Echo boom?

So the summer ended with a bang. “Wow,” said a learned TD economist. Which about summed it up. Last this week we learned the economy’s more stimulated that Bandit following a bitch in heat (I’ve never had the heart to tell him he’s fixed). We’re actually leading the developed world – which is why the dollarette rocketed over 80 cents and people started talking about another interest rate increase on Wednesday.

Next week, the moisters cry? Seriously?

Well, it’s no slam dunk, but as Friday ended the odds were 50% that the prime (and everything else) will rise by another quarter point in a few days, and 90% that there’ll be an increase in October. So at a minimum interest rates will soon he upped. Maybe more than anyone actually expected.

My buddy Derek Holt, chief egg at Scotiabank, is now sounding like a raging bull. “Scotiabank Economics expects the Bank of Canada to raise its overnight rate by 25bps next Wednesday,” he says, flat out. “We believe the central bank remains on the path toward raising its policy rate by about one full percentage point by the end of next year in a more front-loaded set of moves—and likely more increases than priced in by markets through 2018.”

Wow, again. Here’s a major bank warning there are four rate increases to come over the next 15 months. That would result in a prime of almost 4%, secured home equity lines at 4.5%, unsecured lines at 6% and five-year fixed mortgages also at 4%. Of course, if you add on the 2% that the new universal stress test will soon stipulate everyone must pass, this is as good as having 6% mortgages. And to think, a fixed fiver was just 2.3% six months ago.

Now, let’s remember that survey a few weeks ago showing a third of people say they were financially hurt by the central bank’s itsy little quarter-point jump in July, and another showing six in ten would feel seriously impacted if rates popped 1%. And imagine the impact on people who bought houses three years ago with 2.5% financing, who will be renewing at perhaps double that in 2019. Finally, what will be the effect on prices? We know real estate values rose as money costs fell, in almost perfect correlation. Will the reverse now be true? Or does all this economic growth mean the party continues? Will the moisters start buying again?

“Parallels are often made between the stock market and the housing market,” comments Old Ron the Realtor, “but for most people buying equities is optional, whereas having a roof over your head is a necessity. So even in a dreadfully flat market we can depend on homes changing hands. That forms an underlying strength that resists a full scale rout. Moreover, the economic fundamentals are strong, with GDP growth nationally. Against those two realities (inherent demand, and stable economic conditions) it is at least conceivable that we have, after a rapid $200k correction, found a balance between buyer demand and product availability.”

What does history tell us? Wrinkly Ron continues: “As I recall the crash of 1989 to 1994 involved a two-step decline. The first was a rapid 10% dip (we have had 20% this year) followed by a slow painful decent that was influenced by recessionary economics and not local realities. So now we will see. The key will be the number of buyers who put their toe in the water. If we continue to hang around current levels, we may have a true plateau in price that could last a while. If demand gets too robust, then the resulting uptick in prices could bring everyone with a pick-up truck and a tool box back into the market place, facilitating an echo boom.”

Of course, it could be a hard landing and the disorderly decline of a market which destroyed affordability. Maybe central bankers blew it – keeping rates too cheap too long. Derek Holt hints those two cuts back in 2015, when oil collapsed, were a bald mistake. When you look at what happened to Canadian real estate values from the summer of ’15 until governments freaked and intervened, it’s tough to disagree. They created an asset gasbag plus an historic borrowing orgy, and now threaten the ground on which indebted homeowners stand. The result could be shocking.

Anyway, the cost of money may rise on Wednesday and, if not, certainly on October 25th. It appears OSFI (the bank regulator) will indeed usher its stress test into the market. These are about as close to guaranteed as you can get these days. They’re a lot more real than an old realtor’s wish.

Buy at your peril.

121 comments ↓

#1 Todd on 09.01.17 at 7:01 pm

Yet another win for renters.

https://www.thestar.com/news/queenspark/2017/08/31/landlords-can-no-longer-evict-tenants-without-compensation.html

#2 Royal City Dweller on 09.01.17 at 7:05 pm

FURST!

#3 Ian on 09.01.17 at 7:10 pm

I sure hope Mark does engineering better than he does central banking!

If he’s a civil engineer I’m turning in my driver’s license.

#4 RATE HIKE SOON & 90 CENT LOONIE!!!YIPPIE!!!! on 09.01.17 at 7:11 pm

Next week, we will see a 25bp rate hike in Canada, raising the Interest rate to 1.00%.

We expect that the CAD$ will skyrocket to 85-90 cent, resistance at 84 cents, then up we go to 90 cents.

It doesn’t make any sense because Poloz was from the start against a loonie surpassing 69 cents since his inception by Cuckservative Stephen Harper.

#5 Happy Housing Crash Everyone! on 09.01.17 at 7:12 pm

Looks like prices of RE as well as commissions will be crashing. Plus much fewer sales :-). Interest rates going up in a crashing market means much lower prices you dirty shysters(like another 30% in the GTA).

Happy HAPPY Housing Crash Everyone! :-)

#6 Ian on 09.01.17 at 7:23 pm

Happy BoC Day early September edition!!! The Plozzer and The Wilko are back from the golf course perfecting their swings, and ready to give us another gift!

#7 Last Breath on 09.01.17 at 7:25 pm

One last gasp for Nanaimo in August with a tiny increase. Now to follow Van down.

#8 the ryguy on 09.01.17 at 7:28 pm

Was the economy so good 3 years ago that maybe (I) we are underestimating its strength (although weakened) now? Maybe all the transplants have left and are back east and everyone left here still has a good high paying job? Maybe the immigrants that have flooded our country really were millionaires back in wherever and really are spending like crazy here?

I doubt it, but Im just throwing sh*t at the wall and trying to figure out what the eff is going on? How are we growing? I just..don’t understand this stuff anymore.

I cant drive anywhere in Edmonton without seeing “new neighbourhood of (blank)signs, or another condo project. Saturday I went golfing about 30 mins north east of town…driving down the hill all I see is dozens of gorgeous 3500+sq ft houses being built overlooking the course. Tuesday the exact same thing, only on a course 30 minutes west of town.

Prices here are actually somewhat reasonable, I think, with the exception of a lot of the newer downtown condos. Ive noticed on zolo that they rarely list the condo fees, no doubt they are outrageous.

Something doesn’t pass the sniff test. The place Im renting has been listed for 3 weeks now. One showing, and I was curious so I watched from my truck, the elderly couple looked at the 2 houses next to mine as well, both of which are for sale and have been since june.

Its weird for us doomers, we can see it coming, but its hard to see how far off in the horizon it is.

#9 Andrew Woburn on 09.01.17 at 7:32 pm

Remember all those hype stories about Chinese dudes buying in Victoria. We all laughed, right?

We live on a waterfront street in Nanaimo with West Van type views across to the coastal mountains. Our newest neighbours are forty-something Chinese, They bought right across the street from in the the last arrivals who are from Mainland China and that makes four ethnic Chinese families that have moved to our not very long street in the last two years.

For all you vigilant social justice warriors, I have no problem with Chinese neighbours. I had them in Richmond and they are good people. It’s just interesting that those seemingly improbable rumours may have some meat on them after all.

#10 torontomike on 09.01.17 at 7:39 pm

good god I can’t wait until that smug look on all the realtors disappears. sitting in their 905 mcmansions drinking champagne right now. begging for work in 6 months.

