Gen H

Days ago a certain pathetic blog offered these crazed words:

This blog has teemed for years with snarky, whiny, self-absorbed, envious renters and malcontents who cheered market-killing politicians and prayed for the day they could buy without being forced into a bidding war. They were consumed with both FOMO and rage, supporting any and all government action they thought would punish ‘the rich’ homeowners, and level the field.

Well, kids, this is your moment.

Sales are down. Competition is gone. Mortgages still historically cheap. Sellers desperate. Prices tumbling. Realtors ripped. Bargains at last. You’ve moaned long enough. If you’ve wanted a single house, this could be the moment to try. Man up. Or shut up.

The theme of that post was simple. Human nature makes us crave what’s going up, and run screaming from that which falls. People spend months or years bitching about stuff (like houses) being too expensive, then recoil from buying when it gets cheap. Why? Because fear replaces greed – fear prices will fall further. In short, human nature makes us err when things are rising (by paying too much). It makes us miss opportunity (through paralysis) when they decline.

The reaction to that post was classic. The steerage section rose as one to dis me for suggesting they go forth and make a low-ball offer. ‘No way,’ the beast screamed. ‘You’re way too early. This puppy’s going down another 50%! Why would we catch a falling knife?’

Well, in some markets there will be more declines. In others, nope. All real estate is local and what’s a smart strategy in Halifax may be suicidal in Calgary. BC is pooched. 416 is not. 905 is nearing the bottom. Montreal is cheap and steamy (mais oui). The prairies are comatose. Alberta is troubled. Every city is unique. But there are commonalities – and recently they’re suggesting a correction in the detached market may soon have played out. If you are waiting for 50% off, in other words, you may need a few decades. Hope you’re 12.

One big reason conditions are changing is the fact there are so damn many young people. Yes, they have irritating tats, beards, iridescent oxblood nail polish, buy Jukes and vote NDP, but they’re also just as house horny, mindlessly materialistic and vacuous as their parents. These days they’re pouring into condos (big mistake), but that’ll soon change. With condo prices rising and the value of detacheds falling, the leap from one to the other shortens.

Also, in a burst of good news for realtors, it seems the Google generation – with more info at their fingertips than any humans who went before – are pretty thick. Monetary policy. Tax strategies. Market momentum. Regulatory environment. It’s all a fuzzy blur. Just ask RBC (which must be happy, too).

The bank’s latest buyer-intention survey published Tuesday is an eye-opener for those seeking a market collapse. Seems 50% of the little peckers (aged 18 to 34) plan to buy real estate in the next 24 months – the highest number in eight years. A whopping 84% think a house is a good investment and one in 10 would actually buy a residence the way they purchase drones, coconut oil and fairy lights – online from Wayfair without ever seeing it. Remember there are now more moisters than Boomers.

Also great news for the real estate business: despite the incessant bleating of this blog about the new mortgage rules and the impact of rising rates, few care (or read this drivel). An incredible 60% of young buyers have never heard of the B20 stress test and even fewer feel affected by the increasing cost of money. That could be because half of them expect to get the money from the Bank of Mom. And, of course, she’s loaded.

Will prices drop more? Will sales levels decline? Should we expect this rutting season to be a pale imitation of last year’s? Will the March numbers about to be released suck? Yes and yes, yes. Sentiment is negative about detached properties. The news will be stark. The rabble at the bottom of this blog will continue to moan, foment and gnash.

But bargains have emerged. Deal prices are not asking prices. Sellers are hurting. You might be surprised at the result of your tough offer. If, of course, you’re man enough to act before some toked-up Mill crushes it.

246 comments ↓

#1 don on 04.03.18 at 6:11 pm

Now your just having fun

#2 Screwed (U) Canadian Millenial on 04.03.18 at 6:13 pm

Growing up as a screwed Canadian millenial in Toronto, I’ve noticed that the chicks in my high school would fall for those local realtors, drug dealers and felons while I was forced to attend yeshiva summer camp, but luckily I found my fiance in the Holy Land around 2014.

When I returned from aliya to Toronto, I’ve seen my school friends working in executive positions, but mysteriously, the same chicks who would ignore us in class and falsely accuse us of harassment were the ones who suddenly wanted to marry my friends.

After a year in Toronto, me and my fiance decided that we should live in Israel rather than live in a glass condo jungle filled with materialism, hypocrisy and hyper-feminist tyranny.

#3 FOUR FINGERS WATSON on 04.03.18 at 6:15 pm

If you are waiting for 50% off, in other words, you may need a few decades. Hope you’re 12.
…………………………..

…….which means not much of a correction at all, just the market basically going sideways for a decade or so.

#4 Penny Henny on 04.03.18 at 6:16 pm

Will prices drop more? Will sales levels decline? Should we expect this rutting season to be a pale imitation of last year’s? Will the March numbers about to be released suck?-GT

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

Garth maybe the biggest question is ‘Will SFH prices in the 416 ever return to their record levels when the peak was reached in 2013’.

Ha, ha, ha

#5 calgaryguy on 04.03.18 at 6:17 pm

Renting for years. Fine continuing renting if its better. Thinking of buying in Calgary. 30 years old, married, no kids, 210k annual household income, 400k in diversified portfolio.

Looking at detached homes advertised in the $400-450k range. This buys a basic house with garage in some communities here, nothing fancy. Built in the 90s.

Thinking about putting 20% down and locking in an interest rate.

Troubled Idea? I am on the fence. Currently renting a similar house costs around $1850.

#6 Reximus on 04.03.18 at 6:17 pm

Yes, “One big reason conditions are changing is the fact there are so damn many young people”, this is true…

And they have a ton of inheritance coming, especially because they are usually one of a smaller family than used to be the case…I’m from a family of six kids, and even though my parents are well-off, a sixth of it is way less than half!

#7 Martin Terlecki on 04.03.18 at 6:19 pm

When your local radio station starts having a contest to relieve debt, that’s when you know there’s a problem

http://www.iheartradio.ca/virginradio/toronto/contests/destroy-your-debt-1.3677528

#8 mitzerboyakaQueencitykidd on 04.03.18 at 6:20 pm

you called it Garth
you can tell the difference between dog people or non dog people… just like dogs can sense good and bad.

#9 Waiverless on 04.03.18 at 6:21 pm

Hi Flop – I don’t have access to the sales info myself, but I know a guy. I have to go have a scotch at his place and bring the wife and kids when I’m over but he gives me the info when I’m there. So I’ll try and get you more info but we really need a realtor to step on up and help bring transparency to BC.

#10 Andrewski on 04.03.18 at 6:21 pm

Here’s an article from a Royal LePage advisor survey:

https://www.newswire.ca/news-releases/major-impact-to-bc-real-estate-market-expected-from-proposed-taxes-678261713.html

#11 For those about to flop... on 04.03.18 at 6:22 pm

During his speech at the July 2016 Democratic convention, Barack Obama uttered the words ” Don’t boo,vote.”

Here’s my version.

Don’t grizzle,chisel…

M43BC

#12 waiting on the westcoast on 04.03.18 at 6:25 pm

It’s all about what you are willing to sacrifice for your dream home. The Millennials have not seen the ugliness (unless they have seen a few friends recently get burned in TO).

For me, I can be patient for the more reasonable price point. I may have missed the last run but the market on the BC Coast has to revert to the mean eventually (or at least get significantly closer).

Given the slow down in sales, it will start to affect the FIRE industry and put more pressure on the local economy.

And if not, I keep renting and investing in tech… software eats the world.

#13 Gabe on 04.03.18 at 6:29 pm

Yes let me buy a small tight awkward townhouse on sale for 1.2 million from 1.25 million in suburbia. Woohoo!

#14 les on 04.03.18 at 6:33 pm

Are you forgetting what you have said all along–that declines will be a drawn out process?

By the way–how is that broom boy working out at Belfountain?

#15 Welcome to Slurrey on 04.03.18 at 6:34 pm

I am going to start vulching in Slurrey and asking 20% below the typical asking price, which would leave me at a price 25% higher than it was 3 year ago ………….. YVR still going strong.

#16 For those about to flop... on 04.03.18 at 6:38 pm

#1 Waiverless on 04.03.18 at 6:21 pm
Hi Flop – I don’t have access to the sales info myself, but I know a guy. I have to go have a scotch at his place and bring the wife and kids when I’m over but he gives me the info when I’m there. So I’ll try and get you more info but we really need a realtor to step on up and help bring transparency to BC.

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

You did good ,Waiverless,no problems.

Things are done a certain way to get things verified so it’s not a whitewash,also I try to protect myself and my wife as well.

The addresses are up and if someone wants to go back to yesterday’s post and give us an update,then cool,if not I will wait the three months and present it when the database has been updated.

I have a bunch of people that do cameos to help me out, someone will help me out for a couple of weeks and then I don’t hear from them for ages.

I just keep on chugging ,the people who are actively looking for a place to buy are more motivated to chip in because they start seeing things they don’t like about the process,but I will just keep trying to give a slow,steady stream of information and people can jump on and off the Pink Snow Train and I’m not too bothered as I have no idea where I am going with it.

I have the engine,but I have no control over the tracks…

M43BC

#17 renter in Surrey on 04.03.18 at 6:41 pm

So 7-10 years ago when houses in Surrey/Langley were $400-500K advise was not to buy because they were too expensive and destined to decline in value.

Now same houses are $1mil+ and advise is to buy because they were even more expensive last year (not in Fraser valley) and will be even more expensive in the future.

Am I missing something?

PS. yes, there are POS shacks for around 700K, but I am talking about houses, not demolition projects

#18 Man buns on 04.03.18 at 6:42 pm

You’re wrong in YVR Garth. Still way too pricey for the Mills. Do you think money grows on trees? I’m going to take a step back on this one and not catch a falling knife!

Detached sales are hitting 27 year lows!

#19 Newcomer on 04.03.18 at 6:42 pm

“A whopping 84% think a house is a good investment…”

I’m guessing that includes the shoeshine boy.

#20 TRUMP on 04.03.18 at 6:50 pm

NO BLOOD flowing down the streets yet.

When u see red….START buying!!!

#21 Dolce Vita on 04.03.18 at 6:50 pm

Because you say its time to buy, does not mean it is.

I just read Realtor comments on Twitter about YVR and 416 and your upbeat post today is at odds with their doom and gloom on Detached, even the average Condo price is dropping in YVR, 2nd month in a row (still ridiculously high).

We have not seen the bottom yet, not even close, not with inventories increasing as they are.

And no Canadian RE market since 1980 with what is happening now has ever gone sideways, never, ever…steep price drops for 2 years and then at a lower rate for at least 5 more years.

Thoughts do create if you believe in Narnia.

#22 You know val on 04.03.18 at 6:50 pm

I disagree….RBC is toooo interested in keeping the party going … therefore RBC= fake news.. plus not all the Mils have their head up their butts… more crying on the way… pass the tissue please.

#23 Wealth Shock on 04.03.18 at 6:51 pm

Following RE glut in Canada, best investment now is funeral homes as wealth shock is coming peeps…

We put the Fun in funerals!

#24 TurnerNation on 04.03.18 at 6:52 pm

Hello Woke Normies.

Toronto NIMBYism is epic. They’d have us still living in log cabins – can’t tear em down, historic you see.

http://www.cbc.ca/news/canada/toronto/plan-to-demolish-heritage-building-in-roncesvalles-really-beyond-the-pale-councillor-warns-1.4602585

– Urban planning is a myth-based enterprise. All those decades of Sunshine Listers and Unionista
“Urban planners” [sic] got us nothing but UN Agenda mandated ‘densification’
(the cutesy terms for Kommunist Blocks)

Liberty Village is totally unusable – by car or foot – scant exits and sprawled shopping options make even walking a chore. More buildings coming. Read what locals have to say:

https://www.reddit.com/r/toronto/comments/89gknt/construction_of_115m_kingliberty_pedestrian/

#25 muchomarco on 04.03.18 at 6:58 pm

Garth…where in Canada would you buy real estate right now if you had to?

#26 Reach For the Falling Knives on 04.03.18 at 7:02 pm

Good one!

Anyone dumb enough to risk their financial futures in a lousy location or a risky housing market deserves their fate.

Be careful where you buy and what you buy.

Be sure it is big enough and in a good location in case you are stuck in it for a long time.

Location. Location. Location.

#27 For those about to flop... on 04.03.18 at 7:03 pm

O.k ,so I will walk a few people to the door.

Someone verify what happened with these recent flips…

M43BC

1315 SOBALL Street, Coquitlam paid 1.33 ass 1.38 asking 1.53
Sold on March 3 2018

Sold on March 8th 2018

1585 Dansey Avenue, Coquitlam paid 1.17 June 2016 ass 1.23 asking 1.27

3569 KING EDWARD AVE W VANCOUVER paid 2.6 April 2016 ass 2.72 now asking 2.65 sold for?

13697 Malabar Avenue, Surrey paid 1.32 August 2016 ass1.17 asking 1.18 sold for?

6438 Marine Drive, West Vancouver paid 1.28 January 2017 ass 1.26m asking 1.38 sold for?

27 8051 Ash Street, Richmond paid 993k March 2016 asking 969k sold for ?

/////////////////////////
Sold on March 11 2018 for 1.32 according to Vanrentor. Pink Snow.

493 Shannon Way, Delta paid 1.62 March 2016 ass 1.3 now asking 1.35

#28 You know val on 04.03.18 at 7:04 pm

HEY # 8 …. is your dog a good dog or a bad dog?

#29 Asterix1 on 04.03.18 at 7:04 pm

These kids might all want to buy and know nothing about B20, sure, cute!

Banks, their stagnant salaries, debt levels and mom and pop running out of dough will set them straight.

RE in GTA is not going up anytime soon.

#30 MGTOW on 04.03.18 at 7:05 pm

DO NOT marry a female in Canada because she will divorce you for her feminist cause.

#31 Lee on 04.03.18 at 7:09 pm

Two two-storey detached houses just sold in my rather boring area of Thornhill for 99% of list – and there were no price drops – each selling for $1.3 million. As I’ve said over and over again – you won’t ever buy a decent detached in Toronto for under $1.2 million. I think word on the street is $1.2 million in Toronto is absolute bottom. It’s been nice having you all follow this blog waiting for the big drop. But I think we all know it ain’t happening in 416.

I told you that months ago. – Garth

#32 Disillusioned on 04.03.18 at 7:10 pm

For those waiting in the overpriced markets of Greater Vancouver, Victoria and Capital Regional District and the GTA, the call to consider buying after a 10-15% drop in prices comes across as a bad joke.

With that call, you destroyed the faith of the bears that their decision to rent instead of buying in the face of the perfect storm – rising rates, new B20 federal mortgage rules, and provincial taxes and regulations designed to cool and correct the market – was the right decision. Clearly, it was the wrong one.

If prices only dip 10-15%, and that is it, then perhaps the greaterfools are those that missed the doubling and tripling of house prices in the last decade when the first warnings were issued.

