Debtville

Davisville Moms is a web site about shopping, children, shopping, daycare, shopping, health, parenting and shopping. “DavisvilleMoms.com serves a vibrant group of intelligent parents who have embraced the small town feel of their local community, while loving everything big-city living has to offer,” it says.

Davisville is an itsy (2-square-km) hunk of mid-town Toronto where household incomes are twice the norm and the average house sells for $1.4 million. It’s affluent and upscale, but not wealthy and elitist, full of 5%ers and 10%ers, not the 1%ers who crowd into Lawrence Park, Rosedale, Leaside or other surrounding enclaves. In the GTA these days, this is the middle class.

“I came across this post today on one of my mom groups in Toronto,” says Janey, who reads this blog with a flashlight under the covers. “Thought you might be interested.”

As mentioned here yesterday, quietly – without any announcements or media coverage – one in five mortgage applicants are now being kicked out of the big banks, thanks to the stress test that’s set the mortgage bar at 5.15% or higher. Overall, fewer people are being approved for home loans and those who do are being okayed for less. This, plus rising interest rates, is why the decline in house prices – especially single-family homes (like in Davisville) – will accelerate during 2018.

The Moms post gives you another glimpse into the mess that awaits us. People who bought a year ago at peak house, with cheap, variable-rate loans, are screwed. Property prices in 416 are still more than 10% below the peak, while they’ve collapsed by twice that amount or more in desperate-housewifey places like Markham or Richmond Hill. Those who are coming up for renewal cannot count on it happening automatically in a declining market. Banks have every right to determine the value of the property at the time of renewal and may require a lump sum payment in order to renew within regulatory loan-to-value guidelines, if your home’s worth has faded.

Or, you can change lenders – and pass the 5.14% stress test. Or sell.

Recall that between 40% and half of all Canadians with mortgages will be coming up for renewal in 2018 – a tsunami of refinancing at a time when the cost of money is steadily rising after nine years of torpor, when mortgage regs have been seriously tightened, and the lefties running BC have decided to tax empty houses, all foreigners, speculators, rich people, cowboys, and everybody in Canada who owns a second property there. The perfect storm maybe.

Meanwhile, here’s an alarmist piece of news making its way ‘round the web. Since the Dipper budget in BC last week, says Thinkpol, asking prices on houses have been tumbling by double digits. Hoisted as a dubious example is a Richmond sprawler originally listed at $5.8 million now on sale at $1.58 million. Another in Richmond has fallen by 50%, to merely $2.3 million. (Every day this blog’s comments section contains more examples, thanks to the investigative work of one person.) Says the web site’s source: “This is just the tip of the iceberg. Many sellers are delisting and relisting to hide price falls and reset days on the market counter.”

Already the Van property market was in trouble, masked by romping condo sales and moister buyers who have no idea what lies ahead. The sales-to-active listings ratio for detached homes has plunged to just 11.6%, while it is above 57% for apartment units. The local board of trade says, “taxes don’t make homes more affordable”, a sentiment echoed by realtors (of course). Meanwhile the province’s finance minister has stated flatly that the government’s goal is to depress the market and drop prices.

And, no doubt, it will happen.

2018 has the potential to be the single worst year for residential real estate since the credit crisis. Yes, it comes after a decade-long romp as Canadians pigged out on borrowed money and were pushed by greed, house lust and FOMO into a buying frenzy and price excess. Those who got in and out at the right moments have done well. Untold numbers who bought in the last couple of years, or pushed their finances to the margins, stand to lose. As in the American housing bust, it’s these folks who have the power to bring the entire market down in a hurry. Idiot politicians only make it faster and deeper.

Prepare for a lot of whining mommas.

268 comments ↓

#1 For those about to flop... on 02.26.18 at 5:45 pm

Recent Sale Report Realtor Assistance Needed.

This house in West Vancouver sold 26 days ago.

Just for clarification on this point although it got stamped 26 days ago it only got the all clear today.

It is fresh meat.

It was only borderline Pink Snow and they held steadfast on their price after one reduction in May 2017.

It took them a year to sell and it might have turned out alright for them ,but I will put it up and hopefully we can see what happens,especially since I haven’t seen many sales lately over 2 million dollars.

People struggle to get this type of information and yet I thought you guys were gonna vote me off the island.

I’m a survivor…

M43BC

1046 MILLSTREAM RD WEST VANCOUVER paid 4.32

Jan 25:$4,880,000
May 4: $4,780,000
Change: – 100000.00 -2%

https://www.zolo.ca/west-vancouver-real-estate/1046-millstream-road

1046 MILLSTREAM RD WEST VANCOUVER
https://evaluebc.bcassessment.ca/property.aspx?_oa=QTAwMDAyOUJLOQ==

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#2 Lopez on 02.26.18 at 5:48 pm

I am first!

#3 Dead Cat Bounce on 02.26.18 at 5:50 pm

Faketors* are freaking and whining like crazy right now !

#4 TheSpangler on 02.26.18 at 5:50 pm

Given the above, probably a good year to go long on divorce lawyers. Is there an ETF for that?

#5 Happy Housing Crash Everyone! on 02.26.18 at 5:51 pm

Happy HAPPY Housing Crash Everyone. This monster housing bubble will come crashing down. The amount of mortgage fraud is off the charts in Canada and everyone knows it.

#6 Muttley O'Toole on 02.26.18 at 5:51 pm

“Idiot politicians only make it faster and deeper.”
Very true and for some reason I am reminded of the stupid dancer-man Trudeau leading the Pied Piper band of buying frenzy idiots over the cliff.

#7 TurnerNation on 02.26.18 at 5:52 pm

Those blacked out sections triggered me! ;-)

https://www.google.com/amp/www.dailymail.co.uk/news/article-5433973/amp/Square-root-symbol-Louisiana-school-mistaken-gun.html

#8 Squatre Dame on 02.26.18 at 5:52 pm

#196 Stan Brooks on 02.26.18 at 12:53 pm
You won’t find this in a Canadian newspaper.

https://economictimes.indiatimes.com/news/politics-and-nation/why-justin-trudeaus-india-tour-turned-out-to-be-a-diplomatic-disaster/articleshow/63059621.cms
Speaks volumes on the state of democracy/or the lack of such.
************

That’s because the author writes for the Toronto Sun. It is understandable that Trudeau couldn’t pick one bad guy out from a population of 1.3 billion people, the hologram* didn’t even look real. Although he really should know that Indian music is not dance music, it’s called a sitar not a guitar.

*http://musion.com/?portfolio=narendra-modi-campaign-2014

#9 This Week in Money on 02.26.18 at 5:53 pm

Allan Mark Angell discusses West Vancouver real estate:
– topped May 2016
– 50% down on high end mortgages
– guesstimate: 15% of properties – mortgage free

https://www.howestreet.com/2018/02/24/this-week-in-money-16/

#10 Bob Dog on 02.26.18 at 5:54 pm

Canadians are about to learn the true meaning of the words.. Financial Terrorism.

#11 Victoria Observer on 02.26.18 at 5:55 pm

“O Hamlet, what a falling off was there!” King Hamlet.

#12 Hans on 02.26.18 at 5:55 pm

Garth, I get the tightening requirement for new mortgages, the re-appraisal potential in order to ensure compliance with govt regulation on renewals, what I dont get are the seemingly arbitrary increases in interest rates for other products such as personal locs. One was posted recently on the blog. Are the increases a legitimate reflection of costs of funds or increased risk profiles, or are banks taking advantage to tighten the screws on borrowers? Ive always admired how banks were able to increase their spread on their products while holding back decreases in the central bank rates. I just wonder whether the net effect in the future will be banks turning into unwilling landlords and homeowners as people become unable to service debts or sell their homes for more than whats owed on it.

#13 Smoking Man on 02.26.18 at 5:55 pm

Square root of 2

#14 George on 02.26.18 at 5:56 pm

You can see Oren’s name and phone #

So call him. – Garth

#15 NotLegalAdvice on 02.26.18 at 5:57 pm

First!!

#16 sm_yycbksc on 02.26.18 at 5:57 pm

Meanwhile the stock market continues to perform. My balanced portfolio has already recovered from the dip 2 weeks ago and on track for growth this year. Thank you garth for preaching balance and diversification! Cheers!

#17 Ex-Cowtown on 02.26.18 at 5:59 pm

“Recall that between 40% and half of all Canadians with mortgages will be coming up for renewal in 2018 – a tsunami of refinancing..”
+++++++++++++++++++++++++++++++

Bear in mind that when 10% US homeowners got in trouble it almost tanked their economy. And what is our PM doing? Pretending he’s a Bollywood gigolo.

How can this not end well?

#18 Andrewski on 02.26.18 at 6:00 pm

Yet astoundingly, MSM keeps pumping the BS news being pumped by all the real estate boards, that markets are fine.

#19 FOUR FINGERS WATSON on 02.26.18 at 6:01 pm

Banks calling for large sums like the 150k mentioned above will collapse the entire “ house of cards “ housing market. I doubt that will happen, there is too much to lose, so the PTB will step up and not allow it.

#20 get out of the big banks on 02.26.18 at 6:02 pm

and renew elsewhere. Of course at a higher rate– but your prinicipal has dropped. Can take out a HELOC, another option.

brokers just got busier!!……..doom and gloomers? i love these guys. :)

#21 CanadianOne on 02.26.18 at 6:03 pm

Me thinks we are repeating what our southern counterparts did….

http://business.financialpost.com/news/fp-street/mortgage-fraud-prompts-sp-to-lower-canada-bank-risk-metric

another iceberg…. another tip, another crash! Or a tumble! Who knows how market sentiment will pan out this time around.

#22 For those about to flop... on 02.26.18 at 6:03 pm

Recent Sale Report/ Realtor Assistance Needed

I walked by this house today and it had a shiny new sold sticker on it.

Sold 7 days ago.

After starting off at something that might have flown in 2016 ,they took 11.5% off ask and finally found the person they had been waiting for ,despite being one of the cheaper options in Vancouver,only a couple of weeks after the latest reduction.

Could be a developer ,but I think that train is slowing down…

M43BC

958 E 38th Avenue, Vancouver, BC, V5W 1J3

2017-04-04 : $1,550,000
2018-01-12 : $1,399,000
2018-02-05 : $1,379,000

https://www.zolo.ca/vancouver-real-estate/958-e-38th-avenue

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#23 Stone on 02.26.18 at 6:06 pm

Garth, I know you’re not happy that the BC gouvernment has implemented changes that will torpedo real estate for that province. On the other hand, it had to happen at one point. It’s unfortunate they were only able to implement this now versus years ago before the bubble was ripe however I do think it was brave of them to do this at all. After all, if things go to hell in a handbasket before the next election in BC, the NDP may not get re-elected. Sounds pretty selfless to me. Normally, politicians are mostly in the business to get re-elected. This is very out of character. I like it. I’m not a fool to be easily taken by superficial platitudes but this seems genuine. Lets wait and see how this turns out.

Ultimately, I like the bandaid ripped off quickly than to have it pulled off slowly. Slowly hurts more and longer and it isn’t necessary for it to drag longer than needed. Too bad for those who will suffer but isn’t that why there isn’t always a greater fool? Someone needs to take the fall eventually.

#24 The Technical Analyst, CSTA, CPD on 02.26.18 at 6:09 pm

Don’t forget the Canadian Budget release is tomorrow.

More fun.

I’m sure Garth will be covering it on this blog. I’ll be there live.

#25 I vote for Ron Paul on 02.26.18 at 6:09 pm

Toronto needs an economic reset. This is good for the Canadian economy in the long run. It isn’t sustainable to be paying London, UK prices on Banana Republic salaries which are almost the same in Purchasing power parity in 3rd world countries like Argentina or Chile.

#26 Lost...but not leased on 02.26.18 at 6:10 pm

Today’s blog photo:

Is that a German Shepherd with a Roman salute?

#27 Mike on 02.26.18 at 6:11 pm

.
I am fuuuurst……………hey wait

All good here in GVR.
People still looking for lost to built and profit.
RE always goes up.

#28 mark on 02.26.18 at 6:11 pm

Beautiful dogs.
How about some nice pics of the APBT?

#29 Don't Believe The Hype on 02.26.18 at 6:16 pm

This feels like a disaster in the making. $150K lower value for that house they bought last year PLUS a higher mortgage payment is waiting for that Davisville Mom. If they can’t refinance, they may have no choice but to sell, and lose a massive amount of equity in the process. Ouchie. Meanwhile markets were up big today….

#30 young & foolish on 02.26.18 at 6:18 pm

Ouch! But I bet the small time private lenders are set to make a fortune!

#31 TheDood on 02.26.18 at 6:22 pm

Bear in mind that when 10% US homeowners got in trouble it almost tanked their economy. And what is our PM doing? Pretending he’s a Bollywood gigolo.
_________________________________

LOL! Classic stuff.

#11 FOUR FINGERS WATSON on 02.26.18 at 6:01 pm
Banks calling for large sums like the 150k mentioned above will collapse the entire “ house of cards “ housing market. I doubt that will happen, there is too much to lose, so the PTB will step up and not allow it.
______________________________________

There is too much to lose for whom? Dummy homeowners who bought beyond their means and live in a mountain of debt. Too bad for them. After they declare bankruptcy, they can attend a personal finance course, with any luck CRA will allow a tax deduction on the cost of the course!

#32 Nonplused on 02.26.18 at 6:24 pm

I think we are about to test the theory that falling house prices make housing even more unaffordable than rising house prices.

The theory works as follows: Even if home ownership doesn’t have any clear advantage month to month over renting, over the long haul and a 2% annual gain in house prices the 5% initial down-payment can grow to a significant amount of equity, even if no principle is ever repaid. Thus modestly rising house prices are affordable so long as wages are also rising about the same. The equity can be used down the road to do things like pay realtors or fund a down-payment on a different house if you have to move for work or something. Or to renovate the kitchen.

However, if house prices start falling even at a modest rate say of 2%, all of this gets turned on it’s head. Things start happening like today’s example where you have to come up with gobs of cash every time you refinance, unless your principle payments have kept up with the decline. But even in that case the principle payments are “Poof”, gone. There is no equity to finance realtors or new mortgages after selling the house. You can’t move for work or any other reason. I think I am going to call this the “Poof Theory”, because “Poof, your money is all gone” just like in a crypto-currency. Because of the mortgage, the effect is amplified because of course the bank still expects full repayment so only your equity gets eroded.

Of course what happens next according to this theory is that house prices don’t just nicely moderate by 2%/y like they are delusionally hoping for in BC, because once house prices look set to decline speculators disappear. The first ones to go are the realtors themselves who are usually pretty good flippers because they spend so much time in the market. That means bargains that normally get snapped up say if it’s a forced sale now sit on the market at ever lower prices.

Seeing this trend, it isn’t long before real demand buyers decide to hold off. Those buyers become overwhelmed with more homes to see than they can visit in a weekend and seemingly better deals and nicer properties the longer they wait. At this point the market locks up.

This is why leveraged assets like real estate do not go up at 2% per year and then nicely correct at 2% per year. They go up at 2% per year and fall at 20% per year, but only occasionally. It’s the effect of the leverage. All that is required to set it off is some sort of financing issue on the margin.

If you are looking for a financing issue on the margin I think Garth has explained exhaustively that we’ve found it. Record debt ratios, stress tests, rising interest rates, strained price to income ratios, and in BC this inane new property tax on second homes and cottages. 2% per year might not sound like a lot, but as Garth pointed out on a $600,000 place that’s $12,000 a year of after tax money. A lot of people won’t have it. It changes the math a lot. It’s all fine if the place is going up $12,000 a year in price because as a capital gain it’ll only cost about $6,000 of real cash when you sell, but if the prices don’t go up then “Poof”, the money is gone again, and either way it has to be financed in real time, so that money has to come out of the family budget.

I seriously doubt the effect of this new tax in BC is going to have the desired effect of making housing affordable to BC residents in anywhere near the numbers of people that are going to see year’s worth of after tax income just go “Poof”, wiping many of them out. It may be the case that the cowboys from Alberta can afford a significant hit on their cabins, assuming they are not heavily financed, but there are going to be a lot of residents to whom that does not apply.

Because the BC market is so far stretched, particularly Vancouver, stories like the above might become quite commonplace, with 2 or 3 years worth of take home pay just going “Poof” when it’s time to refinance. How many people are going to be able to withstand that?? They are in debt up to their eyeballs as it is.

I see many tears ahead, followed probably by new government rules forcing banks to refinance the renewal principle even if the various tests cannot be met. But by then I think the damage will be done and the horse will be out of the barn.

That, folks, is just the way leverage works. The crash is always much quicker to unfold than the bubble before it was, because of the “Poof” effect. And the thing is prices don’t have to fall that far. All you need to lose is your equity and you have to quit the game, despite the fact the house might still be worth quite a bit.

Of course the only way to prevent a bust is to prevent a bubble from forming in the first place, but it’s way to late for that.

#33 Doug t on 02.26.18 at 6:25 pm

Whining mommas can be SO hot

RATM

#34 Sam the Sham on 02.26.18 at 6:26 pm

People talk about the “stress test” as if it’s something written in stone. It’s really just a recommendation to the banks from the Office of the Superintendent of Financial Institutions (OSFI). Unlike interest rates from the central banks, where a lot of other factors beside mortgage rates, go into the decision to raise or lower rates, the stress test could be dropped at the “flick of a switch” if things get out of hand in the real estate market. The original intention of the stress test was to stabilize the market, not to cause a crash!

Wrong. The stress test is 100% in place to protect the banks from piggy borrowers who will be unable to deal with rising rates. It has zero to do with the health of the real estate market. Did you just make that up? – Garth

#35 Lost...but not leased on 02.26.18 at 6:26 pm

Garth..BTW..

That ThinkPol article was poorly edited..

Re: Richmond property….The original ask $5.8 Million was absurd….it shouldn’t even be mentioned..one could buy a brand new McMansion for less..and it is not even in a upscale neighbourhood….

IGNORE IT as an anomaly.

It is in a SFH neighbourhood and would never garner even multi-family zoning prices.

The guru speaks! – Garth

#36 Stone on 02.26.18 at 6:27 pm

#31 TheDood on 02.26.18 at 6:22 pm
Bear in mind that when 10% US homeowners got in trouble it almost tanked their economy. And what is our PM doing? Pretending he’s a Bollywood gigolo.
_________________________________

LOL! Classic stuff.

