17 at 5:46 pm

#14 FNAiks

Tee Hee the anger phase has started. Like you I sit back and try not to smile. These speculators are on the brink of financial ruin and there are tens of thousands in financial trouble in the GTA. This housing crash will be epic and needed. Price need to revert back to the mean average. We are talking about a 50-75% housing crash in the GTA. Financial pain is coming! Happy Housing Crash Everyone! :-)

#21 For those about to flop.. on 07.09.17 at 5:48 pm

pm
Just back from a Sunday bbq with a large group in Etobicoke. Conversations focused on real estate, word is nothing is selling. Two guys almost came to blows when one suggested to the other he drop his price. Glad my wife took me by the elbow and said to stay out of it. I too often quote from this site, realizing now that could get dangerous (I need this face to stay beautiful), as more people grow desperate. Advice for the blog dogs, keep a low profile going forward. Certainly made for an interesting afternoon.

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

See, I don’t have the same concerns as you.

I’ve already admitted on here that I have a head on me like a monkeys bum ,being a former Semi -Professional football player and all.

If the real estate cartel does catch up with me there is a distinct possibility that I will be better looking after they finish with me.

You know how they like to market everything with a positive spin.

After the confrontation they will say that they administered Baseball Bat Botox…

M43BC

#22 Fluorine on 07.09.17 at 5:48 pm

Does anyone know why the distributions of ZPR are slowly decreasing? 4.5c, 4.2c, 4c, now 3.5c.

It’s not a covered call ETF, and it’s pretty consistent with prices going up and going down.

Thanks in advance for any insight!

#23 Penny Henny on 07.09.17 at 5:57 pm

The return on a five-year Justin Bond-GT

related to James Bond?

#24 SimplyPut7 on 07.09.17 at 6:07 pm

If the central bank hikes five times between now and the end of next year, that home loan could well renew at 3.5%. While still cheap by historic standards, it would add 10.55% to the monthly and annual payments. If the renewal came in at 5% down the road (seems reasonably likely in a few years), then payments would be 24.15% higher.

So what? We can all afford that, right?

——————————–

I don’t think it will take that long to see who is in trouble when rates go up. Mortgage brokers who falsified mortgage applications or used bundled mortgages to get homeowners to qualify for bigger mortgages, should see the effect of their doing way before the end of next year:

BNN at 2:05 min: ‘Some of the millennials are already in trouble…’

http://www.bnn.ca/video/ontario-housing-policies-
could-lead-to-an-overcorrection~1160582

BNN at 3:45 min: ‘I’ve seen people use HELOCs to pay mortgage payments…’; 5:30 min: ‘..multiple debt vehicles that will be affected…’

http://www.bnn.ca/video/the-dangers-of-using-your-home-as-an-atm~1160583

Global News at 1:05 min: July 2017 power of sale (foreclosure) numbers are around 2000 – 2500, up from 200 – 300 in January 2017

http://globalnews.ca/video/3577965/greater-toronto-area-home-foreclosures-on-the-rise

There were also domestic speculators who bought homes, assuming they would continue to rise 10% – 30% year over year. Who knows how these people financed their purchases or what they will do if they have to sell at a loss.

BNN at 2:50 min: How the Toronto housing slowdown is different from Vancouver; 3:05 min: the domestic speculator

http://www.bnn.ca/real-estate/video/buyers-sellers-should-be-cautious-after-toronto-home-sales-drop-realosophy~1161667

#25 I'M NOT POLOZ on 07.09.17 at 6:12 pm

What happens to the Loonie when the real estate bubble collapses in Toronto and Vancouver? Right now, The Loonie is poised to increase to 80-cents after an interest rate hike.

#26 Gentle ,Loving Kindness on 07.09.17 at 6:12 pm

#17 InvestorsFriend on 07.09.17 at 5:24 pm
#93 Spaccone on 07.09.17 at 3:43 pm responded to me about
#88 InvestorsFriend on 07.09.17 at 2:00 pm
Calculation of Capital Gain on U.S. dollar transfers to Canada
=========================================
I’ve been tracking my portfolio and tax in Excel for many, many years now. I will never use any program. I was forced to track ACB myself as for many years I had my portfolio split between two different brokers. I recently moved it from Excel to Google Sheets as it’s easier to see portfolio value in real time and you have a backup in the “cloud”.
You have to treat/calculate USD like you would a stock. The USD amount is the “shares”, and the CAD amount is your cost.
*************************************
Agreed, and that would be simple if the only transactions were Canadian dollars moved to U.S. and then back again and even with multiple movements.
My situation is with U.S. cash in an investment account whereby purchases and sales of U.S. stocks. as well as receipt of dividends, change the cost base of the U.S. dollars as measured in Canadian dollars.
If I make money on selling a U.S. stock simply due to exchange gain, I don’t then get a further exchange gain on bringing the money back to Canada. To avoid that I need to have an accurate cost base on those U.S. dollars.
I just finished my calculations and have a column for unrealized gains on the U.S. dollars and a column for the adjusted cost base of the U.S. dollars as calculated in Canadian dollars. Do you have that?
I found that almost all my exchange gains were made while holding stocks and there was never much unrealised gain on the cash itself. This was because I was (somewhat to my surprise) seldom holding much U.S. cash as such and when I did it was for very short time periods.)
It took me about 5 hours to calculate this as I was going back to 2012. The time was due to data entry and looking up exchange fees. I had to look at every monthly statement back to early 2012. This was with only one or two U.S. stocks most of the time but with dividends and some buys and sells there were a half dozen or more transactions per year and a dozen in 2016 as I added another dividend stock and then sold most of the stocks in several different lots. A template would have helped but doing it myself leads to far better understanding.
Even with a good template I doubt the ability of most retail investors to figure this out.
Mark responds with a claim the template does it all. Does it in fact keep a column for the adjusted cost base of the Canadian dollar or does it just deal with the Canadian dollar capital gain on the U.S. stocks which is a separate matter? He then complicates matters by talking about a situation that adds in loan repayments on a margin loan, not part of my scenario
————————————————–
I think you might be over calculating the portfolio returns. There is a risk in possible obsessive calculations of the portfolio returns because you may start reacting prematurely. (Unless you’re a trader) I try to calculate my Financial Net Worth no more than once per quarter ( It is hard for me not to peek). Anything more than that, I feel I am subjecting myself to noise, but still, may feel compelled to react.
Just some thoughts
http://mastersinvest.com/newblog/2017/5/11/check-daily

#27 Smartalox on 07.09.17 at 6:16 pm

Just remember, when you go to renew your mortgage:

– better have a wad of cash on hand to pay off your HELOC, and keep your Loan to Value ratio favourable, or
-better be prepared to qualify for your renewal at the 5-year Bank of Canada rate (4.61%, but will likely rise when BofC prime rises)
– if you’re not a triple A credit risk, be prepared to take the rate that the bank gives you (likely NOT the rate you started with… but higher)
– all of the above, even if you’ve been a good customer, and have never missed a payment. The don’t care.
– finally, if you think that you’ll get a better deal somewhere else, think again.

The big five have hooked their fish, now all they have to do is bleed them for the next 25 years.

#28 rates vs capital on 07.09.17 at 6:39 pm

#13 Spectacle

“Crowded, actually look forward to your sensory input on this Blog, also major cudos to Victoria Update. ( Yes, I always knew you were correct. )”

——

Kudos to VREU?

Is that kudos for stating that the correction is around the corner for two years, all the while prices have gone up over 20%?

“The benchmark value for a single-family home in the Victoria core increased by 15.1 per cent to $829,600 in June, compared with $721,000 last year.”

http://www.timescolonist.com/business/homebuyers-paying-more-than-asking-price-74m-extra-up-to-june-1.20913635

Or is that kudos for the persistence in posting the same diatribe about collapsing sales in Victoria, regurgitating Garth’s succinct warnings, or for having her head in the sand?

If its any of the above, I would recommend getting a new hero because VREU is a zero…

#29 rates vs capital on 07.09.17 at 6:43 pm

#2, 3 VREU

Oh goody, VREU dropped in with dated diatribe about collapsing sales – again – for the 24th month is a row.

She must have some cognitive dissonance since prices have gone up 20% in Victoria and surrounding communities since she started with her ‘the correction is around the corner’ speech last year arising from the collapse in sales.

Well, I told VREU that she should watch the foreign ownership numbers because she relied on 2015 data – which said that only 0.68% of Victoria buyers were foreign. Guess what, foreign buyers have increased 7 fold in 2016 to 4.7% – and golly gee, prices went up 20% over that time.

Its not like there is a correlation or anything. Its not like people in Victoria just discovered low interest rates after they have been low for 9 years; its not like the economy is booming in a stagnant government town; its not like average incomes have increased as Victoria’s is still below many other major cities.

So why the increase VREU? Oh right, you have yet to answer that question after being asked ad naseum…

If VREU actually got out of her Mom’s basement, she would have seen the changed demographics in Victoria along with the spread of luxury vehicles in a blue collar town.

You need to look around VREU at trends AND look at the numbers – you are not doing a good job of either.

So please VREU, stop misleading people with your hope inducing ramblings about the stages of a collapse or the collapsing Victoria sales when PRICES show you are out to lunch.

When you can tell us wall why prices are increasing when sales are collapsing (and you discount the fact that low inventory is a driver), then come back to the discussion table…

Otherwise, please stop posting your drivel.

#30 Rook on 07.09.17 at 6:43 pm

Garth – Given the above scenario with many people forced to sell or foreclose, how likely is it that our current government will somehow forgive debt or make some sort of concessions for these over-strapped ‘buy at the toppers’? Kind of seems like something Justin would do.

No chance. — Garth

#31 Linda on 07.09.17 at 6:44 pm

Interesting example provided for (current) mortgage of $2,240 per month in this post. Given that the Financial Post noted that the average GTA condo rental cost is now $2,000 per month I begin to see why so many were trying to buy rather than rent, despite truly insane prices for what can only be described as substandard housing. Now if the current rates rise as predicted then yes, the mortgage cost should far exceed the cost of renting. This presumes that the rental controls being brought in will keep the rental rates from rising as quickly as mortgage rates can do. One wonders however if one should also factor in the square footage cost of a detached home vs. a condo when making any housing decision.

Mortgage payments come after the big down payment, the land transfer tax, the legals plus other closing costs, the condo/strata fees, the property taxes and higher insurance premiums. Comparing a rent cheque to a mortgage payment is facile. So you understand Millennials perfectly. — Garth

#32 Smoking Man on 07.09.17 at 6:51 pm

The delema,

Island paradise never look back. Or, stay, posabilty a grand kid on the way. Thats going to be an anchor if its confirmed true. Someone has to stick around and home school that kid. Like everything this year I’m two weeks behind the curve.

So I stated looking at rentals, now I totally see what drove the housing madness. That shits expensive and ugly. Even with drastic cuts to life style, booze, tobacco, casino a million in a balanced portfolio yielding even 8% is nothing.

I may have to repatriate some killer high risk bets, the thought of giving T2 some of it makes me sick. Of course we all aggree this sentance is fiction.

I may need to go to the islands myself, work that ice cream store hard. Imagen me on the lose with the booze cop wife 2000 miles away. It won’t end well for me.

I need an advisor. Garth you at the store next Sunday?

#33 Raj on 07.09.17 at 6:56 pm

“Mortgage payments come after the big down payment, the land transfer tax, the legals plus other closing costs, the condo/strata fees, the property taxes and higher insurance premiums. Comparing a rent cheque to a mortgage payment is facile. So you understand Millennials perfectly. — Garth”

I don’t understand, why people find it so hard to get this simple math.