What is a 15% haircut on a 300% return for existing owners – absolutely nothing.

And if prices only dip a little after these supposed marketing killing measures, then there is no foreseable future where prices will not resume their upward trend.

Looks like a lot of renters and arm chair economists missed out on a once in a life time capital gains opportunity.

Learn to read. Where there have been 30% declines and sellers are motivated, give it a shot. Higher rates going forward will change the market chemistry. Or you can come here and be pissy. – Garth

#33 TurnerNation on 04.03.18 at 7:12 pm

Surely Gatho jests about 905. $900,000 is the going price for a new box-like townhouse near Newmarket. Which would rent for only $1800 each month.

https://www.realtor.ca/Residential/Single-Family/19152452/467-ELYSE-CRT-Aurora-Ontario-L4G2C9-Bayview-Northeast

Did I not clearly write about ‘detacheds’? – Garth

#34 I think I might know something on 04.03.18 at 7:13 pm

In the 416 and 905 you might as well buy now. Rates are low and never going up significantly. In fact, they may well reverse and come down. Immigration to the GTA is massive and will only accelerate in the future. To me, the indications are clear that prices will only rise long-term. In 10 years time, all GTA housing will cost much more than today. Count on it. Everyone will be saying, “Should have bought 10 years ago”. Just like all the renters say today.

Rates will rise, not fall. Affordability will be impacted. – Garth

#35 Steve French on 04.03.18 at 7:14 pm

So I think it would be better to write ” so many damn young people” as opposed to “so damn many young people”…..

What do you reckon on this, Smoking Man (our resident literary genius)?

#36 Reversal on 04.03.18 at 7:15 pm

I think Garth may be a Contrarian.

The masses think RE will go up, Garth: “down.”

The masses think RE will keep going down. Garth: “up.”

#37 Willy H on 04.03.18 at 7:16 pm

“905 is nearing the bottom.”

If that is the case, this “correction” is a simply a speed bump. Barely worth a blog.

Housing asset values should be correlated with Canadian productivity and GDP growth.

Here is what “out of control” housing prices do to an economy over the mid to long haul:

“Rising housing costs put upward pressure on wages, but our mediocre productivity [Canada] ensures that we can’t boost wages to match those higher home prices. That upward pressure on wages combined with the high cost of land means higher prices, less affordable housing and ultimately a weaker competitive position for Canadian industry in a global marketplace.”

http://blog.newinhomes.com/news/how-canadas-mediocre-productivity-affects-housing-prices/

The breathtaking rise in prices over the past decade was both irrational and disconnected from real economic indicators (ignoring oft cited franken-numbers spewed out by governments and central bankers).

This asset bubble was never market-driven. It was all about “almost-free money” peddled by your friendly neighborhood central banker.

When you strip out our energy sector growth* over the past 15 years the Canadian economy resembles a giant steaming turd. Little in the way of innovation, shriveling to non-existent value add in our resource sector, and a shrinking manufacturing sector. The only good news stories we have to offer are a well-pensioned public sector and handful of mortgage-hungry chartered banks churning out record profits year after year.

Our bloated housing prices (even today, after a modest correction) still represent a pathetic and deluded national misallocation of resources.

If it continues much longer, it will decimate a couple of generations and leave our lopsided economy serially under performing.

No wonder provincial governments and the BoC are driving a stake into the heart of this beast!

*and GDP related to housing!

#38 MF on 04.03.18 at 7:21 pm

There you go.

Gta RE is going no where but up. And the 905 has “bottomed” at $800000 give or take.

Lol what a joke.

I thought it would be a slow melt lasting decades.

MF

Some of it will. But years, not decades. You just made that up. – Garth

#39 TurnerNation on 04.03.18 at 7:22 pm

Oh…Generation H must be Generation Hirsute.

Here’s the rentals for 1800-2000 of said million dollar row houses near Nowhere, ON.

https://tinyurl.com/y9uduang

#40 Dave on 04.03.18 at 7:22 pm

You can’t find a house for less than 600K in Qualicum or Parksville, and less than 800k in Victoria. There are hardly any jobs in either region. With many seniors you would expect there be more turnover, but there isn’t. How does it make sense to buy a house at these prices?

So don’t. – Garth

#41 JonBoy on 04.03.18 at 7:26 pm

“Seems 50% of the little peckers (aged 18 to 34) plan to buy real estate in the next 24 months – the highest number in eight years.”

It doesn’t matter what they plan. What matters is what they can qualify to purchase in the market. Simple mathematics will determine their ability to qualify for a mortgage to purchase property. It doesn’t matter what they want, think or hope – what matters is their financial information. I think they will mostly get a rude awakening when they sit down with a bank and get told how big (small?) of a mortgage they are qualified to receive.

I moved to the Lower Mainland a little over a year ago and make a very good salary and I’m still not qualified to purchase a typical detached house in the area ($1M, give or take). I was qualified last year, when rates were lower, but with the new rules and higher rates, I’m down to more like $700-$750K, max and that’s with $100K to put down.

Since I refuse to buy a slowly-deteriorating townhouse that will have silly special assessments and cramped lifestyles for $600K, we rent for roughly 60% of what it would cost us to purchase, max out our investments and wait and see. We’re perfectly okay with not buying a house for quite some time (including never buying a house in this area).

#42 Pete on 04.03.18 at 7:26 pm

Same comment as before. “905” is a massive geographical area…905 to the East are declining “slightly”, but Mississauga and Oakville have not dropped noticeably. Research before you buy, but better to wait until Canadian economy concludes its decline. No bargains to be had in 905 area.

#43 @careeraftschool on 04.03.18 at 7:30 pm

“Seems 50% of the little peckers (aged 18 to 34) plan to buy real estate in the next 24 months – the highest number in eight years.”

Garth, have you ever went out for a couple of beers with this age group? They also PLAN on buying a Porsche in two years, several Chanel purses and travel the world before their first child is born. I will believe it when it actually happens.

#44 Brian1 on 04.03.18 at 7:38 pm

A massive influx of illegal immigrants are planning to cross the Mexican border. This should be treated as an invasion and should be met with military force and
Canadian houses are not cheap.

Go back to the White House and lie down. – Garth

#45 john m on 04.03.18 at 7:38 pm

The thoughts of the future in the present mindset i find frightening

#46 One Eigthty on 04.03.18 at 7:41 pm

“…then recoil from buying when it gets cheap”

Cheap? Where is cheap?

Prices in TO and Van have gone up 200-300% since this blog was started. Now a slight YoY drop in price has them labeled as cheap?

I’ve said repeatedly all real estate is local, and that urban 416 and Van will not crash. Get over it. – Garth

#47 Closer to the beginning, not the end on 04.03.18 at 7:45 pm

I think the flaw in your argument Garth is the supposition that so much else will stay constant, and we will therefore have a fairly mild deflation in house prices.

I think quite the opposite. There are truly massive economic and technological disruptions that will be here within barely three to four years, some within months. Employment is about to be dealt some staggering blows, and the trade wars with their economic impact have barely begun.

The shorter term housing market will be affected as much by these as by its own internal bubble qualities, and far more so in the longer term (10-15 years).

And don’t even start about massive government debt in Ontario and Canada as a whole.

The market may drift downwards for a while, giving the illusion of control and measure.

But not long from now, we’ll be plowing into much worse times.

Toronto/905?

I expect price drops of at least 70% by 2025 or sooner

There just won’t be the same kind of rebound we have had in the past.

Recovery will not happen. We have barely begun to recover from the 2008 crash – we’re mostly just drugging ourselves into denial, through debt.

You forgot the asteroid. – Garth

#48 dakkie on 04.03.18 at 7:45 pm

DELETED

#49 Stone on 04.03.18 at 7:45 pm

905 is nearing the bottom.

———

Why? Is everyone getting a 200% raise shortly?

No? I thought as much.

I will give Garth this much though. If you’re uncontrollably house horny, go out there and make low ball bids and add conditions (bank financing, home inspection, etc). Maybe. Just maybe. Someone may actually accept your offer.

In my case, sold my house just over a year ago. The equity from it is now invested and pays my rent entirely via dividends and other distributions. That’s the equivalent of living for free. How can you beat that? Why would I ever want to go back to owning and kissing that easy money goodbye under current conditions? Ridiculous! Oops, did anyone miss that? Ri-di-cu-lous!

#50 AK on 04.03.18 at 7:47 pm

#43 @careeraftschool on 04.03.18 at 7:30 pm
“Garth, have you ever went out for a couple of beers with this age group? They also PLAN on buying a Porsche in two years, several Chanel purses and travel the world before their first child is born. I will believe it when it actually happens.”
——————————————————————-
Does this group make that kind of money ? What do they do for a living ?

#51 TEMPLE on 04.03.18 at 7:47 pm

Will prices drop more? Will sales levels decline? Should we expect this rutting season to be a pale imitation of last year’s? Will the March numbers about to be released suck? Yes and yes, yes.

Come on, Garth. You might be accurate, but your precision is really lacking. How have your predictions been going so far? Besides, if you can predict the real estate market, why can’t I predict the stock market? Because I can’t, and neither can you.

What’s the national price-to-income ratio on Canadian real estate? Right, pretty much near an all-time high. Sure, demographics might be a motivator, but the US has exactly the same demographic profile and their market is a lot more rational than ours. Everywhere. And that isn’t even mentioning what a crappy bunch of jobs the millennials have gotten stuck with so far.

#52 jim on 04.03.18 at 7:48 pm

Not a good time to buy. Not now, not in most regions.

The time to buy is when people are cursing housing. When reports of bankruptcies, repos (etc) are common.

Is there any reason to suspect that areas hard hit by a downturn aren’t going to follow exemplars in Ireland, the UK, USA, Spain, etc?

People who are overextended and underwater can only hold out for so long. When the mortgage renewals come up, many are pooched. Hence, I don’t think the time to buy is yet.

From an investment standpoint rental yields are still terrible.

#53 morrey on 04.03.18 at 7:48 pm

cousin just sold his house after being too greedy for a year. it was at a 30% discount from June 2017 listing. only two offers and both way below asking.

#54 Not RE Advice on 04.03.18 at 7:49 pm

1.2 mil in YVR.
150k in YEN. (SK)
100k in YXH. (AB)
50k in YDN. (MN)

Did Canadians forget they can move? Or is the allure and prestige of Vancouver worth a million dollar premium? I don’t get people sometimes. There are some nice cities in this country.

#55 Only Pay Cash on 04.03.18 at 7:50 pm

Everything else is a ponzie scheme with the odds stacked against you, destined to make others rich while you are up to your neck in debts – just surviving on a pittance while funding the lifestyles and retirements of others.

How come young people just don’t get it ?

Canada is a large and beautiful country.

Many wonderful places from one ocean to another, that are far far nicer every where you look than in the urban jungles along the 49th parallel.

#56 Oakville sucks on 04.03.18 at 7:55 pm

Pfffff…..things don’t just change overnight…

A recession is just around the corner….we’ll see everything drop a lot more. This is the end of the “roaring twenties” and the 30s have just begun.

#57 Peter McLean on 04.03.18 at 8:03 pm

Heh heh, “little peckers.”

#58 MF on 04.03.18 at 8:07 pm

Some of it will. But years, not decades. You just made that up. – Garth

Oh come on. Since I’ve been reading the blog the mantra has been: rising rates, Osfi, stress test, b20, spec tax, and frozen equity.

We were given countless comparisons to the 92-2003 slow down in the gta of what to most likely expect as well.

I guess all the countles re pumpers we have had on here were right. Even if you wait a “few years”, whatever that means, for prices to go back up you will still be ahead.

Sounds like acquiescence to me. Odd, and a little disappointing to be honest.

MF

Oh, so you did make it up. – Garth

#59 crowdedelevatorfartz on 04.03.18 at 8:13 pm

“Remember there are now more moisters than Boomers…..”
+++++
Excellent!

Now, moving forward, they can take the blame for everything wrong on planet earth……

#60 Ustabe on 04.03.18 at 8:13 pm

Don’t think of it as borrowing from the Bank of Mom (and dad), rather be positive. Think of it as a down payment on the inheritance.

Now is when they need it, why not?

On another note, I’m currently working with a couple of these vilified moisters, helping get leased equipment together, polishing the business plan and general introduction type stuff. You know what they have come up with?

A Waste Management type operation for the grow ops. I sort of know what comes of the spent plants but to see it on paper is mind boggling. Feed stock for animals, fiber for clothing, oils for soaps, fragrances, etc. Bio fuel, you can even dry and compress the spent fiber (after oil extraction,say) and end up with a charcoal like fuel for cooking.

So they are going to get paid to haul the spent plants away, convert it into whatever is in demand and sell that to the relevant industry. If one dries up for a time, move to the next. All done using existing tech and equipment that is cheaply available. While true hemp is a better product for all this, the sheer volume of spent marijuana plants will make up for the lessor volume of side product produced.

I’m thinking this might warrant more than some advice and play money…I’ll let you all know when the IPO is.

#61 Linda on 04.03.18 at 8:17 pm

The ‘parental bank’ may be poorer than you think. Given stats quoted in this very blog, not a few Boomers haven’t so much as opened a TFSA, let alone stuffed an RRSP, invested a portfolio or saved even coffee money, let alone retirement moolah. Some parents will be able to afford to fund ‘the kids’ but certainly not all. Further, if the Mills have been lurking virtually rent free in basements all these years, they should have been able to save their own down payment. Or expect to inherit the family home when Mom/Dad kick it. This presumes the sale of the home won’t be necessary to keep Mom/Dad in Depends & provide care when they are too decrepit to care for themselves any longer. That inheritance may vanish like morning dew.

As for purchasing, if the Mills are working a plethora of low paid, dead end jobs just to keep afloat while living in the parental basement, just how likely is it that they will be able to 1) qualify under the stress test & 2) actually afford to pay for a mortgage, even if Mom/Dad loan them the down payment? Seems a bit chancy to me.

The BoM money comes from HELOCs, which have been romping higher. – Garth

#62 tccontrarian on 04.03.18 at 8:19 pm

“The bank’s latest buyer-intention survey published Tuesday is an eye-opener for those seeking a market collapse. Seems 50% of the little peckers (aged 18 to 34) plan to buy real estate in the next 24 months – the highest number in eight years. A whopping 84% think a house is a good investment and one in 10 would actually buy a residence the way they purchase drones, coconut oil and fairy lights – online from Wayfair without ever seeing it.”
———————————————————-

This is music to my (contrarian) ears. Any time more than 80% of traders are bullish anything, the market moves in the other direction sufficiently enought to punish them. Check out the Market Vane Report:

Market Vane Corp. of Pasadena, CA, weekly surveys 100 investment advisors from brokerage firms. This indicator is one of four different sentiment polls or surveys conducted by investment advisory service newsletters and generally made available to subscribers via telephone recording. The data is also printed in Barron’s. Popular interpretation is generally contrarian.”

https://cmtassociation.org/kb/market-vane/

Also, history shows that what people ‘intend’ to do (with investing, at least) almost always differs from what they ACTUALLY do with REAL dollars.