#11 FOUR FINGERS WATSON on 02.26.18 at 6:01 pm
Banks calling for large sums like the 150k mentioned above will collapse the entire “ house of cards “ housing market. I doubt that will happen, there is too much to lose, so the PTB will step up and not allow it.
______________________________________

There is too much to lose for whom? Dummy homeowners who bought beyond their means and live in a mountain of debt. Too bad for them. After they declare bankruptcy, they can attend a personal finance course, with any luck CRA will allow a tax deduction on the cost of the course!

——-

Allow a tax deduction? Lets not reward stupidity. I think the lesson that will be learned will be reward enough…if they learn it at all. I sense history will repeat itself over and over and over again.

#37 MF on 02.26.18 at 6:28 pm

#16 sm_yycbksc on 02.26.18 at 5:57 pm
Meanwhile the stock market continues to perform. My balanced portfolio has already recovered from the dip 2 weeks ago and on track for growth this year.

-Lol “recovered” from what?

That was not a correction, crash, down day, volatile market (or whatever you want to call it).

That was stocks behaving as they should.

It’s only since 2008 that the massive, unparalleled “stimulus” has meant stocks only go up…er…I mean corporate profits.

MF

#38 Kingkouros6969 on 02.26.18 at 6:28 pm

Can someone explain to me how this works:

A person buys a 1m home and puts a downpayment of 100K. They take on a mortgage of 900K.

For 5 years everything is rosy. When they go to their bank to refinance, the bank informs them that their home is worth half of what it was worth (500K). Doesn’t everything just stay the same? The person pays the new interest rate like before on the remains of the 900K mortgage?

Why does the bank want a lump sum payment? Pardon my lack of knowledge.

#39 YVR Comment on 02.26.18 at 6:28 pm

We might blame the BC NDP for crashing the real estate market, however BC Liberals have had there own share of screw-ups.

I run a small business in Vancouver, we sell professional video equipment and company employs 7 people. Back 2009-2010 when preparation for Vancouver Olympics were in full swing and the economy was doing just fine. Out of the blue BC Liberals decided to remove all the tax credits given to the film industry without realizing its potential effects. 6 months after the winter games were over in Vancouver, BC Liberals came up on the podium and said everything is fine in the industry, of course it is, as the contracts are signed years in advance, talent and resources are put in place for full production. However, as soon as 1 year completed since the announcement of the Tax Credits disappearing all the big productions disappeared along with post-production business, catering, electrical, carpenters, sound stages were sitting empty and the entire industry disappeared.

All the work moved to US, Quebec and Ontario. BC Liberals simply destroyed the industry, after lot of lobbying by different groups, organizations the tax credits were restored and it took another 18 months or so for the work to ramp up. Essentially 3+ years the film, production and post-production business went totally dry. Bottom line, whether it is Dippers or Non Dippers, politicans are politicans, anything they touch becomes toxic.

#40 young & foolish on 02.26.18 at 6:29 pm

Hamlet was a prince

#41 Penny Henny on 02.26.18 at 6:29 pm

Since the Dipper budget in BC last week, says Thinkpol, asking prices on houses have been tumbling by double digits. Hoisted as an example is a Richmond sprawler originally listed at $5.8 million now on sale at $1.58 million.-GT

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

A 63% discount??
HONEY START THE CAR!!!!

#42 MF on 02.26.18 at 6:31 pm

#33 Doug t on 02.26.18 at 6:25 pm

“Whining mommas can be SO hot”

^Not sure if srs?

Gross.

MF

#43 Interstellar Old Yeller on 02.26.18 at 6:31 pm

I know a few new parents who bought Q1/Q2 last year. If they’re overextended I guess they’ll borrow from family and third party lenders, then hope to somehow bail themselves out of this mess (make more money or housing market recovery) before the next time the S threatens to hit the fan.

I feel bad for them. Financially ignorant and self-inflicted, doesn’t mean they aren’t kind people (and the kid has done nothing to deserve the stress and upheaval coming their way.)

#44 AGuyInVancouver on 02.26.18 at 6:32 pm

There’s something funky about that listing on Seaward Court that Thinkpol uses as an example of price cutting. If you look at comparable sales in the area it’s clear the realtor messed up the listing and that 1.58 was the intended price, not 5.8. Not a great example.

#45 For those about to flop... on 02.26.18 at 6:37 pm

Every day this blog’s comments section contains more examples, thanks to the investigative work of one person.-Thor Turner.

I’m like the ugliest suitcase on the baggage carousel.

Nobody wants to claim me…

M43BC

#46 april on 02.26.18 at 6:40 pm

We’re curious to know when condos in the Lower mainland BC will start their decline.

#47 Thinking out loud on 02.26.18 at 6:41 pm

What are blog dogs thoughts on the condo market, especially in the outlying areas of YVR? (Richmond, Surrey etc.) Not everyone wants/needs a SFH. Seems to me those values are going up, quickly. So many buyers rushing to condo/townhouses in the outlying areas, because it’s the only RE left that’s somewhat affordable. For single people w/ no kids, who want to start building equity, isn’t that the only option left?

#48 KLNR on 02.26.18 at 6:41 pm

So they bought last year and went with a 1 year term?
could have locked in for 5yrs at around 3%

#49 jess on 02.26.18 at 6:44 pm

owned up quickly?

Citigroup miscalculation on the annual percentage rate (APR).Around 1.75 million of Citi’s U.S. credit card accounts dating from 2011-2017 are impacted – about 1 percent of Citi card holders during that time frame

“While we have found no evidence of employee misconduct, we should have identified these issues sooner,” said company spokeswoman Elizabeth Fogarty in a statement. “We sincerely apologize to our customers and are taking every action to provide refunds as quickly as possible.”

#50 AfterTheHouseSold on 02.26.18 at 6:46 pm

#26 Lost…
Today’s blog photo:
“Is that a German Shepherd with a Roman salute?”

No. That’s the wolves at the door.

#51 PeterfromCalgary on 02.26.18 at 6:49 pm

Meanwhile stock market are recovery rapidly.

#52 paul on 02.26.18 at 6:50 pm

6 Muttley O’Toole on 02.26.18 at 5:51 pm

“Idiot politicians only make it faster and deeper.”
Very true and for some reason I am reminded of the stupid dancer-man Trudeau leading the Pied Piper band of buying frenzy idiots over the cliff.
—————————————————————–
Talked to Justine’
It’s DANCER PERSON ! to you and don’t forget it. lol

#53 For those about to flop... on 02.26.18 at 6:53 pm

Here is the 73% discount house…

M43BC

10700 Seaward Court, Richmond,

2017-01-30 : $1,488,000
2016-10-20 : $1,538,000
2017-12-12 : $1,588,000
2018-02-16 : $5,880,000

https://www.rew.ca/properties/R2240652/10700-seaward-court-richmond-bc

#54 Smartalox on 02.26.18 at 6:53 pm

That Davisville Mom’s story is an example of what happens when you ‘port’ a mortgage that you took out on one property, to a new property when you move ‘up’ the property ladder.

You sell your first home before the end of the original term on your mortgage. If you pay the mortgage outright before then end of the term, the bank hits you up for a big prepayment cost. So to avoid the cost, you hustle to buy another property worth more than you owe, finance the difference, for a slight increase in the monthly payments.

Easy. Affordable. Avoid a five figure pre-payment penalty.

Except due diligence suffers, because you’re under pressure to buy, and the bank’s only too happy to lend you more money.

Then the term is up, the mortgage is due, and suddenly the bank asks for a proper valuation of your new home. Suddenly, it turns out the house isn’t worth what you agreed to pay for it (cratering prices don’t help) and the bank is offering a lot less as a mortgage on the property.

At that big of a shortfall, it’ll probably be a blend and extend, or a partial HELOC with the 150k extra being unsecured, probably north of 9%. Not to mention all equity being wiped out, and starting from zero.

Better like Davisville… you’ll be living there for 30 years or more, before you settle that account.

#55 Jimbo on 02.26.18 at 6:53 pm

https://m.realtor.ca/Residential/Single-Family/18969371/922-LOGAN-AVE-Toronto-Ontario-M4K3E4-Playter-Estates-Danforth

Boy this spells trouble. 1.7 million dollars for a would be house.

#56 paul on 02.26.18 at 6:56 pm

38 Kingkouros6969 on 02.26.18 at 6:28 pm

Can someone explain to me how this works:

A person buys a 1m home and puts a downpayment of 100K. They take on a mortgage of 900K.

For 5 years everything is rosy. When they go to their bank to refinance, the bank informs them that their home is worth half of what it was worth (500K). Doesn’t everything just stay the same? The person pays the new interest rate like before on the remains of the 900K mortgage?

Why does the bank want a lump sum payment? Pardon my lack of knowledge.
—————————————————————–
To bring loan to value back in line. % wise

#57 ImGonnaBeSick on 02.26.18 at 6:56 pm

So I see SCM has moved on to trolling Chris Pratt for sending his thoughts and prayers to Kevin Smith after a massive heart attack… Wth is happening in this world that someone can’t send their thoughts and prayers to someone else? (Insert sarcasm) Hopefully the Millenial invented social media (end sarcasm) dies a quick painful death…

#58 islander on 02.26.18 at 6:57 pm

“Untold numbers who bought in the last couple of years, or pushed their finances to the margins, stand to lose.”

You said it Garth, but let’s face it, it’s been a 10-15 year run up in YVR…..and those who’ve played and cashed in have done very well. We’ve had many years to figure out our timing, but, as we all know, nothing goes up forever.
Unfortunately, many paper millionaires have been living way beyond their means. These folks will be forced to sell, if only to downsize and yes, the market will be affected. C’est la vie.

#59 Ex-Cowtown on 02.26.18 at 7:01 pm

#38 Kingkouros6969 on 02.26.18 at 6:28 pm
Can someone explain to me how this works:

A person buys a 1m home and puts a downpayment of 100K. They take on a mortgage of 900K.

For 5 years everything is rosy. When they go to their bank to refinance, the bank informs them that their home is worth half of what it was worth (500K). Doesn’t everything just stay the same? The person pays the new interest rate like before on the remains of the 900K mortgage?

Why does the bank want a lump sum payment? Pardon my lack of knowledge.

+++++++++++++++++++++++++++++

The bank wants to be made whole if you walk or decide to go bankrupt. They don’t give a crap about your house; they just want their money back.

Collateral=Equity=Skin in the Game= Ransom.

Nothing pretty about it.

#60 Joe on 02.26.18 at 7:04 pm

A few blogs back you mentioned Toronto and Vancouver house prices wouldn’t budge even in a crash. It’s more about Windsor and Hamilton etc

I said don’t expect urban 416 or 604 to lose 40%, but the burbs could be slaughtered. – Garth

#61 For those about to flop... on 02.26.18 at 7:06 pm

Here is the second house from the article.

They took 49.2% off.

Removed from market…

M43BC

11640 Blundell Rd,Richmond

2017-08-22 : $2,790,000
2017-12-18 : $2,380,000
2017-06-17 : $4,680,000

https://www.zolo.ca/richmond-real-estate/11640-blundell-road

#62 crowdedelevatorfartz on 02.26.18 at 7:08 pm

Rising interest rates.
Indebted borrowers renegotiating loans.

Let the games begin.

#63 Zapstrap on 02.26.18 at 7:10 pm

At least you don’t have to worry about paying your property taxes out west. You can “borrow” the money from the Govt. for a very modest amount and pay it back when you sell. This is another well intended plan that should be shut down. Is this commonplace across the land?

#64 Lisa on 02.26.18 at 7:14 pm

For those about to flop…

Reprieved! From being the brunt of people’s nasty comments to hero.. Look at you!
……………
As for the Davisville mom’s…I’d love to see the smug look on all these faces wiped off. Since when does massive debt equal prestige??
I’m grumpy. I’m going to eat ice cream..

#65 kommykim on 02.26.18 at 7:15 pm

I had an interesting conversation on FaceBook with a mortgage broker the other day. He was whining that one of his clients, who was now divorced and has his mother living in the basement suite, had to refinance to pay off the Ex. The guy no longer qualifies to mortgage via the Big banks and now has to borrow at a MUCH higher interest rate. The broker was complaining that the guy would have qualified under the old rules and how unfair these new rules were. There will be some lifestyle adjustments for many people in addition to those two.

#66 tccontrarian on 02.26.18 at 7:15 pm

“2018 has the potential to be the single worst year for residential real estate since the credit crisis.”-GT
======================================

Given that RE is illiquid, and corrections can take 3+ years to unfold (or much longer, as in Japan), I’d say there’s a good chance that 2018 is only the beginning of a longer decline.
When people ask me when I’m planning to buy back in, my answer is always, “when everyone I know thinks RE is a lousy investment”.
All of a sudden, the 70% correction I’ve been expecting (in YVR), doesn’t seem out of line, does it?

TCC

#67 Dinner? on 02.26.18 at 7:22 pm

I see a woman holding a goat in the Instagram photo on the right hand side of this smelly blog. Please don’t tell me this goat is going to be another victim of that terrible pet adoption situation where the pet ends up on the dinner table!??

http://www.cbc.ca/news/canada/british-columbia/molly-the-pig-1.4550000

#68 Jimmy on 02.26.18 at 7:23 pm

Re: 13

Square Root of -1

#69 Reality is stark on 02.26.18 at 7:24 pm

Modern day mommas don’t whine for long. They leave. Hopefully the next guy still has some cash.
First guy watches the house disappear and gets assessed for alimony and child support.
Subsequently he ends up jumping off a bridge.
Life for men after a real estate downturn is a real treat.

#70 Reynolds531 on 02.26.18 at 7:27 pm

On the other, when I was ten I stood in line at the Royal Bank with my dad to refinance his house at what he hoped was something less than 18%. If he could hang on to that place then (by his fingernails) with zero financial savy…. hopefully most people today will do the same.

#71 Thebarold on 02.26.18 at 7:30 pm

Why are they refinancing a year after buying? Oh those bidding wars. I wonder how much over they bid to win?

#72 TS on 02.26.18 at 7:31 pm

Davisville Mom should be able to make $150,000 through car dates off backpage in 5 years.

Just think happy thoughts…..

#73 JettaFlair on 02.26.18 at 7:32 pm

Flop, this is geared to you and the similarly minded.

My wife and I are tracking Central Coquitlam and Parts of Burnaby/New West border to get an early idea of what the environment is like. We get automatic emails from our realtor and ~15% of the places are either flips from 2016 which are asking for equal to or under value after putting in between 50-100k for renos. For example, this one came in today and someone is trying to make 200k off a greater fool.

https://www.bcassessment.ca/Property/Info/QTAwMDAzWEZEMg==

$1,249,988 LP

Assesed is at 1.068M
Purchase in 2017 is 1.050M

Clearly not a complete picture but a snapshot of 2 areas of the Metro market.

Keep up the great service and see if you can make friends with a VanCity realtor to get some more info and automatic emails.

#74 Newcomer on 02.26.18 at 7:35 pm

#38 Kingkouros6969 on 02.26.18 at 6:28 pm

Why does the bank want a lump sum payment? Pardon my lack of knowledge.
—-

The house is collateral. If you default on the loan the bank will sell it to cover the outstanding amount. They need to be sure that they can easily recover the full amount of the loan, plus the costs involved in selling it, at any time.

#75 Phylis on 02.26.18 at 7:35 pm

#67 oops

#76 JSS on 02.26.18 at 7:39 pm

I’m guessing that the Davisville mammas are mostly attractive, and have gym passes. They can likely leave this mess behind through divorce, and take the kids. They are likely attractive and have good careers. They can find another suitable mate. It is the husband I’d be worried for. Likely to be mid to late forties, bald and slightly overweight.

Better get Davisville’s resident psychologist on the line.

#77 AB Boxster on 02.26.18 at 7:42 pm

38 Kingkouros6969 on 02.26.18 at 6:28 pm

Can someone explain to me how this works

_________________________________________

The bank has originally loaned 900K on a house (originally) worth 1mil.
The house is now worth only 500K.
The bank now owns an asset worth 500k (remember the bank still really owns the house, until the loan is paid off) as collateral on its 900K loan.

Too dangerous for the bank.

They want 500k cash, so that the loan is now 400K secured by the 500K house.

Also, why would a homeowner continue to pay back 900K on an asset that is only worth 500K?

Alberta, 1980’s, house values fell so much that people refused to make payments on a 100K house loan, for a house that was now only worth 60K. Jingle keys was the result.
Gave the house back to the bank and walked away.
(Thanks to T1 for that fiasco.)

This is not possible in most provinces.

Question is..
Why did the bank loan so much money, on a property that was assessed so badly? Does the bank not bear some responsiblity for lending so much on obviously overpriced real estate?

#78 JettaFlair on 02.26.18 at 7:44 pm

A couple of more examples:

https://www.bcassessment.ca/Property/Info/QTAwMDAzVUpOSA==

$889,000 OP
$849,900 LP
$818,000 SP <— we have a winner (loser?)

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

https://www.bcassessment.ca/Property/Info/QTAwMDAzWENLNA==

Sales History (last 3 years)

11-May-2017 $1,005,000

$1,238,000 OP
$1,198,000 LP

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

https://www.bcassessment.ca/Property/Info/QTAwMDAzVU1KUg==

$1,398,000 OP
$1,300,000 SP <—- Winner @ Less than assessed!

There are plenty more. A lot of the listings are stagnant but these few are from the 1st week of Feb.

It's been happening slowly and under the radar but the market is changing. Not sure how far down is left but nothing (detached) is super hot anymore.

#79 Sideshow Rob on 02.26.18 at 7:46 pm

There will be a huge bull market in down and out trophy wives next year. Watch out for those smiling predators.

#80 John Dough on 02.26.18 at 7:47 pm

#34 Sam the Sham on 02.26.18 at 6:26 pm

People talk about the “stress test” as if it’s something written in stone. It’s really just a recommendation to the banks from the Office of the Superintendent of Financial Institutions (OSFI). Unlike interest rates from the central banks, where a lot of other factors beside mortgage rates, go into the decision to raise or lower rates, the stress test could be dropped at the “flick of a switch” if things get out of hand in the real estate market. The original intention of the stress test was to stabilize the market, not to cause a crash!
——
Wrong. The stress test is 100% in place to protect the banks from piggy borrowers who will be unable to deal with rising rates. It has zero to do with the health of the real estate market. Did you just make that up? – Garth

————-
Two wrongs don’t make a right but ….

Wasn’t the stress-test implemented to protect the government from a CMHC bailout, as it is the CMHC that ultimately protects the piggy banks from idiot borrowers. The CMHC’s bondholders might get a good rogering, unless the Fed also backstops the CMHC’s bonds. I made the last sentence up, but some awfully sweet yields there. My guess is ultimately we are on the hook.