#11 AGuyInVancouver on 09.01.17 at 7:41 pm

Poloz would be foolish not to raise rates ASAP. It’s clear they overshot the target. Furthermore it is no longer clear that fighting inflation should be the BoC’s Number One priority. This isn’t 1978. Back then China was a communist backwater where everyone rode bikes. You can’t fight an inflation battle without taking into account that huge change in labour and manufacturing costs.

I’d also add I’m suspicious of the CPI figures, how could our dollar slide so rapidly and yet have so little effect on the price of consumer goods?

#12 Stone on 09.01.17 at 7:44 pm

Well, the master plan is coming together nicely.

Hey, I’ve always wanted to say that. So cool! LOL

Here’s hoping to next week and a rate hike. Here’s also hoping to next month and another rate hike. Come on BOC, you can do it. I believe in you. You have the power.

If it happens, this is going to be fantastic year. Finally some rate normalization. I’ve been saying to so many people over the last 18 months to flush their real estate, that rates are going up, and that it’s a different world coming. Do you think anyone listens to anything I say? The answer is – NOPE! And then I have a good chuckle.

Oh well, sucks to be them. I tried to help but they all think they know better. Regardless, I get to enjoy my near 7 figure portfolio and my lovely dividends coming in. Another bunch coming in next Friday.

Tough life! Not really. I know I’ve got it good.

Garth, thanks for doing your blog. It’s tough being in the minority in regards to real estate and investing in a balanced way but at least I don’t feel like I’m the only one.

#13 prairie person on 09.01.17 at 7:48 pm

Those companies whose bottom line is affected have had their accountants busy calculating the cost of hurricane Harvey. Impacts from Texas will be felt here. The latest figure is that 100,000 homes have been flooded. Infrastructure has been destroyed. I’ve stayed in Beaumont, nice little community. Apparently, it has been destroyed. The destruction is so wide spread that it is hard to conceive. The flooding is terrifying when you need to flee but it is the long aftermath as some homes can be restored but others bulldozed. It’s not just homes. It’s also businesses. Eighty percent of home owners don’t have flood insurance. Vehicles destroyed. To replace all those houses, commercial buildings, infrastructure is going to take a huge number of tradespeople and supplies. I read a report that said the number of tradespeople needed far exceeds the number available. What is going to happen to lumber, plywood, concrete supplies re prices. I have read that in some places plywood has jumped from38.00 to 60.00. I don’t think anyone knows what is going to happen within the US and outside it re costs. Those costs won’t stay in Texas.

#14 RudyGQ on 09.01.17 at 7:48 pm

For the masses it far easier to ‘invest’ in real estate than stocks & debt. The industry makes it so convenient to do so. Why, one can get a ‘rocket’ mortgage merely by pressing a button on a smartphone.

Who in their right mind would want to trade that instant gratification for the patience, discipline and careful study needed for learning how to read financial statements independently? Who would want to take the time to develop the skills of detecting when a CEO of a public company is lying at an annual shareholders meeting (hint: when their lips are moving) such that one can take advantage of financial opportunity.

And what crazy person wants to learn how to examine the difference in growth between raw materials, finished goods and accounts receivables, to have a good indication that a company will write down its inventory such that you can protect your downside. Answer: just about nobody. It’s much more exciting studying your local pro sports athlete or movie celebrity. Now if you’ll excuse me Game of Thrones is calling me.

#15 BS on 09.01.17 at 7:50 pm

And imagine the impact on people who bought houses three years ago with 2.5% financing, who will be renewing at perhaps double that in 2019. Finally, what will be the effect on prices? We know real estate values rose as money costs fell, in almost perfect correlation. Will the reverse now be true?

The reverse plus some will be true. Markets always over correct on the way down. Bubbles always end with a hard landing.

#16 young & foolish on 09.01.17 at 7:53 pm

Old Ron has a point … “but for most people buying equities is optional, whereas having a roof over your head is a necessity …”

I think this is the reason most people struggle with the buy vs. rent issue. Housing is unavoidable.

#17 Babblemaster on 09.01.17 at 7:55 pm

Wow. Certainly a lot of quotes from “experts.” So, apparently, it could be a hard landing. A soft landing. Anything in-between. Or, RE may plateau. Or rebound. Anything could happen. Garth, you’re covering all bases.

#18 Babblemaster on 09.01.17 at 7:57 pm

Also, the cost of money may rise. Or, it may not.

#19 Wet Toast on 09.01.17 at 7:58 pm

My wife and I had a lovely chat with a bank mortgage specialist last night to apply for a mortgage. From then until now, 5 year fixed has gone up .2 percent. What will it be by next Thursday?

#20 Mark on 09.01.17 at 8:05 pm

“We expect that the CAD$ will skyrocket to 85-90 cent, resistance at 84 cents, then up we go to 90 cents.”

Yes, yes, my the tables have turned, in quite short order. Always fun to go back in the comments here and listen to the people who were convinced we were heading for a 40 cent peso, or other similar nonsense.

But with consumer consumption historically so intertwined with housing prices and availability of consumer credit, just what will end up inflating to keep Canadian consumption strong enough to keep the Canadian economy out of outright CPI deflation?

Will the TSX zoom up to 25,000? XIU = $35? Will wages explode? Is there some industry that is waiting in the wings for a lot of investment? Will TSX investors even open their wallets to make up for the loss of housing backed consumption? Unlike housing, stock market ownership isn’t that common amongst younger Canadians in their prime consuming years.

A very good year for the TSX next year seems highly plausible, given that 10-year periods of no nominal index returns is a very highly unusual situation, and a real index return hasn’t been seen since the Nortel-fuelled 2001 apex.

I sure hope Mark does engineering better than he does central banking!

Not sure what you’re suggesting here. I merely pointed out that there’s a large disconnect between actual inflation (ie: nonexistent, month over month CPI = 0.0%, PPI in significant deflation), and all these claims of a hot economy and the need for policy rate hikes. A very flat yield curve has some pretty significant implications historically as well, especially when central banks drive the short end into inversion.

#21 Gravy Train on 09.01.17 at 8:10 pm

Book Review:
Browder, Bill. 2015. Red Notice: A True Story of High Finance, Murder, and One Man’s Fight for Justice. New York: Simon & Schuster.

This book has it all: hedge fund investing, Wall Street bankers, American billionaires, Russian oligarchs, murder, romance—and it’s all based on a true story! Highly recommended reading!

Spoiler alert: The author was instrumental in bringing about the Magnitsky Act—a piece of U.S. legislation that Vladimir Putin desperately wants repealed, and that is the alleged reason why Donald Trump Jr. met with a group of Russians during the 2016 election campaign.

#22 Renter's Revenge! on 09.01.17 at 8:11 pm

#14 RudyGQ on 09.01.17 at 7:48 pm

“Now if you’ll excuse me Game of Thrones is calling me.”

Season’s over. Plus, winter is coming. So really, they have no excuse not to look at those balance sheets :)

#23 Mark on 09.01.17 at 8:13 pm

“Poloz would be foolish not to raise rates ASAP. It’s clear they overshot the target.”

The ‘target’ is 2% inflation.

Year over Year inflation was 1.2%. Month over month inflation (or deflation) was 0.00%.

http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/cpis01a-eng.htm

Keep in mind that these figures still aren’t incorporating the rapid rise in the CAD$ as it takes a few months for such to filter through.

Just how is this ‘overshooting’ the target? Does Poloz not realize he’s fighting the wrong battle, that deflation, not inflation, is the real problem at hand?