Like a couple others here, I’m waiting for ‘blood in the streets’ before I consider buying. And that will not be this year, definitely.

TCC

#63 Nick B on 04.03.18 at 8:19 pm

We are in the second inning of this “correction”, still very early. I feel there’s much more room to run to the downside from here. I’d argue was have a real estate bubble, typically there’s no soft landing and so far we haven’t popped. I may be wrong given I don’t have my own blog :-)

#64 ben on 04.03.18 at 8:23 pm

Garth – not so often you mention Montreal, glad to see it gets a look in today.

I think the market here is a little soft. Some listings are getting sold but at *less* than the target price.

It will be interesting to see if the market also falls here, given that prices are far less detached from wages. Do you have an opinion on Montreal’s direction? I personally think it will also go down a decent amount (more than 10%), but time will tell.

#65 ben on 04.03.18 at 8:24 pm

Does anyone use any raw data for analysing prices? Say a CSV format with price, post code etc? Is this sort of thing available for Montreal?

#66 ben on 04.03.18 at 8:24 pm

I think with the NAFTA good feels it’s getting close to a time where I get partially out of CAD for a bit.

As Jack Nicholson said: what if this is as good as it gets?

#67 When Will They Raise Rates? on 04.03.18 at 8:25 pm

The bank’s latest buyer-intention survey published Tuesday is an eye-opener for those seeking a market collapse. Seems 50% of the little peckers (aged 18 to 34) plan to buy real estate in the next 24 months – the highest number in eight years. A whopping 84% think a house is a good investment and one in 10 would actually buy a residence the way they purchase drones, coconut oil and fairy lights – online from Wayfair without ever seeing it. Remember there are now more moisters than Boomers.

They may intend to buy real etate, but that doesn’t mean that they can , because as you pointed out, most of them are completely clueless – unaware of B20, rising rates, etc…

So the real question is, will single detached prices come down enough for them to be able to buy?

If so, I think we’re looking at a 50 percent correction from here in GTA SFD before the majority of them will be able to enter this market.

#68 YYZer on 04.03.18 at 8:28 pm

#32 Disillusioned
That”s exactly how I feel. I am the “Greater Fool” for not having bought in the 416 years ago.

Hindsight is so clear, and so useless. – Garth

#69 Lee on 04.03.18 at 8:32 pm

#39 MGTOW,

Nobody marries Canadian women anymore. Everyone goes back to the old country.

#70 SimplyPut7 on 04.03.18 at 8:33 pm

Well, in some markets there will be more declines. In others, nope. All real estate is local and what’s a smart strategy in Halifax may be suicidal in Calgary. BC is pooched. 416 is not. 905 is nearing the bottom. Montreal is cheap and steamy (mais oui). The prairies are comatose. Alberta is troubled. Every city is unique. But there are commonalities – and recently they’re suggesting a correction in the detached market may soon have played out. If you are waiting for 50% off, in other words, you may need a few decades. Hope you’re 12
——————————–

I think RBC created a survey to justify why they, the other big banks and credit unions no longer give big discounts on mortgage rates.

Last year they were giving big discounts on prime rates to get new borrowers into mortgages with them before B20 made it difficult for people to leave them for other lenders offering better rates. If they convince people the market is healthy and booming then people will believe that a rate hike or two from the Bank of Canada this year, won’t impact people renewing their mortgage or buying new properties.

* The fact is the Home Capital mess and others invested or borrowing from private lenders haven’t disappeared.
* The flippers still need to offload the expensive properties that should have been sold at no less than 2017 prices.
* The private lender will have to increase mortgage rates on borrowers who can barely make the payments as interest rates go up while the people they used to rely on to invest with them so they can lend money to subprime borrowers have more options, as interest rates rise on lower risk fixed income securities.
* Mortgage investors will not be able to give as much as they used to due to new syndicated mortgage lending requirements coming into effect July 1, 2018.
https://www.fsco.gov.on.ca/en/mortgage/Pages/smi-amendments.aspx

We also haven’t talked about the people who lost their jobs or have reduced hours because of the minimum wage hike and the ripple effect from any slowdown in the housing market. And the local/domestic condo flippers and speculators who don’t realize when all of their units come to market, there may not be many buyers wanting to pay a monthly maintenance fee of $500 or more after paying the mortgage and other housing expenses.

Millennials have very little emergency savings and barely have money to make these mortgage payments now, what happens as rates continue to rise, what expenses will have to be reduced to pay the increasing mortgage costs and how will those industries that relied on that spending from home buyers be affected?

And at some point, people will realize they do not need to live in the GTA to have a detached house, a full-time minimum wage job can carry the cost of a house in smaller towns in Ontario. What happens to those flippers, speculators, and homebuyers who were relying on millennials to keep buying the homes they own at ridiculous prices to sustain their lifestyle?

#71 Nonplused on 04.03.18 at 8:35 pm

Funny thing, human nature.

Today I bought my son new soccer cleats (even though the snow is still deep on the ground because of global warming), and I was able to convince him of the efficacy of buying the blue ones rather than the orange ones because the blue ones were on sale and otherwise the same make and model. I personally am one of those guys who “stocks up” when Costco puts something on sale. If it’s cheap I am much more inclined to buy. Need dog food? 1 bag. Dog food is on sale? 2 bags. I think most people are like that when it comes to personal items and food. Even cars are like that, for example when I bought my truck the fact that the diesel option was “free” (normally $8900 at that time) was quite motivational. Probably wouldn’t have bought it otherwise and even at $8900 off of list it was still an expensive touch.

I think most people act like this. I mean who doesn’t order 2 beers 5 minutes before happy hour ends? If you are going to be having 2 more, it just makes sense. Why pay more? Ever wonder why “wing Wednesday” fills the pubs? Cheap wings. they used to always be cheap because they were considered garbage but now you have to buy them on sale just like everything else. 2 for 1 appies? Guess what we are having for dinner? Everyone loves a sale.

But as Garth points out, when it comes to assets, people have the opposite attitude. I think there are 2 reasons for this that make buying assets a lot different than buying a pair of soccer shoes on sale.

The first is that most people have no idea what something like a house or a stock or a bond “should” be worth, they only have the last few trades to go by, who were quite possibly made by people just as ignorant as they are. Thus, they look for trends, which are just changes in human perception not changes in value.

The second is that assets are much more expensive and the possibility of large gains or losses is much greater. Who cares if you paid $30 to much for some soccer shoes? Whatever you paid the damn kid is going to grow out of them next year so your losses on the $120 or $90 will be complete and everybody knows it. You can’t give away a 4 year old computer so you buy it on sale. And you can sort of tell the price by looking at the sticker, there is competition in those markets. With assets it’s different, you can either make a mint causing FOMO (fear of missing out), or lose a ton causing FOGC (fear of getting creamed) so people react entirely differently.

This “discount mentality” happened to me when I bought my house. I bought it for about 33% off the original list, but the original list was delusional and it had sat on the market forever and been relisted several times. When it finally got more in my price range, knowing the history I made a low ball offer, negotiated a deal, and later found out I still paid more than county appraisal or what the bank thought was replacement! Oh well at least not by much and we really like the place. But I was taken in by all those discounts.

I used to work for a guy who owned a couple of lighting stores and I watched him pricing some new lights that had come in one day. He wanted say $75 for this fixture so that was “our price”, but the price tag also got a “compare at” price of $120 that he just totally made up. Pricing is propaganda and people really don’t know what stuff is worth. That’s why we like to buy things on sale. But not assets. We don’t know what those are worth either so we buy (or don’t) the trend.

And even the house you live in is an asset. You can sell it and despite that Garth may disagree with me it does have a rate of return. Let’s take the example of a house you live in and assume the mortgage is paid off. There is something called “owner’s equivalent rent”, which is the after tax money you would have to pay to rent something similar. So if you don’t have to pay $2500 a month to rent something you can buy for $750,000, your getting 4% right there. But that’s not counting taxes. If you are in a 50% marginal tax bracket it’s more like 6% taxes included. Sometimes money you don’t have to spend is a rate of return too.

So that’s a lot I covered today, a bit of psychology, finance, purchasing advice, and housing. I am trying to remember what my point was as I am sure you are also wondering if you read this far. It is this: If your “owner’s equivalent rent” is equal to or less than what you would otherwise pay for rent for what you want, you can afford it (don’t listen to the banks look at 3-4 times income), your job is secure, your marriage is stable, and you plan to be there a long time, go ahead and buy even in this down turn. Sure, you might buy too early. But just as Garth advises not to panic when stocks decline, you shouldn’t panic when houses decline either if you are in it for the long term. I rented for 3.5 years before I bought this house, and I saved a lot of money. But I also blew $105,000 on rent. I still probably saved money overall, probably saved quite a bit overall, but it’s a tricky business.

But of course if you really can’t afford the house unless it appreciates, now is not the time to buy.

And to all those millennials out there, I would say unless you are married do not buy anything. Why would you? Your life is not yet stable and you are going to have to sell the thing and move before you know it. Instead buy a motorcycle and a pair of back country skis and a tent. See the world, live large, have fun, be mobile. Until you have a wife you don’t need or want to own property. Not even if the “owner’s equivalent rent” works out. You won’t live long in your condo with your new wife before she wants more bedrooms, so don’t tie yourself into anything. Besides maybe a motorcycle. You can get a nice 250 dual sport for $5,000 new, and if you want something bigger don’t worry they have it for a bit more money. 2 month’s rent and nothing in a housing correction your condo could go down that much in a month. And unlike stocks, a dual sport never goes to zero.

#72 Adam on 04.03.18 at 8:37 pm

Am I the only one who had flashbacks to Bush’s “Mission Accomplished” speech when I read the first part of this post saying the correction has nearly played out?

Nearly ten years of price increases, some of them absolutely massive, and, all of a sudden, after just a few months of bad sales stats, the correction has nearly played out?

Wow.

In some areas, yes. As stated. How have so many lost so much reading comprehension? – Garth

#73 Elcaminokid on 04.03.18 at 8:37 pm

We will see the fallout of all this..eventually. Bought real estate in 2001 with my, now, ex wife. House was 124k. She decided to split after 12 years. Left me and my son. Hoped to have kept the house but after 3-4 years of lawyer bills I decided to cash out and sold for 309k in 2016. I now rent with my son in a clean quiet building. Allin for a month is about $1500. Best thing I ever did, and feels so good. I have cash, some investments and no debt. Hydro bills less than $30/month…do not pay for water. Unlimited Internet/Tv/phone..$92/month(secret deals happen in buildings.lol) Apartment insurance is minimal. I find myself not working 60+ hours a week anymore. Now I work a 40 hr week and have alot of time for myself and for my son…and no worries. Welcome to the rat race mills, it get’s worse…good luck to you!

#74 rational on 04.03.18 at 8:39 pm

Garth, many years ago you argued that average families could no longer afford average house prices so a correction is inevitable.

Do you think now average families can afford average house prices in general?

Maybe you are no longer an average family so your opinion has changed as well.

Average families can afford cheap debt, not expansive houses. They only think they own them. And, by the way, why be average? – Garth

#75 Lawnboy on 04.03.18 at 8:41 pm

Those 3 puppies in the pic look like they need some of the best Belfountain has to offer.

Coming soon…new flavour Ice Cream .( I think by July ),

IM-PEACH-MINT

#76 Elcaminokid on 04.03.18 at 8:50 pm

Yes I did keep my Elcamino. My son cannot wait to get his hands on it! Lol!

#77 PastThePeak on 04.03.18 at 8:51 pm

#50 AK on 04.03.18 at 7:47 pm
#43 @careeraftschool on 04.03.18 at 7:30 pm
“Garth, have you ever went out for a couple of beers with this age group? They also PLAN on buying a Porsche in two years, several Chanel purses and travel the world before their first child is born. I will believe it when it actually happens.”
——————————————————————-
Does this group make that kind of money ? What do they do for a living ?
++++++++++++++++++++++++++++++++

Probably plan on buying when Bitcoin hits $100K..

#78 Life in the burbs on 04.03.18 at 8:53 pm

Garth
I have come to the conclusion that between the foreign buyers, GTA amateur land Barrons, and land lusty moisters the gig is up. Unless houses in the GTA shrink 70 to 80 percent a non bank of mom house buyer has not a chance of getting on the property ladder. Yes the deck is stacked against us and the Canadian dream will not be attained by everybody that is willing to work for it. Maybe it is just time to concede the GTA and Vancouver to these house lusty individuals and call it a day. Canada is diverse and has plenty of great cities to be had lets just not kid ourselves anymore.

#79 PastThePeak on 04.03.18 at 8:55 pm

Has much of the RE price correction happened? History would say otherwise. Typically the catalyst for the big first step down is a recession. It hasn’t happened yet, but all the ingredients are in the pot and it is cooking…

Have you tried making an offer? Come back when you have and tell us about it. – Garth

#80 Long-Time Lurker on 04.03.18 at 8:57 pm

#84 Smoking Man on 04.02.18 at 10:18 pm
600k deleted if I could only remember one of them.

Its been a fun 10 years. Don’t think you’ll be seeing a lot more deleted from me. My body can’t take the truth syrum much more. I either go all in or stop altogether. No middle ground from what I see.

>If you do a search you can learn how shock rocker Alice Cooper beat his alcoholism. Apparently, Alice Cooper’s dad was a pastor and his grandfather was an evangelist. The apple doesn’t fall very far from the tree. (Hee hee.)

Also, Charlie Sheen might like your book. I wrote that before.

#81 PastThePeak on 04.03.18 at 8:59 pm

Or, possibly I am wrong, and we are in the mode of perpetual growth. Maybe…

AI + IoT + 5G + diversity + inclusion + equality + more taxes = growth forever

No more recessions…
Governments can borrow every year with no impact…
RE values only go up…

Perhaps we are living in miraculous times.

#82 Sitting on the toilet thinking on 04.03.18 at 8:59 pm

Bottom line is there will be no significant correction unless we have a significant recession. As long as people are working they will pay their mortgages

#83 Hyde on 04.03.18 at 9:03 pm

#31 Lee
…I think word on the street is $1.2 million in Toronto is absolute bottom…

I know the word on the street is that you’re a Moron. 2 properties in Thornhill and that makes it legitimate? How about those same Thornhill properties in your boring neighbourhood that have been re-listed over and over and haven’t sold?

Go play with your pacifier.

Prices have come down and will continue to come down. Don’t believe the hype that prices will not continue to come down. These real estate pumpers were saying the samething last year and here we are, a year later, with power of sales, higher rates and lower prices. Toronto is no different, prices will continue to come down like the rest of the GTA.

#84 Fiendish Thingy on 04.03.18 at 9:05 pm

Sounds like a lot of millennials’ dreams and intentions will be smashed to bits when they meet the very real, unfake news of the B20 stress test.