As stated. It is to protect systemically-important banks. – Garth

#81 Maybe on 02.26.18 at 7:48 pm

#38 Kingkouros6969 on 02.26.18 at 6:28 pm
Can someone explain to me how this works:

A person buys a 1m home and puts a downpayment of 100K. They take on a mortgage of 900K.

For 5 years everything is rosy. When they go to their bank to refinance, the bank informs them that their home is worth half of what it was worth (500K). Doesn’t everything just stay the same? The person pays the new interest rate like before on the remains of the 900K mortgage?

Why does the bank want a lump sum payment? Pardon my lack of knowledge.
*****
Because they can only borrow based on the new appraised value of $500k – maximum they can borrow is $475,000 with 5% equity. That means they would need to pay lump sum to bank that is the difference between the $475k and their outstanding mortgage. If my math is right they would have to come up with $425,000 to bring the mortgage in line if their outstanding is $900k. That is scary.

#82 ANON on 02.26.18 at 7:53 pm

Obviously we don’t have this money. Any clue or advice?

Promise someone to give them back 200k later on, if they give you 150k now. Please, keep the system working, you’re our only hope. You could do it before, you can do it now!

#83 Mike in Toronto on 02.26.18 at 7:54 pm

#76 AB Boxster

“Does the bank not bear some responsiblity for lending so much on obviously overpriced real estate?”

No, the CMHC insures against this. The bank renews the $900k mortgage for the $500k house. The only downside for the owner is they can’t shop around for mortgages.

Moral hazard, paid for by everyone else.

#84 Mattl on 02.26.18 at 7:59 pm

That Seaward house has an assessed value of 1.2, and has comps in the area are in the 1.2-1.4 range. Hasn’t sold in 3+ years so was likely purchased in the 600-700k range. Maybe a lot less if the owner has held for 10+ years. Almost for sure a huge tax free win if it sells for 1.2.

No one acting in good faith would claim that a home that will likely net a huge tax free profit is in fact a huge loss for the owner because they didn’t get 5.3MM for their home that in no market ever would have sold for more than 1.5MM.

As an aside, VW owners will be happy to hear that Golf Wagon sales are on fire. We just listed our car for 4000 and it sold for 15K. Clear evidence that Golf Wagons are in HUGE demand right now. Unfortunately for my neighbor, he is learning the hard way that F150 sales are down. He listed his 2015 F150 for 125K and only got 35K. Tough time to be a a Ford owner these days.

#85 Yorkville Renter on 02.26.18 at 8:01 pm

Extend and pretend time for Davisville Momma… It certainly sucks.

Unlike Garth, I expect at least 40% off homes in even great 416 hoods, especially compared to April 2017 prices… if you go back to 2005 and calculate growth at the historical average, 40% off isnt that much – it’s closer to 60% off.

Patiently my family waits…

#86 Mark on 02.26.18 at 8:11 pm

” If he could hang on to that place then (by his fingernails) with zero financial savy…. hopefully most people today will do the same.”

Only the most egregious examples will go to foreclosure. The rest will suffer 10-20 years of paying the mortgages and accumulating no equity. While their responsible counterparts, those who listened to the advice as dispensed by people like Garth, will benefit disproportionately from the economy returning to returns being expressed in other asset classes.

The situation of nearly the entire economy’s growth in valuation, money supply, etc., being vested with homeowners, is historically highly unusual. The TSX, dead money for a decade, may actually start to come back to life.

#87 Guillaume on 02.26.18 at 8:15 pm

#66 Dinner
I see a woman holding a goat in the Instagram photo on the right hand side of this smelly blog. Please don’t tell me this goat is going to be another victim of that terrible pet adoption situation where the pet ends up on the dinner table!??
http://www.cbc.ca/news/canada/british-columbia/molly-the-pig-1.4550000
————–
Huge load of debt may have generated that, even broke People need to eat, hopefully they won’t be looking for dogs when there will be no more pigs or goat pets at the SPCA…….
Thanks Mr Flop, I don’t always pay full attention to each of your post but they are full of matter ! Simple curiosity, I remember you told you were an immigrant, where from ? Regards,

#88 45north on 02.26.18 at 8:17 pm

Nonplused: Because the BC market is so far stretched, particularly Vancouver, stories like the above might become quite commonplace, with 2 or 3 years worth of take home pay just going “Poof” when it’s time to refinance. How many people are going to be able to withstand that? They are in debt up to their eyeballs as it is.
I see many tears ahead, followed probably by new government rules forcing banks to refinance the renewal principle even if the various tests cannot be met.

there is the idea that government would force banks to refinance bad loans . So far the Dippers have not talked about it but it’s there in the changes they have put in place in BC.

“if prices in Vancouver drop 25%, then one quarter of all households with mortgages go into negative equity.” this would pretty much guarantee that the delinquency rate would increase by a factor of 10. Which fact the banks would instantly recognize and they would react by withdrawing credit.

this is the hidden agenda – a frontal attack on banking

#89 Lost..but not leased on 02.26.18 at 8:20 pm

#35

The guru speaks..Garth

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

Yes grasshopper…..

……if you can snatch the ETF from my hand.
….give or take the odd TFSA…
…….maybe throw in an RRSP or two.

#90 Vanreal on 02.26.18 at 8:20 pm

Hmmm. There’s something fishy about this story. What idiot would only lock in for a year when higher interest rates were predicted a year ago. If they locked in for more than a year then the banks could not reopen the loan. Also they could go to a credit union and not have to deal with the mortgage stresstest.

#91 Bob on 02.26.18 at 8:21 pm

Well, we have finally arrived. Lash yourself to the mast as we turn into the teeth of the storm….

This housing meltdown is going to be epic. Too bad, because it will hurt the country financially and emotionally.

#92 Sean on 02.26.18 at 8:23 pm

So I wonder where the prices will level out too. They haven’t gone down as much as we thought they would, yet.

East Toronto has had many listings in the 6-700 area but they aren’t selling for that. Most get bid up over 800. Yes priced really low to start but still going for much more, these are small 2 bedroom bungalows.

Not many listings yet. Should be very interesting when the amount of them listed goes up over the next couple months.

#93 SoggyShorts on 02.26.18 at 8:31 pm

#56 ImGonnaBeSick on 02.26.18 at 6:56 pm
Wth is happening in this world that someone can’t send their thoughts and prayers to someone else?
************************
The phrase “Thoughts and prayers” has become a bit of an eye-roller, if not a total joke.
In the US there was a mass shooting every 27 hours last year, and every single time people sent “Thoughts and prayers”
5 months after the hurricane several areas of Puerto Ricostill have no power, despite all of the T&P everyone has sent.

“Prayer: How to do nothing and still think you’re helping”

I’m not trying to tell you there is no God, but if there is, I don’t think He works like you think he does.

#94 Reynolds531 on 02.26.18 at 8:33 pm

So what happens when the bank holds a note on a much less valuable house? If the borrower doesn’t pony up the cash for the shortfall?
Jack up the rate on renewal? Foreclose? Make soccer mom work as a teller on the weekend?
Doing anything to squeeze the borrower also hurts the bank. Reduces the likelihood that they see all principal and market interest back..

#95 oncebittwiceshy on 02.26.18 at 8:33 pm

Vanreal: “What idiot would only lock in for a year when higher interest rates were predicted a year ago.”
<<<<<<<<<<<<<<<<<<<<<<<<

The thousand of idiots that could only buy their dream homes with the lowest possible mortgage rate. Best discounted rate last year was under 2% for a one year closed.

You seem to have forgotten that NOBODY actually believed that interest rates were going to go up. Read last years blogs for confirmation of that. lol.

#96 Stone on 02.26.18 at 8:34 pm

#46 april on 02.26.18 at 6:40 pm
We’re curious to know when condos in the Lower mainland BC will start their decline.

———

Clairvoyants are in aisle 3.

#97 Lost..but not leased on 02.26.18 at 8:35 pm

#39 YVR comment..

Playing Devil’s advocate..what is so sacred about the Movie Industry and Tax credits ?

Why does Tinseltown feel that it is owed $pecial privilege$ as opposed to any OTHER industry?

Rather tired of these overpaid (i)Thespians and (ii)support cast holding various Gov’t jurisdictions to ran$om/ extortion.

Maybe think about producing QUALITY worth viewing versus regurgitated overpriced overhyped crap.

#98 Stone on 02.26.18 at 8:36 pm

#53 For those about to flop… on 02.26.18 at 6:53 pm
Here is the 73% discount house…

M43BC

10700 Seaward Court, Richmond,

2017-01-30 : $1,488,000
2016-10-20 : $1,538,000
2017-12-12 : $1,588,000
2018-02-16 : $5,880,000

https://www.rew.ca/properties/R2240652/10700-seaward-court-richmond-bc

———

Context is everything. Thank you.

#99 crdt on 02.26.18 at 8:40 pm

I wonder how much she was coached to over bid? Maybe $150,000? Must be awesome losing over $12K monthly, so far, and this has just begun…

#100 Stone on 02.26.18 at 8:46 pm

#79 Sideshow Rob on 02.26.18 at 7:46 pm
There will be a huge bull market in down and out trophy wives next year. Watch out for those smiling predators.

———

That would make a great tv series. I bet the ratings would be through the roof as watching other people’s misery is always a winner. The Real Ex-Housewives of…Davisville?

#101 mathman on 02.26.18 at 8:48 pm

This is going to start happening in spades – folks that pulled every penny out of their house to buy stuff will have a rude awakening at renewal time.

Banks do not want to foreclose, so will let you continue to pay the mtg on a debt that is more than the house is worth for as long as the owner is dumb enough to do that.
Foreclosure is a last resort and is very expensive for the bank, these costs cut into the loss so they would prefer to avoid.

I will continue to disagree with Garth, the 416 will get a 40% haircut. If I owned a place in the burns with less than 30% equity today, I’d be selling tomorrow…these places are toast.

Home prices and the cost of money are inversely related.

I’ve noticed an awful lot of folks brownbagging and bringing their own coffee to work, have we passed a tipping point in the GTA?

Math

#102 Mark on 02.26.18 at 8:53 pm

“Hmmm. There’s something fishy about this story. What idiot would only lock in for a year when higher interest rates were predicted a year ago. If they locked in for more than a year then the banks could not reopen the loan. “

Read the fine print of most of the ‘fixed’ mortgages these days. Not only do they almost universally have clauses ‘requiring’ pristine maintenance, but most of them also have clauses allowing the bank to deem loss of value, and requiring payment into equity.

In other words, fixed rate mortgages are a complete scam in Canada and aren’t worth the paper they’re printed on. The banks can effectively call them at their option, as almost nobody pristinely maintains a property (especially not someone in a weak equity position), and loss of value is entirely subjective and is in the opinion of the bank.

As far as rates go, as I said last year, spreads are going up, but actual benchmark or policy rates may go down. This will help bank profitability immensely and may very well drive the banks to 1990s-like returns going forward.

#103 Black Sheep on 02.26.18 at 8:54 pm

Patrick’s playlist, on repeat

https://youtu.be/vjfbudp998o

#104 Stone on 02.26.18 at 8:56 pm

#90 Vanreal on 02.26.18 at 8:20 pm
Hmmm. There’s something fishy about this story. What idiot would only lock in for a year when higher interest rates were predicted a year ago. If they locked in for more than a year then the banks could not reopen the loan. Also they could go to a credit union and not have to deal with the mortgage stresstest.
———

Delusion and denial is their modus operandi. They all think they’re smarter. Trust me…the example in this blogpost is for real. I see it daily. Would you like to know how many homeowners are still in a variable rate? There is not a set of Depends on the planet large enough to contain the crapola that is coming for those fools. They are many and plentiful. Best comparison is a zombie apocalypse.

#105 Mean Gene on 02.26.18 at 8:58 pm

If this story is true, then somebody is about to hear from CHMC looking for at least $150,000 bucks or more.

#106 Stone on 02.26.18 at 8:59 pm

#94 Reynolds531 on 02.26.18 at 8:33 pm
So what happens when the bank holds a note on a much less valuable house? If the borrower doesn’t pony up the cash for the shortfall?
Jack up the rate on renewal? Foreclose? Make soccer mom work as a teller on the weekend?
Doing anything to squeeze the borrower also hurts the bank. Reduces the likelihood that they see all principal and market interest back..

———-

Depends on who blinks first. By the way, the bank doesn’t have eyelids. Or eyes.

#107 Federal Budget! on 02.26.18 at 9:00 pm

Huge new tax on the upper 1%ers tomorrow in Bill Moreneau’s budget?

#108 broader mind on 02.26.18 at 9:01 pm

Banks will keep the little fishes swimming on the hook. There wont be any catch and release going on at this party. No appraisals , just sign the new and improved rate and make the payments. Bank earnings exploding . House values irrelevant, lots of money loaned out with the meter running faster and faster. People in Canada will not be able to walk so they will continue to make payments.Totally boxed in.

#109 Frey on 02.26.18 at 9:01 pm

For Those About to Flop, your reason for posting what you post was quite sweet and I apologize for being so mean spirited yesterday.

#110 Mark on 02.26.18 at 9:01 pm

“So what happens when the bank holds a note on a much less valuable house? If the borrower doesn’t pony up the cash for the shortfall?
Jack up the rate on renewal? Foreclose? Make soccer mom work as a teller on the weekend?”

Anything that’s at risk at the big-5 lenders is CMHC subprime mortgage insured. So they’ll keep jacking up the rates as much as they can, and if the arrangement fails, they just let the loan default and CMHC makes them whole.

There’s no economic incentive whatsoever for the banks to ‘work’ with borrowers to maintain them in their houses or making payments. In fact, with rising interest rates, the banks may actually have a strong desire to foreclosure, collect the CMHC proceeds, and re-invest them in more desirable stuff. In essence, the same CMHC subprime insurance that ‘helped’ a financially weak family buy a house, may very well ‘help’ the bank rapidly foreclose upon such instead of considering the calculus of loss that your post described.

#111 emili on 02.26.18 at 9:05 pm

#94 Reynolds531 on 02.26.18 at 8:33 pm

So what happens when the bank holds a note on a much less valuable house? If the borrower doesn’t pony up the cash for the shortfall?
Jack up the rate on renewal? Foreclose? Make soccer mom work as a teller on the weekend?
Doing anything to squeeze the borrower also hurts the bank. Reduces the likelihood that they see all principal and market interest back..

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

For CMHC insured homeowner loans approved through emili, in the event of a claim, CMHC will pay 100% of eligible claims costs*. CMHC’s on-line claims submission system, emiliCLAIMS, provides a fast, simple and secure way to submit homeowner claims. 

https://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/declprsa/index.cfm

#112 Hawk on 02.26.18 at 9:06 pm

I have yet to see a time in life when anything good in a society ever came out of government intervention………I won’t hold my breadth.

#113 Dog in The Fight on 02.26.18 at 9:07 pm

My wife and I looked at a $2.9 million dollar new build in Coquitlam. Really nice location and beautiful finish. Wifey really liked it. If I can buy it for $2.0 million it’ll be a done deal. Not holding my breath though.

https://www.zolo.ca/coquitlam-real-estate/846-rondeau-street

#114 young & foolish on 02.26.18 at 9:07 pm

“Meanwhile stock market are recovery rapidly”

That’s the world economy is growing story.

Well, that’s one narrative. Another is that there really is no inflation (how could there be if people are in debt up to their eyeballs and have scant savings, and in Europe young people can hardly find a job). And all those corporate “profits” are just the result of Fed bank money pumped into the system.

Either way, we don’t seem to have a choice but to play ball.

#115 Dog in The Fight on 02.26.18 at 9:09 pm

Sorry it was this one. Not sure what we’ll do with the WOK kitchen, guess I will have learn to cook different.

#116 Adrian on 02.26.18 at 9:13 pm

“Banks have every right to determine the value of the property at the time of renewal…” -Garth

It’s a little dicey to say that banks “have every right” when the banks themselves can, by turning on or off the lending taps, determine price changes:

“Canada Change in Household Credit and Change in House Prices”
http://www.profstevekeen.com/data-on-credit-employment-and-house-prices/#Canada

#117 SimplyPut7 on 02.26.18 at 9:21 pm

If more anecdotes like these become public knowledge wouldn’t buyers stay away from the housing market, in fear they may not be able to renew the mortgage for the full outstanding balance.

Which would then cause housing prices to spiral downward, increasing the number of people calling the shady mortgage broker to help them get a loan from the MICs for twice the interest the big banks were offering.

Wait until all of the condos being built in YVR and GTA are completed and the speculators need to qualify for financing under B20.

This should get interesting.

#118 Ronaldo on 02.26.18 at 9:25 pm

#29 Don’t Believe The Hype on 02.26.18 at 6:16 pm

This feels like a disaster in the making. $150K lower value for that house they bought last year PLUS a higher mortgage payment is waiting for that Davisville Mom. If they can’t refinance, they may have no choice but to sell, and lose a massive amount of equity in the process. Ouchie. Meanwhile markets were up big today….
————————————————————–
Wondering if Mommie and Daddie got them into it to begin with and whether they will step forward and throw another wad of cash into the place to keep the kids from walking away. Has happened before in situations like this.

#119 Mark on 02.26.18 at 9:31 pm

“It’s a little dicey to say that banks “have every right” when the banks themselves can, by turning on or off the lending taps, determine price changes”

Its the classic banker scam. Inflate the value of assets through lending, and then deflate the assets by withdrawing the lending. The bankers (and their backers) thus acquiring the assets.

Worked great in the 1990s when the owners of the banks received so much return from their ownership of bank stock that a mere 25% downpayment, invested in bank stock (or the broader TSX) in 1990 grew, by ~1998, to be enough to buy a home outright, in cash. The average Canadian big-5 bank stock quadrupling in value.

#120 ImGonnaBeSick on 02.26.18 at 9:31 pm

#93 – SoggyShorts: thanks for the peek into the minds of rabid tweeters… Amazing that the generation that cries victim for every possible thing turns out to be the biggest bullies/intolerants of them all. Zombie apocalypse can’t come soon enough…

#121 Bobo on 02.26.18 at 9:35 pm

Last year my wife and I had to get a small mortgage (240,000) on a newly built house we built. The house appraised at 1.2 mil. Even with a net worth of 4 mil it took 2 months of going back and forth with the bank (green) to get the approval. That was before the stress test! – took a one year closed at 2.99 want to renew this Aug but may have look elsewhere. Crazy !!

#122 KLNR on 02.26.18 at 9:36 pm

@#101 mathman on 02.26.18 at 8:48 pm
…I’ve noticed an awful lot of folks brownbagging and bringing their own coffee to work, have we passed a tipping point in the GTA?
________________________
I started doing that this year, not because I can’t afford it though. Just tired of paying $4 for a coffee and $12 for lunch. Saving a few hundred a month and eating a hell of lot healthier now. cut down on restaurants in general, prices have reached a point where a lot of folks are thinking twice about spending the $$’s regardless of whether they can afford it or not.