#34 millmech on 07.09.17 at 7:29 pm

#27 Smartalox
Absolutely true, I think people are hoping that the government will somehow intervene for them when interest rates hit a paltry 5%-6%.Not going to happen, they didn’t do it when rates went to 20%+ and they will not do it now.
You are also correct about the banks not caring, just watch as they all raise their rates in unison and squeeze every last dollar out of the indebted. The banks will seem to be in a competition to raise their rates now, not lower them, RBC raised their rates and everyone else followed. It is all about increasing the spread for greater profits, better to own the banks than to be owned by them.

#35 Win not Lose on 07.09.17 at 7:35 pm

The folks in Abbotsford, 45 K east of Vancouver haven’t got the message yet.
Average new-home price in Abbotsford exceeds $1 million
The horror – the horror

http://bit.ly/2sUSw8X

#36 mortgageman on 07.09.17 at 7:40 pm

#24 and #27

Mortgage brokers are licensed and held up to a standard. If a mortgage broker falsifies documentation and gets busted, then will lose a license.

Bank employees on the other hand are not licensed and get mortgages done that don’t qualify sometimes. Yet they have no license to lose.

Brokers for the most part do AAA mortgages for the ones that are cmhc insured.

Stop bashing brokers, if anything it is the bank employees that do the funny stuff for the most part.

#37 45north on 07.09.17 at 7:49 pm

Old Ron the Realtor:

July 6 (real estate board) reports indicate a further 1.35% decline from June numbers, or about $10,770 in less than a week. The trend is clearly downward. a serious slump in GTA housing spells both economic and political disaster.

it does support what Garth said:

If prices can drop 14% in the last 60 days, they can sure do that again in the next two months.

and refute what I said ( that prices could go down 28% in 60 days)

http://www.greaterfool.ca/2017/07/06/the-perfect-storm-2/

but if prices can drop 28% in the first half of the year, they can sure do that again in the second half of the year which would spell economic and political disaster. I mean if half of Woodbridge is underwater on its mortgages, there would be shock and anger. Politically, It would be hard to capitalize on that because the other half wouldn’t be. Kathleen Wynne made a silly mistake with her 16-point plan – it made her responsible for the real estate market.

#38 Mike on 07.09.17 at 7:50 pm

Folks,

RE is Canada will NEVER be at 2014 levels. No crash in prices to 2014s. Overall, its up and up. BUY BUY!!

#39 Asterix1 on 07.09.17 at 7:53 pm

Went to a BBQ a few days ago. This guy was telling me how prices in Toronto were going to go up and up. “..no correction/crash happening!” he blasted. I asked him why? His response..

– “Toronto is a World class city, says we are not even close to London, Paris, NY or others in that price category”
– “People have been saying prices will drop for years now, wont happen, just up.”
– “Too many people entering GTA, prices will never drop”

I cracked open another beer and took a deep breath. I told him that the economic fundamentals were just not there to sustain these prices. His response, “..the what?”

I then tried to explain that with stagnant salaries, massive debt ratios, interest rates going up, new mortgage regulations, new municipal/provincial rules and other realities, that things were changing, fast.

He then said, “…prices will keep going up, its Toronto”. It was then time for my next move, walk away from that conversation and that “greater fool”.

The reality is that a large percentage of people are completely oblivious to what is happening around them. This crash is going to be monstrous!

#40 Anastasckya Tolski on 07.09.17 at 8:08 pm

House prices in Toronto will never fall to a collapse. Toronto is ranked #1 in the world for the best place to live. Gender equality and upholding the rights of all diverse expressions of sexuality make Toronto the #1 city to live in for Human Rights and equality.

Toronto is also home to the best women in the world. Canadian women are better educated, know their rights and they do not tolerate abuse of human rights such as patriarchy. This makes Toronto a great city for a woman to succeed in a male-dominated culture.

18 in 20 Canadian women are sexually assaulted in their lifetime in Toronto, so there is work to be done. Unlike third world mud dictatorships, our government is dedicated to ending rape culture in Toronto and every Canadian campus by re-drafting Bill C51 to protect the rights of women, transgenders, and minors who are binary.

Toronto is the greatest place in the world to live.

And it has world-class trolls! — Garth

#41 LJ on 07.09.17 at 8:19 pm

He’s probably close with the call of Feb 22nd as the top.

If you asked me, I’d pick March 18th, which was the date of that silly Pitbull/Robbins expo in TO. That one event seemed to ring the bell pretty loudly…

They’re just taking their time catching on over on the left coast.

#42 dakkie on 07.09.17 at 8:20 pm

The WORST Thing for Canada Real Estate JUST Happened and Nobody is Prepared!

http://investmentwatchblog.com/the-worst-thing-for-canada-real-estate-just-happened-and-nobody-is-prepared/

#43 BlorgDorg on 07.09.17 at 8:24 pm

Suddenly all my friends & relatives, who for years kept badgering me to buy real estate & ridiculing me for renting, are very interested in my opinion about “what’s happening in the GTA market”.

My response to them?

“Sorry, yer F%$ked. HAHAHAH”

#44 OttawaMike on 07.09.17 at 8:25 pm

Ottawa had a record June sold report.
Prince Edward County, Napanee and Kingston are all selling typical volumes and anything in the county that is a gem is bought up by Toronto 1%ers as a summer palace.

I guess Eastern Ontario didn’t get the email about the crash??

#45 crowdedelevatorfartz on 07.09.17 at 8:35 pm

@#40 Anastasia Trollski

OMG she’s baaaaaaaaack

#46 waiting on the westcoast on 07.09.17 at 8:36 pm

#29 rates vs capital on 07.09.17 at 6:43 pm re: VREU…

Never good to get religious on your assumptions… ;-)

Having just moved to Victoria, there does seem to be a lot of Vancouverites who are selling in Van and migrating here. I chatted with a friend who is a successful local investor and he said many of these people think they will be able to get jobs here like in Vancouver. He said they will be sorely mistaken and that will help build the downward pressure in the next year.

I hope Victoria gets a solid pullback over the next couple of years but it certainly has not done anything other than go up in the last twelve months.

#47 broader mind on 07.09.17 at 8:41 pm

I’m a little to lazy to do the research and prefer Garth’s analysis, so could you do a blog outlining TSX performance and more specifically big six bank’s during the last housing downturn. I for one feel the bank’s will make out like bandit’s sucking every last drop out of the moister’s as rates rise. Tons of fish on the line for life now. As stated, house values can drop but the recent mortgage load stays and gets more profitable as rates rise. This is Canada and the bank party is just beginning. We will soon see the difference no recourse makes. Pay,pay,pay more, and just for fun pay lots more ( description of home ownership for years to come)

#48 Raging Ranter on 07.09.17 at 8:42 pm

@#40 Anastasckya, that was an awesome imitation of a Millennial Trudeau supporter. At least I hope it was an imitation.

#49 Raging Ranter on 07.09.17 at 8:45 pm

@44 OttawaMike, the Ottawa market has slowed noticeably the last two weeks. In May, 3 towns on my street were snapped up within days. The traffic on the weekend they were for sale was nuts. Now, three more are up for sale, and I haven’t even seen any drive by traffic this weekend or last. The slowdown should show up in July stats, unless it picks up again.

#50 crowdedelevatorfartz on 07.09.17 at 8:45 pm

@#32 Smoking Man

Sticking around for the grandkid? Free babysitter? Thats the oldest ploy in the grownup childrens handbook.
Are you crazy?
William Holden slipped on am empty booze bottle and look where THAT ended up.
And you want to stagger around the Nictonite spaceship drunk…… dodging empty booze and baby bottles?
And those diaper changes……….with a hangover……….OH YEAAAAAAAAH
Makes a stinky elevator look like a day at the hair salon in comparison.

If you do this. Dont say I didnt warn you

#51 Tony on 07.09.17 at 8:48 pm

Been hearing this bubble talk for 15 years now. Every time gonvernment intervenes prices go even higher. Great to hear prices on average have come down slightly. Not seeing this materialize though as houses in GTA are still super expensive. If it takes another 15 years of stagnating to become affordable again I’ll be an old man. I missed out. Period. Prices won’t fall. Guess I’ll have to buy a dreaded condo or just rent.

#52 Happy Housing Crash Everyone! on 07.09.17 at 8:48 pm

#24 SimplyPut7

great post. Alot of bankrupt Millennial that are only able to stay solvent by borrowing money to pay off borrowed money. Amazing how much mortgage fraud going on.

#53 Ian on 07.09.17 at 8:55 pm

It’s interesting the earlier comment about people getting angry. I was at a backyard BBQ in Thornhill today at a house that could have got $2mln before the slide. Fully paid for, and I asked my friend why they didn’t sell. They just don’t believe there’s a problem. I kept thinking ‘you’re going to lose 800k of tax free capital gains’. I will keep quiet in person going foreward as guaranteed people will be angry!

#54 #14, I Love It, on 07.09.17 at 8:55 pm

I live in Etobicoke and you are absolutely right, nothing is moving here. Plenty of for sale signs but no sales. It’s like the light has been switched off. Open houses empty, overpriced dumps languishing. This real estate goose is fully cooked. I can see why the guy was getting angry, he’s probably one of my neighbours carrying a million dollar mortagages, which seem to be common in my area. Oh well, just sit back and watch it collapse.

#55 FOUR FINGERS WATSON on 07.09.17 at 8:56 pm

No reason to get excited folks. Demand will remain high and outstrip supply as Canada is allowing 300,000 new immigrants per year. By the way, are we building new schools and hospitals fast enough to accommodate the new arrivals? I guess the lineups for healthcare will get a little longer just when the boomer cohort needs it most. Higher taxes anyone?

#56 Vancouver in the Rearview on 07.09.17 at 9:01 pm

Re: Vancouver AirBnB

Garth, I am confused by your comments. You yourself have been saying that the real estate market is unsustainable. Yet, now that government is actually doing something to try to make it more affordable because of huge public pressure, you’re slagging them? Why? Are you waiting for the market to sort itself out? Some of us have been waiting for the last seven years for that to happen, and at some point, one has to recognize that there is nothing function about the Metro Vancouver real estate market. Some level of regulation is required otherwise, you get the Wild West, which is what we’ve seen here.

I could accept that you might say it’s policy overreach, but regulating AirBnB is no different than regulating hotels or any other business. Allowing AirBnB and Uber to continue to flourish in a quasi-illegal/legal mush is not good governance. Personally, I say bring it on – no free rides dodging regulation on the basis that it’s ‘disruption’.

You know this is unsustainable and won’t end well (years of your blogs are evidence of this). You also know bubbles never end gracefully, so why the snideness about what will likely accelerate a return to rationality?

For many of us who have followed your advice and stayed out of the housing market, especially here in YVR where the sane ones look the fool, this situation can’t end soon enough. There are those of us who would like to own our place, have some semblance of security in living arrangements for our families, and not put ourselves up to our eyeballs in debt. We WANT to see housing crash in this city, and crash hard, in the hopes that something resembling a community emerges from the ashes.

Yes, we want to have time and flexibility (Garth’s rules, etc.), but I also want security for my kids to know that they have a shot at being in the same day care and school for an extended period of time without having to move whenever the landlord decides to flip the place or have their ‘niece’ move in.

/Rant

#57 I thinks I know something on 07.09.17 at 9:07 pm

FORMIR – Fear of Rising Mortgage Interest Rates. Total nonsense. As soon as the economy is affected, rates will stabilize and then reduce if required. In a FIRE economy, the govt. will do everything to protect the banks. In Canada, the RE industry is a major part of the economy.

#58 re., rook on 07.09.17 at 9:10 pm

Garth – Given the above scenario with many people forced to sell or foreclose, how likely is it that our current government will somehow forgive debt or make some sort of concessions for these over-strapped ‘buy at the toppers’? Kind of seems like something Justin would do.