#24 Vanrentor on 09.01.17 at 8:13 pm

Hey Happy Housing Crash guy

I thought you would enjoy this thread about another honest realturd.

http://forums.redflagdeals.com/selling-agent-analysis-2123452/

#25 Leo Trollstoy on 09.01.17 at 8:13 pm

t as Friday ended the odds were 50% that the prime (and everything else) will rise by another quarter point in a few days, and 90% that there’ll be an increase in October. So at a minimum interest rates will soon he upped. Maybe more than anyone actually expected.

Rates going up.

Canadian economy booming.

Deflation still non-existent

I sure hope Mark does engineering better than he does central banking!

Any engineer that thinks that finding a well paying job is had to find isn’t that good.

Just sayin

#26 common sense on 09.01.17 at 8:16 pm

Canada Raises and US holds off til 2018.

Can’t wait to possibly see this.

Poloz will do what his US masters tell him.

#27 Ian on 09.01.17 at 8:26 pm

Deflation Mark…do you have any idea what an inverted yield curve even is?

It’s when the market believes rates will fall. Please go to the following link and look closely at the graph. You’ll see that the market is expecting rates to rise. A lot.

https://www.oanda.com/forex-trading/analysis/economic-indicators/canada/rates/yield-curve

#28 Darryl on 09.01.17 at 8:28 pm

Can’t disagree with the T-shirt

#29 young & foolish on 09.01.17 at 8:35 pm

“For the masses it far easier to ‘invest’ in real estate than stocks & debt.” – RudyGQ

Exactly … and it’s why things will not be changing any time soon. People might back away from RE for awhile, but not for long. Was it not just yesterday that we discovered only 19% of Canadians are invested in equities?

#30 Sne-ny-mo on 09.01.17 at 8:43 pm

Latest Island stats to support Orca real estate theory – https://goo.gl/w8GZme

#31 tbone on 09.01.17 at 8:44 pm

How ironic it would be if happy housing crash could some day afford to buy a house. He would have to enlist the services of a real estate agent .
Probably never happen though, as you need a down payment .
For all you renters out there , your landlord loves you for buying them a house with your rental payments.
The smart landlords then use their own money to buy dividend paying stocks .
See… win win . That’s how you get rich .

#32 Jack on 09.01.17 at 8:51 pm

Have any of the people spouting CPI numbers (including the government) actually bought anything in the past 10 years? Inflation is way above what the government reports … it’s over 10 percent a year for the past 10 years. This is from the many websites track the actual cost of goods that the typical middle class family buys and my own expense tracking. THIS is why interest rates are going up. Unless you want to pay 20 bucks for a loaf of bakers bread 5 years from now, rates have to go up, way up!

#33 Adam on 09.01.17 at 8:52 pm

“When you look at what happened to Canadian real estate values from the summer of ’15…”

Let’s not pretend that real estate was already way overinflated long before 2015 (and was certainly heading in that direction even before Carney bolted, when he found that he couldn’t do anything because inflation was low and government wasn’t intervening with sensible mortgage regulations)

#34 Calgary and Edmonton on 09.01.17 at 8:52 pm

They aren’t going down as long as they know greater fools are paying twice their prices for homes in Van and To. As soon as the boomers realize things are going south, they are going to try and cash out their tax free gains and push prices down. People can’t afford $2M homes in Vancouver – it’s complete bs. It’s Herdonomics – and I’m no professor. But I did win the North Vancouver real estate lottery in 2016 and bought waterfront in Nanaimo. God it’s wonderful. Don’t come. We have run out of waterfront for the rest of you and there are already too many boats and kayaks on our waterways!

#35 wallflower on 09.01.17 at 8:55 pm

um….

#21 Gravy Train on 09.01.17 at 8:10 pm
Book Review:

where you bin, gravy train?
that book was Christmas gifting two years ago
the story is VERY old news

but it’s a thriller, ain’t it?

#36 Fixed?????????? on 09.01.17 at 8:56 pm

Bandit is “fixed”????
In the English language of this planet “fixed” means something that was previously broken and was, well, fixed meaning improved, mended, repaired. Along with fastened, attached etc.
A smart and good-looking gentledog like Bandit was crippled, incapacitated and mutilated.
Please use the proper words to describe what was done to him (it was your decision) to accurately specify his tragedy.

#37 Marc Roger on 09.01.17 at 8:57 pm

Common 6k TFSA for 2018!

#38 Look behind the scenes on 09.01.17 at 8:59 pm

#21 Gravy Train

Can’t you tell by how many times you’re told it’s true that Browder really, really wants you to believe him?

That’s why he’s in a battle with a documentary film maker, who opposes Putin, to prevent the real true story from getting out. “The Magnitsky Act. Behind the Scenes”

I’ve seen news where he’s also fighting a legal battle against the real truth in Russia: https://www.youtube.com/watch?v=DOx78CBq0Ck

To be honest I haven’t read the book since by the time I’d heard about I’d already become suspicious of Browder, and I don’t want to give him any money for anything. I have read about the book, though, in a book I learned about when trying to find a way to watch the documentary: https://www.amazon.com/gp/product/2955692328/ref=oh_aui_detailpage_o01_s00?ie=UTF8&psc=1 It’s a very in depth review of “Red Notice” with lots of context by someone who was raised in the USSR.

#39 Miss Ogynist Orangeheir on 09.01.17 at 9:05 pm

DELETED

#40 Joe2.0 on 09.01.17 at 9:07 pm

The only people who won’t be able to afford houses are the average Joes n Janes.
Loads of money contining to come here via off shore buyers, tens of thousands of multi millionaires out there in the world.
Three Chinese youth on the BC ferry discussing how cheap properties are on the Sunshine Coast and how they would make great rentals.
Cash buyers.

#41 Danny on 09.01.17 at 9:14 pm

Wait for the real Tally
And then there are hurricanes…blended with Tornadoes….the like we have never seen before….bigger, stronger and more rain than people’s infrastructure can handle.
Estimates of destruction is always much lower at first. Then reality sinks in and large economies affected for longer periods than governments predict…because to add reality insult to injury….will hurt people more when the first punch comes and they are down.
Hurricane season has a long way to go….hold on.
Forget Dumbo Trump threatening shut down the government to build his silly wall ( really a fence )…sorry Donald the wall is in China built many generations ago to stop real enemies.
Thank goodness the Congress and the Senate collectively also voted in by the people will make more sensible decisions than….crybaby Trump.
Only soon reality will set in and mother nature will show who is boss…and the North American economies will have no choice to help the people…not privileged unreal Trump vindictive promises.

#42 Danny on 09.01.17 at 9:15 pm

Wait for the real Tally
And then there are hurricanes…blended with Tornadoes….the like we have never seen before….bigger, stronger and more rain than people’s infrastructure can handle.
Estimates of destruction is always much lower at first. Then reality sinks in and large economies affected for longer periods than governments predict…because to add reality insult to injury….will hurt people more when the first punch comes and they are down.
Hurricane season has a long way to go….hold on.
Forget Dumbo Trump threatening shut down the government to build his silly wall ( really a fence )…sorry Donald the wall is in China built many generations ago to stop real enemies.
Thank goodness the Congress and the Senate collectively also voted in by the people will make more sensible decisions than….crybaby Trump.
Only soon reality will set in and mother nature will show who is boss…and the North American economies will have no choice to help the people…its citizens.

