Flowing red

Turns out it wasn’t Chinese guys in Lambos. Or even a phalanx of musty millennials. Instead it was speculators – of the kind who’ll pack Toronto’s big conference centre on Saturday for the ‘Real Estate & Bitcoin Pitbull-Rocky Orgy’ – who goosed the prices.

Of the roughly twenty thousand fresh new condos that were bought last year in the massive GTA market, a stunning 48% were purchased by speculators. Investors. Amateur investors. Disciples in the service of our lordly Condo King, Brad Lamb. This supports other evidence that local T.O. families (and the same likely holds true in Van) are at the heart of a run-up in real estate values that foreign buyers have taken the rap for. It’s estimated that 14% of all GTA households now own multiple properties – mostly condos financed with HELOCs on principal residences.

In terms of capital value, condo buyers have done largely okay. Per-foot values have shot higher along with demand over the last five years, yielding a nice profit. But there are two problems with this ‘easy money’ strategy that so many people have walked into.

First, tax. Speckers and part-time landlords buying a unit to lease don’t get to sell and enjoy a tax-free return. In fact, they might not even qualify to enjoy the low (50%) capital gains inclusion rate. The CRA has one of its infamous ‘projects’ in place and is busy telling people who bought, owned for a while then sold that their gains will be considered to be business income. Yeah, baby, 100% tax. That means all the appreciation collected at closing must be declared as earned income in that year. If you were making, say, $80,000 from your job with a 31% marginal tax, then pocketed $100,000 on a condo deal, your rate would jump to 48%. Ouch.

Second, negative cash flow. While renters moan and bitch about the cost of accommodation, the gamblers buying those units are the ones bleeding. At least a lot of them. A new study by CIBC and Urbanation finds an incredible 44% of the speckers are losing money – more than a third of them are throwing away at least a grand every 30 days subsidizing their tenants.

This reported negative cash flow, by the way, is only the shortfall between the actual mortgage payment plus monthly condo fees and the rent collected. It does not take into consideration the cost of insurance, vacancies, property tax, repairs or ascribe any value to the lost utility of the downpayment. Nor does it include closing costs such as land transfer taxes. Factor those things in – plus Ontario’s new universal rent controls – and you suddenly wonder what Mr. Lamb has been smoking telling investors then can earn 15%-20% per year snapping up units in his buildings.

Now, without a doubt, condos are hot. The moisters are increasingly joining the speckers in both Toronto and YVR. As mentioned here the other day, last month in Vancouver just 14% of the detacheds on the market found owners. More than 61% of available condos sold. Prices in Toronto have increased more than 25% in a year – about the same as the plop in McMansion values in the northern burbs.

But the problems with condo ownership are legion, as detailed here days ago. Monthly charges are always the lowest when a building is first occupied, then inevitably rise with time. Special assessments are common, expensive, and can prevent you from selling a unit. Resale values are set by the building, not your property, shackling you to conditions you cannot control. And, at the end of the day, it’s just an apartment. If a dork moves in next door (or above) you’re stuck. But if you rent, you can move.

Now, combine those ownership negatives with the fact that half of all tenants (says the study) are being subsidized by their landlords, and it begs the question… why would anyone buy when they can live in the same unit as a tenant for less? And no risk. No downpayment. No mortgage debt. Huh?

Beats me. And as the bank points out, there are currently 60,000 condos under construction in the GTA, with the pipeline stuffed for at least three years. That could pose too much supply for the demand. Combined with rising mortgage rates (look at Friday’s job stats) plus B20 (and Comrade Horgan in BC) there’s no guarantee prices will continue to swell.

But the landlord blood will keep flowing.

Rent, save and invest, kids. Then buy dirt.

148 comments ↓

#1 Tom on 04.06.18 at 5:44 pm

If you don’t advise owning a condo, then what do you recommend for average wage earners who live where basic houses cost over 600K?

As stated. Rent, save, invest. – Garth

#2 TurnerNation on 04.06.18 at 5:46 pm

This blog’s future direction is clear: Go full on Whatca Minnie.

A place where we share our  experiences and feelings to foster inclusiveness, diversity and understanding.

– References of wealth, wealth accumulation shall be removed.  These terms trigger oppression toward those traditionally marginalized communities facing systemic barriers in mainstream banking access.

– Posting FIRST is not allowed as this might trigger imperialist memories among those which were in fact here “First”

And also  just buya da house!!

#3 Whatcha Minnie on 04.06.18 at 5:47 pm

I’m not here to tell you that you should go to a musical or play or concert or other live performance, because your tastes are most assuredly different than mine and this is not about forcing you to experience things you don’t want to experience. (Although, I would say you should continue to try all of the above because if you give up too easily you may be deprived of an experience that will have an important impact on your life. Heck, I might even give opera another try in the future … well, the very distant future.)

#4 Dave on 04.06.18 at 5:51 pm

How will USA and China trade war effect canada real estate?

#5 FOUR FINGERS WATSON on 04.06.18 at 5:52 pm

The CRA has one of its infamous ‘projects’ in place and is busy telling people who bought, owned for a while then sold that their gains will be considered to be business income. Yeah, baby, 100% tax. That means all the appreciation collected at closing must be declared as earned income in that year. If you were making, say, $80,000 from your job with a 31% marginal tax, then pocketed $100,000 on a condo deal, your rate would jump to 48%. Ouch.
…………………………
Retroactive to when ? And is it even enforceable ?

#6 Canadian in LA on 04.06.18 at 5:54 pm

You really should stop trying to include lost opportunity costs in your real estate investment analysis. I could buy that argument on principle residence, but not on investment properties. I get that you are a stock guy, but your real estate analysis are always terrible. When you tell your investors to put money into a balanced fund, I bet you don’t say “oh but you are not really earning 8% because you have lost opportunity costs on the money invested in this fund”.