This will freeze the condo market , which will bring down the whole house of cards.

The Lower Mainland and Fraser Valley won’t know what hit them.

#85 Dog In The Fight on 04.03.18 at 9:05 pm

My wife and I are shopping for a home. Our budget is $2.0 million, but a nice detached $1.5 is our ideal. I am
Offering assesed -20% and will come up 5%. We are looking in the Coquitlam, Port Moody area. I don’t expect to have a house before the fall, as the sellers don’t really believe yet. But the market is stone cold.

#86 Tom from Mississauga on 04.03.18 at 9:09 pm

Maybe the bottom in Mississauga, 2br condos around Square One were $5-600K ish in June, now one can be had for $350K.

#87 PastThePeak on 04.03.18 at 9:09 pm

#79 PastThePeak on 04.03.18 at 8:55 pm
Has much of the RE price correction happened? History would say otherwise. Typically the catalyst for the big first step down is a recession. It hasn’t happened yet, but all the ingredients are in the pot and it is cooking…

Have you tried making an offer? Come back when you have and tell us about it. – Garth
+++++++++++++++++++++++++++++++++++

Nah. We live in Ottawa, have owned our home free & clear for 6 years, and have no interest in upgrading (first kid hits uni in 2 years). RE has barely moved here for almost a decade, though has had a bit of a pop in the last year.

I am not saying someone shouldn’t buy a ‘house’ now. If they can afford it (they don’t have to live on the edge, can save/invest for retirement and life’s expenses), have a long term ownership horizon, and can weather some lower market values, then sure.

But I still believe our extremely indebted Canadian society will have a doozy of a recession when it (inevitably) comes…

#88 Jason Sensation on 04.03.18 at 9:11 pm

Not sure if the “this is a buying opportunity now” is a long winded April fool’s day joke but I would rather be wrong again about the housing market than buy now. Having said that at least ill be liquid, diversified and sane thanks to Garths advice.

#89 Me on 04.03.18 at 9:13 pm

Someone here types a 70 % drop??

Dude, 2 words ,
Replacement cost

#90 JSquared on 04.03.18 at 9:13 pm

re: #30 MGTOW
DO NOT marry a female in Canada because she will divorce you for her feminist cause.

____

Did it ever occur to you that women divorce because the guy in the marriage is an actual jackass?!? What is it with all the “Men Going Their Own Way” bullcrap? If you’re so unhappy, then men, just keep on going….Trust me, no woman wants your toxicity in their life. Take a look in the mirror bud, you might see the reason for a lot of your problems with women!

#91 MF on 04.03.18 at 9:19 pm

“Oh, so you did make it up. – Garth”

http://www.greaterfool.ca/2015/08/

“In 1990 the average Toronto house traded for $255,020. Ten years later the same house was worth less – $243,255 – because rates stayed high. By 2010 it had mushroomed, to $431,276, as our current era of cheap money began. Today the GTA average is $609,236, and rates have bottomed.

Logic then dictates the negative correlation between house prices and the cost of money is bad news for the next decade, as we head towards rate normalization.”

-Probably petty to post. I can’t believe I even found the link. It actually wasn’t hard. Nothing was made up.

Any ways, You have taught myself (and countless of us) how to invest and be balanced. So for that I am grateful.

MF

So be grateful and stop whining. – Garth

#92 Willy H on 04.03.18 at 9:23 pm

Only a handful of days since Easter and Garth is being crucified in post after post.

I will come to his defense after having gleefully participated in some merciless scourging in a earlier post.

If I am reading this article correctly he states that we have witnessed varying degrees of retrenchment in housing prices in markets across the Great White North. Some markets are already played out, some will drop further and a few have barely budged.

He asserts that an unprecedented number of young millenial virgin-buyers are looking for some real estate tail (citing a recent study) and he further asserts that this may act as drag on aggressive price-drops! This may result in the market plateauing, tempered by almost certain interest rate increases.

Pretty reasonable assumptions based on the fact that the vast majority of folks (millenials included) are financially illiterate getting most of their news and financial advice from Reddit, Facebook crypto-pushers and TMZ.

I would politely disagree. I would argue that a decade plus of disorderly and economically disconnected price increases in Canadian residential real estate will be book-ended by an equally disorderly collapse in prices somewhere around 30-35% in most markets. It’s asset bubble yin-yang in my humble dog opinion.

Garth will rise again …

… tomorrow’s post is only a sleep away.

There is already a 30%-35% decline in many areas. In others, sales have toppled leaving motivated sellers. Get out there and discover for yourself that asking prices have little in common with sale prices. – Garth

#93 Willy H on 04.03.18 at 9:26 pm

Fiendish Thingy on 04.03.18 at 9:05 pm
Sounds like a lot of millennials’ dreams and intentions will be smashed to bits when they meet the very real, unfake news of the B20 stress test.
— — — —

Agreed, B20 is a bingo call to these folks.

#94 Yorkville Renter on 04.03.18 at 9:29 pm

If RE always reverts to the mean, then we’ve still got a LONG way to go.

When March and April’s numbers come out, it will be BIG news and the masses will wake up to the new reality… it’s already starting to happen.

#95 NotLegalAdvice on 04.03.18 at 9:29 pm

Why do you say the 905 is “nearing the bottom” ?

Detached homes are still 300k higher than they were in 2013 – 2014.

A 700k home in 2013 is selling for a million dollars now. So even if I offer 950k, I’ve still missed out.

Tell me this Garth, how much should I place on a 850k house in the 905? What do you think a “desperate seller” would accept?

I’m thinking I go in with 700k.

#96 David on 04.03.18 at 9:31 pm

Do you like falling knives?

#97 NotLegalAdvice on 04.03.18 at 9:31 pm

Sorry I meant to say “how much should I offer on a 850k home”

#98 David on 04.03.18 at 9:34 pm

The recession and devaluation of the currency hasn’t started in earnest yet. But when it does, look out. Buying in the 905 would be total insanity.

#99 Cory in Shangalila on 04.03.18 at 9:35 pm

To the guy who was complaining that rental doesn’t make sense in Canadian housing: Edmonton, Regina, Saskatoon and Winnipeg all have houses for 400K. Pretty sure rental would cover carrying costs.

Anyone care to correct me if I am wrong here?

#100 Mark on 04.03.18 at 9:47 pm

So if I was looking for something in Markham or Richmond Hill, I would aim for a detached at what price? What percentage discount would there be on the listed price? Looks like most (3-4 bdrms + in an average school area) are priced above $900 k. Prices on the way down are sticky so I don’t think I will see evidence of anything resonably priced anything soon.

#101 Fuzzy Camel on 04.03.18 at 9:50 pm

DELETED

#102 Flat Earth Society on 04.03.18 at 9:54 pm

#89 JSquared

“Did it ever occur to you that women divorce because the guy in the marriage is an actual jackass?!? What is it with all the “Men Going Their Own Way” bullcrap? If you’re so unhappy, then men, just keep on going….Trust me, no woman wants your toxicity in their life. Take a look in the mirror bud, you might see the reason for a lot of your problems with women!”

—————

Toxicity, it appears by your response, is not a male only problem.

So, to answer your questions, for every Jackass there is out there, there is also a (babe in total control herself). Not pleasant to deal with. Not pleasant at all.

What is with MGTOW? The answer is (babes in total control herself). If you, as a “toxic male”, have a choice between going to the pub with your pals or being ragged on all night by a (babe in total control herself), which would you rather do? Ya boys you know the answer and don’t you forget it.

Some men are toxic. Certainly. But that is not one of the major problems we face today.

I looked in the mirror and discovered the truth. Men and women are equally as toxic, so I stay away from both.

#103 not interested on 04.03.18 at 9:54 pm

in real estate at these prices.

let me know when i can buy a house for $400,000ish in the GTA that isnt a dive

until then, im renting. And i maybe renting for life…and that’s cool

btw– markham decent houses are going for over $800,000. Take crazy elsewhere

#104 Tedfiftyfour on 04.03.18 at 9:58 pm

Garth is correct.
Generally the worst is over. April and May will surprise most people and fall prices will be positive. Sales will continue to lag.

#105 David on 04.03.18 at 10:05 pm

Why is Calgary suicidal? Rent is definitely a bargain compared to buying but prices are coming down. It’s a great city, better political landscape than toronto and van, and has amazing outdoor recreation. Oil seems to have stabilized and they are diversifying and attracting other head offices. You still see a crash? I think the same logic of tossing out an offer applies.

#106 Gyga on 04.03.18 at 10:06 pm

Prices are crazy in Mississauga, absolutely insane.
Bottom? No way.

#107 young & foolish on 04.03.18 at 10:10 pm

Hey Blog Dogs …. try to enjoy your life … a house is just a house, and if you think they are too expensive in your area, then don’t buy. But waiting for a collapse in our major cities is a bit of a canard. A 50% haircut in 416 or downtown Vancouver would probably mean we are is a serious recession and you will probably be on shaky financial ground.

Speaking to the older members of my family, I have learned that housing was never really cheap, or easy to maintain.

#108 young & foolish on 04.03.18 at 10:18 pm

“A 700k home in 2013 is selling for a million dollars now. So even if I offer 950k, I’ve still missed out.”

Um, ok … and shares of TD were trading for $40 each. Did you buy some then, or did you miss out?

#109 the Jaguar on 04.03.18 at 10:20 pm

So much emotion and angst poured into prices and gambling on the real estate market with no thought or consideration to affordability or its impact on enjoying other aspects of ones life as a consequence of that lack of affordability. Like a crazed pursuit of life extension versus living a quality life. Quality versus quantity. It’s not what you own but what does or does not own you. It’s an old chestnut, but the real goal and source of satisfaction is the daily struggle and small achievements along the way.
Of course it’s a ‘no sell’ scenario, but I feel quite happy to have figured it out early in the game. Feel like I am living in an opium den, though.

#110 young & foolish on 04.03.18 at 10:21 pm

“If RE always reverts to the mean, then we’ve still got a LONG way to go.”

I wonder about this … what is the “mean” supposed to be today after 10 years of EZ money policy?

#111 arfmoocat on 04.03.18 at 10:32 pm

Investor Cash Leaving Canada For U.S. ‘In Real Time,’ RBC Warns

https://www.huffingtonpost.ca/2018/04/02/investment-canada-us-nafta-taxes_a_23400899/

#112 DON on 04.03.18 at 10:36 pm

I am with the second inning folks.

Too many troubling factors present in these times. Canadian economy dipping etc.

Yes real estate is local. The trendy places are always sought after, but far from the best places to live.

MF – you should know by now that Garth routinely chums the greater fool shark tank when things get slow. Remember to read every word or he will get you on a technicality. Bank survey should have tipped you off.

We have yet to have a good full blown Canadian recession in a protectionist global environment.

If the history of human nature is correct…batten down the hatches. Everyone’s mileage will vary.

#113 AisA on 04.03.18 at 10:37 pm

You’re all out of your minds if you think 50% is all that is going to get butchered out of our major city centers.. Just an opinion and everybody has one.

#114 Brandon on 04.03.18 at 10:43 pm

84% plan to buy yet 60% have never heard of B20? Those figures seem to be at odds with economic reality.

#115 LMFAO on 04.03.18 at 10:43 pm

Go back to the White House and lie down. – Garth

…………

#116 Our pal val on 04.03.18 at 10:44 pm

Why buy $1 million house when you’re not a millionnaire…… the mils and others will feel like stooges after they sign on…. it will feel like it takes millennium to get out of debt …somewhere in all that they have to have a family etc. etc. This is not a winable formula… game over!

#117 John in Mtl on 04.03.18 at 10:46 pm

#47 Closer to the beginning, not the end on 04.03.18 at 7:45 pm

You forgot the asteroid. – Garth

P R I C E L E S S -;)

#118 Leo Trollstoy on 04.03.18 at 10:47 pm

All real estate is local and what’s a smart strategy in Halifax may be suicidal in Calgary. BC is pooched. 416 is not.

416 is not

true

#119 will on 04.03.18 at 11:03 pm

#11 For those about to flop…

don’t grizzle, chisel

Ha! thanx for the usage. i forgot about that. my dad used to use the word “chiseler”. that is, someone who rips you off little by little.

#120 Samuel on 04.03.18 at 11:06 pm

I agree with Garth and will add. Single millenials have been buying condos and townhomes by themselves. 2 singles hook up, sell 2 attached properties and buy a single detached. Also many boomers and their kids are also selling 2 places and living in 1 detached house usually with a suite for the wrinklies. If the trend of selling 2 attached and buying 1 detach continued especially in light of the windfall equity in condos and townhomes this could become a long term trend of detached homes outperforming.

#121 A BULL MARKET IS BORN FROM DESPAIR on 04.03.18 at 11:24 pm

Garth
You profess to know about the markets and economics and trends and all that stuff. Somewhere in your life you must have heard the truism that says a bear market is born in the height of euphoria and a bull market is born in the depths of despair. We haven’t even begun to get into the depths of despair. Your call about buying now is completely unjustified and goes against all investment wisdom. Way too early and violates the first principle of investing

#122 Jimini on 04.03.18 at 11:27 pm

Gen H will need Prep H.

#123 SoggyShorts on 04.03.18 at 11:46 pm

#91 MF on 04.03.18 at 9:19 pm

There is a HUGE difference between
decade
and
decades

Garth said it doesn’t look good for the next decade, which one would take to mean 8-12 years if you are being reasonable.

You claimed he called for decades of melt, which implies at least 20 years, and sounds like up to 40 years.

See the difference?

#124 Reading Comprehension... on 04.03.18 at 11:47 pm

It’s really funny reading the article then negative comments people write about what they want the article to say rather than what it does say.

Says a lot about those people writing comments.

#125 Cathy Groom on 04.04.18 at 12:02 am

I’m not so sure there are very many miillenials in a position to buy a home. I know of only a few….most are working low wage or contract jobs, back in school again to get a better job, in the army or not even working. And the rich Moms and Dads, granted there are more of them….but they also want to enjoy retirement and not outlive their money.

#126 Welcome to Slurrey on 04.04.18 at 12:12 am

Garth i agreed with your opinion 10 years ago that we were gonna have a correction , but i can say i was wrong then about yvr ……but so were you ……. why is it so hard to admit that although you had good facts to base your opinion on the subject ………. prices have not fallen the way you had pictured , instead have risen to a point of insanity and if they do come down will be nowhere close to your original prediction ………..

#127 Victor V on 04.04.18 at 12:26 am

#106 Gyga on 04.03.18 at 10:06 pm
Prices are crazy in Mississauga, absolutely insane.
Bottom? No way.

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

Average SFH prices are down y/y as are sales.

https://mississauga.listing.ca/detached-home-price-history.htm

#128 NumNum on 04.04.18 at 12:27 am

“Learn to read. Where there have been 30% declines and sellers are motivated, give it a shot. Higher rates going forward will change the market chemistry. Or you can come here and be pissy. – Garth”

Are you suggesting offering 50% of the asking price? Because if that isn’t feasible and is unlikely to be going forward then those who didn’t buy a house in the last decade have really missed out. That implies there is nothing “troubling” about Canadian real estate at all.