#43 S.Bby on 09.01.17 at 9:19 pm

“Derek Holt hints those two cuts back in 2015, when oil collapsed, were a bald mistake.”

Many people would certainly agree with that statement. Poloz was clearly panicked and showed us amateur hour.

#44 Nonplused on 09.01.17 at 9:23 pm

I guess Keystone is shut down now too (the south leg got built because the Americans wanted that part) because there is no place to deliver the oil.

I wonder if Harvey changes the pace of rate hikes south of the border. Texas is something like the 10th largest economy in the world if taken by itself so having Houston under water for 2 weeks is a recession all by itself. There will be much lost productivity. Remember it was at least 2 weeks after Katrina that the full extent of the damage there was understood. Harvey will likely be the same.

The “broken window” fallacy states that all the drowned cars, houses and equipment represents GDP growth when replaced but real economists know destroying capital infrastructure always represents a loss and rebuilding it diverts capital away from other uses. If you have to replace your broken window you might not be able to afford a new iPhone. A broken window represents an economic loss. A broken Houston represents a big economic loss. Oh well the airport is working again so maybe the damage isn’t that bad.

Anyway it’ll be interesting to see how this plays out. Lots of looting going on as always after one of these storms but the food is just going to go bad anyway so the people who need it should probably take it. Of course they are takin TV’s too and that isn’t justified.

And now there is a new storm in the Atlantic that is even bigger but so far not expected to make landfall although they won’t know for a week.

#45 Johnnyboy on 09.01.17 at 9:25 pm

If you folks remember we had a wealth expo in Toronto few months ago. As it turned out, it was also the top of our real estate bubble. Check out some of the people aho attended that event and their thoughts about real estate. This may make you weep for these people (or crack you up big time) but it is what it is. As George Carlin once said, “Never underestimate the power of stupid people in large groups.”

https://torontolife.com/real-estate/think-going-go-even-sky-high-wealth-expo-attendees-talk-torontos-housing-market/

#46 White Crock BC on 09.01.17 at 9:32 pm

Happy Housing Crash Everyone! on 09.01.17 at 7:12 pm

Looks like prices of RE as well as commissions will be crashing. Plus much fewer sales :-). Interest rates going up in a crashing market means much lower prices you dirty shysters(like another 30% in the GTA).

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

My God, you must have been badly screwed over by an agent at one point in your life.

Care to tell the story?

#47 FOUR FINGERS WATSON on 09.01.17 at 9:36 pm

I’m shocked ! Who neuters their best friend ?

#48 Chimingin on 09.01.17 at 9:41 pm

#36 – Fixed??? Oh, spare me your vapours. Spaying or neutering is the responsible thing to do, and anyone with a brain knows it. So that puts you in the brainless category, obviously.

I used to work for the Humane Society, and the number of unwanted animals desperate to find homes was very difficult to fathom. The owners who “didn’t have the heart” to keep unwanted puppies themselves, so dumped them on the shelter. The number of owners who would be “heartbroken” to put their old and sick dogs down, so they left them with us. Spare me your ridiculous judgment and misplaced moral outrage. You want to be pissed at somebody? Find the owners I described above and let them know what you think. Better yet, save us all the waste of time that is your opinion. It is ludicrous and reflects on you entirely, and not on responsible pet owners at all.

I keep telling myself this will be the last time I read the comments, and now I think I really am done with them…

Perhaps we can fix No. 36. I have his email addy and IP… — Garth

#49 Willy H on 09.01.17 at 9:51 pm

“Derek Holt hints those two cuts back in 2015, when oil collapsed, were a bald mistake.”
___ ___ ___ ___ ___

Poloz may have erred on the side caution but it was Carney’s inaction on interest rates and feeble warnings on consumer debt that built the broad foundations of this bubble over his tenure. His lack of action drove the dollar to all time highs while our economy became increasing reliant on energy and housing.

The Canadian economy today is less diverse and more reliant on housing than at any point in our history. Manufacturing and resource value-add have been virtually wiped out.

Poloz may have pulled the trigger too often but Carney never even managed to disengage the safety!

#50 Willy H on 09.01.17 at 10:04 pm

The BoC containment of inflation is backed only by franken-numbers. Same for the Fed in the USA.

Real inflation (including housing and fuel costs) far exceeds the published central banker rates.

Anyone who does the shopping in their household knows this.

Post-Secondary tuition alone is rising at 4% a year!

Today we are at $47/barrel for oil, CAD has just shot up, yet $1.20 at the pumps!

A decade of wage and salary stagnation has left a large swathe of our society far worse off in terms of buying power than the generation that came before.

#51 waiting on the westcoast on 09.01.17 at 10:12 pm

Mark’s deflationary hope in post #20 was… “Yes, yes, my the tables have turned, in quite short order. Always fun to go back in the comments here and listen to the people who were convinced we were heading for a 40 cent peso, or other similar nonsense.”

Mark – Canada’s rise in the dollar is due to our perceived rate hike and the US perceived to be staying stagnant.

But as the Fed will likely continue increasing rates – the CDN dollar will again return to a lower $ relative to the US. The only thing that can really power it out would be wholesale oil prices radically rising.

#52 Happy Housing Crash Everyone! on 09.01.17 at 10:38 pm

#45 Johnnyboy

The show was the peak stupidity of the housing bubble. Nothing but speculators telling each other how smart they just before the crash. That will be comedic gold as time goes on.

#53 acdel on 09.01.17 at 10:39 pm

This is worrisome, should of happened a few years back to control the insanity, now, at it will do is hurt many who are just trying to raise a family, on the flip side, hopefully it will rid off all those who created an obscene artificial market to get rich quickly; dam if you do and dam if you don’t, perhaps this will be a lesson that many in the past have learned, not all, but the one’s that understood this all along. Good-luck!

#54 Dolan McFastnue on 09.01.17 at 10:40 pm

Garth, How do we rebalance our portfolios Tuesday Morning at 830am? Add heavilly to Preferreds? Sell REITs like they are going out of style? and Invest heavily in CAD hedged ETFS to enjoy the ride up to 90?

#55 Happy Housing Crash Everyone! on 09.01.17 at 10:51 pm

#24 Vanrentor

I’m calling it a fake story. Realtors creating a fake story using some fake problem with a realtor. Open houses are crickets. There is no demand and shysters know it. Buyers can not qualify and in fact are walking from deals. The RE crash will only get worse. If Interest rates go up next week you can say bye bye RE as the crash will pick up speed on the down side.

Happy Housing Crash Everyone !

#56 Mark on 09.01.17 at 11:22 pm

“But as the Fed will likely continue increasing rates – the CDN dollar will again return to a lower $ relative to the US. “

Good luck with that theory. Interest rate differentials do not dictate currency valuations (as places like India and various Central American banana republics would have the strongest currencies in the world if that were the case). The Canadian dollar is rising due to deflationary trends growing in the Canadian economy including the strong likelihood that overindebted, overleveraged Canadian consumers will be kneecapped by rising risk premia on their residential RE loans.

Poloz could (and arguably should and probably eventually will as the error of his ways is learned) drop the policy rate to zero, and this won’t arrest the rise of the Canadian dollar against the USD$. The fundamentals for the CAD$ are simply better than in the US due to lower national debt, a more favourable mix of industry, a more educated workforce, and social problems that are pale in comparison. Additionally, CAD$ barely exists offshore compared to USD$, so there won’t be a mountain of forex reserves returning to Canada to buy Canadian exports either.