……..

stay clear of the TSX if we get to that point. She’s in early meltdown mode already,…..in -ve territory with the rest of the world in glorious green

#59 I thinks I know something on 07.09.17 at 9:21 pm

I just can’t believe that anyone in his right mind would actually believe that rates will be allowed to rise by Trudeau to the point that the Canadian RE industry (and hence economy) would be affected. Poloz will pull back the reins on any rate increases if RE prices drop significantly. To hope that Toronto RE prices will ever drop to 2015 levels is plain silly.

#60 InvestorsFriend on 07.09.17 at 9:24 pm

Question re capital gains on exchange rate change:

Imagine you bought $10,000 U.S. dollars back when the Canadian dollar was par for a cost of $10,000 Canadian.

Imagine that later the exchange rate is $1.50 Canadian per U.S dollar so that you have a $5,000 Canadian unrealized gain.

If you transfer that back to Canada as Canadian cash you must declare a $5,000 capital gain and pay tax. So far, so simple.

But if you do the Norbert Gambit and buy $10,000 U.S. of Horizons currency ETF, DLR.u U.S. dollars trading trading in U.S. dollars and then have that journaled over to the Canadian side of your portfolio as DLR (U.S. dollars trading in Canadian dollars on Toronto), that would not seem to trigger a capital gain. You just bought $15k Canadian ($10,000 U.S) of DLR and you still own it for the moment.

Now you sell the DLR on Toronto for Canadian dollars. This triggers approximately no gain (except a buy / sell spread and a the trading charges). The capital gain on DLR is tiny.

In this scenario you have realized the gain on the currency but you never actually transferred back Canadian currency for a gain.

I seem to be missing something here. What would trigger the gain to report?

Is a transfer of a stock (and DLR is effectively a stock, or is it not?) from the U.S. side of your taxable account to the Canadian dollar side create a taxable event, although nothing was sold?

Is there maybe a special rule for DLR since in journaling that over you are effectively moving cash over as opposed to a real stock.

Maybe you have to treat bringing over DLR as like bringing over actual U.S. cash? That would seem fair.

But then you could also do the Norbert Gambit by buying CN rail in the U.S.and journaling that to the Canadian side and selling in Canada. Does transferring CN rail bought in the U.S over to the Canadian side trigger tax even though no stock was sold?

Anyone have actual experience and knowledge on this?

#61 Winterpeg on 07.09.17 at 9:31 pm

Soon it will be plain illegal for people to rent out secondary suites, laneway houses and any investment property (like a condo) for short-term guests. It gets worse, too: citizens will have to apply for and obtain a business license in order to provide rooms in principal residences plus pay a 3% tax on revenues – as well as reporting the cash flow as income to the CRA. -GT

While I don’t agree with a business licence and a 3% tax on principle residence rental rooms rentals, doesn’t reporting a cash flow to CRA make a bit of sense?

#62 i'm jus sayin' on 07.09.17 at 9:34 pm

#56 Vancouver in the Rearview on 07.09.17 at 9:01 pm
Re: Vancouver AirBnB

Garth, I am confused by your comments. You yourself have been saying that the real estate market is unsustainable. Yet, now that government is actually doing something to try to make it more affordable because of huge public pressure, you’re slagging them? Why? Are you waiting for the market to sort itself out? Some of us have been waiting for the last seven years for that to happen, and at some point, one has to recognize that there is nothing function about the Metro Vancouver real estate market. Some level of regulation is required otherwise, you get the Wild West, which is what we’ve seen here.

I could accept that you might say it’s policy overreach, but regulating AirBnB is no different than regulating hotels or any other business. Allowing AirBnB and Uber to continue to flourish in a quasi-illegal/legal mush is not good governance. Personally, I say bring it on – no free rides dodging regulation on the basis that it’s ‘disruption’.

You know this is unsustainable and won’t end well (years of your blogs are evidence of this). You also know bubbles never end gracefully, so why the snideness about what will likely accelerate a return to rationality?

For many of us who have followed your advice and stayed out of the housing market, especially here in YVR where the sane ones look the fool, this situation can’t end soon enough. There are those of us who would like to own our place, have some semblance of security in living arrangements for our families, and not put ourselves up to our eyeballs in debt. We WANT to see housing crash in this city, and crash hard, in the hopes that something resembling a community emerges from the ashes.

Yes, we want to have time and flexibility (Garth’s rules, etc.), but I also want security for my kids to know that they have a shot at being in the same day care and school for an extended period of time without having to move whenever the landlord decides to flip the place or have their ‘niece’ move in.

/Rant

No offense but you missed the boat. Where i live prices doubled in 7 years. My advice is don’t take advice from people over the internet. Even if there is an interest rate driven correction, your monthly payments will be the same: high prices and low rates vs low prices and high rates. anyone here waiting for the ‘correction’ is in for a shock, all you need to know is the gov made it harder for everyone, and i mean everyone to buy and gave millions of homeowners more reasons to not sell

#63 realist on 07.09.17 at 9:48 pm

If the central bank hikes five times between now and the end of next year

Yeah, and if a giant asteroid strikes the earth, we all go the way of the dinosaurs. About the same odds.

Don’t go Zero Hedge on us.

Consensus forecast. — Garth

#64 waiting on the westcoast on 07.09.17 at 9:54 pm

#56 Vancouver in the Rearview on 07.09.17 at 9:01 pm says… “Re: Vancouver AirBnB
Garth, I am confused by your comments. You yourself have been saying that the real estate market is unsustainable. Yet, now that government is actually doing something to try to make it more affordable because of huge public pressure, you’re slagging them? Why?”

Hey – I feel your pain but the reason it’s such a big problem is because of government involvement in the way up. Now they are going to overdue the fix and create even more problems. Be careful what you wish for!

#65 young & foolish on 07.09.17 at 9:55 pm

Cheap money results in expensive assets …. not only housing, but equities as well. Big deal, what goes up, comes down, and then goes back up again … yawn.

What is really noticeable on this blog is the glee with which posters are welcoming a RE crash … the bigger it seems, the better. But nobody is welcoming an equity market crash, where most of the wealthy have parked their stash. What does that say to you?

That’s easy. No equity crash is on the horizon. — Garth

#66 And I Quote on 07.09.17 at 9:57 pm

“Wisdom comes from experience. Experience is often a result of lack of wisdom.”
― Terry Pratchett

#67 toronto1 on 07.09.17 at 10:01 pm

RE carnage has began- seeing some real fear and loathing out in Brampton and Oshawa those two are like heat maps on MLS- checking the asking and sold prices and a lot of people are underwater already.

Even out in Newmarket seeing house prices i have not seen since 2015. Mississauga same thing, semi’s listing low then dropping their prices….

everyone sees these and says who cares, the seller was in distress, well it matters for two reasons:

1. those new lows will be used by banks and property appraisers for financing going forward
2. if your into your HELOC for say 100K, when prices drop and you want to refinance your screwed as you may be above your debt ratio

when the summer ends, listings will explode again only to go no bid- by December- Feb you will see homes 30% lower at a minimum then now

#68 TurnerNation on 07.09.17 at 10:04 pm

Still giving this lots of thought (no I haven’t been drinking).
The #1 problem facing today’s Millennials – as opposed to the previous ones, born in year 1900 – is that they never learned to Kick It Out!

https://www.youtube.com/watch?v=i9ChFwRbmeU

“”Kick it out – Kick it out”, she said
“kick out your motor and drive
While you’re still alive – kick it out! ”

The kids are alright?

M41ON

#69 Foreign Exchange Gains and Losses on 07.09.17 at 10:07 pm

#17 InvestorsFriend on 07.09.17 at 5:24 pm
#26 Gentle, Loving Kindness on 07.09.17 at 6:12 pm

“There are no provisions in the [Income Tax] Act which specify whether a foreign exchange gain or loss is on account of income or capital. In determining whether such a gain or loss is on account of income, the basic principles of determining income from a business or property for purposes of subsection 9(1) of the Act must be applied. Thus the major problem in determining the income tax status of foreign exchange gains or losses is the identification of the transactions from which they resulted, or, in the case of funds borrowed in a foreign currency, the use of the funds. A related problem is the determination of the method of accounting to be followed in reporting foreign exchange gains or losses for tax purposes.”

http://www.cra-arc.gc.ca/E/pub/tp/it95r/it95r-e.html

#70 T on 07.09.17 at 10:10 pm

#28 and #29 rates vs capital on 07.09.17

Cutting down someone who puts in actual effort. Lovely.

I don’t see you doing much but talking. And at that it’s mostly just negative drivel.

#71 Dude on 07.09.17 at 10:18 pm

#38 Mike “… its up and up…”
#55 Four Fingers Watson

Dudes, you seem to be on a different level and it isn’t real estate.

Get with the program!

#72 Happy Housing Crash Everyone! on 07.09.17 at 10:27 pm

To much evidence the housing market in the GTA is crashing right now! You realtor trolls can post whatever fiction you want. Guess what 99.99% of the viewers who come here won’t even read your post and even if they did, no one would care. Everyone is seeing this housing crash unfold for themselves. The only post that counts is Garth’s post. Your posts like mine means nothing. You realtor shills are going down. You realtors will financially suffer. Some of you realtors will never get another sales commission again. NEVER GET ANOTHER SALES COMMISSION CHECK AGAIN. :-)

Happy Housing Crash Everyone! :-)

#73 John on 07.09.17 at 10:36 pm

I want to repost this. excellent post

SimplyPut7 on 07.09.17 at 6:07 pm
If the central bank hikes five times between now and the end of next year, that home loan could well renew at 3.5%. While still cheap by historic standards, it would add 10.55% to the monthly and annual payments. If the renewal came in at 5% down the road (seems reasonably likely in a few years), then payments would be 24.15% higher.

So what? We can all afford that, right?

——————————–

I don’t think it will take that long to see who is in trouble when rates go up. Mortgage brokers who falsified mortgage applications or used bundled mortgages to get homeowners to qualify for bigger mortgages, should see the effect of their doing way before the end of next year:

BNN at 2:05 min: ‘Some of the millennials are already in trouble…’

http://www.bnn.ca/video/ontario-housing-policies-
could-lead-to-an-overcorrection~1160582

BNN at 3:45 min: ‘I’ve seen people use HELOCs to pay mortgage payments…’; 5:30 min: ‘..multiple debt vehicles that will be affected…’

http://www.bnn.ca/video/the-dangers-of-using-your-home-as-an-atm~1160583

Global News at 1:05 min: July 2017 power of sale (foreclosure) numbers are around 2000 – 2500, up from 200 – 300 in January 2017

http://globalnews.ca/video/3577965/greater-toronto-area-home-foreclosures-on-the-rise

There were also domestic speculators who bought homes, assuming they would continue to rise 10% – 30% year over year. Who knows how these people financed their purchases or what they will do if they have to sell at a loss.

BNN at 2:50 min: How the Toronto housing slowdown is different from Vancouver; 3:05 min: the domestic speculator

http://www.bnn.ca/real-estate/video/buyers-sellers-should-be-cautious-after-toronto-home-sales-drop-realosophy~1161667

#74 acdel on 07.09.17 at 10:38 pm

I don’t know; this whole world has gone crazy controlled by a few psychopaths; tell me if I am wrong to suggest that these issue’s would never have happened with higher interest rates?? What pisses me off the most was the gross negligent that happened in 2008/2009 and nobody cared!! Well some, but the highers got the last laugh and continue to do so to the expense of the future generation. Wow, just Wow!

#75 Lahdeedah on 07.09.17 at 10:38 pm

A millennial married couple who bought a fixer-upper in the west Toronto burbs had a neighbor 6 doors down who said they didn’t approve of them extending the height of the house another story higher, said it would obstruct the view. For two years they battled this person, and had to move back in with parents. So they had to pay a mortgage on their present property and the one they just bought.