#123 Andrew Woburn on 02.26.18 at 9:38 pm

Garth has advised many times that variable mortgage rates are based on Canadian bank rates but fixed mortgage rates relate to bond interest rates primarily determined in the US. Garth also advises that US bond interest rates are likely to rise significantly this year.

As the horror stories like the Davisville mom spread, I foresee a rush to get out of variables and into fixed.
It seems to me that anyone who thinks they could be facing an equity shortfall on renewal should bite the bullet now and try to roll into a five year mortgage ASAP before rates go up and equity falls more. The fees will hurt but not as much as the pain of being late to this party.

#124 VicPaul on 02.26.18 at 9:40 pm

#72 TS
Davisville Mom should be able to make $150,000 through car dates off backpage in 5 years.

Just think happy thoughts…..
——–
Happy thoughts….or happy endings?

#125 For those about to flop... on 02.26.18 at 9:41 pm

#109 Frey on 02.26.18 at 9:01 pm
For Those About to Flop, your reason for posting what you post was quite sweet and I apologize for being so mean spirited yesterday.

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

Apology accepted.

We’re fine.

While other people on the blog hypothesize as to what’s going on in Vancouver real estate,I try to show what’s happening with verifiable evidence.

It’s not a subject on the blog everyone is interested in and I know a large number of people just scroll by.

Fine by me.

That said,I think you might have seen that there is a group of people interested and some of them help me report.

For me it’s all about sharing information and contributing something to the blog in my own unique way…

M43BC

#126 A123 on 02.26.18 at 9:44 pm

A few blogs back you mentioned Toronto and Vancouver house prices wouldn’t budge even in a crash. It’s more about Windsor and Hamilton etc

I said don’t expect urban 416 or 604 to lose 40%, but the burbs could be slaughtered. – Garth
——-
It is 416 and 604 that are overpriced and unaffordable. These are the homes that people have overextended themselves and won’t be able to pay when rates go up. These will also be stress tested . Remember those examples of dumps that you quoted on your blog last year that were selling for $1M . I can see these dumps depreciating big time.
Houses outside of 416 were more affordable and people may be able to bear the rise in rates, and thus less defaults.

#127 DON on 02.26.18 at 9:47 pm

“When it comes to Vancouver real estate, millennials don’t appreciate comparisons to the 90s
Empathy gap between homeowners and renters is growing and telling folks to consider the suburbs rarely helps”

http://www.cbc.ca/news/canada/british-columbia/vancouver-real-estate-90s-ballance-1.4553070

Garth – Batten down the hatches. This wave of disgruntled Millennial is on the way and SCM is at the helm. Take cover!

#128 Fake News Again on 02.26.18 at 9:48 pm

#39 YVR Comment on 02.26.18 at 6:28 pm
We might blame the BC NDP for crashing the real estate market, however BC Liberals have had there own share of screw-ups.

I run a small business in Vancouver, we sell professional video equipment and company employs 7 people. Back 2009-2010 when preparation for Vancouver Olympics were in full swing and the economy was doing just fine. Out of the blue BC Liberals decided to remove all the tax credits given to the film industry without realizing its potential effects.

______

Please explain to us why your biz should get subsidized but Bob’s biz or Sally’s biz or Frank’s biz or Amandeep’s biz or Tony’s biz….do not.

And the word’s “because of the jobs” excuse is not an excuse.

#129 DON on 02.26.18 at 10:03 pm

#19 FOUR FINGERS WATSON on 02.26.18 at 6:01 pm

Banks calling for large sums like the 150k mentioned above will collapse the entire “ house of cards “ housing market. I doubt that will happen, there is too much to lose, so the PTB will step up and not allow it.
**************************

Just like they did in Spain, Ireland, and the headquarters of the PTB…the US.

#130 M on 02.26.18 at 10:05 pm

..I won’t comment about the single women with a mortgage. I date enough of those so I can write a book non-publishable in Norte Gringo Land.
..my pseudo existential question is …in which way Gringo North will not utterly collapse considering that mortgage industry is structurally sub-prime (i.e. periodic renewable) and the effects of up to 25% down payment are negligible when house price gets a 28% dump and there is no cash in the kitty to come up with the difference when time to re-mortgage comes ?
Considering that 70%++ of the Canadian economy IS real estate via HELOC consumption, it’s enough for 4% of the last 5years owners to be underwater to have a prompt criticality event ending in a melt down.
..the above mentioned example does exist in “lower” markets too i.e. Montreal

..the mantra “will be no housing crash in Canada” should be read “it WILL be a housing crash in Canada” unless the laws of economics are suspended overnight.

What this will do to Canadian Pesso is anyone’s guess… but is an amazing business opportunity.

#131 Observing on 02.26.18 at 10:14 pm

Garth, after a long day of work I really enjoyed reading this post. It almost feels like the tide is turning. It sure feels great to be on solid footings. I heeded your advice and now am ahead because of it. Thank-you.

Life is stressful enough, I can only imagine what this correction is going to do to families and relationships.

#132 guru on 02.26.18 at 10:15 pm

full B20 impact starts in mid-march. Spike in volume starts in the next few weeks to unprecedented levels. A lot of people simply don’t qualify and the approved amounts in the GTA would not allow them to purchase anything remotely close to the current prices…… Sales will plummet starting in mid-march and prices will be forced lower throughout this year. A few large chinese/middle eastern brokerages have already started unwinding their assignments/properties as the divert funds to better cash returns in other markets/assets. (Follow the smart money)

#133 thelastwhistle on 02.26.18 at 10:15 pm

correction on last post,
Garth

Doesn’t the new BC policy effectively guarantee that laundered money will flow from places like China into enclaves that are not subject to the restrictions like Whistler. This will cause massive economic disparity and rather than Balkanization, Ghettoization will occur, with middle/lower class folks crowded into the protected zones and wealthy Asian “elite” enclaves in resorts like Whistler. Eventually private security firms will be set up like in the US to keep ghetto residents out of the enclaves.

#134 Fake News Again on 02.26.18 at 10:21 pm

#113 Dog in The Fight on 02.26.18 at 9:07 pm
My wife and I looked at a $2.9 million dollar new build in Coquitlam. Really nice location and beautiful finish. Wifey really liked it. If I can buy it for $2.0 million it’ll be a done deal. Not holding my breath though.

https://www.zolo.ca/coquitlam-real-estate/846-rondeau-street

____

A typical BC cornflakes glue box on a 7000 foot lot for only 2.8 million !! What a deal !!

#135 Reynolds531 on 02.26.18 at 10:24 pm

I have idea how to quote a post from above!

So…if the banks are jacking rates on insured renewals if you can’t cough up the equity shortfall what is the best strategy then?

Do you pray you have enough in your rsp to place your mortgage in a self directed at the posted rate? I’d rather pay myself 8% and thumb my nose at the bank!

For clarity, I’m locked in for 4.5 years so already thumbing my nose at them…

#136 Reynolds531 on 02.26.18 at 10:25 pm

**I have no idea how to quote….or type.

#137 thelastwhistle on 02.26.18 at 10:28 pm

Garth

I smell a new Stepford wives-style reality show here, the Desperado Dames of Davisville. You could actually break into the reality show genre as the centrepiece role model in this(think Bruce Jenner before the sex change). The good guy financial advisor trying to talk the ladies down from the edge of the abyss while lounging around in your speedo budgie smuggler and sipping single malts in your tropical virtual office down on Bay Street. Off course, between practicing your putting stroke and practising a bit of karaoke in secret in your office, you are forced to come on line to see how the steerage comments section is going.

This could be yuge!

#138 Pete from St. Cesaire on 02.26.18 at 10:29 pm

Wondering if Mommie and Daddie got them into it to begin with and whether they will step forward and throw another wad of cash into the place to keep the kids from walking away. Has happened before in situations like this.
———————————————————————-
Yep, it will happen plenty. Can’t have their kids become a ‘failure’ now can they. Somebody will have to take the stress away from these ‘snowflakes’ or else they ARE going to walk. The last thing their parents want is to hear whispers from friends and neighbours; “did you hear so&so’s kids are back to renting again” or “I guess so&so’s girl wasn’t really making as much money as her father was telling us she was”.

M47QC

#139 Your Joking on 02.26.18 at 10:43 pm

#113 Dog in The Fight – You must be kidding me at $2 million. I have seen better for $320,000 on a 17,340 SF lot with landscaping and trees to die for.

#140 Long-Time Lurker on 02.26.18 at 10:59 pm

#195 Milly on 02.26.18 at 12:36 pm
Might be a stupid question…

But say, in a non-inflated real estate environment when buying is beneficial, how much of your portfolio should you liquidate to put a down payment on the place? Is there an interest rate threshold where it’s worth liquidating all of it? Or Is it better to keep some of that cash flow? It seems depressing to get rid of investments and put it all in a home just to start again.

Thanks :)

>Start at the end. I mean estimate when and how you want to retire then figure out how much money you can put into housing.

This is all suggestive. Do your own research or find an expert. I’m just a blog commentor.

These might help:

https://www.fool.com/retirement/2017/08/02/should-you-pay-off-your-mortgage-or-save-for-retir.aspx

Should You Pay Down Your Mortgage or Save for Retirement?

If you have a bit of cash each month to put toward your future, is that money best spent paying down debt or investing for retirement?

by Katie Brockman

…At the same time, it’s also wise to start investing for retirement as early as possible in order to take full advantage of compound interest. Investments tend to gain value exponentially, so every year you delay saving for retirement will set you back to a disproportionately large degree. Money invested now has much more value than the money you’ll invest five or 10 years from now.

This is where interest rates come into play. If you have an unusually high interest rate on your mortgage, then it makes financial sense to pay down that debt first. Because the stock market has historically gained about 7% per year, if your interest rate is higher than that, then you’re likely paying your lender more than you could earn by investing the money instead.

Now let’s assume that you only make the minimum mortgage payments and instead put that extra $188 per month into your retirement savings, rather than your mortgage payment.

Assuming you start with $0 in savings and earn an average of 7% per year on your investments, in 20 years you’d wind up with about $96,000 in your retirement account — about $45,000 in contributions and $51,000 in earnings. That only puts you slightly ahead of the $46,000 in interest you’d save by paying off your mortgage 10 years early. However, if you continued to invest that $188 per month until the end of your 30-year loan term, your retirement savings would swell to $221,000 — that’s $153,420 in earnings on top of your $67,680 investment. All in all, you’d come out $30,000 ahead by investing your spare cash, rather than using it to pay off your mortgage 10 years early…

…To sum it up, you can save more money in the short term by paying down your mortgage faster, but in the long term, you’ll likely come out far ahead by saving more for retirement. In any case, you certainly shouldn’t completely neglect your retirement savings while you pay off your mortgage. Even if you choose to repay your loan on an accelerated schedule, make sure you save something for retirement while you have time — and compound interest — on your side.

You can also play around with this:

Retirement Calculator

https://www.calculator.net/retirement-calculator.html

#141 morrey on 02.26.18 at 11:35 pm

(Every day this blog’s comments section contains more examples, thanks to the investigative work of one person.)
oh dear. You too are drinking the cool aid. Nothing posted by that dude is verifiable EXCEPT the current asking price. I have never ONCE seen the historical trends of which he pontificates about.

#142 Chelsea on 02.26.18 at 11:58 pm

Well, not too much happening in B.C., regarding prices, still being listed in the nose bleed level. But, a sprinkle of sales here and there. Same homes listed, and not seeing too many drops in asking prices. I suppose to early to see any correction, will have to wait until Spring. The speculation tax (.05%) information will be revealed. I know for certain we are glad we do not carry a mortgage. Over a long period of years renting we saved up to buy a decent, average (small) home to accommodate my husband and I and 2 loveable kitties … and got to plant our grape vines somewhere…

#143 For those about to flop... on 02.27.18 at 12:05 am

#87 Guillaume on 02.26.18 at 8:15 pm

Thanks Mr Flop, I don’t always pay full attention to each of your post but they are full of matter ! Simple curiosity, I remember you told you were an immigrant, where from ? Regards,

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

I’m from the land down under,down under…

M43BC

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

#144 Smoking Man on 02.27.18 at 12:13 am

Yes I’m talking to Jack again. The haze knows shit.

#145 JRT on 02.27.18 at 12:18 am

This article via link is exactly what most of the readers on this blog were warned and knew it would happen. Via Drudge Report-Canada’s most read news site.

https://www.cnbc.com/2018/02/26/rising-mortgage-rates-hit-new-home-sales-hard-a-bad-sign-for-builders.html

#146 Reade on 02.27.18 at 12:38 am

Garth when are you going to talk about what’s going to happen in cottage country. Surely a lot of those properties are going to be in trouble.

#147 joblo on 02.27.18 at 12:40 am

Wuz that now HGTV?
New Series Premieres Sunday, April 1st at 6pm e/p
Flop with Flop Kanada
hosted by none other than the infamous GF poster
For those about to flop…

#148 n1tro on 02.27.18 at 12:40 am

No wonder that davisville mom is underwater, her grammar like her finances is horrible!

#149 DON on 02.27.18 at 12:44 am

#123 Andrew Woburn on 02.26.18 at 9:38 pm

Garth has advised many times that variable mortgage rates are based on Canadian bank rates but fixed mortgage rates relate to bond interest rates primarily determined in the US. Garth also advises that US bond interest rates are likely to rise significantly this year.

As the horror stories like the Davisville mom spread, I foresee a rush to get out of variables and into fixed.
It seems to me that anyone who thinks they could be facing an equity shortfall on renewal should bite the bullet now and try to roll into a five year mortgage ASAP before rates go up and equity falls more. The fees will hurt but not as much as the pain of being late to this party.
****************

You may have spooked the herd, as the desire to get out first to lessen the pain. Could this be the tipping point?

#150 Go Kart Mozart on 02.27.18 at 12:44 am

Re: “Davisville Moms ”

That group name is sexist

#151 Dolce Vita on 02.27.18 at 1:28 am

To the consternation of many and as I have said repeatedly, we are witnessing the start of the:

Greatest Canadian RE Devaluation in History.

Good reading the RE denial posts today, typical (e.g., PTB will save us, seems suspicious to me, clairvoyance, not understanding that B20 is to protect the banks and people from themselves, etc.).

No one will save you. They never have historically and they never will especially not Big G, what with all the debt they are piling on.

Simple Bank Balance Sheet Math:

When Fixed Assets go down (their unsecured RE mortgage value).

Current Assets go up to offset the “down” (a.k.a., Cash Flow…from the Davisville Mom and all the RE Greater Fools like her, HELOC mavens, et. al.).

Bad news for the economy as jobs will be lost, retirement nest eggs decimated = consumer spending abated (along with paper RE millionaires that used to post here regularly but alas, unheard from in quite some time).

Good news for the economy as bad economic players will be purged from GDP for about a decade.

Creative Destruction. At work. Something new and better will emerge from all this…

#152 NEVER GIVE UP on 02.27.18 at 1:44 am

CONTRARY to other opinions on this blog
I think the NDP chose wisely and with solid advice from those who should know at UBC.

The following video is advice that the NDP almost certainly followed in forming the recent tax policy.
GOOD WORK!

https://www.bnn.ca/real-estate/video/should-foreign-buyers-be-banned-from-the-b-c-housing-market~1315398

It is time to end the financial rape of our young people.
Bring on the CRASH!

#153 Widening Gyre on 02.27.18 at 1:46 am

#1 For those about to flop…

Hey flop – a little birdie told me Millstream went for $4.39m.

Love your work Sir – keep it up :-)

#154 Frunk on 02.27.18 at 1:49 am

“Recent Sale Report Realtor Assistance Needed”

Dude – how can you care about this so much and be incapable of talking to a realtor? Seriously. Email one. Just one. They all give this info.

#155 NEVER GIVE UP on 02.27.18 at 1:49 am

#133 thelastwhistle on 02.26.18 at 10:15 pm
correction on last post,
Garth

Doesn’t the new BC policy effectively guarantee that laundered money will flow from places like China into enclaves that are not subject to the restrictions like Whistler. This will cause massive economic disparity and rather than Balkanization, Ghettoization will occur, with middle/lower class folks crowded into the protected zones and wealthy Asian “elite” enclaves in resorts like Whistler. Eventually private security firms will be set up like in the US to keep ghetto residents out of the enclaves.
==================================
Dont worry, with the stroke of a pen and a vote the boundaries can be extended anywhere that abuse is taking place.
Now that the NDP Government has shown its teeth. No one should doubt their resolve!

#156 NEVER GIVE UP on 02.27.18 at 1:51 am

Cant even believe my last 2 posts.
Only a few years ago I would have snarled at the mention of the NDP.

Now I am giving them a chance to not renew my hatred of them if they can keep their hands out of the cookie jar after being in power more than one term.

#157 NEVER GIVE UP on 02.27.18 at 2:03 am

#123 Andrew Woburn on 02.26.18 at 9:38 pm
Garth has advised many times that variable mortgage rates are based on Canadian bank rates but fixed mortgage rates relate to bond interest rates primarily determined in the US. Garth also advises that US bond interest rates are likely to rise significantly this year.

As the horror stories like the Davisville mom spread, I foresee a rush to get out of variables and into fixed.
It seems to me that anyone who thinks they could be facing an equity shortfall on renewal should bite the bullet now and try to roll into a five year mortgage ASAP before rates go up and equity falls more. The fees will hurt but not as much as the pain of being late to this party.

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

As Caesar would say before letting the lions out to kill. “Let the games begin”.

I am looking forward to seeing maximum financial decimation of the hysterical masses!

#158 Alie g on 02.27.18 at 2:28 am

The Seaward property listing was OBVIOUSLY a typo. $1,588,000 misprinted as $5,880,000. The Assessment is only $1,235,000. And frankly isn’t worth over $1M.
Blundell Road property is STILL idiotically listed. Assessment is only $1.5M. What is it? Shady realtor trying to hoodwink a sucker into thinking they’re getting a bargain because the asking prices has dropped 50% when in reality it is still listed about $800,000 too high?
Alpha Drive property was sold at the end of 2015 for $1,272,000 A’s a tear down, new house built in 2016. Then some poor schmo paid $2,600,000 for it three months ago. Clearly realizing now they over paid.
Broadway property was assessed in 2016 at $1,274,600 and in 2017 at $1,530,000 I don’t see a listing of $1.7M as a “panic” sale … it’s STILL too high for that POS on a small lot.