The theory that money just chases higher interest rates has been most thoroughly discredited as an economic model. Rising rates implies a currency crash, in that, the higher rates are needed to compensate owners of the currency for a loss in purchasing power. Since Canadian CPI is basically not changing and trending towards outright deflation, the coast is all clear for Poloz to run extraordinary accommodative monetary policy instead of the abnormal tightness historically experienced.

1 CAD$ = $1.50 USD$ eventually.

#57 AD on 09.01.17 at 11:29 pm

The 2% universal stress test will certainly cool the market. But as we’ve seen with the 5/40 policy, it will not last forever. Ultimately this is just a way of pretending rates are higher than the are. After 2 or 3 years of rates rising to more normal levels, the government likely will scale back or drop that incremental stress test requirement.

#58 Phil on 09.01.17 at 11:30 pm

A 0.5% increase in rates by the BOC, isn’t it only about 75$ per month more for a 400k mortgage?

I’m sure people will be able to dig that up. A third from their yearly raise. The rest by cutting back on 1 restaurant outing per month.

No reason people would be forced to sell. Only job losses caused by automation… but that will happen slowly over years.

Tightening rates don’t trigger sales so much as weaken demand. That drives values down, erasing equity. — Garth

#59 Newcomer on 09.01.17 at 11:35 pm

#29 young & foolish on 09.01.17 at 8:35 pm
“For the masses it far easier to ‘invest’ in real estate than stocks & debt.” – RudyGQ

Exactly … and it’s why things will not be changing any time soon. People might back away from RE for awhile, but not for long. Was it not just yesterday that we discovered only 19% of Canadians are invested in equities?
——————–

But what will they invest with? It’s safe to say that almost none of the 81% who do not own equities have a penny to their name outside of their real estate holdings. If (heaven forbid) those were to decrease in value, and banks started charging real money for loans, where would the money for more real estate investment come from?

#60 TnT on 09.01.17 at 11:36 pm

#21 Gravy Train on 09.01.17 at 8:10 pm

Read that and the true “take-a-way” is how modern Russia operates.

Take that knowledge and apply it to US congress and Trump. It’s a clear Billionaire battle for Alpha Dog on a global scale.

#61 SoggyShorts on 09.01.17 at 11:43 pm

#36 Fixed?????????? on 09.01.17 at 8:56 pm

Lol you’re probably one of those people who thinks piercing your kids ears is mutilation. Get a grip, there’s plenty of things in this world to be outraged about–responsible pet owners isn’t one of them.

#62 waiting on the westcoast on 09.01.17 at 11:48 pm

Even more confused Mark thinks… “Good luck with that theory. Interest rate differentials do not dictate currency valuations (as places like India and various Central American banana republics would have the strongest currencies in the world if that were the case). ”

Dude – comparing a banana republic relative to the US versus two highly integrated and similar economies (Canada relative to the US) are another example of why you are failing economics… ;-)

BTW – high interest rates ARE one way that they try (and somewhat succeed) to prop their currencies…

#63 Bread on 09.01.17 at 11:54 pm

#32 jack
Unless you want to pay 20 bucks for a loaf of bakers bread 5 years from now…

Heh funny, now you mention this.
Yesterday I paid $10,- for 1 smallish loaf at the Artisan bakery in Steveston village near Richmond BC.

Never paid so much for one loaf. The bread was decent, but certainly not spectacular.

So yeah, we are getting close to it at least, 20 dollar bread.

#64 FOUR FINGERS WATSON on 09.01.17 at 11:58 pm

If u ever get out to B.C. there’s this nice little sativa called “Skunk Bud #3”. I think you might really enjoy it.
………………………..
#56 Mark on 09.01.17 at 11:22 pm
“But as the Fed will likely continue increasing rates – the CDN dollar will again return to a lower $ relative to the US. “

Good luck with that theory. Interest rate differentials do not dictate currency valuations (as places like India and various Central American banana republics would have the strongest currencies in the world if that were the case). The Canadian dollar is rising due to deflationary trends growing in the Canadian economy including the strong likelihood that overindebted, overleveraged Canadian consumers will be kneecapped by rising risk premia on their residential RE loans.

Poloz could (and arguably should and probably eventually will as the error of his ways is learned) drop the policy rate to zero, and this won’t arrest the rise of the Canadian dollar against the USD$. The fundamentals for the CAD$ are simply better than in the US due to lower national debt, a more favourable mix of industry, a more educated workforce, and social problems that are pale in comparison. Additionally, CAD$ barely exists offshore compared to USD$, so there won’t be a mountain of forex reserves returning to Canada to buy Canadian exports either.

The theory that money just chases higher interest rates has been most thoroughly discredited as an economic model. Rising rates implies a currency crash, in that, the higher rates are needed to compensate owners of the currency for a loss in purchasing power. Since Canadian CPI is basically not changing and trending towards outright deflation, the coast is all clear for Poloz to run extraordinary accommodative monetary policy instead of the abnormal tightness historically experienced.

1 CAD$ = $1.50 USD$ eventually.

#65 John Smith on 09.02.17 at 12:07 am

A third of people also say their $200/monthly pilates membership was financially hurt by the central bank’s itsy little quarter-point jump in July, and another showing six in ten would have their $12/day Starbucks consumption seriously impacted if rates popped 1%.

#66 Chaddywack on 09.02.17 at 12:09 am

CRA Conviction posted related to RE Flipping in the Metro Vancouver area.

Looks like they are finally starting to crack down. Often CRA is tipped off to things like this.

https://www.canada.ca/en/revenue-agency/news/newsroom/criminal-investigations-actions-charges-convictions/surrey-resident-sentenced-tax-evasion-real-estate-sales-rentals.html

#67 waiting on the westcoast on 09.02.17 at 12:10 am

For all of us going for more sanity in Vancouver… get your friends to watch this movie…

https://www.bloomberg.com/news/articles/2017-09-01/tulip-fever-review-a-rare-love-story-for-finance-geeks

#68 WFL on 09.02.17 at 12:42 am

First time posting here, found an amusing article on my Google news feed. Local media pumping the RE tire very hard. While a lot of “sold” properties a couple months back in YVR are relisted recently. I’m guessing deals are not getting completed?

http://www.vancouversun.com/want+investment+with+return+600k+salary+surprise+property+vancouver+still+your/14485870/story.html

#69 Smoking Man on 09.02.17 at 12:42 am

When fate and things hit your making your nose bleed.

Nothing else matters.

Love you humans dispite your programing.

#70 Oft dleted misaligned stock.picker on 09.02.17 at 12:42 am

I’m not buying it. The GDP numbers are faked. Why is anyone believing the story….well they aren’t….only the media and union goons who are trying to shore up Trudeaus collapsing support. Why is private sector industry still failing to create any jobs ? !The Liberals have flooded the balance sheet with a tsunami of billions and fake government jobs…..civil service and contract…..It’s still debt….not national revenue. It’s a scam people.

#71 Farm Wife on 09.02.17 at 12:53 am

Perhaps we can fix No. 36. I have his email addy and IP… — Garth

I’m sure we have an old elastic gun somewhere in the barn that could be donated to the cause unless you’d rather wait for fall branding…..

By the way # 48 all the beef and pork that you put on your plate is from animals that have been fixed…shocker eh!

#72 Dolce Vita on 09.02.17 at 3:23 am

#48 Chimingin

Good reply. Reality informs SJW fantasy.