Two years later, they had a third kid, I guess cause paying two mortgages is pretty stressful and you gotta chill, and now they are paying this troublemaker neighbor twenty-five-K to build themselves a wall…that will obstruct the view of the couple’s renovated house.

Neighbor must be a Trump supporter. Otherwise, this wall to obstruct a house that ‘obstructs’ their view makes zero sense.

#76 Sunnyside on 07.09.17 at 10:39 pm

Old Ron the Realtor totally nails the Star’s bullshit ‘reporting’ of June’s numbers for the GTA. Plus, not only did they bury the 14% price decline, but they also came up with this crap angle:

https://www.thestar.com/life/homes/2017/07/08/townhome-condo-prices-continue-to-climb-due-to-short-supply.html

No wonder MSM is dead.

#77 joe on 07.09.17 at 10:39 pm

Rook on 07.09.17 at 6:43 pm

Garth – Given the above scenario with many people forced to sell or foreclose, how likely is it that our current government will somehow forgive debt or make some sort of concessions for these over-strapped ‘buy at the toppers’? Kind of seems like something Justin would do.

No chance. — Garth
==========

I predict mass debt forgiveness, Banks would rather take 40 cents on a dollar then lose it all.
lot of speculators mostly work on cash under the table, no one pays tax in GTA so they dont really care abt tainted credit. they will cash out and start over.
personal bankruptcy, short selling of underwater houses and foreclosures will be big business.

#78 crowdedelevatorfartz on 07.09.17 at 10:49 pm

@#70 T
“I don’t see you doing much but talking. And at that it’s mostly just negative drivel.”
++++++

I’m not so sure about that.
Toronto R.E. pricing and sales are starting to melt.
Vancouver R.E. has been ridiculously priced for at least 4 YEARS longer than the TO gongshow……with only a slow decrease in price and sales over the past few months.
Victoria? Who knows ?
But there is certainly something odd about the published stats.

Perhaps the Federal govt and the Provincial govt should grow a pair and actually end all the Real Estate sales number pumping bullshit?
A house or a condo is the most important expenditure the average person will ever purchase and you cant get verifiable, true information on past price, current days listed, history, etc. ????
WTF.
We Canadians are ALL Greaterfools for allowing this horseshit Realtor ponzi PR sales pumping bullshit to go on and on and on for so long.

This should have been a Federal election deal breaker.
Unfortunately, by the time the next election rolls around tens of thousands will be financially ruined.

Access to historical, verifiable, truthful information on the house you want to buy shouldnt be a shell game involving $1 million dollars and 25 years of your life……….

#79 InvestorsFriend on 07.09.17 at 10:51 pm

Schools and Hospital for immigrants?

#55 FOUR FINGERS WATSON on 07.09.17 at 8:56 pm said:

… Canada is allowing 300,000 new immigrants per year. By the way, are we building new schools and hospitals fast enough to accommodate the new arrivals? I guess the lineups for healthcare will get a little longer just when the boomer cohort needs it most. Higher taxes anyone?

**************************************
The ideal immigrant is a young person or couple already educated and ready to work in Canada. They are healthy and don’t need hospitals much. They earn enough income to pay the taxes to cover the costs of educating their children. That’s the ideal. Also in some areas school enrollments are down so no new schools needed.

Which province has the higher taxes, Nova Scotia (and the other Atlantic Provinces) with aging population and stagnant population and few immigrants or Ontario with many more immigrants as a percentage of its population?

#80 For those about to flop... on 07.09.17 at 10:55 pm

I will throw another softball to the realtors on here in the hope of getting some help reporting in real time.

This house was purchased for 1.25 ,assessment came in at 1.4 and eventually after reductions they were asking 1.38.

So they had a bit of wiggle room ,which is a plus for you guys so show me the result.

I can’t report in real time without your help.

No shit,Sherlock…

M43BC

1795 Sherlock Avenue Burnaby.

https://www.zolo.ca/index.php?sarea=1795%20Sherlock%20Avenue,%20Burnaby&filter=1

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

#81 Trumpocalypse2017 on 07.09.17 at 10:55 pm

Uh oh…..

Even Trump’s own children now admit to collusion with Russia:

https://www.nytimes.com/2017/07/09/us/politics/trump-russia-kushner-manafort.html

Trump will do what is so obvious and predictable – he will start a conflict with North Korea and/or others, to distract from the corner he has now painted himself into.

There is a reason world wars start in August.

Get ready.

#82 Saint Herb on 07.09.17 at 10:56 pm

When do cottage prices start to take a hit. Before or after the prices in the GTA drop?

They are sky high too. If people start to feel pressure to afford there house, they would probably sell the cottage first to reduce expenses and make some money. Then cottage supply would go way up and maybe prices would come down.

I wish the TOsold guy would start sending his sold emails again. They would be so helpful now to gauge the prices.

#83 Sir James on 07.09.17 at 10:58 pm

DELETED

#84 Entrepreneur on 07.09.17 at 11:01 pm

It feels like I am on a roller coaster ride with these interest rates, as well as gasoline prices, omg. This kind of up and down leadership is so wrong and hard on the youth.

B.C. has had the carbon tax for about ten years to fight climate change BUT B.C. has about 170 wildfires right now.

On the G20 Summit meeting: Would like to hear the side of protestors, hear their side of the G20. After all, T2 said he is for transparency and discussions. I think Trump is trying to get the Canadian voters upset when he praised T2, and he succeeded.

Comments at the end of websites tell it like it is: “The future is to internalize your economy, ban imports rather than tariff them and rebuild the manufacturing economy. Trade is dead.” ThinkRightGM and “See Statistic Canada dats table 202-0605 which is inflation adjusted median incomes”…that correlation is a pretty good indicator that trade doesn’t work.”

Sure glad that we have internet to get the real truth out and thanks to all.

#85 InvestorsFriend on 07.09.17 at 11:05 pm

Interest Rates

#15 Sidera on 07.09.17 at 5:09 pm
Please stop pandering about rising interest rates in Canada. It is not happening any time soon for the simple facts brought up in your article regarding the debt servicing costs increasing. The country cannot with stand a rate hike at this time, especially with the central bank targeting inflation.

****************************************
Many people argue that governments can’t raise rates and low rates are better for their debt and for the economy.

But if low rates are so great and can be achieved by government why were they ever high?

Governments were crippled under high interest costs in the late 1970’s and ’80’s. Yet they did not immediately drop rates. They even raised rates in around 1980 or 1982 to break the back of inflation. (Paul Volker, Fed chair)

Today’s low rates are certainly driven in PART by government. But also by a simply lack of demand for borrowing. As a percentage of total houses, we are building far fewer today than back then . As a percentage of the economy there is little construction of any kind compared to the massive growth back in the 60’s, 70’s 80’s.

Demographics and the fact that the western world is largely “built out” are responsible in good part for low rates.

If rates rise due to fear that borrowers will default on loans or for other market based reasons, governments may be powerless to stop it.

In recent years governments printed money to buy bonds and drive down interest rates and did it without causing inflation. But can that continue?

I never thought I would see mortgages under 6%, not when I came of age with rates at more like 18%. Similarly young people now can’t imagine rates EVER going as high as 6%. Well, the future can bring surprises for today’s young as it did for me.

#86 InvestorsFriend on 07.09.17 at 11:15 pm

Reporting Gains on currency movements back to Canada

#69 Foreign Exchange Gains and Losses on 07.09.17 at 10:07 pm
#17 InvestorsFriend on 07.09.17 at 5:24 pm
#26 Gentle, Loving Kindness on 07.09.17 at 6:12 pm

“There are no provisions in the [Income Tax] Act which specify whether a foreign exchange gain or loss is on account of income or capital. In determining whether such a gain or loss is on account of income, the basic principles of determining income from a business or property for purposes of subsection 9(1) of the Act must be applied.

***********************************
Well, that may be but is completely off topic to my question which was whether a taxable currency gain was triggered at all in my example. I was assuming it was a capital gain if it happens. The possibility it is taxed as regular income is another topic and not my question at all.

Reminds me of a television ad from world vision or one of those groups many years ago (mid to late 1970’s) who bragged they were “providing answers to unasked questions”. I figured they should start with answers to the asked questions rather some question no one even asked.

#87 InvestorsFriend on 07.09.17 at 11:25 pm

Tracking taxes not portfolio

#26 Gentle ,Loving Kindness on 07.09.17 at 6:12 pm kindly responded to me suggesting I was calcualting portfolio returns too often in my currency gain question.

I do have a column for unrealized gains on currency but the whole exercise was to get the correct cost basis for my U.S. dollars as measured in Canadian dollars in order to calculate the tax when a currency gain is realized.

I then went on to give an example where it looks like no currency gain is triggered when a large gain on currency is transferred back via Norbert Gambit but that just seems too good to be true. (Norbert can give a little gain based on currency movements between the Norbert buy and sell dates (like three days) but does not seem to trigger a gain on the cash itself.

#88 Gentle ,Loving Kindness on 07.10.17 at 12:35 am

#87 InvestorsFriend on 07.09.17 at 11:25 pm
Tracking taxes not portfolio

#26 Gentle ,Loving Kindness on 07.09.17 at 6:12 pm kindly responded to me suggesting I was calcualting portfolio returns too often in my currency gain question.

I do have a column for unrealized gains on currency but the whole exercise was to get the correct cost basis for my U.S. dollars as measured in Canadian dollars in order to calculate the tax when a currency gain is realized.

I then went on to give an example where it looks like no currency gain is triggered when a large gain on currency is transferred back via Norbert Gambit but that just seems too good to be true. (Norbert can give a little gain based on currency movements between the Norbert buy and sell dates (like three days) but does not seem to trigger a gain on the cash itself.

—————
Sorry about that, I’ve got nothing!!

#89 yorkville renter on 07.10.17 at 12:40 am

#57 & #59 – I think yous knows very little. Rates will stabilize? They moved last week; the decline has been going strong for 2 months.

People who think Toronto is world-class have never been to a world-class city. NYC, Tokyo, London – comparatively, Toronto is small town.

People who think our housing market impacts equities give Canada way too much credit. It will affect the TSX, but you think an exchange in an actual world-class city will blink if Toronto has a housing crash?

People who think rates will never get back to 5% are just wrong.

History repeats itself. The internet is new; eCommerce is new; Housing Markets have existed forever. Property has been bought and sold in Toronto for a long enough time that we know how this plays out.

https://www.reddit.com/r/canada/comments/5y65ku/real_estate_rise_and_demise_in_19891990_toronto/

#90 Dee on 07.10.17 at 12:42 am

I still cant understand the immigration and population will support higher prices argument. If that’s the case, the most densely populated places on the planet would also have the absolute highest real estate prices. That’s not the case. It is immigrants and a population + money (and excessive amounts of allowable credit) that drive prices upward

#91 TheDood on 07.10.17 at 12:48 am

#59 I thinks I know something on 07.09.17 at 9:21 pm

I just can’t believe that anyone in his right mind would actually believe that rates will be allowed to rise by Trudeau to the point that the Canadian RE industry (and hence economy) would be affected. Poloz will pull back the reins on any rate increases if RE prices drop significantly. To hope that Toronto RE prices will ever drop to 2015 levels is plain silly.
________________________

You can’t be serious! Do you not agree that housing in general in Canada is WAY WAY WAY overpriced and needs at least a 50% correction? How is a piece of sh!t detached in YVR or TOR costs 2 million, and a brand spankin’ new 3000sq ft beauty south of the border costs a fraction of that? Are houses better in Canada? Even though they’re made of the same materials? Canada is 5 years past due for a huge correction. The Canadian RE industry needs two swift kicks in the nuts. Thats my 2 cents worth.