#159 jane24 on 02.27.18 at 2:29 am

Well this was what I was waiting for. Banks finally wising up and refusing to value homes at whatever crazy price was paid for them in a bidding war and taking a step back to assess true value. One of the main factors in the price run-up was the refusal of the big banks to properly appraise a home and stick to that value. CHMC should now insist that banks hold 20% of the skin in the game under a homeowner default. That would really ensure that appraisals are valid.

#160 Nonplused on 02.27.18 at 2:35 am

This guy Jordan Peterson is eating up the internet. He’s a Canadian psychologist who won’t do gender flexibility but mostly talks about other subjects.

Here is his take on why globalization can’t work as we currently envision it. To summarize, you are asking people who can’t even manage their own life or their families to run the world. They are too far disconnected from what they do to experience a feedback loop. Kind of like the NDP imposing draconian no-resident taxes. It’ll all seem good for a while when prices drop as they intended but they’ll be out of office when the SHTF.

Anyway: https://www.youtube.com/watch?v=IpXVoSZyHXM

#161 AGuyInVancouver on 02.27.18 at 2:40 am

#133 thelastwhistle on 02.26.18 at 10:15 pm
correction on last post,
Garth

Doesn’t the new BC policy effectively guarantee that laundered money will flow from places like China into enclaves that are not subject to the restrictions like Whistler. This will cause massive economic disparity and rather than Balkanization, Ghettoization will occur, with middle/lower class folks crowded into the protected zones and wealthy Asian “elite” enclaves in resorts like Whistler. Eventually private security firms will be set up like in the US to keep ghetto residents out of the enclaves.
_ _ _
Whistler, aka the Resort Municipality of Whistler, has always depended on outsiders and non-Canadians buying expensive real estate. Finding accommodation for the workers has always been a challenge but funnelling offshore money into it is less problematic than into our larger cities.

#162 SoggyShorts on 02.27.18 at 2:54 am

#120 ImGonnaBeSick on 02.26.18 at 9:31 pm
#93 – SoggyShorts: thanks for the peek into the minds of rabid tweeters… Amazing that the generation that cries victim for every possible thing turns out to be the biggest bullies/intolerants of them all. Zombie apocalypse can’t come soon enough…
***************************
If a tragedy happens, and someone “helps” with
“I’m sending you my thoughts and prayers”, and the response is
“Thanks for nothing”
I’m not sure that counts as intolerance or bullying.
https://goo.gl/images/YHei3v

M38AB

#163 Floppy on 02.27.18 at 2:59 am

E38th sold 1,285,000… would have brought 1.5 at peak

#164 Karma on 02.27.18 at 3:46 am

This is an interesting website for engaging in topical discussion:
https://www.kialo.com/

I bet SCM will go to town on it.

#165 Stockpicker on 02.27.18 at 4:17 am

Forced sales always start the tumble. Whether it’s divorce, transfer, death, job loss, sickness, court order or whatever. Forced sales are an early precursor of a cascading down cycle. Since 99% of all new originations were variable interest only paper, there’s going to be a shit show based on the massive number of renewal terms in the pipe for 2018….something like 80%.

Now I know you hate stock picking.. and as I said I wouldn’t post my last few picks…..but you would have loved to know I bought Cisco at $34……and it was $45+ last close. Oh well..6% p/a is way better the 30 in a week. Right? The other four I told you about are also going gangbusters. The last swoon was a great op to cult he on cheap stock. Much like real estate will be …. in about ten years. Bwahahahaha. I think differently, that’s what makes a market. Step up …… the answer to the problem is to make more money.

#166 Howard on 02.27.18 at 6:16 am

Liberals’ gender-based budget moving on equality in sports
http://www.cbc.ca/news/politics/budget-sports-gender-policy-1.4552805?cmp=rss

I would like the Liberals to address the gender inequality in the military, particularly on the front lines.

From there, they should address gender inequality in garbage disposal jobs. Don’t see many women hoisting up those bins.

#167 NoName on 02.27.18 at 6:36 am

Interesting, actually very interesting, it would be great to know are favesville mom’s busy or not.

In this paper we do something else: using data on more than 100 million births and focusing on within-year changes in fertility, we show that for recent recessions in the United States, the growth rate for
conceptions begins to fall several quarters prior to economic decline.

http://www.nber.org/papers/w24355

#168 John Dough on 02.27.18 at 7:43 am

Wasn’t the stress-test implemented to protect the government from a CMHC bailout ………

As stated. It is to protect systemically-important banks. – Garth

——————

I believe my credit is still good here, so I will respectfully disagree. Morneau got tired of hitting the bankers over the head with a well-thumbed copy of your book, and he knew he had to appear to do something until the NVCC rules fully kick in.

The CMHC worked as intended in reducing loansharking, until low rates caused them and the banks to become creative. Boardwalk REIT stated yesterday that 99% of their mortgages are CMHC insured. Who in hell let that happen? My boomer friends and I often speculate on who is buying all these houses. I think it is us.

Bankers read the fine print (see emili’s star, below), which will compel them to start culling their loan book of anything that has even a whiff of lax diligence. Don’t go near the water. Sharknado III is coming out soon.

[For CMHC insured homeowner loans approved through emili, in the event of a claim, CMHC will pay 100% of eligible claims costs*.

*Provided clear and marketable title to the property can be conveyed, the approved lender has conducted enhanced due diligence when requested by CMHC and there is no evidence of misrepresentation by the lender or their staff.]

OSFI, the bank regulator, is an independent quasi-judicial body. It does not take orders from the Chateau kid. – Garth

#169 crowdedelevatorfartz on 02.27.18 at 8:15 am

@#166 Howard

apparently you missed the CBC Socialism Report at 6pm.
Gender inequality in the budget may mean such things as redistributing federal money evenly like Sweden.
For example.
The budget for snow removal has been gender neutralized.
Sidewalks are plowed with the same amount of budget dollars as roads because more women walk than men.
Seems Vancouver has already caught on with their bicycle lanes…..
Last Friday it snowed almost 5 inches in Burnaby.
Sat morning the roads werent plowed but I watched a City plow clear the parking lot …….. of a Golf Course.

#170 john polito on 02.27.18 at 8:18 am

NOSTRADAMUS.

Dueling Banjos

Looks like a lot of Grand Canyon days ahead for commissioned Real Estate Agents. From the rim (top) it looks like a long, long way down. It will prove fatal if they don’t have a back up parachute, meaning rainy day money.
When you show up for your appointment to borrow a little hold you over coin from your old buddy, banker Bob, you will find that Bob has been let go. His replacement looks a lot like that Hell’s Angel dude, you know the one, hard as nails with the dead eyes. Yes, the same guy you used to see at the local Stripper Bar, great place to unwind in after a tough day at the office spooning clients .
You are now in the OK corral, the suns in your eyes and you are out of bullets meaning (cash). In the back ground playing softly , Dueling Banjos . Your worst nightmare is now about to begin as you come to the realization that the dead eyed banker is about to spoon you over the old proverbial rain barrel. Oh the horror of it all, just not fair.

#171 NOSTRADAMUS on 02.27.18 at 8:20 am

TEST

You passed. – Garth

#172 dharma bum on 02.27.18 at 8:22 am

#76 JSS

It is the husband I’d be worried for. Likely to be mid to late forties, bald and slightly overweight.
——————————————————————–

HEY! I resemble that remark!

https://www.youtube.com/watch?v=RrcXYn6HqX8

#173 Cheekmonster on 02.27.18 at 8:22 am

A123″ says Hamilton is way more “affordable” so they won’t correct as much as Toronto should. WRONG!!!!

——
Hamilton prices rose at a ridiculous percentage over the past 2 years just like Toronto.

And Hamilton has a High Crime rate, High taxes and lower quality city services, lower income, traffic on 403 and Skyway are terrible. For anyone considering buying in Hamilton go down to one of the malls (Jackson, Eastgate, Limeridge, the stores at the old CentreMall) then look around. Say to yourself, how in the hell do these people afford prices starting at 500k and go way up to a million for below average houses????

The builders in the Hamilton/Stoney Creek areas are mostly all crooks too.

Long story short, if Toronto prices go down so to will Hamilton. I think Hamilton is facing more of a crisis than any city in Canada. Get ready for the foreclosures!!!!

#174 Headhunter on 02.27.18 at 8:36 am

#122 KLNR
I started doing that this year, not because I can’t afford it though. Just tired of paying $4 for a coffee and $12 for lunch.

Therein is the rub! Just because you increase the price of something doesnt always equate to a increase in value.
I see this happening all over the place. 2 beers and a cheeseburger for lunch with tip run you $40-$45 bones.. Dont care how much $$$$ is in my blue jeans just not worth it anylonger.

#175 Fish on 02.27.18 at 8:41 am

Bank don’t like your money sitting, actually they
Are grumpy, and cutting hours of
business in open time, to walk in I guess they preparing for the robots

#176 Ex-Cowtown on 02.27.18 at 8:41 am

#166 Howard on 02.27.18 at 6:16 am
Liberals’ gender-based budget moving on equality in sports
http://www.cbc.ca/news/politics/budget-sports-gender-policy-1.4552805?cmp=rss

I would like the Liberals to address the gender inequality in the military, particularly on the front lines.

From there, they should address gender inequality in garbage disposal jobs. Don’t see many women hoisting up those bins.

++++++++++++++++++++++++++++++++

When you stop and think about it, The Soy Boy Pm’s government is rabidly sexist, racist and gender-ist.

Seriously, it is. It makes decisions based purely on sex, race and gender. This is the textbook definition of sexism, racism and genderism.

Nowhere in the calculation is the ability of the person considered. This is ever bit as racist as hiring only WASP’s for every available position. No different at all if you stop and think about it.

MLK would be turning in his grave with the giant step backwards that the “Progressive” movement has taken.

#177 LivinLarge on 02.27.18 at 8:48 am

“2018 has the potential to be the single worst year for residential real estate since the credit crisis.”…the worst year in a decade? Well, there has to be a “worst” in any time frame so this looks to be it.

Can you, me or Dupree do anything that will make a meaningful difference in how this plays out? So, why are we pull hair and gnashing teeth over stoooofff we have no control over?

#178 Tater on 02.27.18 at 8:58 am

#48 KLNR on 02.26.18 at 6:41 pm
So they bought last year and went with a 1 year term?
could have locked in for 5yrs at around 3%

—————————————————————-
Likely they borrowed the DP from somewhere or were “gifted” it by BOM&D. Plan was wait a year for prices to go up 20%, then refinance at 80% of the new value, and pay off the DP loan.

Stress test completely screws that up as they likely can’t qualify based on income and the falling prices mean their LTV is above 80%.

#179 Dave Ahem on 02.27.18 at 9:04 am

With a 70% homeownership rate and the crash you’re predicting, what is the political fallout? How angry is that 70%, who have ALL the money, going to be when their nest egg is destroyed. The last time housing looked this dour, we got 0% down and 40 year AM’s so Harper could get re-elected. Boomers own all the houses and their voter turnout is about 100%. How are they going to feel when they realize all of this is policy driven. Any thoughts?

#180 maxx on 02.27.18 at 9:08 am

“2018 has the potential to be the single worst year for residential real estate since the credit crisis. Yes, it comes after a decade-long romp as Canadians pigged out on borrowed money and were pushed by greed, house lust and FOMO into a buying frenzy and price excess.”

Great. It’s about time that value and potential were restored to cash and that bricks and mortar were repriced accordingly.

Far too many fools lose their ability to think critically and independently when it comes to re, which offers the irresistible prospect of bragging at cocktail parties or on stupid social blogs (present blog excepted). Fool’s money is not truly their own as it mainly gets moved around by the influence of give-away rates, realtards, and msm coupled with the marketing machine rather than their own determination and long-range view.

Many of us, but not nearly enough, spend our working lives focused on doing a decent job and retaining something of our efforts for the future. I used to think that this was what most people did and a few decades ago, it probably was more like that.

I now realize, since reading this blog, countless books and meeting with scores of bank and finance types, that those of us who now own their time, and by extension, their lives (at least to a greater extent than the average fool) are almost freakish. If the axis of money indicates that at zero, one has neither assets nor debt, then the spread between the haves and have-nots is stark indeed……and widening……especially now that cb’s globally are pushing to restore the value of currency. It is obvious that fools absolutely must be forced to realize that they are drowning and taking the wider real economy with them – because they can’t truly think for themselves.

“They have a big house, luxury car, robot vacuum cleaner and take 5-star luxury vacays, so WE get to do that too. WE’LL show them.”

People are incredibly dumb, and just when you thought they couldn’t possibly do anything more stupid, another gob-smacking head-shaker comes along. No wonder realtards made so much lucre.

There has never been a better time to rent whilst this fubar works itself out of the system and if it doesn’t, real economies worldwide will never perform at peak – they will continue to slide mostly sideways, with Franken-bubbles messing with the forces of economic gravity, keeping the VIX up, up and up.

The irony of the past nearly 4 decades is that, when money was actually worth something, many more people seemed to have it. Now, this is the exception to the rule and hordes of people are heading into retirement empty-handed, or nearly so, having been lured into overspending by realtards and FIRES’s army of merry, koolaid quaffing twits.

I know too many people who are in absolute panic mode because they haven’t nearly enough to live the retirement life they felt they were entitled to have when they were working stiffs. Many will be spending their final years looking for cut-price everything and playing the lottery, hoping for fiscal salvation. This freaks me out, as cb’s and government have now engineered a perfect storm of huge economic inequity and retiree needs, both coming together at the worst possible time in history.

I used to empathize with many over-spenders and debtors, but that has been greatly tempered since the gfc, when I realized that so many who spent like drunken sailors, went totally nuts with near ZIRP, and not so much as a nod to the future of their finances.

Tough noogies. Sort your own sorry butts out. Society at large has no business paying for dumb-a$$ behaviour. Banks are now in hyper-vigilance, because so much risk abounds, on the quality job front as well as that of rising rates. They already have a great deal of intelligence on the actual quality of borrowers anyway.

They just didn’t pull the plug earlier because rates were so stupidly low.

#181 NYCer on 02.27.18 at 9:18 am

Questions I have:

1) Why is the Davisville required to renew her mortgage and how did the value fall below assessed by $150k if the peak was 1 year ago in April?

2) I have read reports on the number of mortgage holders renewing in 2018 (40%?) seems high. Do we know how many of those are using 2, 3, 4, or 5-year terms and HAVE to renew?

3) For those who HAVE to renew, I always assumed most are 5-year terms, surely the value today is still much higher than 5 years ago or heck even 3 years ago, so they wouldn’t be underwater yet correct?

#182 Stan Brooks on 02.27.18 at 9:20 am

Great day, the 2018 budget is crafted, a state of art design by our progressive government of fairness.

https://ca.finance.yahoo.com/news/paternity-leave-deficit-cybersecurity-expect-200544815.html

Equal pay in government based on seniority is pretty interesting, no matter the position/responsibility you get paid equally between genders! yay!

Turning the tide on economic woes, easing the loonie on its way to …. nothing.
Rosie sunny skies ahead.

and then ….. you run out of pot.

#183 Tater on 02.27.18 at 9:47 am

#60 Joe on 02.26.18 at 7:04 pm
A few blogs back you mentioned Toronto and Vancouver house prices wouldn’t budge even in a crash. It’s more about Windsor and Hamilton etc

I said don’t expect urban 416 or 604 to lose 40%, but the burbs could be slaughtered. – Garth
—————————————————————-
If the burbs get slaughtered, the core won’t be saved. We will definitely see a 40% decline from the peak in the 416. We’re already halfway there.

#184 John Dough on 02.27.18 at 9:57 am

OSFI, the bank regulator, is an independent quasi-judicial body. It does not take orders from the Chateau kid. – Garth

They are all looking at the same fish bowl together.
I happen to know Pancho Villa, we had lunch together …… an oldie but a goodie ;-)

#185 IHCTD9 on 02.27.18 at 9:58 am

#176 Ex-Cowtown on 02.27.18 at 8:41 am
#166 Howard on 02.27.18 at 6:16 am
Liberals’ gender-based budget moving on equality in sports
http://www.cbc.ca/news/politics/budget-sports-gender-policy-1.4552805?cmp=rss

I would like the Liberals to address the gender inequality in the military, particularly on the front lines.

From there, they should address gender inequality in garbage disposal jobs. Don’t see many women hoisting up those bins.

++++++++++++++++++++++++++++++++

When you stop and think about it, The Soy Boy Pm’s government is rabidly sexist, racist and gender-ist.

Seriously, it is. It makes decisions based purely on sex, race and gender. This is the textbook definition of sexism, racism and genderism.

Nowhere in the calculation is the ability of the person considered. This is ever bit as racist as hiring only WASP’s for every available position. No different at all if you stop and think about it.

MLK would be turning in his grave with the giant step backwards that the “Progressive” movement has taken.
_______________________________________

I think Trudeau’s tenure as PM will turn out to be the worst thing for the Canadian fertility rate since the pill.

There are already many reasons not to produce offspring in this country, now Trudeau is adding one more, forcing prospective parents to ask themselves:

“What happens if we have boys…?”

#186 IHCTD9 on 02.27.18 at 9:59 am

#175 Fish on 02.27.18 at 8:41 am
Bank don’t like your money sitting, actually they
Are grumpy, and cutting hours of
business in open time, to walk in I guess they preparing for the robots
_____________________________________

Something’s going on, I’m on [email protected] #3 in less than 2 years.

#187 Fish on 02.27.18 at 10:04 am

I hope the budget will stick to the facts with NO mixup, likeRIGHT OFF RAILS,
let’s just hope they could almost handle 2 things, at the same time,

#188 maxx on 02.27.18 at 10:25 am

#8 Squatre Dame on 02.26.18 at 5:52 pm

“#196 Stan Brooks on 02.26.18 at 12:53 pm
You won’t find this in a Canadian newspaper.

https://economictimes.indiatimes.com/news/politics-and-nation/why-justin-trudeaus-india-tour-turned-out-to-be-a-diplomatic-disaster/articleshow/63059621.cms
Speaks volumes on the state of democracy/or the lack of such.
************

That’s because the author writes for the Toronto Sun. It is understandable that Trudeau couldn’t pick one bad guy out from a population of 1.3 billion people…….”

Horse feathers. Stan has a great point. This India trip was his worst – so far – in a long series of OMFG national embarrassments. Mr. Dressup mangled the whole affair from beginning to end, anniversary of Canadian confederation and all.

Modi had more time (and affection) for the kids when they FINALLY got to meet him.

Yet another leviathan waste of taxpayer (including most especially MIDDLE CLASS) dollars.