More than 2 thumbs up.

#73 Dolce Vita on 09.02.17 at 3:24 am

#48 Chimingin

Good reply. Reality informs SJW fantasy.

More than 2 thumbs up.

#74 In the name of Bandit on 09.02.17 at 7:03 am

“Perhaps we can fix No. 36. I have his email addy and IP… — Garth”

Chant: Fix 36! Fix 36! Fix 36!

#75 Wrk.dover on 09.02.17 at 7:08 am

I ordered some car parts from the RockAuto warehouse in Sugarland Texas on Monday morning. Tuesday I got a notice, that the building and parts were all right, but nobody could get to work. Somebody actually went in for a night shift of normalcy Thursday night and picked my order.

Tracking it, it actually moved around in, and left Houston, but according to the info this morning, it is in a weather delay in transit to Texarcana.

After all that, maybe Fedex drove straight into a puddle?

#76 maxx on 09.02.17 at 7:48 am

#31 tbone on 09.01.17 at 8:44 pm

“For all you renters out there , your landlord loves you for buying them a house with your rental payments.”

Not even close. We sold it all at close to peak to rent. We haven’t seen a rent increase in close to 7 years. The “smart” landlord is up to its eyeballs in rising condo fees and special assessments – every year. Outstanding location, incomparable views and great value for us, but the “smart” landlord is most definitely not making out like a bandit.

I can just imagine the stories hitting msm when the cheap-a$$ stuff that’s been going up across the country starts to sprout mold and popping glass windows.

Fees and maintenance bite.

#77 Bytor the Snow Dog on 09.02.17 at 8:37 am

@157 Dyslexic Psychiatrist-

Alas, I wish someone would invent a sarcasm font.

I am no fan of US Imperialism.

#78 Bytor the Snow Dog on 09.02.17 at 8:50 am

Re: Bandit being neutered….

Just like all married men.

PS- A lot of money will be made off of us poor saps due to Harvey because the “market price” of goods will increase because of “scarcity”. Whether that scarcity actually exists or if it has been artificially manufactured is another matter.

#79 Dissident on 09.02.17 at 8:52 am

RE — #4 RATE HIKE SOON & 90 CENT LOONIE!!!YIPPIE!!!! on 09.01.17 at 7:11 pm

“It doesn’t make any sense because Poloz was from the start against a loonie surpassing 69 cents since his inception by Cuckservative Stephen Harper.”

That’s a silly and fundamentally unfounded conspiracy theory you have there and you know it.

#80 Smoking Man on 09.02.17 at 8:56 am

DELETED

#81 Dissident on 09.02.17 at 9:03 am

#9 Andrew Woburn on 09.01.17 at 7:32 pm
Remember all those hype stories about Chinese dudes buying in Victoria. We all laughed, right?
____________________

No need to rationalize. Its fairly obvious – Vancouver is basically Hong Kong part deux – same sea-side, mountainous landscape, same status symbol of buying an idyllic house on land (so many Chinese mainlanders live in condo high rises, this is the ultimate status symbol on which to spend their fortunes). Hong Kong is still grossly unaffordable for most Chinese. Vancouver is a second-best alternative.

I have Chinese friends who left GTA for Vancouver. Part of that reason was that they thought their current neighborhood was not Chinese enough, and that the suburbs of Vancouver area (ironically, not on the island) will allow them to actually buy a house.

#82 Chant: Fix 36! Fix 36! Fix 36! on 09.02.17 at 9:19 am

#48 Chimingin on 09.01.17 at 9:41 pm

#36 – Fixed??? Oh, spare me your vapours. Spaying or neutering is the responsible thing to do, and anyone with a brain knows it. So that puts you in the brainless category, obviously.

I used to work for the Humane Society, and the number of unwanted animals desperate to find homes was very difficult to fathom. The owners who “didn’t have the heart” to keep unwanted puppies themselves, so dumped them on the shelter. The number of owners who would be “heartbroken” to put their old and sick dogs down, so they left them with us. Spare me your ridiculous judgment and misplaced moral outrage. You want to be pissed at somebody? Find the owners I described above and let them know what you think. Better yet, save us all the waste of time that is your opinion. It is ludicrous and reflects on you entirely, and not on responsible pet owners at all.

I keep telling myself this will be the last time I read the comments, and now I think I really am done with them…

Perhaps we can fix No. 36. I have his email addy and IP… — Garth

#71 Farm Wife on 09.02.17 at 12:53 am

I’m sure we have an old elastic gun somewhere in the barn that could be donated to the cause unless you’d rather wait for fall branding…..

By the way # 48 all the beef and pork that you put on your plate is from animals that have been fixed…shocker eh!

#72 Dolce Vita on 09.02.17 at 3:23 am

#48 Chimingin

Good reply. Reality informs SJW fantasy.

More than 2 thumbs up.

#73 In the name of Bandit on 09.02.17 at 7:03 am

“Perhaps we can fix No. 36. I have his email addy and IP… — Garth”

Chant: Fix 36! Fix 36! Fix 36!

—–

From argument to lynching escalated fast at this supposedly rational safe space.

#83 Dolce Vita on 09.02.17 at 9:28 am

#70 Oft dleted misaligned stock.picker

July Labour Force Survey:

Employees = 35.7 thousand
Self-Employed = 25.2 thousand

Public = 20.1 thousand
Private = 35.9 thousand

Unemployment Rate = 6.3%, down -0.2% from June.

Sample Size = approximately 56,000 households, resulting in the collection of labor market information for approximately 100,000 individuals.
______________________________

Does not appear faked to me nor Public heavy.

#84 babblemaster has it right on 09.02.17 at 9:42 am

#17 Babblemaster on 09.01.17 at 7:55 pm
Wow. Certainly a lot of quotes from “experts.” So, apparently, it could be a hard landing. A soft landing. Anything in-between. Or, RE may plateau. Or rebound. Anything could happen. Garth, you’re covering all bases.

#18 Babblemaster on 09.01.17 at 7:57 pm
Also, the cost of money may rise. Or, it may not.

————————————–
I’m glad I never took this blog too seriously.

#85 HereIsNow on 09.02.17 at 9:46 am

How about the latest US jobs report. Looks like that economy is starting to crater after a few rate hikes. I guess QE infinity is coming soon.

150,000 new jobs in a month is ‘cratering’? Jobless rate is barely over 4% – that’s full employment in economists’ minds. Too funny. — Garth

#86 NoName on 09.02.17 at 9:48 am

of topic, interesting and funny. Definitely Watch !!!
https://goo.gl/D5wjKX

#87 Robert on 09.02.17 at 10:00 am

Life is going to get a little bit more expensive and its not interest rates or Bill’s tax hikes.

Our car and house insurance is soon to go up.
Someone has to pay for Texas.

#88 CHERRY BLOSSOM on 09.02.17 at 10:04 am

DELETED

#89 MF on 09.02.17 at 10:16 am

#59 Newcomer on 09.01.17 at 11:35 pm

Exactly. The way the average person looks at it is:

1) how much will renting a comparable place cost on a monthly basis?

2) will I have anything left over to “invest”?

The answer most of the time is since rents are too high (and going higher), most people decide they might as well pay off a mortgage and at least have an asset at the end.

Some may argue and show me some spreadsheet proving otherwise, but this is how most people decide on whether to buy or rent. So far, those who have bought have made the right choice.