#129 Half Full on 04.04.18 at 12:28 am

Eight years ago you said sell. We did. We’ve been renting since, waiting for the slow correction. Waiting for the inevitable reverting to the mean. Now you say this is as good as it gets for a correction? I’ve got news for you. Prices are not going down. They are up and only up in my hood. We are in small town BC. No new jobs, no industry. I wish we would have bought years ago when places cost 30% less. No, I haven’t lost my reading comprehension abilities. Yes RE is local. Yes it has only gone up.

#130 rental property math on 04.04.18 at 12:33 am

https://www.realtor.ca/Residential/Single-Family/19226645/142-WEST-18TH-Street-Hamilton-Ontario-L9C4G4

Just get a bung in a good area of Hamilton for 500K. No need to whine.

#131 Go Kart Mozart on 04.04.18 at 12:48 am

re: the picture…….. does the ‘H’ stand for Halitosis?

#132 JCM on 04.04.18 at 12:56 am

We’re clearly only in the early stages of the correction. Honestly, the recession hasn’t even started yet. (A recession almost always follows the bursting of a housing bubble like the massive bubble that burst in the GTA last year. Ireland, the US in 2008, Canada in 1990, Spain, Japan… look it up)

Also, Vancouver RE has been treading water for a year. If it truly is “pooched” now… that’s 20% of the BC economy, the 3rd biggest economy in Canada. If Van RE rolls over, guess what: That’s national.

Real estate is indeed local, but it is inextricably linked with the economy, which is national. C’mon Garth!

#133 Mattl on 04.04.18 at 1:02 am

There are always deals be had. We bought our latest place during peak crazy. Knew the listing history of the home and figured the offshore owners might be motivated to finally unload it. Got the house for 12 percent off ask and 15% under assessment. This in a market that was going crazy.

Garths advice is good, now is a decent time to really know your numbers and make a deal. Or you can wait until the market turns back into a sellers market.

#134 Hairy Potter on 04.04.18 at 1:17 am

We’ve been shopping for a bigger place since spring 2017. Finally pulled a trigger this February, sold our condo and purchased a house in Van. We saved around $250K by making a decision to buy in 2018. So I agree 100% with “With condo prices rising and the value of detacheds falling, the leap from one to the other shortens”. I experienced it myself

#135 Disgruntled on 04.04.18 at 1:33 am

Garth it is clear your blog is pretty Ontario centered. But just FYI prices haven’t dropped a damn bit in Vancouver so maybe this is not so much you think anything’s going on sale here but you’ve perhaps finally come to the realization This Is The New Normal. Fortunately I did buy a condo but that’s pretty small consolation considering I was actually in the market for a detached about 12 years ago!

#136 Oft deleted much maligned stock Picker with a great tan on 04.04.18 at 1:50 am

Not time to buy. Why stabilize a falling market. Sit back until there’s blood in the street. Make offers so low you hear screaming a mile away. Lowball for a year until everybody is doing it and then when your local realtors is on his knees you make an offer at a quarter of ask. It’s time to think like a pirate….not someone’s savior.

#137 Two-thirds on 04.04.18 at 2:08 am

Tonight’s post reminded me of my brother’s recent experience in Edmonton.

He was looking for a 4-bed SFH in the $500-600k range and apparently, there was a lot to choose from. He actually said the trouble was too much choice, in almost every neighborhood.

The kicker is that price reductions were hidden all over, but only the realtor could provide the history of the houses my brother was interested in. He actually shared a few with me and I was shocked to see price drops of anywhere from $30k to $100k on properties that were listed last fall and re-listed in the spring, some 2-3 times in between.

He had about 15 houses on his list, and of those, 4 or so had pending offers on them within a week of listing. He said 2 or 3 of his favorites were basically sold within a week, so he decided to start looking at higher priced properties that had big discounts: the mid-500s in top neighborhoods sold relatively fast!? He actually put an offer on a place, as a backup, because the house that had been sitting for over 200 days unsold and empty got an offer on the same week he saw it. The first offer went through, for a reduced price after more than 6 months on the market.

The place he ended up buying is a 4-bed with a 3-car garage and a massive yard in a mature neighborhood, boomer house. He said that schools in the area were the deciding factor, and that apparently a lot of people want their children in these schools and not many houses like these come to market. Last week he showed me the listings in his new neighborhood and only 5 houses are for sale, none like his and 3 are million-plus. I guess Garth is right, all RE is local.

I wish him well; he and his wife both have stable, non-oil-related jobs and are highly educated, established professionals. Apparently the bank approved them within 48 hrs (they had a pre-approval for more than the sale price) and they had 20% down.

So Garth may be right about certain markets for detached, single family houses: price drops and lots of supply = discounted sales and (hopefully for my bro) buyers getting a deal.

#138 Smoking Man on 04.04.18 at 2:17 am

Why I love Vegas. Wobbling back to your room is not a cultural crime. You blend.

This last weekend I had my kid on periscope, me on periscope doing karioki .

He felt compelled to walk me back to my room. Along the way a couple of cop chicks in steletos and fishnet leggings took a photo with me. I hope my kid tipped them.

It went up on Facebook Twitter and I had zero recollection of grabbing their thighs.

I deleted it all after I had about 5 coffees in the next morning.

Truth drilling has consciences. Be careful. Better to be a liar it pays better and no fear of an assains bullets.

Truth chasers are in Some ones scope.

#139 lckdown on 04.04.18 at 2:40 am

If you can afford the monthlies and you have been looking to buy, go ahead and do it. There are areas that are turning into a buyers market.

If you are wanting to buy there is no reason to time the bottom of the market. Unless you are a speculator.

#140 jane24 on 04.04.18 at 2:59 am

Why do so many on this blog think that immigrants will maintain insane RE prices. My parents immigrated to Canada in 1970 with five kids, five suitcases, a few tea chests of effects and started again from the bottom. I don’t see that the story would be any different today for most newcomers.

#141 Saint Herb on 04.04.18 at 4:47 am

There is already a 30%-35% decline in many areas. In others, sales have toppled leaving motivated sellers. Get out there and discover for yourself that asking prices have little in common with sale prices. – Garth
—————————–

If this is the case, why does a list of solds for the week in Vaughan area show all the houses sold at 95-100% of asking. And the prices still seemed pretty high. If these kind of price drops have happened, why haven’t they been reported. That seems like big news.

I am also looking for a price decrease in the King City area. There the prices tripled over the past 6 years. What costed 1.2M now cost 4M and they haven’t budged.

Maybe I can’t see the forest for the tree. If renting and waiting for the bubble to burst was the plan, and this is it. It certainly was not worth the wait.

It was suppose to be; sell house high, rent, invest, buy house low, come out way ahead.

Now its; sell house high, rent, invest, buy house higher, lucky if you break even….

#142 Stan Brooks on 04.04.18 at 4:48 am

So we are saying now that 1.5 mil for cardboard particles house in Mississauga and Scarborough, 2 mil in Vauhgan is justified price as little peckers with no money want in?

Or sh..ty townhouse in Richmond Hill with no backyard for 1.3 mil is fine?

I don’t think so.

70-80 % decline in real values for these is a given.

When this debt fuel economy implosion accelerates, watch out.

It will be an epic crash at the end of which your lust for houses will be gone for quite a while.

It beats me why a normal person would like to live in such places with questionable weather, nothing to do all year around, very expensive cost of living and high taxes.

It starts making sense when you realize people living there are not normal, but brainwashed good for nothing, i.e. unable to move to greener pastures losers with inferiority complex.

#143 When Will They Raise Rates? on 04.04.18 at 4:56 am

Gap down on the Dow incoming:

https://www.cnbc.com/2018/04/04/china-new-us-tariffs-including-soy-cars-and-chemicals.html

#144 Stan Brooks on 04.04.18 at 4:58 am

#89 Me on 04.03.18 at 9:13 pm
Someone here types a 70 % drop??

Dude, 2 words ,
Replacement cost

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

Dude, 1 word:

Market.

Ability to administer and run mental facility with insane personnel is very limited.

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

#145 Howard on 04.04.18 at 5:38 am

I was initially worried that my parents didn’t take the plunge and sell their Willowdale detached last year.

But Garth now assures us that 416 real estate will keep going up forever. Fine by me. Will make my decision whether or not to return to Canada an easy one. And my folks will enjoy watching their equity keep rising and rising.

I made no such statement. – Garth

#146 Howard on 04.04.18 at 5:43 am

#105 David on 04.03.18 at 10:05 pm

Why is Calgary suicidal?

—————————————

He never said it was.

He said that a viable strategy in one city (say, Halifax) might be suicidal in another city (say, Calgary). It was just a general statement to which he added random examples.

#147 OttawaMike on 04.04.18 at 6:35 am

hmm. This looks like trouble: Banks are seeking appraisals on renewals more and more.
https://askross.ca/2018/03/more-bad-news-for-mortgage-renewals-in-canada/

#148 Oft deleted much maligned stock.picker on 04.04.18 at 6:41 am

There has never been a ‘V’ shaped recovery in real estate history….which is why I said that this was no time to buy…not even close. In my 40 years of direct experience , including the much interfered with QE period of this century, the market cycle resembles a long slow ocean wave…..7 to 12 years up…..18 to 24 month peaks….7 to 10 years down with a 12 to 36 month bottom. The kids who buy the next wave will never know what happened to you……they’ll look at bland long term charts and be told that there’s never a bad time to buy real estate…..because over a 50 period the charts seem to smooth over all the rough patches and show an upward bias. These long term trend lines make fools of all market pundits and goons of all long term holders who pay outrageous premiums for land that returns less than the equity market over the same distances.

Be prepared for a grinding death of a thousand cuts until your memory of today’s daily prognostications fell like the onset of dementia. Call me in ten years for my buy call.

#149 T on 04.04.18 at 6:51 am

Garth, have you invested in some real estate lately? Is that why you’re suddenly more optimistic that real estate has bottomed?

Compared to most, I frequently buy and sell. My words always flow from experience, which should be a comfort to you. – Garth

#150 Howard on 04.04.18 at 7:04 am

On a serious note, today is the 50th anniversary of the assassination of Martin Luther King.

Let us remember a civil rights legend who, unlike modern day spoiled rotten SJWs shamefully attempting to compare their campaign for genderless bathrooms to MLK’s struggle, faced real bigotry and real violence in his life.

#151 Ace Goodheart on 04.04.18 at 7:13 am

So T2 has apparently pissed off both Greenpeace and David Suzuki. Which are both good things. He may have some form of a backbone after all. Perhaps if he could get Wild Bill under control, and come out fighting for the businesses that keep us all out of caves and stone age ways, we might get a bit of an economic recovery.

We have three powerful rich kids “growing up” in office, and one is not going to grow up. Fortunately the one who will never grow up, is not one of our elected leaders.

There are some nice bargains in Toronto housing right now, but nothing like what was available in 2012-2013 in the “not so prime” neighbourhoods. That was the best buying opportunity yet in this City.

When you get a train track or a street separating properties worth over a million, being sold in blind auctions with bidding wars, from identical properties listed for 300K, that sit for months and go under asking, you know you have found something special. That situation does not exist anymore in Toronto, but it did back in 2012.

For anyone with a lot of guts and who is searching for glory right now, the best bet seems to be the battered and broken down small cap companies, whose share values are being trashed by the current market correction. This is not an area for the faint of heart. A lot of these companies are going to go to zero. But if you do some digging and you do your homework, you can find solid, well run businesses that are being sold for much less than they are worth. That seems to be where the money is right now.

Of course, the current equities market correction will last forever, there will never be another bull market and everyone should dump their equities.

And their houses…..

#152 Be Realistic on 04.04.18 at 7:16 am

For those who are wondering why people are paying so much in the GTA for example, it’s because life is good here. Stop complaining about living in “boring” 905 or not having a sprawling 5 acre property in 416.

If you’re bored, get a hobby or take up a sport. Opporunities are plentiful in 905 if you turn off the laptop and head outside.

If you don’t like your small patch lot in 416 next to all the hippest restaurants, then learn to cook and move to Gravenhurst.

Bottom line is, GTA is a great place to live when compared to other places in the world. That’s why people are coming in droves and will continue to do so; and make no mistake, they’re not all poor and meek. Alot are very wealthy.

So as Garth says, go out and try your hand with some tough offers. If you don’t try, you don’t know.

#153 Howard on 04.04.18 at 7:17 am

GTA March numbers are out :

https://www.thestar.com/business/2018/04/04/gta-home-sales-down-40-while-average-price-drops-14-from-previous-march-report-shows.html

Ave price down 14% vs March 2017 (down 9% in 416).
Sales down 40% yoy.
New listings down 12% yoy (huh? does that make sense?)

I had to laugh when I saw the Globe’s headline for this report :

Toronto home prices show signs of rebound

https://www.theglobeandmail.com/real-estate/toronto/article-toronto-housing-market-show-signs-of-rebound/

This “rebound” consists of the average price rising from $767K in Feb18 to $784K in Mar18.

#154 Victor V on 04.04.18 at 7:18 am

Breaking: GTA home sales down 40 per cent in March compared to last year, report shows

https://www.thestar.com/business/2018/04/04/gta-home-sales-down-40-while-average-price-drops-14-from-previous-march-report-shows.html

Home sales in the GTA dropped 40 per cent year over year in March, with the average price also decreasing by 14 per cent, according to the latest Toronto Real Estate Board report.

TREB reported 7,228 residential transactions last month in the GTA, a steep drop from the record 11,954 sales reported in March 2017. Last month’s figure is down 17.6 per cent compared to average March sales for the previous 10 years.

The average price in March 2018 was $784,558 for all housing categories in the GTA, including detached, semi-detached, townhomes and condos. The average price was $915,126 in March 2017.

For the city of Toronto, the average price of a home was $817,642, down about 9 per cent from $897,856 a year earlier.

The share of high-end detached homes selling for more than $2 million in March 2018 was half of that reported in March 2017, further affecting the average price.

#155 Tony on 04.04.18 at 7:34 am

Dow futures down over 500 points 10 minutes ago but might be all green by the open.

#156 Asterix1 on 04.04.18 at 7:34 am

I listen to the radio when I drive around in my car in the GTA. What type of ads do you think I hear all the time?

Come and invest your money at Inc Financials.

OR

Call us for bankruptcy protection. Refinance your debt. Need a quick-loan? You need a HELOC, call us.

#157 Gravy Train on 04.04.18 at 7:47 am

#128 NumNum on 04.04.18 at 12:27 am
“Are you suggesting offering 50% of the asking price?”

Suppose the number of homeowners willing to take a 50% haircut is 0.1% of the total. (You may be able to research this population parameter on the Internet.)

Now, if you randomly send out 5,000 offers, you can expect close to 5 responses to your offer. (The sample statistic should approx. the population parameter.)