So it’s not simply a journalist who “writes for the Toronto Sun” who is laughing out of their nasal passages……..that unique note is a thunderous chorus that echos around the world on Youtube, msm, social media and last but not least, global halls of power…..of ALL stripes.

Check it out – there are masses of it. Masses.

Any attempt to spin this mamma is not only stupid, it’s futile.

#189 IHCTD9 on 02.27.18 at 10:43 am

#174 Headhunter on 02.27.18 at 8:36 am
#122 KLNR
I started doing that this year, not because I can’t afford it though. Just tired of paying $4 for a coffee and $12 for lunch.

Therein is the rub! Just because you increase the price of something doesnt always equate to a increase in value.
I see this happening all over the place. 2 beers and a cheeseburger for lunch with tip run you $40-$45 bones.. Dont care how much $$$$ is in my blue jeans just not worth it anylonger.
______________________________________

Yep, it’s the same human nature that produces the Laffer Curve with taxes. There is a line in the sand were folks say “not worth it” and don’t come back.

I’m a shameless bastard when it comes to cutting my expenditures. I don’t care what anyone thinks, or what it looks like.

The 4 of us went out to dinner last week, I shared a pizza with my youngest, 2 bottomless pops shared by 4, no booze. Go ahead, – give me some grief about it!

Wife went to a get together with co-workers, dinner and a movie. A glass of beer was just under 10.00. Yep, small town, chain roadhouse, almost 10.00 for a glass of beer. Probably was a draught too.

Honestly though, it’s the taxes I enjoy paying less of the most.

#190 For those about to flop... on 02.27.18 at 10:56 am

You can bank on it…

M43BC

“The Biggest Banks for Your Buck in Every State.

Socking away money for an emergency fund is one of the first steps to building a financially secure future. Most experts recommend keeping these dollars immediately available, and a savings accounts provides the liquidity to access the cash on a moment’s notice. So which banks have the most deposits on hand? Figuring out the answer to that question led us to create our new map.

We adopted a list of the largest banks in each state from GOBankingRates. First, GOBankingRates figured out the largest bank headquartered in each state. Then, we color-coded each one according to each bank’s deposit size within that market—green have high deposits over $50B, but pink states have comparatively small figures, as low as under $1B. We then added the logo of the bank in question.

It is important to pause and consider GOBankingRates’ methodology in putting the data together. They looked at official FDIC documents to find the headquarter location and deposit totals from 2017, which can often be different from what one might expect. For example, Wells Fargo has its world headquarters in San Francisco, but the bank’s U.S. operates are actually headquartered in Sioux Falls, SD. Same thing goes for Charles Schwab—the investment company is located in San Francisco, but the bank is kept separately in Nevada. And if you watched the Super Bowl, you know U.S. Bank is associated with Minneapolis.

All that being said, there are several interesting surprises in our map. For example, Northfield Savings Bank in Vermont ($681.7B) stands out far and above as the largest bank with the most deposits inside a single market. That’s not a typo—a savings bank nobody’s heard of almost triples the deposits of Wells Fargo. And yes, we double checked the numbers. Wells Fargo is far away in second place with its U.S. headquarters in South Dakota ($264.9B), followed by Bank of America ($171.9) in North Carolina as a distant third place.

In terms of general trends, our map demonstrates how almost none of the states with a large bank (over $50B in deposits in a single market) are located in the Midwest. The two exceptions are U.S. Bank which controls the top spot in Ohio ($62.4B) and Wells Fargo in South Dakota—as if South Dakota even belongs in the Midwest. All the other banks headquartered across the country’s midsection are relatively small in terms of deposit size.

In fact, the smallest banks tend to be in states with comparably small populations. Wyoming takes last place with the only institution under a billion in deposits, Hilltop National Bank ($0.6B), followed by Idaho with D.L. Evans Bank ($1.1B). Even the First National Bank of Alaska is more than twice as big ($2.5B). If these banks want to grow deposits, they need to move to larger population centers.

Here are the ten largest banks in terms of deposits held within a single market ($ billion), together with their total holdings company wide ($ billion).

1. Northfield Savings Bank: Vermont $681.7 inside market and $681.7 in total

2. Wells Fargo Bank: South Dakota $264.9 inside market and $1,200 in total

3. Bank of America: North Carolina $171.9 inside market and $1,300 in total

4. Charles Schwab Bank: Nevada $162.4 inside market and $162.4 in total

5. Ally Bank: Utah $86.3 inside market and $86.3 in total

6. MUFG Union Bank: California $80.6 inside market and $86.8 in total

7. TD Bank: Delaware $79.7 inside market and $227.1 in total

8. USAA Federal Savings Bank: Texas $72 inside market and $72 in total

9. Capital One Bank: Virginia $66.2 inside market and $66.2 in total

10. U.S. Bank: Ohio $62.4 inside market and $329.5 in total

All this goes to show that the world of bank deposits is complicated. Never assume the largest banks are always located in booming metropolises, as Wells Fargo and Northfield Savings Bank demonstrate. And yet the general trend remains undeniable—having a large population only helps to grow the size of a bank’s deposits too.”

https://howmuch.net/articles/largest-bank-in-every-state

#191 Renter's Revenge! on 02.27.18 at 11:01 am

#79 Sideshow Rob on 02.26.18 at 7:46 pm
There will be a huge bull market in down and out trophy wives next year. Watch out for those smiling predators.

:D

#192 IHCTD9 on 02.27.18 at 11:08 am

#185 maxx on 02.27.18 at 10:25 am
____________________

Trudeau’s leadership so far smells worse than a sewage truck running over a skunk in front of a Paper Mill.

Every time I think I’ve seen the pinnacle of stupid regarding his bird brained goofball dunce blockhead mouth breathing ideas, he sets the bar a notch higher.

I’m not sure how he’s going to top this India trip. I figured after China bounced him out the door like a drunk vagrant he would have toned down the raw douchebaggery a little.

But nope, instead he makes a deal that burns half a billion dollars while thinking he just made a billion dollar deal benefiting Canada, he dances around on a stage like an asshat, and then dresses up in a successful bid to become a laughing stock among the Indian locals.

Truly, Justin is suffering from some kind of brain damage. I feel terrible for his kids – especially his poor son. We need to keep Trudeau from leaving the country ever again at all costs. We also need to prevent him from opening his mouth and speaking while there is a camera in the vicinity.

Even though I want him to win the election (or Jagmeet) to produce horrible pain and economic suffering for Canada – I’m not sure how I can endure the embarrassment of having this dingbat as our PM and having him talk to and visit other countries. I wish he would just shut the hell up, and stay here.

#193 Guy in Calgary on 02.27.18 at 11:13 am

I suspect in the example included that there is information being left out. They may have missed payments or their credit may have lowered significantly. Possibly have high balances on unsecured credit facilities with the same institution.

If they are a good client, pay on time, have investments etc. it is unlikely this would happen at renewal.

#194 For those about to flop... on 02.27.18 at 11:20 am

#153 Widening Gyre on 02.27.18 at 1:46 am
#1 For those about to flop…

Hey flop – a little birdie told me Millstream went for $4.39m.

Love your work Sir – keep it up :-)

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

Thanks WG.

Paid 4.32

Sold 4.39

Probably a 225k mistake after everything is factored in.

I will present it as CONFIRMED PINK SNOW when I verify the numbers on the assessment website in a few months…

M43BC

#195 Victor V on 02.27.18 at 11:22 am

#183 Tater on 02.27.18 at 9:47 am

If the burbs get slaughtered, the core won’t be saved. We will definitely see a 40% decline from the peak in the 416. We’re already halfway there.

=====

No IF…the burbs ARE getting slaughtered.

http://torontorealestatecharts.com/2018/02/06/january-2018-detached-markham/

http://torontorealestatecharts.com/2018/02/06/january-2018-detached-richmond-hill/

http://torontorealestatecharts.com/2018/02/06/january-2018-detached-vaughan/

#196 Victor V on 02.27.18 at 11:24 am

BREAKING: Fed’s Powell nods to ‘gradual’ rate hikes, close eye on inflation

https://www.bnn.ca/fed-s-powell-nods-to-gradual-rate-hikes-close-eye-on-inflation-1.1012455

WASHINGTON – Federal Reserve Chairman Jerome Powell, pledging to “strike a balance” between the risk of an overheating economy and the need to keep growth on track, told U.S. lawmakers on Tuesday that the central bank would stick with gradual interest rate increases despite the added stimulus of tax cuts and government spending.

Fed policymakers anticipate three rate increases this year, and Powell gave no indication in prepared remarks to the House Financial Services Committee that the pace needs to quicken even as the “tailwinds” of government stimulus and a stronger world economy propel the U.S. recovery.

“The [Federal Open Market Committee] will continue to strike a balance between avoiding an overheating economy and bringing … price inflation to 2 per cent on a sustained basis,” Powell said in prepared remarks for his first monetary policy testimony to Congress as Fed chief.

“Some of the headwinds the U.S. economy faced in previous years have turned into tailwinds,” Powell said, noting recent fiscal policy shifts and the global economic recovery. Still, “inflation remains below our 2 per cent longer-run objective. In the (FOMC’s) view, further gradual rate increases in the federal funds rate will best promote attainment of both of our objectives.”

#197 A J on 02.27.18 at 11:24 am

Reading this, I’ve never been so happy to be a renter than I am right now.

Ahhhh feels good.

#198 Squatre Dame on 02.27.18 at 11:25 am

#188 maxx on 02.27.18 at 10:25 am
#8 Squatre Dame on 02.26.18 at 5:52 pm
“#196 Stan Brooks on 02.26.18 at 12:53 pm
You won’t find this in a Canadian newspaper.
https://economictimes.indiatimes.com/news/politics-and-nation/why-justin-trudeaus-india-tour-turned-out-to-be-a-diplomatic-disaster/articleshow/63059621.cms
Speaks volumes on the state of democracy/or the lack of such.
************
That’s because the author writes for the Toronto Sun. It is understandable that Trudeau couldn’t pick one bad guy out from a population of 1.3 billion people…….”

——– Unpaid journalist #3

Horse feathers. Stan has a great point. This India trip was his worst – so far – in a long series of OMFG national embarrassments.

****** me again ******

This is what your “journalist” wrote:
“After going to great length to convince Punjab Chief Minister Amarinder Singh that his (Trudeau’s) government did not associate with radicals, we learned that one such radical was part of his own entourage in India.”

Cambridge Dictionary sez: Entourage (noun) – the group of people who travel with and work for an important or famous person.

Now here’s what a real journalist** wrote:

“On Atwal’s personal Facebook page, there are photos of him with hockey star Wayne Gretzky, former Liberal leader Michael Ignatieff, and a long-haired Trudeau before he was prime minister…..
Khan said she spoke with Atwal earlier Monday, and he explained to her that he was in India this month for a “health visit” when he was invited to a reception where he was photographed with Sophie Grégoire Trudeau, the prime minister’s wife, and with Canada’s infrastructure minister, Amarjeet Sohi.”

So he was not actually part of Trudeau’s entourage, just an inadvisable invitation. But people like to exaggerate. I want to know if Gretzky is secretly planning to blow up the NHL!
This will all be quickly forgotten by those in the world who have more important things to worry about. Like Trump, Xi Jinping, and Putin. You and Stan should try the Butter Chicken!

**
https://www.thestar.com/news/canada/2018/02/26/who-is-jaspal-atwal-man-at-centre-of-controversy-over-trudeaus-india-trip-remains-a-political-mystery.html

#199 PastThePeak on 02.27.18 at 11:33 am

The vast majority of the Canadian population is “clueless”. It it isn’t specifically about intelligence – just that most don’t have much of an idea about how things work & why.

The primary reason? They have no interest. Most consider any topic related to finance, politics, policy, government, etc – to be boring to the extreme (I should know – I am married to one). As noted more than once on this blog, people put more consideration to the shoes they buy than a house (by probably 2 orders of magnitude).

For Dainsville Mom (who could be a dad), I would bet the first time in their life that they thought at all about RE ownership risks, what really is a mortgage, was that trip to the bank. Not the best time to start an education around a topic is top 3 money decisions of your life (others being retirement savings, and marriage)

#200 Ace Goodheart on 02.27.18 at 11:36 am

She bought a house in Davisville with a one year mortgage?

#201 Stan Brooks on 02.27.18 at 11:40 am

#189 IHCTD9 on 02.27.18 at 10:43 am

Yep, it’s the same human nature that produces the Laffer Curve with taxes. There is a line in the sand were folks say “not worth it” and don’t come back.

I’m a shameless bastard when it comes to cutting my expenditures. I don’t care what anyone thinks, or what it looks like.

The 4 of us went out to dinner last week, I shared a pizza with my youngest, 2 bottomless pops shared by 4, no booze. Go ahead, – give me some grief about it!

Wife went to a get together with co-workers, dinner and a movie. A glass of beer was just under 10.00. Yep, small town, chain roadhouse, almost 10.00 for a glass of beer. Probably was a draught too.

Honestly though, it’s the taxes I enjoy paying less of the most.

———————————

Cost of living in Frankfurt, the financial heart of Europe.

https://www.numbeo.com/cost-of-living/in/Frankfurt

1 euro = 1.5 CAD.

Restaurant (END PRICE, TAXES INCLUDED, NO TIPS)
Domestic Beer (0.5 liter draught) 4.00 €
Imported Beer (0.33 liter bottle) 3.50 €

Childcare
Preschool (or Kindergarten), Private, Monthly for 1 Child 321.67 €

Rent Per Month (apartment there is equivalent to condo)
Apartment (1 bedroom) in City Centre 889.66 €
Apartment (1 bedroom) Outside of Centre 643.91 €

Salaries And Financing
Average Monthly Net Salary (After Tax) 2,834.21

that is around 52 k CAD net per year after taxes (70 k _ before taxes), per person, 104 k net per family with 2 workers.

#202 A J on 02.27.18 at 11:43 am

#55 Jimbo

Wow. Trouble indeed. Appears developers are dumping planned builds.

#203 For those about to flop... on 02.27.18 at 11:46 am

#163 Floppy on 02.27.18 at 2:59 am
E38th sold 1,285,000… would have brought 1.5 at peak

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

Thanks, this sale is consistent with what I have seen other houses of this size/condition go for in the neighbourhood.

Mainly land value,of course.

A lot of people left a bunch of money on the table,but also a lot of people in my neighborhood never even attempted to cash in their tickets…

M43BC

958 e 38th ave ,Vancouver.

2017-04-04 : $1,550,000
2018-01-12 : $1,399,000
2018-02-05 : $1,379,000

https://www.zolo.ca/vancouver-real-estate/958-e-38th-avenue

#204 Howard on 02.27.18 at 11:49 am

#169 crowdedelevatorfartz on 02.27.18 at 8:15 am
#176 Ex-Cowtown on 02.27.18 at 8:41 am
#185 IHCTD9 on 02.27.18 at 9:58 am

At this point, I fully expect that if Canadian women give this prancing buffoon another majority government, the Liberals will be further emboldened and draft legislation to rescind men’s suffrage.

#205 Alistair McLaughlin on 02.27.18 at 11:52 am

Regarding the “thoughts and prayers” discussion, the people tweeting “T & P” are engaging in the cheapest form of virtue signalling. They are in fact using a tragedy to seek momentary validation and approval from other shallow virtue signallers. These pathetic souls then check their Twitter account repeatedly to see how many liked their Tweet, or better yet, re-Tweeted it.

“Thoughts”, like “prayers”, are by definition private. If one truly keeps those suffering in their “thoughts and prayers”, then one would express such sentiments through ACTION: i.e. sending money, sending food, volunteering, raising awareness, etc. The fact that you Tweeted T&P proves that the suffering victims occupy little real estate in either your thoughts or your prayers.

Same with the fools who leave “R.I.P” in the comments sections of articles that report on someone’s death, invariably using their Facebook login. Your flippant abbreviated comment did no good; offered the family no comfort whatsoever. But your facile gesture netted a handful of likes from other equally shallow FB users, each like triggering a temporary endorphin release that helps keep your frail ego partially inflated.

#206 maxx on 02.27.18 at 11:52 am

#38 Kingkouros6969 on 02.26.18 at 6:28 pm

“Can someone explain to me how this works:

A person buys a 1m home and puts a downpayment of 100K. They take on a mortgage of 900K.

For 5 years everything is rosy. When they go to their bank to refinance, the bank informs them that their home is worth half of what it was worth (500K). Doesn’t everything just stay the same? The person pays the new interest rate like before on the remains of the 900K mortgage?

Why does the bank want a lump sum payment? Pardon my lack of knowledge.”

1. Interest rates creep up;
2. Cost of money goes up;
3. People cannot borrow as much b/c they can’t afford what they used to on much lower rates;
4. Sales slow, listings therefore increase and values drop b/c increasing numbers of people have less borrowing power;
5. Rinse and repeat, making the outlook for real estate values less rosy;
6. Meantime, as interest rates increase, money, vis-a-vis real estate, becomes far more attractive b/c banks pay more for it;
7. As real estate values continue to decrease, the amount of the mortgage will stare the market value in the eyes as market value continues its slide past on its way down the ladder;
8. As market value slides down the ladder past the (relatively static) amount of the mortgage, that increasing difference is what the banks want you to fork over before they renew mortgages for another term;
9. Part of the difference is based on projected future rate increases, which continues to affect real estate values……
10. Now, had you bought a home in the U.S, your term could be 30 years. Some lucky souls bought gorgeous places at mind-blowingly low rates and don’t need to worry for a very long time;
11. But up here in Canada……..not so much.

#207 TheDood on 02.27.18 at 11:56 am

#179 Dave Ahem on 02.27.18 at 9:04 am
With a 70% homeownership rate and the crash you’re predicting, what is the political fallout? How angry is that 70%, who have ALL the money, going to be when their nest egg is destroyed………
___________________________________________

They have ALL the money?? Really???
They have NO money because they spent it all and then borrowed and kept borrowing, and now they’re in trouble. Their anger is irrelevant, but it should be pointed at their own stupidity. Nobody put a gun to their head. They did what they did because they’re Sheep. Followers who cannot think critically for themselves.

Hats off to Comrade Horgan for blowing up BC RE. The only politician with the kahunas to bring it all back down to earth.

#208 Howard on 02.27.18 at 12:03 pm

#122 KLNR on 02.26.18 at 9:36 pm

I started doing that this year, not because I can’t afford it though. Just tired of paying $4 for a coffee and $12 for lunch. Saving a few hundred a month and eating a hell of lot healthier now. cut down on restaurants in general, prices have reached a point where a lot of folks are thinking twice about spending the $$’s regardless of whether they can afford it or not.