MF

#90 Robert on 09.02.17 at 10:19 am

@62 BTW – waiting on the westcoast-” high interest rates ARE one way that they try (and somewhat succeed) to prop their currencies…”
—————————————————————–
We are an exporting economy. Canada can not afford to have a strong currency. This interest rate cycle will hurt our exports. Higher rates = higher debt servicing taking money out of everyone’s pocket and higher govt debt servicing cost = higher taxes.

#91 MF on 09.02.17 at 10:22 am

” The key will be the number of buyers who put their toe in the water. If we continue to hang around current levels, we may have a true plateau in price that could last a while. If demand gets too robust, then the resulting uptick in prices could bring everyone with a pick-up truck and a tool box back into the market place, facilitating an echo boom.”

-I believe this is what will happen. With the economy doing well (if you believe the stats), demand still super high, a .25% percent raise here and there by our 100% incompetent central bank won’t do anything.

“Maybe central bankers blew it – keeping rates too cheap too long. Derek Holt hints those two cuts back in 2015, when oil collapsed, were a bald mistake.”

-This is not a maybe. Of course they blew it, and they know it very well. Rates were too low for too long. Now we have a huuge asset bubble. They are incompetent.

MF

#92 DON on 09.02.17 at 10:48 am

#58 Phil on 09.01.17 at 11:30 pm

A 0.5% increase in rates by the BOC, isn’t it only about 75$ per month more for a 400k mortgage?

I’m sure people will be able to dig that up. A third from their yearly raise. The rest by cutting back on 1 restaurant outing per month.

No reason people would be forced to sell. Only job losses caused by automation… but that will happen slowly over years.

Tightening rates don’t trigger sales so much as weaken demand. That drives values down, erasing equity. — Garth
******************
@phil

Why the happy path. What about increasing taxes, users fees etc that are also adding on the pile. Coffee shops and restaurants aren’t as busy as they used to be. In my workplace more folks are brown bagging their lunches already. You assume they aren’t already stressed.

#93 DON on 09.02.17 at 11:00 am

“As I recall the crash of 1989 to 1994 involved a two-step decline. The first was a rapid 10% dip (we have had 20% this year) followed by a slow painful decent that was influenced by recessionary economics and not local realities. So now we will see. ”

Back in 1989 to 1994 better middle class paying jobs – less now. Bubble was not as extreme UN-affordability in some places (actually most places in BC – even small town BC – when I heard what the prices were in Merritt, BC I knew things were stupid – most of the mills are gone now – lucky the town is on a major highway.) In addition, we are not isolated other countries are raising rates as well. Credit card debt is a major concern right now (for the banks) which will have an impact on people’s ability to borrow. The list goes on.

Ron is still omitting some valuable data – I take it Cherry picking season is still open.

#94 crowdedelevatorfartz on 09.02.17 at 11:12 am

@#65 Mr Smith
“A third of people also say their $200/monthly pilates membership was financially hurt by the central bank’s itsy little quarter-point jump in July, and another showing six in ten would have their $12/day Starbucks consumption seriously impacted if rates popped 1%.’

*******

It should get interesting.
First they came for my Personal Trainer.
Then they took away my Jenny Craig Meals.
Last they took my leased car, furniture, tv, phone, computor……..

Well…. at least I still have my free, untaxed entertainment…this Blog, Happy Housing Crash and…..elevator rides.
My life is complete.

#95 rainclouds on 09.02.17 at 11:50 am

DELETED

#96 Ian on 09.02.17 at 11:51 am

Saw this on the CBC app just now. Neil MacDonald giving it to us straight. Good to see. Finally some MSM making some sense.

http://www.cbc.ca/news/opinion/canadian-government-lending-1.4272195

#97 Algonquin Settler on 09.02.17 at 11:56 am

#75 maxx on 09.02.17 at 7:48 am

Not even close. We sold it all at close to peak to rent. We haven’t seen a rent increase in close to 7 years. The “smart” landlord is up to its eyeballs in rising condo fees and special assessments – every year. Outstanding location, incomparable views and great value for us, **but the “smart” landlord is most definitely not making out like a bandit.**
—————-
Your “smart” landlord is able to legally deduct rental loss against other income (eg. employment income) for tax purposes

#98 Ian on 09.02.17 at 12:09 pm

#84

Garth…this figure is VERY misleading.

So many businesses are pushing people to part time work because of the Obamacare cap. And so many people have given up looking. Adding those figures, true unemployment is high 8’s – 9%.

Trump won in the rust belt for a reason. The people know it’s bogus.

#99 Oft dleted much misaligned stock.picker on 09.02.17 at 12:20 pm

#82…..Dolce Vita….. Polling households for labour stats…..that’s not exactly empirical. The last stats indicated public service hires were running 2-1. But…..I’m sure the Toronto star would find a reason to justify that to it’s readership.

#100 rainclouds on 09.02.17 at 1:20 pm

Deleted

It’s OK. full article is in the sun. Apparently gaming the system is OK ?

BTW my in laws are Chinese and they are pissed too.

#101 Howard on 09.02.17 at 1:54 pm

DELETED

#102 For those about to flop... on 09.02.17 at 2:17 pm

Pink Lemonade stand in Surrey.

These guys went for the quick flip and now are in the quicksand instead.

Picked up for 900k with an assessment of 879k.

The ink dried on the paperwork in early June of this year and a couple of months later she is looking for a new owner that will love her for a little longer and not the real estate equivalent of a one night stand…

M43BC

16715 84 Avenue, Surrey

Aug 8:$999,800
Aug 29: $899,800
Change: -100,000 10%

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDA3N1VBUA==

https://www.zolo.ca/index.php?sarea=16715%2084%20Avenue,%20Surrey&filter=1

#103 Dissident on 09.02.17 at 2:21 pm

RE – #91 DON on 09.02.17 at 10:48 am
(And these two gems of replies)
#65 John Smith on 09.02.17 at 12:07 am
#93 crowdedelevatorfartz on 09.02.17 at 11:12 am

“In my workplace more folks are brown bagging their lunches already. You assume they aren’t already stressed.”

Same here. And yet I still see dummies lining up for their daily starbucks fix. That’s easily $100+/month up in smoke for designer coffee. Coffee that gives me the jitters after 10 gulps. No thank you. I’ll stick to grocery bought tea instead.

#104 Nut on 09.02.17 at 2:37 pm

Rent vs buy
I was a renter, until 2001 when home prices started creeping up after the lengthy 1990’s consolodation. I cashed out my RRSP, paid the tax, and bought a modest house with a rental suite.The house cost a little over 4x’s my annual income. The benifits were immediate. I’d been paying over 800 a month in rent, but now had my own house for 500 a month (due to rental income covring more than half the expenses. Plus, in the first year the market value went up 30%. Whew, just made it. Had I waited another year to buy it would have been too late. there is no way and average income earner can pay rent and save enough to keep pace with a rising RE market. After 9 years the market value of my house was 9x’s my annual (work) income. When I sold it felt like robbery, but what the heck, the buyer was willing. I moved up to a McMansion with two rental suites in the basemnt and it still only cost me 500 a month out of my work income to live there in luxury. Finally sold last year as the RE market was insane, and seemed really tippy. The sale price of my second house was 16x’s my annual (work) income. Word was the buyers mortgage is 3000/mo and income is 70,000. Jeeezzzz. That can’t be right. How they going to eat? My net worth during this time 15 years – increased at a 19.5% commpound annual rate. I couldn’t have done that with stocks. Right now I put all my RE gains in stocks and I’m getting 30,000+ in annual dividends. This still feels like robbery, but I’m getting used to the feeling. I was thinking that I could keep pace with the RE market but so far prices have exceeded what I sold my house for, and my portfolio of stocks is not keeping up. TSX has been drifiting a bit lower since Feb. However, I anticipate that will change here in lower mainland BC. Home prices will slump and consolodate. My expectation is my stocks with dividends reinvested will creep up. House prices could slump 15% and my stocks could go up 15%. If it works out that way, I will probably sell enough stocks to buy another house and have $ left over. Nothing like home owership, but not at any price.