Not that I’d ever do something like this myself! :)

#158 TurnerNation on 04.04.18 at 8:12 am

Once again, “city planning” is a myth. It’s 100% densification agenda.
There is no quality of life in Kanadian Blocs.

NO planning took place here.

https://www.thestar.com/news/gta/2018/04/03/worried-about-local-water-and-sewer-capacity-toronto-staff-move-to-pause-condo-development-at-yonge-eglinton.html

“A report from staff headed to Toronto and East York community council on Wednesday comes after city planning staff identified growing concerns development in the midtown neighbourhood was outpacing the available infrastructure, like pipes, schools and parks.”

#159 crowdedelevatorfartz on 04.04.18 at 8:24 am

@#140 jane24
“My parents immigrated to Canada in 1970 with five kids, five suitcases, a few tea chests of effects and started again from the bottom. ”
+++++

Now?
The parents send their kids on a 1st class flight.
Buy them a Lamborgini.
Buy a house worth 5 million.
Set the kids up in school/University.
File for Citizenship.
Leave.

https://www.google.ca/url?url=https://www.theglobeandmail.com/news/british-columbia/incomeless-students-spent-57-million-on-vancouver-homes-in-past-two-years/article31892652/&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiAj9aIzqDaAhVozoMKHbqHDxgQFgg0MAY&usg=AOvVaw2DvQ_NbJkcuikatLng6KFY

“Nothing to see here, move along. Nothing to see….”

#160 Steven Rowlandson on 04.04.18 at 8:26 am

“Well, kids, this is your moment.

Sales are down. Competition is gone. Mortgages still historically cheap. Sellers desperate. Prices tumbling. Realtors ripped. Bargains at last. You’ve moaned long enough. If you’ve wanted a single house, this could be the moment to try. Man up. Or shut up.”

Okay.
Show us listings for decent homes in the $30,000 to $60,000 range on service lots.. Man up. Or shut up.

I think I am close to giving up. So many closed ears. – Garth

#161 dharma bum on 04.04.18 at 8:26 am

#49 Stone

“The equity from it is now invested and pays my rent entirely via dividends and other distributions. That’s the equivalent of living for free. How can you beat that?”
——————————————————————–

You can’t.

That’s the way you do it!

#162 Skeptic on 04.04.18 at 8:30 am

Garth, I don’t understand the basis of your opinions. Since 2011, you have been preaching about how the housing market is overvalued and is ripe for a correction. Now that the market has finally slowed, and prices have returned to where they were last year, you are saying that we have reached the bottom? So does that mean that everyone that listened to you lost out on 6 years of gains, and now have to pay substantially more than they would have if they had never listened to you at all?

Also, I find it comical how you embrace stats showing that prices have fallen, and yet rejected the same stats last year by claiming that the housing mix (condos vs. houses) and other factors were skewing them. It sounds like you are talking out of both sides of your mouth.

It’s comical how my comments about certain areas and housing types posing value is being taken as a blanket comment on every house in every hood in every town that every blog reader lives in. You cannot be that thick. I hope. – Garth

#163 Luc on 04.04.18 at 8:33 am

What is Wealth Shock?
https://www.ctvnews.ca/health/a-wealth-shock-in-midlife-may-lead-to-death-study-suggests-1.3869345

#164 Trumpocalypse2018 on 04.04.18 at 8:39 am

TRADE WAR, THEN REAL WAR

Breaking News

http://money.cnn.com/2018/04/04/news/economy/china-tariffs-us-goods-soybeans/index.html

#165 Honey Dripper on 04.04.18 at 8:49 am

Yup, my millenial daughter just bought a house with her boyfriend. This is the second time she’s done this. Sheesh!
https://thestockmarketspeculator.blogspot.ca/2018/04/daddys-little-girl.html

#166 dharma bum on 04.04.18 at 9:09 am

#140 jane24

Why do so many on this blog think that immigrants will maintain insane RE prices. My parents immigrated to Canada in 1970 with five kids, five suitcases, a few tea chests of effects and started again from the bottom. I don’t see that the story would be any different today for most newcomers.
——————————————————————-

That is the legacy of this country.
My old man came here in 1948, a penniless refugee.
He lived in the room of a house of a friend of a friend, and paid a weekly rent after getting a factory job (somewhere in what is now known as the GTA).
He bought his first house 2 years after getting married, in 1960.
Price: $29,000.00
That was all the money in the world, and more.
He carried a $23K mortgage.
That cost him somewhere around $125/month in those days.
That was roughly 25% of his income.
So, it made sense to buy.
Recently, that exact house sold for $2.3 Million (mid-town Toronto, in the area, south of St. Clair between Bathurst and Spadina, near Casa Loma).
If the new owner put down 20% and mortgaged the rest, they’d be looking at carrying around $8K a month.
To maintain the ratio of 25%, their annual income would need to be close to $390K.
Only a small percentage of today’s immigrants earn that kind of income after 10 years of landing here.
Those that do, are now paying a foreigner’s tax to punish them for being wealthier that those born here.
As far as attaining the dream of home ownership in Toronto, the vast majority of immigrants cannot follow in the same footsteps as those that preceded them.

#167 Tony on 04.04.18 at 9:17 am

Silver just got kicked in the teeth, that didn’t take long.

#168 IHCTD9 on 04.04.18 at 9:26 am

I think the young moist GTA’ers should prepare themselves for 700K+ regular old typical SFD’s as a low end floor. Can’t see it going much lower than that, even at 5-6%. Could even be higher if there is any truth to there being much larger influxes of foreign cash than commonly reported.

700-800K is a good basis for long term personal affordability calculations. Rates are going up too, so figure that into your equation as well. 5% would be a good safe number.

It’s pretty simple really, if you are camping out waiting for GTA houses to become “affordable”, but you can’t see yourself paying over 5K per month in mortgage, taxes and insurance – then you need to start loving the renters lifestyle, or plan your move.

Repeat: If you can afford a ~5K per month mortgage payment, then happy days may be coming over the next few years.

If you can’t, either get busy renting permanently, or get busy bailing.

#169 Ian on 04.04.18 at 9:30 am

What? I awake this am to find Garth has left the bear camp on GTA housing??

Of course a buyer intention survey is important, but I think this will be, er, ‘trumped’ by other factors. 24 months is a long way out. Views of those buyers are very likely to change as the bear market rolls along.

Add in:

1) Ontario’s economy far too dependent on real estate currently (coming job loss)

2) Problems now emanating from the US (stock market issues, falling GDP estimates (Atlanta Fed model)

3) GTA housing that needs to drop 54% to get to previous valuations (in 1996 and 1985) below the long term trend

About the only bull factor I can think of is that I believe the US Fed is done with rate rises. With all the chaos between the last day of January to today (trade war – Dow futures down 500), the US Fed will sit out June and by fall, the damage is likely to be so much they will sit that out too, and then QE4 (which won’t even come close to working) will be back on the table.

I’m sticking with my peak to trough 54% decline model for median price in the GTA.

Then you shall be wrong. – Garth

#170 Howard on 04.04.18 at 9:35 am

The TREB also show that detached homes in Richmond Hill are more expensive than detached homes in the 416! And that’s after a 16% haircut yoy. Seems to me York Region still has much further to fall.

#171 Lee on 04.04.18 at 9:43 am

#169 Ian,

a 54% drop means the average detached in Toronto would sell for about $550,000.00. That would carry for about $3200 a month all inclusive of utilities in some parts of the city. People can pay that collecting beer bottles and turning them in, Two minimum wage earners could pay for that, comfortably. Toronto will never get that cheap. Deal with it.

#172 crowdedelevatorfartz on 04.04.18 at 9:46 am

Trump wanted a trade war……..now he’s’ got it.

Perhaps to get the publics mind off his “deplorable” life?

What’s the old poem?

“Catch a tiger by the tail…..?”

#173 Gr8est Loser on 04.04.18 at 9:48 am

You know whats worse than paying too much for a property?

Investing all of your real estate capital in the markets just before it collapsed.

There really isnt any difference. No one really cares about your money like you do. Why would they?

Time to pick up the pieces and figure out a way to survive when you are too old to work but too young to collect CPP.

#174 IHCTD9 on 04.04.18 at 9:51 am

#151 Honey Dripper on 04.04.18 at 8:49 am
Yup, my millenial daughter just bought a house with her boyfriend. This is the second time she’s done this. Sheesh!

______________________________

Scary. I guess the pain and anguish was not high enough last time.

Here’s hoping that it is near unbearable this time around.

One of the big things I’m learning here on the GF, is to never, under virtually any circumstances; ever financially backstop your kid and s.o. on any kind of long term financing.

The sound, time tempered advice would be free as usual of course.

#175 N on 04.04.18 at 10:12 am

#160
“Well, kids, this is your moment.

Sales are down. Competition is gone. Mortgages still historically cheap. Sellers desperate. Prices tumbling. Realtors ripped. Bargains at last. You’ve moaned long enough. If you’ve wanted a single house, this could be the moment to try. Man up. Or shut up.”

Okay.
Show us listings for decent homes in the $30,000 to $60,000 range on service lots.. Man up. Or shut up.

I think I am close to giving up. So many closed ears. – Garth

Seems that we’re now resigned to the fact that the GTA is no longer going to support individuals that could afford a home by working locally (other than a condo). Either have a business or foreign income or a means of tax evasion and you can make GTA your home. Hats off for those that made a decision to take a risk and plunge into the market in 2008 – 2012. For the rest, start planning a move to some other city.

#176 SilverSon on 04.04.18 at 10:17 am

When house values began declining in early 1989 the “bottom” was not realized until 7 years later and then house values didn’t return to their 1989 values until 2003. What’s different this time such that the market has found it’s “bottom” seven times faster than it did last go-around? I suspect there’s other stuff in the economy nowadays that’s influencing how far and how fast RE values are going to decline, but what are those influences and how are they different from 1989? Or did the 2008 ripple in RE values influence things?

Also if RE values start going back up again beginning later this year, doesn’t that mean the mind boggling level of mortgage debt Canadians already have will further increase? I know lots of people that ran out of money years ago and have been getting by on HELOCs ever since, but sooner or later these people are going to run out of credit and the ability to service it. I realize if the RE party continues the equity on their RE will go up which will raise their availability of credit, but it seems to me they’re going to run into a point of no return where the costs to service that debt create a debt spiral. Maybe someone can share some math that suggests how Canadians can financially support further increases in RE values given that their income hasn’t even come close to keeping pace with their living expenses.

#177 Tater on 04.04.18 at 10:18 am

The buying intentions don’t much matter when credit contracts. We’ve had demand pulled forward by those who were trying to beat the stress test. April and May will be the true indicator of where things are going. If prices can move sideways in the GTA detached market, I’d agree that the slump is likely over.

But if they have big declines, look out below.

#178 Tony on 04.04.18 at 10:20 am

Re: #169 Ian on 04.04.18 at 9:30 am

Tariffs slapped on other countries by America, trade wars and a falling stock market are both kryptonite for the Canadian housing market. Tariffs will push input costs sharply higher in America resulting in much higher inflation and higher interest rates. The spillover effect will hit the Canadian housing market.

#179 IHCTD9 on 04.04.18 at 10:23 am

Got a little more info on that nice place down the road that popped up for sale again not even a year after it changed hands.

The place sold in a bidding war last spring for 700K (~50K over ask). It was relisted a month or two ago for 789K.

The old owners were barely out the door before the place was back on the market. The new owners never even bothered to move in.

Obviously, going from 700-789K, this is not a flip, but a bid to quickly escape the deal in a comfortable fashion.

I’m told the buyers are Croatian immigrants, older, retired. Probably by way of the GTA, probably been here a while.

Too bad they succumbed to the red mist. If they actually need to sell, they are going to get rag-dolled on this house.

A couple other folks are watching too – namely the two couples that had to knock their similarly priced homes down ~100K before they finally sold last fall. This 700K house is what got the other two to quickly reno and list.

The Croatian couple has evidently bought the local peak – and I mean the individual home that marked the peak. Everyone has failed to get that much for even nicer homes since.

They are going to get their asses power-kicked all the way back to Zagreb on this place.

#180 IHCTD9 on 04.04.18 at 10:30 am

#162 Skeptic on 04.04.18 at 8:30 am
Garth, I don’t understand the basis of your opinions. Since 2011, you have been preaching about how the housing market is overvalued and is ripe for a correction
_________________________

It is over valued. It is ripe for a correction. It is in the process of correcting. YMMV on local correction values. Much time will need to pass on the way down before a bottom can be called.

For all we know, interest rates could be 20% in 5 years with 15% unemployment and a GTA SFD will be going for 300K.

Trying to vulch a cheap house in a long time expensive market is a waste of time. Doing this just means you can’t afford it. Just move on rather than point fingers.

#181 Rifles on 04.04.18 at 10:38 am

If that is what counts as a correction I want my money back.

Vancouver ain’t no low ball offers being accepted. Or, more accurately, it is hard to describe accepting $50k off what you would have taken in November on a $3.5m house as a “correction”. So houses sit a little longer. Big deal.

No vultching or other signs of distress other than what we have known all along from those who are clambering in to the market with a pant load of debt, paying $1.60/ltr for gas and finding groceries too expensive these days.

#182 Be Realistic on 04.04.18 at 10:43 am

“What do you mean no 50% drop in Toronto?!?!” Yes,
reading comprehension is not strong suit with a few of you.

Garth, on a side note … do you have any strategies/advice for someone who is considering a move-up/upsize? Within personal affordability of course. I have 2 1/2 years left on a portable mortgage of 2.49%. The bank says they’ll add another year at 2.49% should I move. I have equity in current home around 250K.

#183 Smoking Man on 04.04.18 at 10:44 am

Ouch!!!

http://www.trebhome.com/market_news/release_market_updates/news2018/nr_market_watch_0318.htm

#184 IHCTD9 on 04.04.18 at 10:44 am

Okay.
Show us listings for decent homes in the $30,000 to $60,000 range on service lots.. Man up. Or shut up.
_____

Dood, you can’t even buy an empty building lot in the windswept Tundra of rural Ontario for that.

That’s sub 1X income for a couple working at Tim Hortons making minimum wage.

That’s a $250.00 mortgage payment.

I could barely finance a brand new, fully dressed; top of the line ATV for that little.

#185 Tony on 04.04.18 at 10:51 am

Re: #165 Honey Dripper on 04.04.18 at 8:49 am

I got a good laugh out of this one. The father goes on about his daughter yet he purchases shares in Goeasy Financial. Me thinks what happened from 1996 to the year 2000 will repeat itself with this company or worse.

#186 Brett in Calgary on 04.04.18 at 10:52 am

Oil may be bouncing back… but not all oil is the same.

https://twitter.com/trevortombe/status/958500295406833665

Rarely do the news outlets talk “Western Canadian Select”.