———————————-

I live abroad now but when I was living in Toronto I used to attend a weekly pub trivia night at one of the Duke pubs downtown. Going weekly for many years (my friends and I were trivia fanatics, it was the highlight of our week; yes, really) I was able to observe and track the rise in prices.

When we started going regularly in 2011, a plain burger with a side (fries or salad) was $8.99. Over the course of FOUR (!) years it steadily increased to $11.99 (a 33% rise) and they removed the salad side option, meaning that if you wanted a healthier side dish than fries, you had to pay extra. At the same time the menu shrank as did the portion sizes. Last year when I visited Toronto and went to trivia with friends at the same pub, I ordered a flatbread pizza. It was a main course item and I believe the price was around $13.99. What was presented before me was so laughably skimpy I thought they gave me an appetizer portion by mistake (they didn’t).

I don’t know if the current pace of restaurant price inflation is usually high, or if such rises are normal from an historical perspective. But 33% more in just four years for a crummy pub burger?

#209 TurnerNation on 02.27.18 at 12:11 pm

When will this weblog be achieving Gender Parity in its comments section??

M42ON

#210 Alistair McLaughlin on 02.27.18 at 12:13 pm

@ #179 David Ahem, you’ve got your history of the Zero & Forty mortgages backwards. They were brought in in 2006 when the housing market looked anything but dour (it was booming). They were eliminated in early 2009 when the market was at its most dour and the government got scared.

#211 For those about to flop... on 02.27.18 at 12:16 pm

Frunk
“Recent Sale Report Realtor Assistance Needed”

Dude – how can you care about this so much and be incapable of talking to a realtor? Seriously. Email one. Just one. They all give this info.

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

Frunk,

You raise a good point in a somewhat grumpy tone,but this has been dealt with one here before.

Some of the developers I work for would probably smile at my efforts on here others would no doubt frown,I decided from the start to try and do it this way for a couple of reasons.

They include…

To protect myself and my wife.

To give the realtors on here a chance to speak, instead of name calling, I have tried to build relationships with them and let them tell their side of the story.

To get the people of Vancouver on this blog involved and help create at the very last a thin sliver of transparency that from reading thousands of comments on here over the years, Vancouverites and Canadians seem to crave.

People stated they were going to lobby the government for change ,and I said while you guys handle that I will set up a project to circumvent the system while I was off work for 7 months following major ankle surgery.

Instead of getting grumpy at me help out like a lot of the crew do.

If you are not happy with the current system the citizens of this country need to help guys like me trying to make a difference or suffer in silence…

M43BC

#212 Alistair McLaughlin on 02.27.18 at 12:24 pm

Davisville Mom won the Bidding War Olympics last year. Sounds like the bank just retested her urine sample and found something they didn’t like.

#213 B20 Failure on 02.27.18 at 12:27 pm

60 days into B20 and the markets in Vancouver, the Island and Kelowna are still cooking. So much for another ‘moister killing game changer’ in real estate.

Oh well, I am sure that in a few months after its clear it has little impact that a new ‘game changer’ will be heralded. We have a long history of that with the elimination of the 40 year mortgages, increase in down payment requirements, the first stress test, changed loan to equity ration, new provincial policies…

Every six months the hope of a crash is kept alive with a new ‘game changer’ being heralded as the end of the hot market. And yet, prices and sales up for the past decade…

You have no idea yet of what the impact will be. – Garth

#214 Ian on 02.27.18 at 12:28 pm

Powell just admitted around 11am that the Fed may need more than three rate hikes this year:

https://www.marketwatch.com/story/powells-first-faux-pas-came-quick-2018-02-27

Here’s a response to a Representative this morning to a question about what it would take to raise rates more than three times:

“Thank you, Ms. Maloney. You’re right that every quarter, every participant in the FOMC submits a projection of what they feel is going to happen to the economy and also their projection for appropriate monetary policy. And at the December meeting, the median participant called for three rate increases in 2018. Now since then — we will submit another projection, all of us, in three weeks — but since then, what we’ve seen is incoming data that suggests that strengthening in the economy. We’ve seen continuing strength in the labor market. We’ve seen some data that will, in my case, add some confidence to my view that inflation is moving up to target. We’ve also seen continued strength around the globe, and we’ve seen fiscal policy become more stimulative. So I think each of us is going to be taking the developments since the December meeting into account and writing down our new rate paths as we go into the March meeting, and I wouldn’t want to prejudge that.”

#215 Alistair McLaughlin on 02.27.18 at 12:35 pm

@199 PastThePeak, the weirdest thing about the Davisville Mom’s post is the tone. She doesn’t really express any alarm. Just a friendly callout for advise (sic), with emojis.

In the same tone she might ask, “I purchased Norton’s Brewer’s Yeast as the recipe called for, but these muffins just aren’t rising. Obviously, I don’t have any other yeast in the house. Any advice?”

The seriousness of her situation seems to be entirely beyond her scope of awareness. For now.

#216 Tater on 02.27.18 at 12:37 pm

#181 NYCer on 02.27.18 at 9:18 am
Questions I have:

1) Why is the Davisville required to renew her mortgage and how did the value fall below assessed by $150k if the peak was 1 year ago in April?

2) I have read reports on the number of mortgage holders renewing in 2018 (40%?) seems high. Do we know how many of those are using 2, 3, 4, or 5-year terms and HAVE to renew?

3) For those who HAVE to renew, I always assumed most are 5-year terms, surely the value today is still much higher than 5 years ago or heck even 3 years ago, so they wouldn’t be underwater yet correct?
—————————————————————–
1) Took a 1 year mortgage I’d guess. And the average detached in Davisville is down about 18% from March of 2017

2) I haven’t seen a breakdown of what terms the mortgages are that are expiring, but most banks and mortgage lenders break out how much of their book is rolling off in the next year, so by aggregating those, we know roughly what portion of the mortgages outstanding need to be renewed in a given time period.

3) There has been a “strategy” to buy a house with a borrowed DP so that you get 20% down and avoid the CMHC stress test. You take a 1 or 2 year mortgage and pay a hefty rate on the DP loan expecting that when the mortgage needs to be rolled, the price has appreciated enough that you can refi at 80% of the current price and pay off the DP loan.

#217 Steven Rowlandson on 02.27.18 at 12:42 pm

It is only a place to live people. It is not an investment.

#218 Tater on 02.27.18 at 12:43 pm

#213 B20 Failure on 02.27.18 at 12:27 pm
60 days into B20 and the markets in Vancouver, the Island and Kelowna are still cooking. So much for another ‘moister killing game changer’ in real estate.

Oh well, I am sure that in a few months after its clear it has little impact that a new ‘game changer’ will be heralded. We have a long history of that with the elimination of the 40 year mortgages, increase in down payment requirements, the first stress test, changed loan to equity ration, new provincial policies…

Every six months the hope of a crash is kept alive with a new ‘game changer’ being heralded as the end of the hot market. And yet, prices and sales up for the past decade…
—————————————————————
B20 hasn’t really kicked in yet. If you got 90 or 120 day pre-approval in December, you have until April to use it.

#219 SimplyPut7 on 02.27.18 at 1:02 pm

#179 Dave Ahem on 02.27.18 at 9:04 am

Any thoughts?

—————

Q: With a 70% homeownership rate and the crash you’re predicting, what is the political fallout?

A: There shouldn’t be a substantial political fallout. I know this is hard to believe, but Toronto and Vancouver are not the centre of the universe, most people (and voters) who own homes, own them outside of these cities and their homes are reasonably priced. Their houses didn’t increase in price year-over-year like these cities, and are a reflection of the income of the people living and working in the community and not how much debt people were willing to get their hands on to buy a home they could not afford to maintain for the next 25 years.

Q: How angry is that 70%, who have ALL the money, going to be when their nest egg is destroyed.

A: If they didn’t use their home as an ATM, why would they be angry. I know the media wants you to believe everyone gave money to their kids for down payments. Some did, most home buyers went to non-bank/MICs to get their down payments or raided their RRSP. Don’t believe everything you see on TV especially HGTV – 99% of people in Toronto do not live like that!

Q: The last time housing looked this dour, we got 0% down and 40 year AM’s so Harper could get re-elected. Boomers own all the houses and their voter turnout is about 100%. How are they going to feel when they realize all of this is policy driven.

A: While the turnout for Boomers is high according to Elections Canada, not all Boomers vote. And they did not all get 0% down and/or 40 year mortgages. Many people still live in the home they lived in when they raised their kids. Long before Gen-X and Gen-Y thought banks were their friends and borrowing the maximum amount from a bank to buy a home without any savings left after the home purchase was a great idea.

#220 Ex-Cowtown on 02.27.18 at 1:13 pm

#204 Howard on 02.27.18 at 11:49 am

At this point, I fully expect that if Canadian women give this prancing buffoon another majority government, the Liberals will be further emboldened and draft legislation to rescind men’s suffrage.
+++++++++++++++++++++++++++++++++++

I wish. But methinks that they intend men to suffer as never before.

#221 Stan Brooks on 02.27.18 at 1:16 pm

#208 Howard on 02.27.18 at 12:03 pm

I don’t know if the current pace of restaurant price inflation is usually high, or if such rises are normal from an historical perspective. But 33% more in just four years for a crummy pub burger?

————————

Real inflation is 7-8 % annually, what do you expect?
Shrinking plates, increasing prices.

https://www.youtube.com/watch?v=RP34yHPntxc

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

It will rise to 10 + % this year due to minimum wage increase.

with 1.25 % official BOC rate/salary increase rates, you are being ripped of by 7-9 % in purchasing power decline annually. Each year.

Remember bananas at $ .29 a pound?

#222 Lisa Power on 02.27.18 at 1:17 pm

#185 – thanks for the laugh. I have 3 boys. Was drinking hot tea when I read it so almost had a dangerous situation. Lol.

#223 1.41421356237 on 02.27.18 at 1:20 pm

#13 Smoking Man on 02.26.18 at 5:55 pm

Square root of 2
________________________________________
1.41421356237
Thanks for asking!

#224 Patrick on 02.27.18 at 1:21 pm

Garth, I would love to get your take on what’s going on with secondary markets like Hamilton. A lot of young people like myself are looking to places like this for affordable housing.

#225 Mark on 02.27.18 at 1:24 pm

“3) For those who HAVE to renew, I always assumed most are 5-year terms, surely the value today is still much higher than 5 years ago or heck even 3 years ago, so they wouldn’t be underwater yet correct?”

RE has stagnated in most of Canada (including GTA/GVR) since the 2013 apex, so no, those who took out a mortgage 5 years ago, with an amortization such that there was relatively little paid into equity, are still quite vulnerable.

Nearly all of the alleged “increases” seen since 2013 have been mix-related. An onslaught of new RE coming to market, brand new luxury RE, significantly skewed the averages higher. But on individual identical housing units sequentially transacted in, on average, there has been relatively little gain or loss. The upside was exaggerated due to the mix changes, and as of right now, the downside is also being exaggerated.

“2) I have read reports on the number of mortgage holders renewing in 2018 (40%?) seems high. Do we know how many of those are using 2, 3, 4, or 5-year terms and HAVE to renew?”

~40% of Canadian mortgages are ‘overnight’, ie: they have to be renewed literally every day. The term structure of the rest of the mortgage market can be determined through the banks’ financial reporting and presumably other proprietary sources for which Garth cites.

The bottom line is that Canadian RE-backed borrowers, unlike Americans, are incredibly exposed to interest rate risk.

“1) Why is the Davisville required to renew her mortgage and how did the value fall below assessed by $150k if the peak was 1 year ago in April? ”

She likely dramatically overpaid, the result of some really good quality hoodwinking by the commissioned salespeople. Some people are just destined to be poor, that’s all I gotta say. Had she read my analysis over the years, she would’ve known not to pay anything more than 2013 prices in most locales in Canada as that was the peak.

#226 senta on 02.27.18 at 1:47 pm

Free advice to Davisville mom with underwater mortgage.

Happened to me in 1989. Bought a splitlevel in scarborough for $299K – market tanked in 1990. Interest at 15%. Wife and I had to get 2nd jobs to hold on. Father & mother had to hauled out of retirement to babysit 2 brats. Worked like dogs for 5 years. Finally sold in 1995 said house for 215K after putting another 50K on needed repairs and reno’s. Bought another house to $399K in 1995. Now worth about 2000K – mortgage free and retired at 55. Shit happens in life – just hunker down and keep on going.

#227 Damifino on 02.27.18 at 1:47 pm

#199 PastThePeak

Most consider any topic related to finance, politics, policy, government, etc – to be boring to the extreme (I should know – I am married to one).
——————————-

I was married to one too, but she changed. She noticed a great deal of air-headedness going on and decided to educate herself somewhat on the topics you mention.

Today, she even acknowledges that, although he’s a dapper fellow with eccentric taste in socks, T2 may not have been the best choice for PM. Of course, that doesn’t mean she pines for the return of Harper, either.

#228 TheDood on 02.27.18 at 1:51 pm

#213 B20 Failure on 02.27.18 at 12:27 pm
60 days into B20 and the markets in Vancouver, the Island and Kelowna are still cooking……….
__________________________________________

Really?

I don’t think “cooking” correctly describes any of those markets. More like sellers are running for the exits as fast as they can. No end of dummies here in BC still buying because they think getting into RE is a good investment. So sad.

#229 Morning Terrorist on 02.27.18 at 1:57 pm

#209 TurnerNation on 02.27.18 at 12:11 pm
When will this weblog be achieving Gender Parity in its comments section??
#############

Never. Women only worry about what they can change, and sing about what they can’t.

Here’s a smuggled clip of Trudeau’s after-party in Little India (Brooklyn). Maybe not to everyone’s taste, but Shilpa Ray really opens up her pipes at about 2:00 !

Bon appetit,

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

#230 Howard on 02.27.18 at 2:06 pm

#218 Ex-Cowtown on 02.27.18 at 1:13 pm

I can’t tell if you misunderstood me or are making a word play?

“Suffrage” means the right to vote.

#231 IHCTD9 on 02.27.18 at 2:18 pm

#198 Squatre Dame on 02.27.18 at 11:25 am
______________

Let’s stop bickering about the trivial tangentials, and focus on what is actually important:

Q: Is Trudeau a ******* idiot?

A: Yes, absolutely he is. No Canadian PM has ever acted like such a buffoon on the world stage as Justin Trudeau. The entire planet is literally on its ass laughing at this mentally stunted balloon head PM of ours.

Q: Has Trudeau actually done anything that helps Canadians?

A: Hell no. If we could barely shuffle off to work due to the sheer weight of our overstuffed wallets – then yes he may have been of some help lightening the load. But as it is, the budget will balance itself, it’s the current year, everyone is broke, and what else is new.

No one with a brain is going to say Trudeau is a smart, or wise politician. Everyone with the ability to reason in an intellectually honest manner knows that Trudeau has been a horrifying mistake.

Let’s not dance around the fundamentals, Canada is suffering serious and repeated blows to our economy – yet our cement headed leader is out travelling around making a complete ass of himself rather than taking care of important business here at home.

#232 Renter's Revenge! on 02.27.18 at 2:22 pm

All assets are wealth transfer mechanisms. Just make the ones you buy transfer wealth to you, instead of from you, and yer good.

#233 A J on 02.27.18 at 2:25 pm

#229 Morning Terrorist

*Raises hand*

Not all women.

#234 Howard on 02.27.18 at 2:35 pm

Annoys me when the National Post passes off US surveys as generalized fact. I would be surprised if this were true among Canadian millennials.

Millennials are ditching credit cards, and it’s threatening the entire industry

http://business.financialpost.com/personal-finance/debt/millennials-are-ditching-credit-cards-and-its-threatening-the-entire-industry

#235 Mark on 02.27.18 at 2:57 pm

“Millennials are ditching credit cards, and it’s threatening the entire industry”

Well of course. The millennials have no money. The result of government policy that has largely left them overly indebted, and underemployed.

Meanwhile government just keeps shoveling the money at older people. For instance, a life-long Canadian citizen senior citizen has a government guaranteed minimum income of $17,554.68, and will additionally receive an additional $400 as a GST credit. So roughly $18k is the minimum income of even a penniless elderly Canadian.

Think the Millennials would have financial problems if they received that kind of money “from the government” while they were studying or trying to find a job?

#236 Rooster on 02.27.18 at 3:10 pm

#234 Howard on 02.27.18 at 2:35 pm

Millennials are ditching credit cards, and it’s threatening the entire industry.
————

I just noticed today that someone ” borrowed” mine a week ago. I’m the third person I know that experienced this quite recently. I’ll have to adjust my morning routine – check the Visa then check the blog.

#237 A J on 02.27.18 at 3:12 pm

#234 Howard

I’m a millennial and don’t have any credit cards. I use VISA debit when I need a credit card for hotels, online purchases, etc. The only debt I have are student loans and a car loan, which will be paid off this summer. My goal is to pay off my debt and never go into debt again. Many people I know (all millennials) have the same goal. But overall, I think credit debt cards are millennials new go-to.

#238 Morning Terrorist on 02.27.18 at 3:16 pm

#233 A J on 02.27.18 at 2:25 pm
#229 Morning Terrorist

*Raises hand*

Not all women.

————–
With N=1, Parity – it’s just a kiss away, kiss away.

#239 Chris on 02.27.18 at 3:22 pm

# IHCTD9

Well if you want to blame Trudeau, look what Harper and conservatives have gotten us into. Emergency low interest rates put in place by Harper have brought us into this mess. Trudeau was handed a mess when he took over and there is only so much he can do to fix. Atleast Canada under Trudeau has a better reputation abroad.

#240 IHCTD9 on 02.27.18 at 3:32 pm

#227 Damifino on 02.27.18 at 1:47 pm
#199 PastThePeak

Most consider any topic related to finance, politics, policy, government, etc – to be boring to the extreme (I should know – I am married to one).
——————————-

I was married to one too, but she changed. She noticed a great deal of air-headedness going on and decided to educate herself somewhat on the topics you mention.

Today, she even acknowledges that, although he’s a dapper fellow with eccentric taste in socks, T2 may not have been the best choice for PM. Of course, that doesn’t mean she pines for the return of Harper, either.
________________________________________

I’m married to one as well. My wife would still vote NDP if they were conducting public beheadings of political opponents out in the street. Total partisan when she’s not voting strategically to keep the Cons out.

It’s amazing how many important political concerns she just does not care about. Jobs? Nope. Prosperity? Nope. Deficits? Nope. Government debt? Who cares. Trade deals? Nope. Taxes? More is better!