#92 yorkville renter on 07.10.17 at 12:53 am

#77 – I predict you’re 100% wrong.

$0.40 on the dollar and who’s paying the $0.40?
The government wont give banks $$$.
CMHC is insurance for non-payment.

Are you suggesting RE will go to $0.00?

#93 BT on 07.10.17 at 12:57 am

Do you honestly think 3.5% mortgages are going to tank this market? Still dirt cheap. Owners will tack on an additional 5 years to their amortization than sell to the basement dwellers at a discount. It’s quite sad the blind hope some of you hold out. Look at vreu, clearly living in a dream world yet still posting daily about Vic market tanking when it’s on fire.

#94 Codificar on 07.10.17 at 1:01 am

#40 Anastasckya Tolski on 07.09.17 at 8:08 pm

Toronto = Feminist Realtors? Are 0.5 bathrooms oppressive because it doesn’t have space for a Hermes handbag?

Thank God I LEFT TORONTO…That city is nothing but an infestation of Women this, women that, but dare speak up for Murdered Aboriginal Women, they look at you as if you were convicted of a terrible crime like child molestation.

Nearly 19 out of 20 females in Toronto think like Anastackya, a paranoia against men in a relatively safe country like Canada.

That is why I left. I can’t bear being treated like a criminal and harassed daily with social justice warrior bollocks when my investments pay for their tuition. I also liquidated my shares and investments and invested in US Treasury Bills and American multi-national companies before leaving Canada.

Toronto is definitely that bad that I wanted not to also leave, but sever all ties with Canada, because, face it everyone, with the exception of Quebec, Toronto dictates the rest of Canada.

P.S. Is “Mud” referring to one derogatory term to label underdeveloped countries as poor (as in inhabitants live in mud houses) or is it the Alt-Right way of describing refugees? What an unbelievable alliance of Stormfront and feminism.

#95 BT on 07.10.17 at 1:11 am

Do you honestly think 3.5% mortgages are going to tank this market? Still dirt cheap. Owners will tack on an additional 5 years to their amortization than sell to the basement dwellers at a discount. It’s quite sad the blind hope some of you hold out. Look at vreu, clearly living in a dream world yet still posting daily about Vic market tanking when it’s on fire.

#96 Tom from Mississauga on 07.10.17 at 1:21 am

Attacking short term rentals…I just took one to avoid commute 3 hours a day to new job so not exhausted and get fired. How’s that helpful? Wish I had a job like the bureaucrat that made the regulations.

#97 Tom from Mississauga on 07.10.17 at 1:22 am

Btw, it was on kijiji.

#98 Pete from St. Cesaire on 07.10.17 at 1:48 am

Prince Edward County, Napanee and Kingston are all selling typical volumes and anything in the county that is a gem is bought up by Toronto 1%ers as a summer palace.I guess Eastern Ontario didn’t get the email about the crash??
————————————————–
Napanee is a hole and Kingston is a very local market, so for them to remain stable early in the collapse isn’t remarkable.
The County’s RE gems being bought up by the 1%ers has always been happening and will continue to do so. You see, gems are valuable and rare; where as McMansions in places such as Richmond Hill or Markham are worthless. No 1%ers will ever buy a place there to live in. The aspirational 14%ers, however, flock to those places believing that the million-dollar price tag means that it is a millionaires house. What a pathetic bunch they are.

#99 Pete from St. Cesaire on 07.10.17 at 2:13 am

Soon it will be plain illegal for people to rent out secondary suites, laneway houses and any investment property (like a condo) for short-term guests. It gets worse, too: citizens will have to apply for and obtain a business license in order to provide rooms in principal residences plus pay a 3% tax on revenues
———————————————————
The name of the game is control. The govt. doesn’t like the sharing economy proposed by the young people who see it as a way to make ends meet. Therefore you will see strict controls on everything such as:
1) Ride sharing (carpooling), where you’ll need a permit, special insurance and stringent car inspections, register all riders (who will need a permit/background check to be riders of course) and keep a daily log of all riders and trips. Essentially controlling who you can associate with.
2)Micro houses and solar power. RV/houseboat living.
3)An inability to rent anything to anyone (or allow them to use something of yours) without a licence to do so. Can’t let people share things; how would the govt. be sure that there wasn’t some ‘consideration’ changing hands un-taxed.
4) Any off-grid or under-the-radar lifestyle. Including living at home in parents basement; which will soon be deemed to have a taxable value (for anyone over 18).
5) Any pooling of ressources, such as many friends (especially non-relatives) living in the same building communally so as to be able to look after each other’s kids instead of paying for daycare, sharing internet wi-fi, and so on.

#100 Pete from St. Cesaire on 07.10.17 at 2:20 am

I predict mass debt forgiveness, Banks would rather take 40 cents on a dollar then lose it all.
lot of speculators mostly work on cash under the table, no one pays tax in GTA so they dont really care abt tainted credit. they will cash out and start over.
personal bankruptcy, short selling of underwater houses and foreclosures will be big business.
——————————————————
Garth is right. There will be no forgivness for the average indebted Joe. But just like in 2008 if the too-big-too-fail want a bailout they will get it. You must realize that the bailouts which were to save the banks from collapse due to the US housing market collapse could have taken the form of bailouts to the homeowners to cover their mortgages and that in turn would have saved the banks; but NO, the bailouts went straight to the banks who continued to foreclose on the homes of people even though through the bailouts the banks had already been bailed out of any losses on the houses in question. The bail-out scheme was simply a wealth transfer under the guise of having been necessary for the survival of the system.

#101 Slippery cricket on 07.10.17 at 2:23 am

Personally I like airbnb , hotel rooms don’t really suit my needs. I would much rather rent a condo. Need to regulate them? Fine. But suggest everyone should stay in a hotel, not for me.

#102 ColintheColin on 07.10.17 at 2:42 am

Hey Flop,

For your place on Sherlock. Listing was terminated on July 5. Listed price at the time was – 1.38

Might come back on next week at a different price but who knows.

#103 jane24 on 07.10.17 at 2:46 am

I think that Vancouver is taking the right steps by regulating AirB&B and condos. Income is income for tax reasons. Why should this income stream be tax free.

Last year my family of 6 decide to rent a 2 bed condo through AirB&B by the Gardiner Expressway in TO for our summer visit to family. We had two babies with us so needed a kitchen. The condo was obviously no-one’s actual home but set up for short term rentals. The condo was tiny, the building was busting at the seams as obviously this was not the only AirB&B. With nowhere for guest parking the roads were choked with rental cars. Took ages to drive in or out of this part of TO. Spoke to a few regular owners in the building and they were furious at having so many strangers with access to their building. Overall a bit of a nightmare all round.

Interestingly we had to pay the rental fee to a bank account in Ireland so the amount of tax fraud going on must be massive. This year we are AirB&Bing in Montreal. Learned our lesson and going for a detached house. Rental fee this time is payable to a bank here in England!!

#104 nubbers on 07.10.17 at 3:47 am

It’s amazing to hear talk of how pressured people will be with mortgage interest rates at 5%, but when you look at history you have to wonder if rates would stop there.

There was a time when people considered a long term average interest rate to be around 8-9%. In 1992 (in the UK), I remember a colleague boasting that he had been able to fix his mortgage at 13% (turned out to be a very bad move as rates plummeted a few days later).

Given that interest rates vary over a period of multiple decades, I wonder what rates the most recent crop of 25-year mortgagors will see before they are paid off. These unfortunates likely have a lifetime of pain ahead of them.

#105 A Reply to #64 waiting on the westcoast on 07.10.17 at 6:17 am

“Now they are going to overdo (not overdue) the fix and create even more problems.”

#106 Julia on 07.10.17 at 6:24 am

#33 Raj

Just go on any message board or commenting section of Facebook on real estate articles and you see it all the time. Unbelievable the number of people that call renters stupid because a mortagage payment is less than rent, real estate always go up and when the mortgage is paid off they will live in their property for free.

If I dare comment I get called a jealous renter. Often worse.

#107 A Reply to #86 InvestorsFriend on 07.10.17 at 7:13 am

“… my question … was whether a taxable currency gain was triggered at all in my example.”

The answer to your question was in the link I provided. If your transactions are on account of capital (and not income), then the comments in 12 and 13 of Interpretation Bulletin IT-95R apply to your situation.

#108 Ponzius Pilatus on 07.10.17 at 7:22 am

FYI.
http://www.richmond-news.com/news/weekly-feature/feature-get-ready-for-the-uber-of-real-estate-in-richmond-1.20982923

#109 Victor V on 07.10.17 at 7:24 am

Mortgages won’t be only problem for many Canadians as rates rise: Debt-laden Canadians owed $211B on home equity lines of credit at end of last year

http://www.cbc.ca/beta/news/business/interest-rates-helocs-canada-debt-1.4192847

#110 Smoking Man on 07.10.17 at 7:43 am

Peterson knocks it out of the park.

https://youtu.be/s4c-jOdPTN8

#111 maxx on 07.10.17 at 7:59 am

#8 TurnerNation on 07.09.17 at 4:42 pm

“Sample headline you see on CBC:
“It was horrific” – passenger on Air Canada flight delayed for 15 minutes. Someone needs to do something about this”

Solution: more govt control. You are free to leave at any time folks..no really……………..”

You have a good point TN, but you chose a less than ideal example. This airline needs a serious kick up management’s backside. Delays are part of air travel, however 2 weeks ago we checked in at 04:30 for a flight abroad, to be told “your tickets have been revoked”. A bit tough to walk away from that.
The sfb at the counter was beyond arrogant, with attitude to spare. THAT’S what truly ticks people off and why, when it comes to lazy, pi$$-poor airlines, we really do need to tighten the legal screws.

We’ve never had such a disgusting complement of flights – from start to finish.

A total embarrassment to Canada.

#112 IHCTD9 on 07.10.17 at 8:44 am

#105 Julia on 07.10.17 at 6:24 am
#33 Raj

Just go on any message board or commenting section of Facebook on real estate articles and you see it all the time. Unbelievable the number of people that call renters stupid because a mortagage payment is less than rent, real estate always go up and when the mortgage is paid off they will live in their property for free.

If I dare comment I get called a jealous renter. Often worse.
_________

If I add in utilities, taxes, insurance, and maintenance – I’m paying an honest 7-800.00/month to live in my own paid for house.

In the Hinterland.

I’ll basically make jack after selling if I’m honest about costs too, and I only paid 123K for my place lol!

No one wants to run the real numbers, every last justification to be a land baron is maximized by those up to their eyebrows in debt.

#113 Dissident on 07.10.17 at 8:52 am

Some people seem to disagree.

http://www.bnn.ca/why-six-top-economists-think-the-bank-of-canada-should-stay-on-hold-1.800688

#114 NoName on 07.10.17 at 8:59 am

What’s up with gas consumption
in Canada is seems to be trending down.

Car sales you look ok-ish, passenger cars down, trucks up imported cars sale in basement (-20 something), but total sales YoY -1.6%

Why are kanadians not driving?
Cause we got not a little convoy
Rockin’ through the night…

Bonus video.
https://youtu.be/8JPZskYKUvY

#115 };-) aka Devil's Advocate on 07.10.17 at 9:15 am

As people get the Government they deserve so too do they get the real estate market they deserve.

#116 Victor V on 07.10.17 at 9:17 am

27% of Canadians already ‘in over their head’ with mortgage payments: MNP

http://www.bnn.ca/27-of-canadians-already-in-over-their-head-with-mortgage-payments-mnp-1.800710

An alarming number of house-poor Canadians are teetering close to the edge in terms of meeting their debt obligations, according to a poll conducted on behalf of MNP. The report from the chartered accountancy firm says even a modest increase in interest rates could push many homeowners over the edge.