#187 Honey Dripper on 04.04.18 at 10:58 am

Re: #174 IHCTD9

Cheers Man!
It has been unbelievably frustrating watching this all play out.

#188 Citizen on 04.04.18 at 11:07 am

Hi Garth,
Great blog!

Yes also agree conditions are locally dependent.
Public sector town always seems to be sheltered.

What’s your opinion on the Ottawa real estate market for detached homes?

#189 Andre on 04.04.18 at 11:09 am

Garth,

I think most people take the decisions on purchasing a house based on the current monthly installments they will need to pay (no forward looking scenario analysis). Therefore I still think there will be a bigger correction once the BoC increases its interest rate to a slightly higher level ( 4 – 5 %). Considering it may take 3 – 5 years to get there and other 1 or 2 to observe the full impact, I think that we are looking at a 4 to 7 years lag for the market to be corrected. The first signals of a real correction should be shown by a softening of the condo market. Is my logic incorrect?

#190 Dave Ahem on 04.04.18 at 11:15 am

We bought a shoe box in Toronto three years ago that costs almost 900K now (we paid 635). If million dollar houses in Toronto dropped 30%, I’d withdraw my TFSA and savings and move IMMEDIATELY. Hence why real estate in Toronto is never going down. I’m not that lucky.

#191 Reynolds531 on 04.04.18 at 11:21 am

#165

Best story I’ve read in a while. She makes 89k and she’s that dumb. Epic.

#192 rental property math on 04.04.18 at 11:24 am

What happened to the happy housing crash guy? ..and for the record. prices in Hamilton look like April 2017 again and climbing. Now Ijust have to wait for my weed stocks to rally again. I guess i’m not a stock picking genius after all. I’ll wait till June 6th and average down a bit before the last senate meeting. Then back to my old trusty low mer mutual funds from a company that will remain nameless.

#193 SimplyPut7 on 04.04.18 at 11:28 am

#147 OttawaMike on 04.04.18 at 6:35 am

Before B20, banks in the GTA didn’t care where the down payment came from (Bank of Mom and Dad, private lender etc.), and issued mortgages to buyers who skirted around the first set of restrictions from CMHC requiring a stress test of prime +2% for borrowers with less than 20% down payment.

But I guess IFRS 9 makes it harder for banks to justify the amount of money they gave to people and they are adjusting the amounts on the more riskier people now, rather than have their shareholders or the media outside of Canada find out how close to a Home Capital situation, some of the big banks really are.

Now I’m wondering if OSFI created B20 because they cared about the risks in the housing market and the taxpayer revenue backing these mortgages or worried bank shares would tank when IFRS 9 compliance was required on January 1, 2018 and some of the higher risk borrowers would start to default as interest rates started to rise.

#194 IHCTD9 on 04.04.18 at 11:38 am

…so he decided to start looking at higher priced properties that had big discounts
_______

If any one wants to vulch some bang for the buck – this is the way to think.

The high end properties in a lot of places are already beat up on price, and listings are frequently long in the tooth. You can end up with a way nicer place for not much more money. This is for living in, not trying to flip obviously (you’d get killed trying to flip top end houses right now).

Out my way, 4-500 K gets you a nice brand new “fancy Colorado” on an acre.

650K (and dropping) gets you timber framed beauties on 15 acres with 3 car garages and an exquisite landscaped property including in-ground pools, big hot tubs, decks with glass rails etc.

That 150K premium gets you double the value. Unfortunately though, it also triples your tax bill.

#195 ole doberman on 04.04.18 at 11:40 am

Don’t listen to Garth today guys, he probably bumped his head or is playing an April fools game on us. Either way it’s never different and prices are going lower.

#196 Rentin on 04.04.18 at 11:42 am

Gartho,

The vast majority of people complaining here didn’t have the means to successfully weather out a downturn in housing anyways. They don’t see that, only the missed returns that YOU kept them from achieving because of your advice since 2008. (I can remember the “Crashing in Kelowna” blog entry which extrapolated monthly declines into yearly losses….). Read it again and humour yourself.

I think to those people who look to blame you for their mistake; of either listening to you or not buying a house, the following example should suffice:

Say a person approaches me and asks if they should buy a lottery ticket with the numbers already picked out. I say don’t, its a waste of money, you won’t win. So they don’t, but still watch the outcome of the draw. Wouldn’t you know it, their numbers come up. Now I have prevented them from winning.

And for you math geniuses have the 1,2,3,4,5,6 lotto number conversation with the combination/permutation illiterate. It will blow your mind.

#197 Duke on 04.04.18 at 11:45 am

#63 Nick B on 04.03.18 at 8:19 pm
We are in the second inning of this “correction”, still very early. I feel there’s much more room to run to the downside from here. I’d argue was have a real estate bubble, typically there’s no soft landing and so far we haven’t popped. I may be wrong given I don’t have my own blog :-)

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

You are absolutely right. It is way too early but the signs tell us that it will be going down for sure.

#198 Old Ron the Realtor on 04.04.18 at 11:46 am

DOOM OFF !

TREB MARCH: 7,228 Sales (Better than I expected with very low listings

Price : Up to $784,558 . That is a 6.7% INCREASE SINCE DECEMBER 2017 !!!

Average Prices have increased $49,000 + in 4 months.

I doubt this will be noticed in all of the doom, but folks the mini crash of 2017 is fading in the rear view mirror.

#199 Damifino on 04.04.18 at 12:02 pm

#180 IHCTD9

Trying to vulch a cheap house in a long time expensive market is a waste of time.
————————————

I agree about a house. A condo, on the other hand, you may be able to vulch in a couple of years. But the question is: who would want to?

#200 april on 04.04.18 at 12:28 pm

#135- You must be a realtor and your wrong.

#201 Shortymac on 04.04.18 at 12:31 pm

The fact that the 416 hasn’t quite melted is a good bit of info for me, my roommate is getting married and has convinced his fiancee to sell her condo and move in with us to our rental property.

I’m trying to convince her to contact a realtor and put her condo up for sale now and not wait until the wedding but she’s “traditional” and doesn’t want to move in before the wedding. I’m worried it’ll take forever for her to sell it.

Even with the price drops she’ll make money off of it because she bought like a decade ago. Their idea is to rent for a while with us and then buy in the next 2 years using the money earned from the condo sale.

Even now there are detacted homes in the “good” area of rexdale listed for 800k, insane. I’m waiting for 500k-ish, do you think it’s possible with B20 and the melt in the 416?

(Example: https://www.realtor.ca/Residential/Single-Family/19145906/9-COVE-DR-Toronto-Ontario-M9W3V2-Elms-Old-Rexdale) I rent a similar place for 1900/mon currently.

#202 Victor on 04.04.18 at 12:33 pm

#198 Old Wrong Realtor

Dec 2016 to Mar 2017 price increase was 25%.
Today YoY detached are -17% and condos just +6%.
See you in May/June to talk about condos close to 0 or negative when B20 will fully kick in.

#203 Ouch!!! on 04.04.18 at 12:39 pm

#183 Smoking Man on 04.04.18 at 10:44 am

Ouch!!!

http://www.trebhome.com/market_news/release_market_updates/news2018/nr_market_watch_0318.htm
______________________________________

You live in Cali now so what do you care about Toronto RE Markets ? You told us you are never coming back here!
Wow, now that’s a relief :)

#204 For those about to flop... on 04.04.18 at 12:45 pm

#181 Rifles on 04.04.18 at 10:38 am
If that is what counts as a correction I want my money back.

Vancouver ain’t no low ball offers being accepted.

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

I go about things a little differently than the average person on here.

I try to show what’s going on instead of just talking about what I think is going on.

You might be interested in this recent sale in Delta

They were asking 1.75 after they spent 1.62.

Someone offered 1.32 and they accepted.

They only offered roughly what it was assessed at after the previous guys got carried away,but the main point they went in and low balled and got it.

I will show more examples if you like.

The house across the street has just lowered their price.

Exhibit A:

494 Shannon Way, Delta

Mar 13:$1,438,000
Apr 3: $1,398,000
Change: – 40000.00 -3%

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

Sold on March 11 2018 for 1.32

493 Shannon Way, Delta paid 1.62 March 2016 ass 1.3 now asking 1.35

May 19:$1,750,000
Aug 10: $1,620,000
Change: – 130000.00 7%

https://www.zolo.ca/delta-real-estate/493-shannon-way

https://www.bcassessment.ca/Property/Info/QTAwMDA1Vk1BQg==

#205 Fake News Again on 04.04.18 at 12:45 pm

“Well, in some markets there will be more declines. In others, nope. All real estate is local and what’s a smart strategy in Halifax may be suicidal in Calgary. BC is pooched.”

The DENIAL of YVR Real Estate by those who live out east is mind boggling.

Methinks you are the one in denial. – Garth

#206 ole doberman on 04.04.18 at 12:45 pm

Looks like after a decent rally Home Capital Group is looking to continue it’s down trend. Prices lower!

#207 waiting on the westcoast on 04.04.18 at 1:10 pm

#198 Old Ron the Realtor says… “Price : Up to $784,558 . That is a 6.7% INCREASE SINCE DECEMBER 2017 !!!”

True – but the YoY trend is down by 17% for SFD. And 14% the housing market in Toronto overall. Monthly prices typically go up month over month in Spring. Annual numbers are more indicative of overall trend.

http://business.financialpost.com/real-estate/toronto-luxury-home-sales-tank-from-last-years-record-pace

#208 I’m stupid on 04.04.18 at 1:12 pm

No one likes a Debby downer, especially one trying to run for PMO. The majority of voters are home owners and no home owner would vote for a housing bear, so transitioning to housing neutral would give a housing bear a shot. Is that it Garth?

I can’t seem to see how you switched your tune in a matter of days. Then I realized that there was no blog post Sunday night. I thought that was unusual but now it makes sense. Easter Sunday the entire family is there and as a family it’s decided Garth will try to run. A strategy session Monday morning and the first optimistic housing post.

You nailed it. I’m running for the NDP. – Garth

#209 Harry Tasker on 04.04.18 at 1:21 pm

Garth is just testing our loyalty today, the way God tested Abraham in the Bible.

He wants to see if we leaned anything in 10 years, and how to argue logically if we’re ever faced with having to deal with unscrupulous and deceitful RE agents.

#210 Howard on 04.04.18 at 2:01 pm

#198 Old Ron the Realtor on 04.04.18 at 11:46 am

Is that the latest realtor vermin talking point?

Not content with the year over year numbers, and month over month numbers aren’t too impressive, so let’s look at….current month versus 3 months ago.

#211 Newcomer on 04.04.18 at 2:36 pm

Garth, you say, “It’s comical how my comments about certain areas and housing types posing value is being taken as a blanket comment on every house in every hood in every town that every blog reader lives in.”
——

And I get it: Real estate is local. That said, I’m still missing part of the equation. If 416 is not pouched (you said months ago that detached in the 416 would not go below 1.2 M) and 905 is reaching the bottom, is it your take that there has always been support for prices around where we are now, such that the Toronto market was undervalued in the past, or do you estimate there been recent changes in the market that supported the doubling in prices?

#212 IHCTD9 on 04.04.18 at 2:41 pm

Even now there are detacted homes in the “good” area of rexdale listed for 800k, insane. I’m waiting for 500k-ish, do you think it’s possible with B20 and the melt in the 416?

(Example: https://www.realtor.ca/Residential/Single-Family/19145906/9-COVE-DR-Toronto-Ontario-M9W3V2-Elms-Old-Rexdale) I rent a similar place for 1900/mon currently.
_______________________________

Oh man – the job ain’t good enough to live where that thing costs 800K. No job is that good. Don’t care if the family is close by, the school is close by, whatever is close by.

Outside of the GTA, for 800K; I could buy a house only the crème de la crème of household incomes could even think about owning in the GTA. I could then stick a brand new C7 Z06 in my three car garage. Then I could park a PAIR of brand new CanAm Maverick Trail DPS 1000’s in the next bay. Then I’d still have enough coin left over to park a new 20XX Yamaha Grizzly 850 twin (if they make it – come on Yamaha!!) in bay three.

800K at avg. 4.25% means you’ve paid the bank half a million dollars in interest over 25 years.

800K (principal) + 500K (interest) + 75K (taxes) + 63K (insurance) + 22K (CMHC)

Almost 1.5 Million in 25 years to own that house in a hood where the avg. household income is 72K.

You’d have to earn $1,845,000.00 pre tax dollars to pay these costs. That’s EVERYTHING a 72K household makes for 26 years in a row, ALL OF IT.

#213 Victor V on 04.04.18 at 2:41 pm

This headline in today’sFinancial Post is bound to cause anxiety among over-leveraged homeowners and realtors.

===

Toronto home prices see biggest drop in almost 30 years

http://business.financialpost.com/real-estate/toronto-luxury-home-sales-tank-from-last-years-record-pace

#214 Entrepreneur on 04.04.18 at 2:42 pm

My take on todays blog is similar to #195 ole Doberman:

1) GT is playing dumb
2) having a nervous breakdown
3) can’t take the constant emails of wanting to buy
4) playing devil’s advocate
5) has a couple of RE thugs on each side of him

I pick #4, devil’s advocate.

#215 SimplyPut7 on 04.04.18 at 2:47 pm

#180 IHCTD9 on 04.04.18 at 10:30 am

Many detached homes in the GTA were in the range of 300k in 2014 before the Bank of Canada and private lenders started influencing mortgage rates.

The income of GTA families haven’t gone up enough to justify the price increases we are seeing. I think once people start renewing their mortgages we will start seeing who could never afford the mortgage payments if mortgage rates were above 2% to 2.5%.

I don’t think the foreign buyer problem in the GTA is a large as Vancouver. We just have a lot of people who didn’t realize how fast their banks could turn on them once interest rates started to rise. Even the private lenders are running into problems e.g. borrowers defaulting (I know someone who was giving private loans who is having that trouble now).

If rates don’t stop rising, it will get very messy in the GTA very quickly.

https://askross.ca/2018/03/more-bad-news-for-mortgage-renewals-in-canada/

As a saver, I’m happy for the higher rates, how long will it take before I see a 4% GIC at a big bank again? Maybe 2020?

#216 Mike on 04.04.18 at 3:00 pm

If the correction is complete it means that any talk of a real estate bubble prior to 2016 was flat wrong. I am forced to decide whether there is something wrong with the real estate market, this blog, or both.

#217 waiting on the westcoast on 04.04.18 at 3:04 pm

You nailed it. I’m running for the NDP. – Garth

Garth – if you win, get me in the senate! ;-)

#218 Damifino on 04.04.18 at 3:10 pm

#208 I’m stupid

A strategy session Monday morning and the first optimistic housing post.
————————————

In what universe is today’s post viewed as optimistic?