On the flip side, she is totally the opposite with her personal actions. Saving and investing for the future is huge. Controlling spending is huge. Getting value for the dollar is huge. Staying comfortably ahead of potential bills before they materialize is huge. Financial preparedness for the future is huge. She is modest, with solid goals, and willing to sacrifice to make it happen. She is an unabashed Capitalist, loves having lots of Money working for her. She’s Mike Harris/Warren Buffet at home.

There is a massive chasm between the actions she votes for, and the actions she takes for her household. In fact, they are opposite.

I have also casually come to understand over the years that I don’t have a prayer of understanding her by listening to her words, but only by watching her actions. Her words regarding some things (not all) are near worthless. It’s amazing really. She will regularly say one thing, and do another – sometimes even doing essentially the opposite of what she said. She has no clue she is doing it. I wonder how many women out there are like this on some topics?

At any rate, if all Women voted like my wife does, and for the reasons that she does; our country would look like Venezuela in 2-3 majority mandates.

#241 Amazing Kreskin on 02.27.18 at 3:36 pm

#221 Stan Brooks on 02.27.18 at 1:16 pm
Remember bananas at $ .29 a pound?
++++++++++++

No, but just tell me your net worth and I will guess your weight.

#242 45north on 02.27.18 at 3:45 pm

Victor V: there’s no if – the burbs are getting slaughtered.

Each of the three areas has a chart for detached home sales. They all show a 50% drop from January 2017 to January 2018. Two things will make it worse: the effects of B20 wouldn’t be fully felt until March and the very high likelihood the US Fed raises rates in March.

Debtslavecreator: The dumb luck this country has had for years is coming to an end

Ian: from his link: Jerome Powell: So I think each of us is going to be taking the developments since the December meeting into account and writing down our new rate paths as we go into the March meeting, and I wouldn’t want to prejudge that.”

The point is Canada has scant influence over the US Fed or the US House of Representatives. This is the perfect storm – Canada is going to be battered like it never has before. Mr Dress-Up has no idea how to captain the ship.

#243 T on 02.27.18 at 3:50 pm

#225 Mark on 02.27.18 at 1:24 pm

Some people are just destined to be poor, that’s all I gotta say. Had she read my analysis over the years, she would’ve known not to pay anything more than 2013 prices in most locales in Canada as that was the peak.

—————

You always make me laugh Mark.

Your analysis is always a joke. 2013 was not the peak of anything Toronto or Vancouver related. I owned a few properties in the gta until I sold in 2016. I watched the markets very closely for years, spring 2017 was the peak in the GTA.

Anyone who reads your ‘analysis’ and believes it needs their heads examined. Publically available data proves you very wrong.

But – as usual – you will ignore this and all data and continue to post your indefensible arguments.

#244 aa5 on 02.27.18 at 3:54 pm

I think most Cdns will simply walk away from these mortgages as soon as they can’t refinance out more money.

The banks can book all the profits they want, but at the end of the day you still have to get the full amount of the loan paid back, and all the interest collected to realize the profit.

#245 Visa Fraud Squad on 02.27.18 at 3:55 pm

All Points Bulletin

We have narrowed down the list of suspects to someone who lives in BC, buys contact lenses in bulk, owns a Playstation, and enjoys music concerts.
If you know anyone who fits this description please call us immediately.

#246 Alistair McLaughlin on 02.27.18 at 3:55 pm

@#239 Chris, politicians do not control interest rates. The independent Bank of Canada does.

#247 T on 02.27.18 at 3:56 pm

#235 Mark on 02.27.18 at 2:57 pm
“Millennials are ditching credit cards, and it’s threatening the entire industry”

Well of course. The millennials have no money. The result of government policy that has largely left them overly indebted, and underemployed.

—————

Where do you get your data from? Can you start referencing please? This is just ridiculous. Millenials with skills are making bank, just like anyone from any generation with skills. Those without skills aren’t making much, again like any generation.

I sense your bitterness in every post. It’s a great world out there, lots of potential for those willing to put in the time and effort. Complaining on a blog about your specific situation like it’s the norm isn’t going to get you further ahead.

#248 Howard on 02.27.18 at 4:02 pm

#237 A J on 02.27.18 at 3:12 pm

I applaud your fiscal prudence but you’re missing out by not earning points (or is that possible now on a Visa debit?).

As long as you’re prudent and pay off your balance every month, using a credit card for all your purchases allows you to accumulate points quickly. I used my points to buy gas cards and grocery store cards, not on frivolous things, so it was worth it. Since I paid it off regularly I almost never incurred interest charges.

I’m using the past tense as I now live in a country where credit cards don’t really exist.

#249 Tulips on 02.27.18 at 4:02 pm

#225 Mark on 02.27.18 at 1:24 pm
Nearly all of the alleged “increases” seen since 2013 have been mix-related.
————————————————————
Not even close to the situation here in the Fraser Valley. February 2013 Average Detached price was $540k. February 2018 Average Detached price is $1020k. The peak is no sooner than the present, and maybe even later in these parts.

#250 waiting on the westcoast on 02.27.18 at 4:06 pm

#225 Mark on 02.27.18 at 1:24 pm says… “RE has stagnated in most of Canada (including GTA/GVR) since the 2013 apex, so no, those who took out a mortgage 5 years ago, with an amortization such that there was relatively little paid into equity, are still quite vulnerable.”

The 2013 apex… It never gets old… :-)

#251 Mark on 02.27.18 at 4:12 pm

“Not even close to the situation here in the Fraser Valley. February 2013 Average Detached price was $540k. February 2018 Average Detached price is $1020k”

Sounds like you missed my point. The average housing unit transacting in the past 5 years is substantially different from the average unit transacting in 2013. Of course they’re going to be more expensive because the units that are actually transacting are much nicer and much larger on average than what transacted in the past.

But that doesn’t mean that an individual unit, which is what a person owns, buys, and sells, actually has appreciated. Its quite dangerous, in RE, to rely upon ‘averages’ without recognizing that what an ‘average’ property is may very well have changed substantially. And with the supply onslaught of brand new luxury supply, this is quite obvious.

Where do you get your data from? Can you start referencing please? This is just ridiculous. Millenials with skills are making bank, just like anyone from any generation with skills.

There’s lots of places to look this up, but it is well known that in real dollars, Millennials have lagged significantly behind. With most of the gains in the economy having gone to the older crowd in the workplace. The situation for Millennials in some skill areas is absolutely dreadful.

#252 Stan Brooks on 02.27.18 at 4:16 pm

Budget 2018 was released

https://ca.finance.yahoo.com/news/canada-budget-holds-fire-amid-nafta-clouds-focuses-211000674–business.html

and immediately loonie dived further against USD/Euro.

fun stuff.

#253 Howard on 02.27.18 at 4:18 pm

#247 T on 02.27.18 at 3:56 pm
#235 Mark on 02.27.18 at 2:57 pm
“Millennials are ditching credit cards, and it’s threatening the entire industry”

Well of course. The millennials have no money. The result of government policy that has largely left them overly indebted, and underemployed.

—————

Where do you get your data from? Can you start referencing please? This is just ridiculous. Millenials with skills are making bank, just like anyone from any generation with skills. Those without skills aren’t making much, again like any generation.

————————————

Erm, not quite, “T”.

Millennials with skills are obviously doing better than those without skills (no kidding?) but far FAR worse than Boomers with skills when they were the age of current Millennials.

Boomers without skills still did well, very well. Such was the benefit of relatively little global competition and an overly generous welfare state. Millennials without skills, by contrast, will be poor and miserable for life.

That ain’t bitterness, it’s just reality.

#254 Tulips on 02.27.18 at 4:38 pm

#251 Mark on 02.27.18 at 4:12 pm

But that doesn’t mean that an individual unit, which is what a person owns, buys, and sells, actually has appreciated. Its quite dangerous, in RE, to rely upon ‘averages’ without recognizing that what an ‘average’ property is may very well have changed substantially. And with the supply onslaught of brand new luxury supply, this is quite obvious.
————————————————-
Fair enough – there will be influence of new stock on the average prices. But having watched the housing market closely for the past 5+ years in our area, I know of many fully completed neighborhoods in Langley for example with no new construction that were selling in 2013 in the $500K-$600K range that are now in the $900K-$1100K range. House prices in most of the burbs east of the Port Mann Bridge have nearly doubled in the past 5 years, and it’s ludicrous to suggest 2013 was the peak. At least in this area.

#255 waiting on the westcoast on 02.27.18 at 4:42 pm

#251 Mark on 02.27.18 at 4:12 pm says… “Sounds like you missed my point. The average housing unit transacting in the past 5 years is substantially different from the average unit transacting in 2013.”

While there may be some housing that the sales mix applies, housing stock in general has radically increased in price over the past 4-5 years in the GTA/Vancouver. As someone earlier posted, the market appears to have packed in the codes last spring. Clinging to a failed theory is embarrassing.

#256 waiting on the westcoast on 02.27.18 at 4:45 pm

Peaked in the core…

New keyboard software, Sorry :-)

#257 SoggyShorts on 02.27.18 at 4:48 pm

#248 Howard on 02.27.18 at 4:02 pm
#237 A J on 02.27.18 at 3:12 pm

I applaud your fiscal prudence but you’re missing out by not earning points (or is that possible now on a Visa debit?).

As long as you’re prudent and pay off your balance every month, using a credit card for all your purchases allows you to accumulate points quickly. I used my points to buy gas cards and grocery store cards, not on frivolous things, so it was worth it. Since I paid it off regularly I almost never incurred interest charges.
**************************************
Exactly what I was thinking. I pay for absolutely everything on my Visa(rent, cellphone,
everything, and my bank pays the whole balance automatically every month from my account.
1.25% of every dollar I spend I get back in cash rewards–over 60 years that is going to add up.

Having it set up so that your balance is automatically paid in full is an absolute must for this to work though. If you pay interest even 1 time it wipes out months and months of points.

#258 Stan Brooks on 02.27.18 at 4:58 pm

https://ca.finance.yahoo.com/news/canada-budget-holds-fire-amid-nafta-clouds-focuses-211000674–business.html

Finance Minister Bill Morneau’s third budget outlined slight deficit improvements without much in the way of new spending, refusing to blink in the face of U.S. corporate tax cuts and trade uncertainty that strike fear into Canadian companies.

“We will be vigilant in making sure Canada remains the best place to invest, create jobs and do business — and we will do this in a responsible and careful way, letting evidence, and not emotion, guide our decisions,” he added.

———————————–

These 2 are outright insult to ANY intelligence.

Sad, pathetic, tragic.

#259 chopstix on 02.27.18 at 5:09 pm

197 A J on 02.27.18 at 11:24 am
Reading this, I’ve never been so happy to be a renter than I am right now.

Ahhhh feels good.
——————————————-
i have no clue what city you’re situated in, but many renters in TO and Scamcouver are constantly worried about reno/demovictions and having to seek a place that is affordable and not a dump….have you seen the headlines recently on how $$$ are the rental prices? but maybe you’re well off enough to afford $2k/mo or so….if so kudos.

trying to find an affordable place for a mid income earner (under $70/yr, esp if you’re single, as am I) is one of the most stress inducing experiences I’ve ever gone thru…seems it’s echoed repeatedly out there by many. luckily i have fab landlords (and their adorable kids) who have no desire to move…my rent is cheap (very) by today’s standards..i even added $200/mo more recently on my own accord (gratitude runs both ways)…we have great relations, get along like family…they’re the 2nd set of landlords and i’ve been there 14 yrs now….but i just can go into hyper anxiety thinking of the day they move and might have to depart and pound the pavement again, too to find new digs. i’d rather put a gun to my head.

in outlying areas (maple ridge) lots of renovictions, there, too.

people who aren’t already in the market are fked either way.

#260 PastThePeak on 02.27.18 at 5:15 pm

#240 IHCTD9 on 02.27.18 at 3:32 pm
I’m married to one as well. My wife would still vote NDP if they were conducting public beheadings of political opponents out in the street.
…..
On the flip side, she is totally the opposite with her personal actions
….
At any rate, if all Women voted like my wife does, and for the reasons that she does; our country would look like Venezuela in 2-3 majority mandates.
++++++++++++++++++++++++++++++++++

My wife isn’t quite the same, but has similar characteristics in doing many things personally the opposite of how she “believes” politically. She is not really NDP, but solid liberal (more I think because of US politics than Canadian).

My wife works hard, is a sole proprietor in contract work, hustles for new gigs, and loves to make money (but she also likes to spend it..:). But she hates the amount she has to pay in taxes, thinks gov’t are incompetent, can’t stand unionized businesses. Thinks T2 is an airhead.

But at election time, she is drawn to the nice things that Liberals or NDP have to say (intentions I guess), and that gets her vote.

As to your last point, I am not panicking yet – but you can see with the reaction to BC’s latest efforts, the class warfare that the Feds have stirred up, and the chronic cluelessness of Ontario voters – that the masses will cheer on the destruction of the economy if they think it will give the middle finger to anyone who makes a dollar more than they do.

I no longer believe that what happened in Venezuela couldn’t happen here.

#261 chopstix on 02.27.18 at 5:25 pm

197 A J on 02.27.18 at 11:24 am
Reading this, I’ve never been so happy to be a renter than I am right now.

Ahhhh feels good.
——————————————-
i have no clue what city you’re situated in, but many renters in TO and Scamcouver are constantly worried about reno/demovictions and having to seek a place that is affordable and not a dump….have you seen the headlines recently on how $$$ are the rental prices? but maybe you’re well off enough to afford $2k/mo or so….if so kudos.

trying to find an affordable place for a mid income earner (under $70/yr, esp if you’re single, as am I) is one of the most stress inducing experiences I’ve ever gone thru…seems it’s echoed repeatedly out there by many. luckily i have fab landlords (and their adorable kids) who have no desire to move…my rent is cheap (very) by today’s standards..i even added $200/mo more recently on my own accord (gratitude runs both ways)…we have great relations, get along like family…they’re the 2nd set of landlords and i’ve been there 14 yrs now….but i just can go into hyper anxiety thinking of the day they move and might have to depart and pound the pavement again, too to find new digs. i’d rather put a gun to my head.

in outlying areas (maple ridge) lots of renovictions, there, too.

people who aren’t already in the market are fked either way.
———————————————————
btw further to my post i thought after 10 yrs the place i’m in was first sold, when the current (at that time new) landlords/family took over that i was out…new incoming landlord (wife) was hesitant to keep me on…but good refs from former family helped out….but before it was sold i had to pound the pavement in north van, west van, burnaby, downtown trying to find something…and again this was 6yrs ago BEFORE the really ridiculous rental prices that we see today….and it’s even tighter is the squeeze now with more competition jostling…and no i can’t leave the city to work elsewhere: been here 23 yrs working same company, happily employed for now (even though they’re constantly outsourcing overseas etc).

#262 maxx on 02.27.18 at 5:27 pm

#198 Squatre Dame on 02.27.18 at 11:25 am

You can fool some of the people…………

#263 Howard on 02.27.18 at 5:34 pm

#257 SoggyShorts on 02.27.18 at 4:48 pm
#248 Howard on 02.27.18 at 4:02 pm
#237 A J on 02.27.18 at 3:12 pm

You pay your RENT on credit card? How did you swing that? I always asked to do that, but none of my landlords ever accepted anything but postdated cheques.

#264 Overheardyou on 02.27.18 at 6:14 pm

#226 senta on 02.27.18 at 1:47 pm
Free advice to Davisville mom with underwater mortgage.

Happened to me in 1989. Bought a splitlevel in scarborough for $299K – market tanked in 1990. Interest at 15%. Wife and I had to get 2nd jobs to hold on. Father & mother had to hauled out of retirement to babysit 2 brats. Worked like dogs for 5 years. Finally sold in 1995 said house for 215K after putting another 50K on needed repairs and reno’s. Bought another house to $399K in 1995. Now worth about 2000K – mortgage free and retired at 55. Shit happens in life – just hunker down and keep on going.

——

If only Millennials were as tough and resilient as you were. Too bad we had it easy in life. Most just give up when the going gets tough

#265 Overheardyou on 02.27.18 at 6:23 pm

#253 Howard on 02.27.18 at 4:18 pm
#247 T on 02.27.18 at 3:56 pm
#235 Mark on 02.27.18 at 2:57 pm
“Millennials are ditching credit cards, and it’s threatening the entire industry”

Well of course. The millennials have no money. The result of government policy that has largely left them overly indebted, and underemployed.

—————

Where do you get your data from? Can you start referencing please? This is just ridiculous. Millenials with skills are making bank, just like anyone from any generation with skills. Those without skills aren’t making much, again like any generation.

————————————

Erm, not quite, “T”.

Millennials with skills are obviously doing better than those without skills (no kidding?) but far FAR worse than Boomers with skills when they were the age of current Millennials.

Boomers without skills still did well, very well. Such was the benefit of relatively little global competition and an overly generous welfare state. Millennials without skills, by contrast, will be poor and miserable for life.

That ain’t bitterness, it’s just reality.

———

It’s called adapting. You change your reality and you change your life. You make the choices. Unskilled can become skilled through self education. But if you keep thinking you can’t then you’ll never make any changes. People who start out poor can become wealthy. Wealthy can become poor.

#266 Ronaldo on 02.27.18 at 7:12 pm

#221 Stan Brooks on 02.27.18 at 1:16 pm
Remember bananas at $ .29 a pound?
———————————————————–
I remember them at 10Lbs. for a dollar. But I am probably quite a bit older than you are.

#267 Nuke on 02.27.18 at 11:20 pm

The City of Toronto is going to preserve 800 Toronto scattered homes for affordable housing by moving them to a coop or land trust.

Here is the link for the properties. The market value, debt and cost of repair. Great move to keep quality homes in desirable neighbourhoods rented to modest income earners.

https://www.toronto.ca/city-government/accountability-operations-customer-service/long-term-vision-plans-and-strategies/tenants-first/reoi-expression-of-interest-for-houses/

#268 Christina on 02.28.18 at 5:06 pm

I hope these prices come toppling down, prices right now are the wild wild west.

I went to look at a townhouse a few weeks ago, listed at $929, we laughed and walked away. I also got a text the next day from the realtor asking me if we were going to put in an offer, I didn’t even respond.

I noticed the price went UP to $999 this week, so I got in contact with the realtor. His response said something to the effect of “Yes, the price went up. The seller wanted to slow down the process and only want serious buyers.” The one RIGHT NEXT DOOR sold last month for $940 (down from $986).

What a greedy joke. They probably had a few offers below asking, and didn’t think that was right.

haha. good luck selling it now.

https://www.zolo.ca/new-westminster-real-estate/271-francis-way/th16