“Three in ten home owners say that they will be faced with financial difficulties if the value of their home goes down,” the report read. “Even if home values don’t decline in the near future; more than a quarter of Canadians (27 per cent) who have a mortgage agree that they are ‘in over their head’ with their current mortgage payments.”

#117 Average Joe on 07.10.17 at 9:36 am

Jeans bubble?

https://www.thestar.com/business/2017/07/10/pricey-jean-manufacturers-going-bankrupt.html

In my book, paying the least amount possible for a commodity (whether it be a pair of jeans or a house) is always in style.

#118 Millmech on 07.10.17 at 9:41 am

#94 BT
That’s exactly what the banks want,by adding another 5yrs to the amortization the bank gets another 5yrs of interest payments.If you look at amortization tables the first 11years of payments usually goes to interest repayments not principal,so adding another 5 years of interest payments will be encouraged.
I was told by a friend of mine who worked at TD that the average Canadian pays between $400,000-$500,000 in interest payments over their lifetime,and it was the banks job to get as much of that as possible!

#119 For those about to flop... on 07.10.17 at 9:59 am

#101 Colin.
Hey Flop,

For your place on Sherlock. Listing was terminated on July 5. Listed price at the time was – 1.38

Might come back on next week at a different price but who knows.

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

Hey Colin,thanks,here are some recent sales if you want to help me again.

Some as recent as last week.

Let’s see what’s going on…

M43BC

1401-38 1st Ave W Vancouver..Paid 1.32 asking 126

447 232 st.Langley paid …4.15 asking..4.88

4302-4508 Hazel st.Burnaby paid 1.38 ask 1.5

275 Rabbit Lane West Vancouver paid 1.9

4368 Cambridge st. Burnaby paid 1.41 ask 1.49

6291 Bellflower Dr. Richmond paid 2.2

4405 Sophia st. Vancouver paid2.23

5688 Sussex Ave Burnaby paid 1.96 ask 1.68

1607 Balmoral Ave. Coquitlam paid 1.3 ask 1.39

4468 Blair Dr Richmond paid 1.15 ask 998

26290 126 Ave. Maple Ridge paid 2 ask 2.26

4655 Mahood Dr Richmond paid 2.04 ask 1.88

1470 Camelot Rd. West Vancouver paid 4.6 ask 4.99

4250 Chelsea Cres. North Vancouver paid 3.15 ask3.23

#120 SimplyPut7 on 07.10.17 at 10:48 am

#73 John on 07.09.17 at 10:36 pm

Thanks!

#121 InvestorsFriend on 07.10.17 at 10:48 am

Tax on currency exchange capital gain?

#106 A Reply to #86 InvestorsFriend on 07.10.17 at 7:13 am
“… my question … was whether a taxable currency gain was triggered at all in my example.”

The answer to your question was in the link I provided. If your transactions are on account of capital (and not income), then the comments in 12 and 13 of Interpretation Bulletin IT-95R apply to your situation.

*****************************************
Thank you for the link. Assume any currency will a capital gain. (The question is whether a gain is triggered at all in my Norbert example other than the small change in the currency ETF between buying and selling very quickly) I can’t see any answer in that link at 12 /13.

If you are interested and knowledgeable on the matter provide YOUR answer / interpretation to the tax question from my post 60 above.

So many people on this and other blogs seem to trade in taxable accounts. Some of them should have experience and knowledge on currency exchange gains and how to track the cost basis of U.S. dollars as measured in Canadian dollars.

#122 IHCTD9 on 07.10.17 at 10:57 am

The wife and I (who have no immediate intentions of moving up, but maybe in the next 5 years… ) were teased by a familiar new MLS listing about a 4 minute drive from where we live. BEAUTIFUL place, Timber frame, cathedral ceilings, massive windows, 3 story walk out to pool, hot tub, awesome landscaping. Guy has been hard at work on this place for probably 15 years. I’ve watched the build progress since they first dug the hole. Guy did an awesome job, and the money dumped into the backyard alone likely cost more than I paid for my whole house.

Asking 750K, we could own it for 2300.00/month after proceeds of sale of current house are put down. That’s really not a lot considering we paid 1200.00/month on our current house 17 years ago.

It’s totally doable while even still allowing us to invest and spare cash every month.

The temptation killer was the taxes: $7500.00/year on a house in the hinterland. This tax bill is higher than our ex-mortgage payment was for our final term. I have philosophical objections to paying that much tax for almost nothing. No sewer, no sidewalk, no street lights, no water. Fire and Police services used once per 10 years (maybe). I get snow removal, and road repairs.

I told the wife we wouldn’t make it to retirement in that house before the tax bill hit 10,000.00+ per year, and this is a 100% guaranteed fact. Our current tax bill has doubled in less than 17 years, and we’ve got 20 to go before hanging up the gloves. It could easily be up over 15,000.00 per year by 2037. That’s the kind of tax Bill that starts eroding home values…

I know I’m probably just a cheap bastard, but I also know when my wallet is being abused. Wife agreed – it’s a rip, it will 100% guaranteed cost almost 1000.00/month during retirement just to service the city’s tax revenue while we are in retirement.

We’re happy to let someone else pay the City on this one, while we eventaully move to a jurisdiction that has a little better record for handling their costs…

#123 NoName on 07.10.17 at 10:58 am

With help of Google translate I was reading an article where one populist is scolding other populist. (Bild)

And that was funny with all funny translated sentences. Even I who speaks and write with an accent had hard time making a sence of it.

#124 I thinks I know something on 07.10.17 at 11:04 am

#91 TheDood on 07.10.17 at 12:48 am

You can’t be serious! Do you not agree that housing in general in Canada is WAY WAY WAY overpriced and needs at least a 50% correction? How is a piece of sh!t detached in YVR or TOR costs 2 million, and a brand spankin’ new 3000sq ft beauty south of the border costs a fraction of that? Are houses better in Canada? Even though they’re made of the same materials? Canada is 5 years past due for a huge correction. The Canadian RE industry needs two swift kicks in the nuts. Thats my 2 cents worth.

———————————————————-

I totally agree that GTA housing is wayyyyy crazy overpriced (based on the traditional fundamentals). However, the conditions were set up by the super genius “powers that be” to raise house prices to these lofty level (i.e. no control on foreign money, massive immigration, CMHC, zirp, etc.). I just don’t think that any measures that have recently been introduced (like the ridiculous foreign tax, empty house tax, etc) will have any effect. And that is because there are sooo many huge loop holes in these measures that you’ll be able to drive dozens of Mack trucks through them. As far as rising rates go, what a joke! Our super genius leaders have placed us, and the economy, in a trap that cannot be escaped without an economic collapse. Or at least serious pain for many. If rates do go up significantly, watch the economy crumble and listen for the howls from all quarters to again lower rates. And our genius leaders will do exactly that.

#125 Leo Trollstoy on 07.10.17 at 11:07 am

Why is gold so useless?

This chart shows that gold is now at a ‘treacherous’ level
http://www.cnbc.com/2017/07/10/this-chart-shows-that-gold-is-now-at-a-treacherous-level.html

#126 InvestorsFriend on 07.10.17 at 11:11 am

Cost Base of U.S. dollars in terms of Canadain

I just found a site that deals with this

https://www.adjustedcostbase.ca/index.cgi

and more specifically:

https://www.adjustedcostbase.ca/blog/calculating-adjusted-cost-base-for-foreign-currency-cash/

It confirms what I realised that calculating adjusted cost base of U.S. dollars is quite complex. It provides tools.

I will look into whether they discuss the Norbert gambit situation.

#127 Iconoclast on 07.10.17 at 11:15 am

#77 Joe:
> I predict mass debt forgiveness, Banks would rather take 40 cents on a dollar then lose it all.

Banks will take you out and claim the balance from CMHC if they can.
Or they will take you out and sell at auction; if it won’t sell they will buy it themselves and set up their own residential REIT.

Either way, you lose.

#128 Raj on 07.10.17 at 11:30 am

“27% of Canadians already ‘in over their head’ with mortgage payments: MNP”

http://www.bnn.ca/27-of-canadians-already-in-over-their-head-with-mortgage-payments-mnp-1.800710

#129 Another Deckchair on 07.10.17 at 11:49 am

@121 IHCTD9

“We’re happy to let someone else pay the City on this one, while we eventaully move to a jurisdiction that has a little better record for handling their costs…”

*WHERE* are taxes lower?

Like you, we have a small place, but on a street where small places like ours get replaced by megaliths.

MLS house value gone up 4x in 20 years.

After watching expenses (down almost to the penny) for 2+ years, we’ve come to the conclusion that almost 10% of our living costs are in property tax alone.

(side note: interesting exercise – keeping track of every $$ spent. It’s an eye opener for sure. Best financial move we made – figure out where $$ go, and then figure out if $$ needed to go there)

#130 n1tro on 07.10.17 at 12:22 pm

@#116 Average Joe

Never discount millennial douchebaggery to pay for $350-$500 pair of jeans to sacrilegiously sit on the face of Buddha which is printed on the ass cheek of the said pants.

#131 jess on 07.10.17 at 12:22 pm

recruitment f(raud) irms

anderson group
“The Guardian has seen evidence showing that the closure of parts of the scheme followed Anderson being asked by HMRC’s fraud and investigation service for details about the large numbers of VAT registration applications made on behalf of Anderson clients last year.

Documents show that almost 2,000 of the Anderson scheme’s mini companies are now being simultaneously liquidated.

Tax experts say the moves make it extremely difficult to pursue the defunct firms for any potential VAT or national insurance debt – particularly as each mini company appears to only have a Philippines-based director and barely any retained assets….
http://www.taxresearch.org.uk/Blog/2017/07/10/the-governments-desire-to-slash-regulation-is-going-to-cost-us-a-fortune-yet-again/

BBC uncovers ‘aggressive’ tax avoidance scheme
By Zoe Conway Reporter, BBC Radio 4 Today

29 May 2015

Recruitment giant’s tax scheme liquidated after HMRC asks questions …
https://www.theguardian.com › Business › Financial sector
50 mins ago – It has been used by recruitment agencies supplying low-paid workers to … A prosecution for tax fraud may not be out of the question.”.

Recruitment directors sentenced for tax fraud | CCH Daily
https://www.cchdaily.co.uk/recruitment-directors-sentenced-tax-fraud

http://www.telegraph.co.uk › Finance › Jobs
Jul 22, 2012 – The tax office is to investigate the recruitment industry following allegations … gangmasters, exploit their workers and also cheat the exchequer.

#132 Ace Goodheart on 07.10.17 at 12:38 pm

Not sure if the GTA market is going to crash to the extent that a lot of the posters on here seem to think it is. Granted it has been in free fall for a number of months, but it appears to be finding its bottom and it does not look like it’s going anywhere near the depths that others might think.

We have to remember that a real estate market in free fall, following a lofty, speculation fueled high, will usually find its bottom just slightly below the middle class affordability threshold. This is because most of the people who own houses in the GTA did not buy them during the most bubbly periods of market over valuation. So they can afford to sell them, and still make a windfall profit even if prices decline by 20 or 30% from the high point.

I predict the market will find its legs in a month or so and the overall decline won’t be more than 25% from the high. And remember, the high is not the actual value of each house. The high is an aggregate which was determined by looking at the prices people paid, during a particular period.

Every house in the GTA did not change hands, so we only get the absolute most ridiculous prices, which are not the prices that everyone paid.

The upside of this is that during the last days of the market upswing, very few people were able to buy, because very few houses were being sold. So again, the damage is limited.

#133 jess on 07.10.17 at 12:42 pm

“What we found was contractors had been employed by contracting firms, agencies, those agencies then had contracted out to government agencies and the government agencies were paying through this company.”