#219 Sardonic Lizard on 04.04.18 at 3:18 pm

Garth! You’ve been labelled a hypocrite on a popular social media website…

https://www.reddit.com/r/PersonalFinanceCanada/comments/89e4l8/garth_turner_flipped_3_houses_in_the_last_10/

(a) Who cares? and (b) restoring and saving century buildings is not exactly the definition of ‘flipping,’ especially if you don’t sell them. What a bunch of kiddies on that site. – Garth

#220 Steven Rowlandson on 04.04.18 at 3:29 pm

#175 Which planet are we talking about? There is nothing on earth that is affordable.

#221 Steven Rowlandson on 04.04.18 at 3:36 pm

#184

I know that. I’m not an idiot. I am a follower of the 3 years pay rule which was devised for the protection of the working man. Unfortunately the working man’s pay rate is 50+ years out of date relative to real estate prices.
We have an Ebeneezer Scrooge labour market and a lifestyles of the rich and famous real estate market. The two are irreconcilable.

#222 Newcomer on 04.04.18 at 3:50 pm

#168 IHCTD9 on 04.04.18 at 9:26 am
…..
It’s pretty simple really, if you are camping out waiting for GTA houses to become “affordable”, but you can’t see yourself paying over 5K per month in mortgage, taxes and insurance – then you need to start loving the renters lifestyle, or plan your move.
———

Are you saying that people will continue to pay less to rent a place than it costs to provide the place rented?

#223 Zapstrap on 04.04.18 at 3:55 pm

#216 waiting on the westcoast on 04.04.18 at 3:04 pm
You nailed it. I’m running for the NDP. – Garth
Garth – if you win, get me in the senate! ;-)

Not so fast … Garth could start a bidding war for that.

#224 LivinLarge on 04.04.18 at 4:02 pm

Mike, have you consided that there might be something wrong with you instead? The simplest solution is almost always the best solution.

#225 PastThePeak on 04.04.18 at 4:04 pm

BoC interest rates. Based on what we have seen so far, I don’t think the BoC overnight rate will go any higher than 2.5% – and likely less (2-2.25%). That is still 75-100 basis points higher than now.

Why?
– Poloz is a dove and will only be pulled higher by his hair, kicking and screaming all the way
– It will take over a year from now to get there. Lots can happen, and I would say that economic growth risks (for Canada) are tilted to the downside.
– With all of Canada’s debt and structural issues, the “neutral rate” is likely around that 2.5% mark now (down from 3.5-4% it used to be). I don’t expect the rates to go above neutral prior to next recession.

That doesn’t mean that mortgages won’t rise higher than implied by the BoC rate, as fixed rates mtgs are influenced by the bond market. That could mean a 5% mortgage by mid-to-end of next year and B20 means qualifying at 7%, which is quite a high bar compared with just last year.

#226 PastThePeak on 04.04.18 at 4:14 pm

#211 IHCTD9 on 04.04.18 at 2:41 pm
….
You’d have to earn $1,845,000.00 pre tax dollars to pay these costs. That’s EVERYTHING a 72K household makes for 26 years in a row, ALL OF IT.
+++++++++++++++++++++++++++++++++

Well, I would say then that the $72K household is not buying much property in the GTA any longer (clearly many could own from years past). They are either renting, hoping for some inheritance, or waiting on Lotto 649.

That of course refers to a single family buying a home for just themselves. It doesn’t address multiple households in the same house – in-law suites, basement apartments, etc.

I get your point though. $800K would get you a really nice, large (3K sq ft) house in the good part of Ottawa burbs (which are still within 25 mins of downtown).

…but that means I am not in the GTA, am not cool, and I can’t walk to multiple hip restaurants that serve locally grown (roof top??) artisanal vegan food.

#227 Smartalox on 04.04.18 at 4:24 pm

Real Estate Board of Greater Vancouver Stats for March are released!

https://www.rebgv.org/sites/default/files/REBGV-Stats-Pkg-March-2018.pdf

Highlights:
– ‘Triple Top’ is IN! for residential detached average prices. (https://www.investopedia.com/terms/t/tripletop.asp)

Flopper, you may think that these areas are the best to concentrate your ‘pink’ post investigations. I would suggest instead that you do like Abraham Wald counselling Bomber Command, directing your efforts to areas where the correction is not yet so glaringly obvious:

– YTD Detached Sales falling 57%(!) in Port Moody, sales to listings at only 25%
– YTD Detached Sales in West Van down 43%, sales to listings at only 16%
– YTD Detached Sales in Richmond down 35%, sales to listings at 27%
– YTD Detached Sales on the Van Westside down 32%, with only 20% of listings having a chance at selling.

Total (all areas) YTD Sales to Listings: 35% (last year at this time, the ratio was 44%)

#228 SilverSon on 04.04.18 at 4:35 pm

#211 IHCTD9 on 04.04.18 at 2:41 pm

“Almost 1.5 Million in 25 years to own that house in a hood where the avg. household income is 72K.

You’d have to earn $1,845,000.00 pre tax dollars to pay these costs. That’s EVERYTHING a 72K household makes for 26 years in a row, ALL OF IT.”

There’s 26 years’ worth of property tax and maintenance to be added too, don’t forget.

#229 Shortymac on 04.04.18 at 4:36 pm

Even now there are detacted homes in the “good” area of rexdale listed for 800k, insane. I’m waiting for 500k-ish, do you think it’s possible with B20 and the melt in the 416?

(Example: https://www.realtor.ca/Residential/Single-Family/19145906/9-COVE-DR-Toronto-Ontario-M9W3V2-Elms-Old-Rexdale) I rent a similar place for 1900/mon currently.
_______________________________

Oh man – the job ain’t good enough to live where that thing costs 800K. No job is that good. Don’t care if the family is close by, the school is close by, whatever is close by.

Outside of the GTA, for 800K; I could buy a house only the crème de la crème of household incomes could even think about owning in the GTA. I could then stick a brand new C7 Z06 in my three car garage. Then I could park a PAIR of brand new CanAm Maverick Trail DPS 1000’s in the next bay. Then I’d still have enough coin left over to park a new 20XX Yamaha Grizzly 850 twin (if they make it – come on Yamaha!!) in bay three.

800K at avg. 4.25% means you’ve paid the bank half a million dollars in interest over 25 years.

800K (principal) + 500K (interest) + 75K (taxes) + 63K (insurance) + 22K (CMHC)

Almost 1.5 Million in 25 years to own that house in a hood where the avg. household income is 72K.

You’d have to earn $1,845,000.00 pre tax dollars to pay these costs. That’s EVERYTHING a 72K household makes for 26 years in a row, ALL OF IT.

_______________________________________

Yeah, the issue is FINDING a job outside of the GTA.

Heck, even trying to find a job in Barrie was difficult, both my husband and I decided to stay in Toronto because of it.

#230 45north on 04.04.18 at 4:37 pm

Howard: from your link:

Home sales in the GTA dropped 40 per cent year over year in March, with the average price also decreasing by 14 per cent, according to the latest Toronto Real Estate Board report.

TREB reported 7,228 residential transactions last month in the GTA, a steep drop from the record 11,954 sales reported in March 2017. Last month’s figure is down 17.6 per cent compared to average March sales for the previous 10 years.

https://www.thestar.com/business/2018/04/04/gta-home-sales-down-40-while-average-price-drops-14-from-previous-march-report-shows.html

January 2018 was down 40% compared to January 2017
February 2018 was down 40% compared to February 2017
March 2018 was down 40% compared to March 2017

There’s a pattern here. The pattern is a downward deflationary spiral. In the US, the suburbs were hit first and hardest. In response the US Fed lowered interest rates from 5% to 0% and kept them there for seven years. Now the US Fed is raising rates and the Bank of Canada follows because it has to.

But bargains have emerged. if you had real money and if it was a real bargain then you might buy

#231 For those about to flop... on 04.04.18 at 4:56 pm

Hey Smartie,I was gonna put something up but everyone seemed interested in Toronto.

Here is how The Vancouver Sun summed things up…

M43BC

“Metro Vancouver home sales down nearly 30 per cent in March

Home sales were down nearly 30 per cent in March in Metro Vancouver, as the region marked its lowest first-quarter sales in five years.

The Real Estate Board of Greater Vancouver says home sales in the region totalled 2,517 in March 2018, a 29.7 per cent decrease from the 3,579 sales recorded in the same month last year.

The board says last month’s sales were 23 per cent below the 10-year March sales average.

Vancouver home sales also slid over the first quarter, with the board reporting a 13.1 per cent decrease over the first three months of 2018, compared with the same period last year.

Board president Phil Moore says this represents the region’s lowest first-quarter sales total since 2013.

“We saw less demand from buyers and fewer homes listed for sale in our region in the first quarter of the year,”he said, in a statement Wednesday.

Moore cited high prices, new tax announcements, rising interest rates, and stricter mortgage requirements among the factors affecting home buyer and seller activity.

New listings were also down in March. The board says there were 4,450 detached, attached and apartment properties for sale in Metro Vancouver last month, a 6.6 per cent decrease compared to the 4,762 homes listed in March 2017.

“Even with lower demand, upward pressure on prices will continue as long as the supply of homes for sale remains low,” said Moore, adding that inventory, particularly in the condo and townhome segments, of homes for sale remains “well below historical norms.”

The composite benchmark price for all residential properties in Metro Vancouver is currently $1,084,000, a 16.1 per cent increase over March 2017 and a 1.1 per cent increase compared to February 2018.

Sales of detached properties in March 2018 reached 722, a decrease of 37 per cent from the 1,150 detached sales recorded in the same month last year. The benchmark price for detached properties is $1,608,500, a 7.4 per cent year over year increase.

Condo sales and townhouses were also down in March 26.7 and 24.1 per cent, respectively.

The benchmark price of an apartment property is $693,500, a 26.2 per cent increase from March 2017, while the average price of a townhouse increased 17.7 per cent to $835,300.”

#232 saskatoon on 04.04.18 at 5:01 pm

“toked-up Mill”

great line, garth.

appreciated.

#233 Yorkville Renter on 04.04.18 at 5:15 pm

#171 – That would carry for about $3200 a month all inclusive of utilities in some parts of the city. People can pay that collecting beer bottles and turning them in, Two minimum wage earners could pay for that, comfortably

__________

That’s a crock of shit and you know it …or are too dumb to do basic math

#234 Dee on 04.04.18 at 5:23 pm

And im thinking this thing just started rolling. We’re gonna see low volume sales and lots of listings within a month or two. Wife’s family is still super bullish. “Re cant go down any further”. I dont know where the floor is on this but i dont think we’re close

#235 Old Ron the Realtor on 04.04.18 at 5:39 pm

Old Ron stands by his numbers. Since December, we are up 6.7% in price.

If you want to compare today to April of 2017 feel free, but current data supports a decent recovery.

I was one of the first Brokers to declare a crash last spring, so I am not working with rose coloured glasses, I calls em as I sees em, and right now, we are trending up.

#236 OttawaMike on 04.04.18 at 6:03 pm

Old Ron
Ottawa central west is appreciating nicely this spring too.
Everything priced correctly is moving fast and overall prices are up the 6-7% you speak of in T.O.

#237 Smartalox on 04.04.18 at 6:06 pm

Hey Flop,

That ‘article’ is a fair copy of the REBGV press release, albeit one that appears to have been dictated through a broken telephone.

The problem with the article is that the writer (and quite likely the readers) confuse a few things:
– The Metro Vancouver Region is not a specific neighbourhood of Vancouver – they go back and forth on this a couple of times.
– ‘Homes’ are different from ‘houses’ – they use apartment and townhouse sales figures to blunt the bad news at the top end of the market.
– Monthly stats only reflect a point in time. The sales figures for any given month, fail to record sales that fail to close.
– Year-to-Date comparisons DO take failed sales into account (albeit with a 90-day lag) and so are vital to assess the long-term health, and indicate trends in the markets.

The trends are not good. There are still a few pockets where the number of sales went up (People still think that Burnaby, Van East and New West are HOT, for example) but the word is slowly getting out.

The next three months leading up to Assessment day on July 1st will be critical in the lower mainland.

#238 Tony on 04.04.18 at 6:24 pm

Re: #206 ole doberman on 04.04.18 at 12:45 pm

A large fall in real estate prices would push up the shares of Home Capital. The static home prices and lack of listings is hurting them. If home prices take a large fast drop look for their share price to double very quickly. People will always switch to the alternate lenders before declaring personal bankruptcy. The static home prices presently is preventing this.

#239 Dark day on 04.04.18 at 6:39 pm

If this is not capitulation. Not sure what is. 10 years of warning for this???

What part of ‘don’t buy if you cannot afford’ do you not understand? – Garth

#240 Graeme on 04.04.18 at 7:11 pm

I’m inclined to wait some more to vultch in Van. Perhaps not even until next year? Prices have barely fallen. As it seems already others here have observed. I actually know of some very recent closures for as high a price as ever in my hood in the exurbs of Coquitlam.

#241 David Pylyp on 04.04.18 at 8:59 pm

The blood in the streets has started

Toronto Star
They listed their house twice last year but received no formal offers, just a phone call with “a lowball” proposal.

“We haven’t put our house on the market again and we need to close in seven weeks. There is no point. We are watching the market so closely with our realtor and we can’t afford to take the amount of money that we will get offered right now. If we got a delay in closing then it would be fine. I’m sure the market will recover in time,” he said.

https://www.thestar.com/business/2018/04/04/they-bought-their-prebuilt-homes-at-the-markets-peak-now-they-face-financial-ruin.html

I’m sure the market will be fine …. in 2020

#242 Linda on 04.04.18 at 9:34 pm

‘the BofM money comes from HELOC’s. I didn’t ask where the money was coming from. I said that while some parents could afford to fund their children, others could not. As for HELOC’s romping higher, that does not necessarily mean it is because the people taking them out are gifting $ to the kids so they can buy RE. Instead, they could be using those funds to pay for parental care or fund their own expenditures.

So now I’m wondering, do financial institutions track & publish stats on just what HELOC’s are used for? Do they care as long as they get paid interest/principle? And if parents are indeed using HELOC’s to give $ to their kids for a downpayment I’d expect their eventual estate to be reduced by the amount of the HELOC, especially if those self same people are part of the group that makes no payment against the principle & maybe even skips paying the interest.

#243 Mrsa on 04.05.18 at 2:09 am

Hello Garth, I have read that 1 in 5 people with mortgages would fail the new stress test in a few reputable places but I haven’t seen or been able to find where you learned that 60% of young people don’t know about it. I’d like to share that with my daughter. We have been talking to her about this topic. Thank you very much.

#244 Tim on 04.05.18 at 10:58 am

Buy a house if you need one, crave one and can afford one. Waiting for the market to shed half its value is fruitless.

—————————————————————

This is the best housing advice. Don’t try to time it…housing is too unpredictable.

#245 Pulp Faction on 04.05.18 at 8:51 pm

For all the good reasons you have stated over the years, I am waiting to vultch.
You have given me a great financial education.
This is not sustainable.

#246 Long Time Lurker on 04.06.18 at 4:01 pm

This is the time I wish I too have access to bank of mom. I am more like bank for mom.