#105 For those about to flop... on 09.02.17 at 2:53 pm

Pink Lemonade stand in Surrey.

It looks like the last guys have got a bit of competition out that way, but these guy’s lemonade is a little bit more expensive.

Picked up for 1.62 in May 2016, this decent looking house at least avoided the plague that is known as The Surrey Salmon,referring to the go-to choice of stucco out that way for the past 20 years or so.

So while these guys don’t have to worry about being caught fishing without a permit ,they do have to find a way to reel in the difference between their buying price and the lower assessment…

M43BC

16248 25 Avenue, Surrey

May 2:$1,798,000
Aug 29: $1,699,000
Change: – 99000.00 -6%

https://www.zolo.ca/index.php?sarea=16248%2025%20Avenue,%20Surrey&filter=1

https://evaluebc.bcassessment.ca/Property.aspx?_oa=RDAwMDA0VjcwWA==

#106 Howard on 09.02.17 at 3:28 pm

DELETED

#107 Happy Housing Crash Everyone! on 09.02.17 at 3:39 pm

#70 Oft dleted misaligned stock.picker

Lol all those fake stats to support lower rates has now turned the other way now. Explosive growth when there isn’t. Rates going up and up and up while people struggle to keep jobs , make payments as credit gets tightened in a crashing housing market. This means RE will crash and crash back to mean average. Happy Housing Crash Everyone!

#108 Howard on 09.02.17 at 3:50 pm

DELETED (and go away)

#109 Tbone on 09.02.17 at 4:20 pm

# 75 max

You sold at the peak and haven’t had a rent increase in 7 years ?
It peaked recently , not 7 years ago .
My tenants made me wealthy . I made the down payment and they paid the rest, I got rich and they still rent .

Don’t buy condos , buy single detached . You can control your expenses.
Houses don’t cost as much as condo fees to maintain, not even close.

If you can’t afford Toronto , look outside Toronto
And make sure you don’t have a garbage dump , railroad tracks , power lines or nuclear reactors in your back yard.

I stand by my claim… renters make the smart landlords rich.

Anyone I know with wealth usually got there through real estate.
Just takes time , you know time in the market as they say.

#110 jess on 09.02.17 at 4:23 pm

Charlie Weston June 17 2015 2:30 AM wrote:
Call for Central Bank probe after Provident sacks ‘whistleblowers’
http://www.independent.ie/business/irish/call-for-central-bank-probe-after-provident-sacks-whistleblowers-31308556.html
===================
Quality ?
subprime plunge!
3610.nov 2015
mon aug 21 – 1745. aug 22 589.50 872 sept 2017
provident financial bank started in 1880 -subprime to personal borrowers in GBritain
Provident Financial sees nearly £1.7bn wiped off stock market value …
– MARKET REPORT: Provident Financial to crash out of FTSE 100 after calamitous two weeks which saw shares collapse 66% in a day.
https://www.theguardian.com › Business › Provident Financial
Aug 22, 2017 – Provident Financial has issued its second profit warning in two months. … Provident grew rapidly in the years after the financial crisis, stepping .

ex-boss of Provident Financial surrenders £4.2m of pay and bonuses after crisis sent shares plummeting
Read more: http://www.thisismoney.co.uk/money/news/article-4846218/Shamed-ex-boss-Provident-Financial-surrenders-4-2m.html#ixzz4rYK7gVWV

subprime auto “policing itself “?
jobs
84 HereIsNow on 09.02.17 at 9:46 am
According to Dean :….The job growth in the establishment survey was unusually concentrated in the good producing sector, which accounted for 70,000 new jobs. Manufacturing led the way with a gain of 36,000, of which 13,700 were in autos.
Construction added 28,000 jobs, an unusually large gain. Mining added 6,500 jobs as a result of a gain of 6,800 jobs in support activities for mining. Coal mining jobs were unchanged and now stand 2,100 above their year-ago level. Job growth in health care was just 20,200, down from an average of about 27,000 over the last year. Job growth in restaurants was also weak at 9,200.
http://www.truth-out.org/news/item/41807-job-growth-weakens-in-august

Federal Reserve Governor Lael Brainard warned about the potential for more subprime auto loan defaults.
“Underwriting appears to be quite lax last year in subprime auto lending,” said Brainard. “Delinquencies rates suggest some borrowers are struggling to keep up with payments.”

#111 Tbone on 09.02.17 at 4:29 pm

# 103 Nut

Hey Nut ,

I see renters made you wealthy . Good for you.
Looks like they bought you a house .
Bless them for being so generous.

#112 DM in C on 09.02.17 at 5:51 pm

Happy we locked in our 5 year renewal in Dec @2.5% Once renewal hits we’ll be selling — empty nesters with a 4bdrm, 2500 sq ft place in YYC is a bit ridic.

#113 steerage steward on 09.02.17 at 9:21 pm

One man showed her photos in his phone. They were of Ms. Dion when she was 12 years old. A woman lifted her sleeve to reveal Ms. Dion’s lyrics tattooed on her forearm. Another woman drove five hours with her granddaughter. You were my grandpa’s favorite singer, one person said.

Ms. Dion doesn’t take this lightly, and she never did. She’ll go home exhausted.

“I want them to love me for the rest of my life,” she said.

#114 steerage steward on 09.02.17 at 9:26 pm

nice riote

#115 steerage steward on 09.02.17 at 9:28 pm

https://c1.staticflickr.com/4/3058/5841417431_7de6065cac_b.jpg

You on the right.

Don’t think we will money in reinstate

#116 steerage steward on 09.02.17 at 9:32 pm

Kinda cool to be in Canada ahh?

https://i.ytimg.com/vi/Pa1DJ008t9Y/maxresdefault.jpg

#117 steerage steward on 09.02.17 at 9:35 pm

Well god help us, at least we don’t live in Toronto

https://www.youtube.com/watch?v=3JWTaaS7LdU

#118 Smoking Man on 09.03.17 at 12:06 am

When ripped our of your mind
https://youtu.be/PMigXnXMhQ4

#119 Smoking Man on 09.03.17 at 12:15 am

Chixs that want a smoking man
It will be disappointing. I’m done

https://youtu.be/1UUYjd2rjsE

#120 steerage steward on 09.03.17 at 12:19 am

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

The 80s were great, but back then we weren’t all in debit. Debit was a bad word

In the 2010 the kids don’t know what it this word means means. They will enjoy finding out

#121 dave in kincardine on 09.03.17 at 8:04 am

Strange economy when houses seem to be declining, and the oil patch is in the pits and yet we had a big growth number. Maybe consumers are binge buying to forget their troubles. If you have bit off too much debt or are worried about your job security, shouldn’t you NOT spend money and pay down debts. Financial behavior is fascinating to me.