He said the profiles of the registered directors seemed unusual.

“Some of the directors had no qualifications to be directors, they were in homes in areas where you wouldn’t expect directors to be living — young people living in Blacktown, and some of the blocks looking like vacant blocks.

“So I’m not surprised that eventually the federal police came on to this as a problem.”

Senator Cameron said many of the contractors affected worked for government agencies.

“A myriad of government agencies [were involved]. ABC was one, the Department of Immigration and Border Security, Social Security, the NDIS, Defence — right across the spectrum of federal government agencies,” he said. …..

http://www.abc.net.au/news/2017-05-18/tax-fraud-allegations-could-risk-investigations-senator-says/8537608

======
reforms to crack down on phoenixing following the ATO arrests.”The biggest challenge in phoenixing is the risk that directors pop up again and again,” shadow assistant treasurer Andrew Leigh said.

“They get barred, but due to lax laws for registering as a company director, they can go back on and set up again pretending to be someone else. Director identification numbers can help avoid that.”

Jun 6 2017 at 5:11 PM Updated Jun 6 2017 at 5:11 PM

http://www.afr.com/news/policy/tax/tax-office-stops-mystery-party-swooping-on-plutus-tax-fraud-firms-20170606-gwlp1c

Tax Office stops mystery party swooping on Plutus tax fraud firms

#134 SimplyPut7 on 07.10.17 at 12:44 pm

#36 mortgageman on 07.09.17 at 7:40 pm

I will give you some examples of what I have personally experienced:

There’s a newlywed couple I know, they don’t make much money. After the wedding (which was March 2017), they moved into the basement of the mother of the groom’s house to save money to buy their own place, in a couple of years. They are like most millennials who have not changed their spending habits to prepare for a future where they have to make sure they have enough money set aside to pay household expenses without dipping into the HELOC, credit cards or other credit vehicles to pay monthly expenses.

They got a little impatient and when the bank turned them down for the mortgage they wanted, they went to a family member who is mortgage broker and qualified to buy a house in Oshawa – they move in September.

***

I have a friend who is a teacher and she was surplused (she has to go to another school with more students), over the past several years, her school went from 1000 students to 700 students. Many of the students come from very low income families on social assistance. She said they all moved to Oshawa to move into cheap houses – several families can live in one house and have more room and pay less than what they could get in Toronto.

***

I went to an open house in my area in March 2017, I told the on-site mortgage broker from a big bank, I don’t have the $100k+ for the down payment on the home. The person asked if I was able to get the down payment from somewhere else. Then the person told me that if I have a tenant in the basement, it would improve my chances of qualifying for the mortgage.

***

I have met mortgage brokers, realtors and bank employees who really love what they do, are honest and care about their customers/clients.

But I have also met people who will do anything to close a deal, whether it’s because of greed, fear of losing their job for not selling enough homes/mortgages, or needing the money to feed their own families, since most of these jobs pay very low and the commissions help employees make a living wage.

The real estate and mortgage industries need a compliance and enforcement structure that will deter people from making unethical choices. Because industry professionals who are not disciplined, encourage others to mislead the public into thinking the mortgages applications or homes sold were bought by homeowners who will not be financially underwater from a couple of rate hikes.

#135 Trollson on 07.10.17 at 1:12 pm

I would like to move to a place where there are gay people but where they don’t have the power to advertise their life style to my children, like they do in Toronto.

#136 Brunett43 on 07.10.17 at 1:17 pm

My son who is 21yrs old is moist for buying a house. I keep telling him no not yet, explaining to him that the market prices are way too high. I’ve referred him to this site. Then I got the “would you possibly lend me money for a down payment”. I shuddered, with a distinct “NO WAY” Having read Garths many comments about Bank of Mom and Dad…I’m glad I listened.

#137 IHCTD9 on 07.10.17 at 1:27 pm

#128 Another Deckchair on 07.10.17 at 11:49 am
@121 IHCTD9

“We’re happy to let someone else pay the City on this one, while we eventaully move to a jurisdiction that has a little better record for handling their costs…”

*WHERE* are taxes lower?
__________________________________________

500K house (real nice, with 100 acres) in Tweed = $1500.00/yr property taxes :).

I don’t know where we’ll end up at the end of our working careers, I can only say it will have to be in a jurisdiction that CAN’T charge 5 figure annual property taxes.

The way I see it, no one will be able to live within 50 km of a brokeass dying small/medium sized City. You’ll get annexed and find yourself paying the same taxes as those who live right in town (or more). I live in a small Village, but now it’s part of the medium City 25 km away. Guess what that did to my taxes?

There is only one way to have a real nice place in a decent area without getting destroyed by taxes and that is to strategically “renovate” your way into it.

Other than doing that, you’d probably have to get North of 7 to be safe – just stay 50KM away from anything that has it’s own Police and Fire dept., and you should be ok. If City Hall looks like the Taj Mahal while the rest of the city is filled with dilapidated period correct WW2 homes with teens out pushing strollers at all times of the work day – keep looking.

#138 Wrk.dover on 07.10.17 at 1:47 pm

IHCTD9: and don’t be getting expansion horny either. If you get a building permit, you will meet the assessor, and he will certainly be more impressed by what you already have there than he was the last time.

Tax increase because of new addition
Tax increase to catch up to all the stuff he did not realize.

Potential property tax increase, the greatest governor on the reno economy for long term keeper homeowners. It has stopped me dead.

#139 nick on 07.10.17 at 1:48 pm

#131 Ace Goodheart on 07.10.17 at 12:38 pm

“but it appears to be finding its bottom and it does not look like it’s going anywhere near the depths that others might think.”

_____________________________________

Based on… what, exactly? What data are you looking at that brings you to those observations?

#140 Lee on 07.10.17 at 2:00 pm

#136,

Or you could move to Chicago and pay about 2% of property value in realty taxes. For a $500,000 US property, which is of course a decent property in Chicago, you’d be paying $10,000 plus a year in US dollars for realty taxes. Not uncommon to pay $15,000.00 US a year on such a property. Coming to a Province near you in the not to far off future.

#141 IHCTD9 on 07.10.17 at 2:11 pm

#90 Dee on 07.10.17 at 12:42 am
I still cant understand the immigration and population will support higher prices argument. If that’s the case, the most densely populated places on the planet would also have the absolute highest real estate prices. That’s not the case.
__________________________________________

Average amount of money brought to Canada by immigrants is $47,000.00. They blow half of that just getting settled.

Average savings remaining after getting settled in Canada is $20,000

One fifth of all immigrants to Canada have no savings at all.

2/3rds of all immigrants make sending money back home a top priority, along with educating their kids.

So you are probably correct. Sure there will be some rich ones, but most will be average/poor/broke.

Seeing as how many come from the 3rd world, there is an excellent chance the average is probably made up of a handful of multi-millionaires, with all the rest of them being under that 47K mark.

#142 Widening Gyre on 07.10.17 at 2:29 pm

#134 Trollson

We would like you to move there too. Don’t let the door hit you on the arse on your way out.

#143 Hairhead on 07.10.17 at 2:40 pm

Just another anecdote from the Valley of the Nuts/aka/Fraser Valley & Greater Vancouver.

I currently rent a post-war bung in Vancouver. e-value BC now gives it an appraisal value of $4.4 million, up $800,000, or 22% from last year’s value of $3.6 million.

My mother, who lives in a gorgeous home on a 65 x 250 lot with a sea/wildlife view on Vancouver Island, only blocks from all amenities (grocery store, library, beach, etc. etc._ current appraisal, $360,00 DOWN 5% from $380,000 last year.

There are 100 kilometres between the two homes.

This kind of market is both bizarre and unsustainable.

#144 IHCTD9 on 07.10.17 at 2:59 pm

#139 Lee on 07.10.17 at 2:00 pm
#136,

Or you could move to Chicago and pay about 2% of property value in realty taxes. For a $500,000 US property, which is of course a decent property in Chicago, you’d be paying $10,000 plus a year in US dollars for realty taxes. Not uncommon to pay $15,000.00 US a year on such a property. Coming to a Province near you in the not to far off future.
_____

NJ is the same deal. Got a 4-500K house? 10K+ per year in taxes. But they pay taxes less in other areas. If the 500K Chicago property was a real knockout, and other costs of living and taxation were low – then I’m not sure I wouldn’t just pay it. It’s a package deal, if there is true mutual benefit – I’m in.

Out in the Hinterland, I would get jack for my money towards a huge tax bill. No benefits of living in a big city, no benefits of not living in a big City. They just want my money because MPAC says my house is worth X so hand it over. No matter if you have to dump 20K on a new well, or you’re out 25K because your septic field plugs up.

No thanks, I’ll move to an area that the civil servants haven’t started bleeding out yet. All I need is some space around me, good fishing, camping, ATV trails, and a fair tax levy.

#145 IHCTD9 on 07.10.17 at 3:23 pm

#137 Wrk.dover on 07.10.17 at 1:47 pm
IHCTD9: and don’t be getting expansion horny either. If you get a building permit, you will meet the assessor, and he will certainly be more impressed by what you already have there than he was the last time.

Tax increase because of new addition
Tax increase to catch up to all the stuff he did not realize.

Potential property tax increase, the greatest governor on the reno economy for long term keeper homeowners. It has stopped me dead.
________

I never get permits for renos and upgrades – F’em. I even built an addition on my house without a permit – AND GOT CAUGHT. Had to buy the permit, that was the only repercussion.

I have about 2 acres I inquired about severing. Yikes, there sure were a lot of reasons why this was impossible. Although, I understood – with a large injection of cash supplemented by several trips to City Hall in order to beg, plead, and grovel – that something could be done about it. I stopped at this point, I think I was about to learn what you were talking about.

My house at this point is fairly assessed, and taxed IMHO. But I have heard from others that which you have spoken of. FWIW, my M.O. with the house and property, is to basically do what I want to do, and plead ignorance if I get caught – which is basically never as it turns out. Playing stupid when needed has also been 100% effective in avoiding any real consequences. I’m reasonably smart about what I can get away with. I know who the industry Rats are too :). This has worked for building permits, Fire permits, demo permits, renovation permits, ESA inspections – you name it.

#146 jess on 07.10.17 at 3:24 pm

#139 Lee on 07.10.17 at 2:00 pm

State of Illinois reduced to junk along with several universities

…”At the University of Illinois at Urbana-Champaign, the public university with the highest tuition and fee costs in the state, average tuition now costs $15,626 annually, up 80 percent since 2006.”

https://www.illinoispolicy.org/moodys-downgrades-7-illinois-universities-5-are-junk/

aussie’s are angry

“There is another serious aspect to these phony colleges and courses. At “Graduation” these people are elligible for a four year graduate Visa to enable them to find employment with a view to PERMAMENT RESIDENCY.”

New crackdown on college scams as millions in payments suspended
http://www.theaustralian.com.au/…millions…/cd3d5c1d9876fc865e1d75a0e6e40577
Sep 16, 2016 – The federal government has suspended hundreds of millions of … With a projected increase from 600,000 to ONE million overseas students at … the same Visa entitlement, this means we will be getting hundreds of thousands of immigrants into the country who do not show up in our immigration numbers.

http://www.theaustralian.com.au/higher-education/new-crackdown-on-college-scams-as-millions-in-payments-suspended/news-story/cd3d5c1d9876fc865e1d75a0e6e40577

#147 IHCTD9 on 07.10.17 at 3:33 pm

#134 Trollson on 07.10.17 at 1:12 pm
I would like to move to a place where there are gay people but where they don’t have the power to advertise their life style to my children, like they do in Toronto.
_________________________________________

You can blame Politicians for that, and that the GPP seems to still be quite popular. I doubt it would last long if no one showed up.

However, they seem to be headed for some controversy with their impromptu alliance with BLM and subsequently booting the Cops out of the parade. We now know that there are black gay cops out there, and now they’re offended at damn near everyone. Thanks GPP+BLM. Hope the TPS and OPP are having a good laugh.

Anyway, if you don’t take your kids to the GPP parade, you then totally undermine any control the gays had over your kids.

#148 bdwy sktrn on 07.10.17 at 3:52 pm

#142 Hairhead on 07.10.17 at 2:40 pm
Just another anecdote from the Valley of the Nuts/aka/Fraser Valley & Greater Vancouver.

I currently rent a post-war bung in Vancouver. e-value BC now gives it an appraisal value of $4.4 million,
—————————-
you are obviously on the west side, so you are comparing boardwalk/park place to vermont avenue.

locationx3.

there is land to be had nearby 604 with no ferry for a small fraction of the local prices (even lower than VI), all amenities, beach nearby, with cheap gas/booze/legal 420/+ more

telus must have ‘uppa-ed’ it’s signal strength in white rock, because as of a few weeks ago i’m getting strong cdn signal (not roaming) at 7km inside trumpland.

plenty of 5+ acre lots with or without house (or palace)available for 100k to 1m cdn.

did i mention no ferry? nexus crossing takes between 0 and 10 min. usually much closer to 0. ferry is 200+ return for a small family . nexus is 5 bucks/yr – unlimited crossings.

#149 CJBob on 07.10.17 at 4:03 pm

#134 Trollson on 07.10.17 at 1:12 pm
Lots of choices where this type of thing isn’t acceptable. I’d recommend either North Korea or Iran. Basically look for a country where human rights aren’t a top priority.

#150 Norbert's Gambit on 07.10.17 at 4:06 pm

#60 InvestorsFriend on 07.09.17 at 9:24 pm
#120 InvestorsFriend on 07.10.17 at 10:48 am

“Anyone have actual experience and knowledge on [Norbert’s gambit and the tax implications thereof]?”

“Assume any currency will a capital gain … If you are interested and knowledgeable on the matter provide YOUR answer / interpretation to the tax question from my post 60 above.”

Well, I know a little about a lot, and even a lot about a little. :)

My understanding of Norbert’s gambit is per the attached link:
http://www.finiki.org/wiki/Norbert%27s_gambit

If I understand your example in #60 above, then you (a) convert C$10,000 to US$10,000—price ratio is 1 : 1, no bid-ask spread and no fees, (b) buy with the US$10,000 as much stock as you can of TSX:DLR.U (which trades in U.S. dollars), (c) have the broker transfer all the stock to TSX:DLR (which trades in Canadian dollars), and (d) sell all the stock of TSX:DLR for C$15,000—price ratio is 1.5 : 1, no bid-ask spread, and no fees. Have I got that right?

According to comment 13 of Interpretation Bulletin IT-95R (see link below), you would report a capital gain of $5,000 at step (d) above.
http://www.cra-arc.gc.ca/E/pub/tp/it95r/it95r-e.html

“Foreign currency funds on deposit are not considered to be disposed of until they are converted into another currency or are used to purchase a negotiable instrument or some other asset, i.e. foreign funds on deposit may be moved from one form of deposit to another as long as such funds can continue to be viewed as ‘on deposit’.”

#151 Victor V on 07.10.17 at 4:09 pm

Finance Minister Bill Morneau signals confidence in the Canadian economy, days before the central bank’s rate call

http://business.financialpost.com/news/economy/the-canadian-economy-is-really-firing-on-all-cylinders-morneau/wcm/b25c8756-a725-4411-9d4f-799c04b2a917

“I’m not going to talk about rates, it’s the Bank of Canada’s responsibility,” Morneau, the finance chief in Prime Minister Justin Trudeau’s government, said in a Bloomberg TV interview from the G-20 summit in Hamburg that aired Monday.

“What I do think is that, as the economy does better, that puts people in a better situation to face whatever the challenges — whether it’s a different economic environment, a personal situation or a change in global environment,” he said. “These are all things people are more resilient against when the economy is doing better.”

“What we see back in Canada is that the global economies are positive, but the Canadian economy is really firing on all cylinders,” Morneau said.

#152 Dissident on 07.10.17 at 4:23 pm

Doing some stats research for my job, and wouldn’t you believe it, but 2016 was a record number for immigrants coming to Canada, and registering as the main driver in population increases. Very interesting.

And 2016 was the boom year for housing purchases.

Coincidence? Hm…

http://www.statcan.gc.ca/pub/91-002-x/91-002-x2017001-eng.htm

#153 Glengarry Girl on 07.10.17 at 4:34 pm

#77 joe

I agree that there will be all kinds of intervention. The banking industry and mortgage brokerages have already proven that they will break the rules. They have room to change the terms of the loans by lengthening their amortization period. I moved to Seattle at their peak and witnessed and read about their correction in real time. It happened very quickly, 2 years. I read an excellent blog called the Seattle Bubble daily. I also observed what was happening all around me in the the higher end planned community where I rented. I will share some of those stories here. I’m a logical and fair person that plays by the rules, what I saw and read about was at times amusing and at other times made me angry. What I do know is that the human nature and greed will kick in when people start to realize that they are loosing. Lawyers started to help people en mass with Short Sales and Strategic Defaults. Many were consulted to simply stop paying their mortgages. I know that many people lived payment free for years. An agent on my street went for coffee every day at the coffee shop that I met my friends. He was bragging about living in a 1.2 million dollar house without paying for it. I felt really angry because I was paying $2800 a month in rent on the same street.

#154 ER on 07.10.17 at 4:43 pm

Portfolio growth, economic growth, may be a impossible if climate change continues at this pace (of course, Trump says it’s not happening, so it must just be fake news…)

http://nymag.com/daily/intelligencer/2017/07/climate-change-earth-too-hot-for-humans.html

#155 WUL on 07.10.17 at 4:46 pm

Similar to the new ratio of listings to sales in GTA real estate. 19-1 Astros/Jays. Both the real estate biz and MLB need new mercy rules for inhabitants of the Big Smoke. Tough there these days.

#156 AGuyInVancouver on 07.10.17 at 4:50 pm

#142 Hairhead on 07.10.17 at 2:40 pm
Just another anecdote from the Valley of the Nuts/aka/Fraser Valley & Greater Vancouver.

I currently rent a post-war bung in Vancouver. e-value BC now gives it an appraisal value of $4.4 million, up $800,000, or 22% from last year’s value of $3.6 million.

My mother, who lives in a gorgeous home on a 65 x 250 lot with a sea/wildlife view on Vancouver Island, only blocks from all amenities (grocery store, library, beach, etc. etc._ current appraisal, $360,00 DOWN 5% from $380,000 last year.

There are 100 kilometres between the two homes.

This kind of market is both bizarre and unsustainable.
______________________________

But I bet there’s no dim sum or bubble tea place near your mom’s house.

#157 dan on 07.10.17 at 5:05 pm

The Globe reporting condo rents are averaging $2000 per month is complete bullshit. That’s what the owners maybe asking for but it’s not what they are getting. You can negotiate these monkeys down really quickly. Each month these units sit empty equates to $200 rental discount.

#158 Entrepreneur on 07.10.17 at 5:11 pm

#150 Victor V…Morneau just came out of the G20 meeting and is thinking globally, not locally. My take.

And some information need not be for everyone to read on here, silence is golden.

#159 Asterix1 on 07.10.17 at 5:36 pm

#131 Ace Goodheart on 07.10.17 at 12:38 pm
Not sure if the GTA market is going to crash to the extent that a lot of the posters on here seem to think it is. Granted it has been in free fall for a number of months, but it appears to be finding its bottom and it does not look like it’s going anywhere near the depths that others might think.
——————

It’s been in free fall for a couple of weeks, not a number of months. Prices are not finding their bottoms, check graphs, it’s going to be a long way down.

You can believe what you want. It’s already written on the wall, lots of info out there to analyse. Once analysed, it’s difficult to think that this debt party will continue.

#160 Jim on 07.10.17 at 5:42 pm

Does anyone know anything about a W-8BEN tax form? Thanks….Jim

#161 NoName on 07.10.17 at 5:54 pm

“What we see back in Canada is that the global economies are positive, but the Canadian economy is really firing on all cylinders,” Morneau said.

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Maybe he has confidence in Canada economly bui i dont, when my previous employer closed the shop 3yrs ago, out of 90-ish only 10-12 make same or as much they did at old plant.

Some pepole had to take early retirement and look for another job just to maintain same standard of living.

bonus song for ruling class
Money – Pink Floyd
https://youtu.be/JkhX5W7JoWI

#162 Rifles on 07.10.17 at 6:07 pm

Gotta say, much as I like and use AirbnB, living next to one ain’t much fun. Friends of mine live next to a house rented as such (and apparently bought to fulfil this purpose) at $350/night. Guests have proven largely indifferent to the views of neighbours when asked to keep it down at 1:00 am on a Tuesday night. The owners don’t live nearby. Complaints to the city have yielded very little beyond assurances that “we will look in to it”. For people who have to endure this in their midst April can’t come soon enough.

#163 InvestorsFriend on 07.10.17 at 6:17 pm

Currency Gain and Norbert’s Gambit

Norbert’s Gambit at 149 responded to me with some good information.

We are nearly there. But let me clarify the example a bit see capital letters insertion

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If I understand your example in #60 above, then you (a) convert C$10,000 to US$10,000—price ratio is 1 : 1, no bid-ask spread and no fees, AFTER A TIME THE CURRENCY RATIO HAS CHANGED TO 1.5 to 1 AND I HAVE A $5000 CANADIAN UNREALIZED GAIN) (b) buy with the US$10,000 (WHICH IS $15,000 CANADIAN) as much stock as you can of TSX:DLR.U (which trades in U.S. dollars), (c) have the broker transfer all the stock to TSX:DLR (which trades in Canadian dollars), and (d) sell all the stock of TSX:DLR for C$15,000—price ratio is 1.5 : 1, no bid-ask spread, and no fees. Have I got that right? YES, AND MY ISSUE IS THERE IS NO GAIN ON SELLING DLR BOUGHT FOR $15k CANADIAN AND SOLD FOR $15k CANADIAN.

According to comment 13 of Interpretation Bulletin IT-95R (see link below), you would report a capital gain of $5,000 at step (d) above.
http://www.cra-arc.gc.ca/E/pub/tp/it95r/it95r-e.html

“Foreign currency funds on deposit are not considered to be disposed of until they are converted into another currency or are used to purchase a negotiable instrument or some other asset, i.e. foreign funds on deposit may be moved from one form of deposit to another as long as such funds can continue to be viewed as ‘on deposit’.”

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I AM NOT SEEING WHY THERE IS A GAIN AT STEP. d) I know I did gain $5000 Canadian but not on the buy abnd sell of DLR at step D. And one would not report a gain at when buying the DLR or any other stock, gains are upon sale. (Would they?) Is my cost base for DLR $10,000 Canadian? How so, I paid $15,000 Canadian for it.

As far as I know when I have U.S. dollars and buy a U.S. stock that is not the time when I report a gain, rather it is when I sell that U.S. stock. Maybe that is the part I have wrong per the paragraph above. I will check some other sources on that.

If this is so then there is even more work to tracking the cost base of U.S. dollars and to reporting capital gains on U.S. currency than I thought.

#164 InvestorsFriend on 07.10.17 at 6:20 pm

Apologies to Garth and all as I pasted my comment above into the new blog just released. So any response can go to the new page.

#165 AGuyInVancouver on 07.10.17 at 9:06 pm

AirBnB is no much touchy feeling “sharing” than your granny taking in paying lodgers during the Depression was.