Cash flow is cash flow. – Garth

#7 YVR - 60% crash! on 04.06.18 at 5:54 pm

“a stunning 48% were purchased by speculators. Investors. Amateur investors. ”

So 52% were purchased by foreign buyers?

End users. – Garth

#8 Tom on 04.06.18 at 5:54 pm

You are so in denial. CREA undertook an initiative to market Canadian homes to Chinese buyers–Ross Kay Howe Street. This hasn’t been mentioned in mainstream media. They created a marketing methodology to attract foreign investors to get the highest price for Canadian homes. Type https://china.realtor.ca/index.html

So what? As a seller, I’d like that. – Garth

#9 mitzerboyakaQueencitykidd on 04.06.18 at 5:55 pm

it is good to park some money in dirt.

#10 PastThePeak on 04.06.18 at 5:58 pm

Garth, would that CRA project you mentioned apply to out of country vacation property? We sold our Florida condo last year and I am working on the taxes now. Hadn’t heard of this from the accountant yet.

#11 Jungle on 04.06.18 at 5:59 pm

You forgot to mention in to core rents went up almost 20% and vacancy rate very low at 1%, helping to support the condo speculation.

The other problem supporting condos is the lack of new rental purpose buildings and failed gov policy.

Leaving it to the private sector to take care of this need is a big mistake, and surprising our socialist liberal gov let it get this far. But then again, since the liberals have failed with so much bad policy it is not surprising.

You think the government should build apartments? – Garth

#12 MF on 04.06.18 at 6:00 pm

And this is news because?

It’s obvious to all of us living in condo towers that the majority of “owners” are speculators, and the units are being traded like upper deck baseball cards were in 1991.

I also couldn’t care less about owner issues since 1) the rents are too high regardless of some perceived cash flow issue and 2) they have capital gains based on the usual suspects (low rates, media, realtor scum etc).

Nobody cares about negative cash flow since they only plan on holding on to the units for a few years or less anyways.

MF

#13 Linda on 04.06.18 at 6:03 pm

Speaking of ‘flowing red’, the Trump trade skirmish/war battered the markets again today.

Regarding Mr. Lamb, perhaps that 15-20% ROI is if one builds a condo tower & then sells off all the units to ‘investors’. And who knows? Perhaps if the vaunted Millennial for a place of one’s own is realized then an investor who bought a pre-built condo can flip it for a profit, though given the CRA perils outlined in this post that potential profit is looking less than certain.

#14 Jungle on 04.06.18 at 6:04 pm

Is Bitcoin and weed stocks mania finally coming to an end?

#15 Reximus on 04.06.18 at 6:04 pm

If you HAVE to live in 416…sell your condo, buy a nice semi in the best hood you can afford. Do it, do it now

#16 SJW Canadian Millenial on 04.06.18 at 6:05 pm

Selling properties for profit should always be taxed. It isn’t fair that a single African-American mother pay the same regressive sales tax as someone who owns an entire floor of luxury penthouses in downtown Toronto.

It isn’t fair that single mothers in Toronto are unable to afford basic necessities such as shampoo and sanitary napkins because it’s HST taxable, while Canadian-born Baby Boomers deduct their basic needs on their tax returns.

Speculators who purposely resell houses and condos for profit should pay their taxes. It’s unbelievable that high-rise condos are growing like weeds in the slums of Toronto, pushing up rent prices and causing crime to pay the pills. Shame on you 1%ers!

#17 PastThePeak on 04.06.18 at 6:06 pm

Was the Mattamy example posted endlessly the last couple days not a good example of what a down / slow melt + B20 and IFSR 9 can to those that over extend?

Buy a house if you want and can, but don’t pay a price at the upper end of absolute affordability when all the ducks are lined up. Life throws a few curves that impact your finances from time to time.

If that article about IFRS 9 impacting mortgage renewals when values go down becomes even close to widespread, then it might cause a world of hurt for those who HELOC’d as soon as they could, but still carry a big mortgage.

#18 For those about to flop... on 04.06.18 at 6:07 pm

#287 YVR Renter on 04.06.18 at 5:25 pm
#249 Floppy- still….c’mon, $2.7 million for that crack shack??? YVR is ridonkulous!

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

I know,I know ,but I can only report what comes through.

Consider this though,you laugh at the 2.7 ,but nearby I have another case that they paid 11.38 for and seemed destined to loss money.

The house on Larch is surrounded by houses asking 5/6 million and so someone decided to use the current conditions to their advantage, and if the market continues to decline they will still be in decent shape for a while with the option to develop if needed in time.

My main point is that it is a relatively prestigious neighborhood but it didn’t help these guys from taking a big knockdown in price.

Luckily for the guys on Larch it was not a recent purchase and most likely made an amazing profit.

The guys on Elm street?

Nightmare…

M43BC

6349 Elm st, Vancouver.Paid 11.38 January 2016 ass 9.23 2017

On for 12.38

https://www.zolo.ca/vancouver-real-estate/6349-elm-street

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

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

Recent Sale Report.

This one might open the eyes of a few people that are still having problems seeing what is going on in Vancouver.

This house on the Westside of Vancouver sold 19 days ago.

6202 Larch st,Vancouver

Asking 3.28

Just sold for 2.7

2017 assessment 3.48

780k or 22.5% less than assessed.

580k or 17.7% less than asking.

I can only help people see who want to see.

I can’t fix cataracts…

M43BC

https://www.zolo.ca/vancouver-real-estate/6202-larch-street

#19 TheDood on 04.06.18 at 6:08 pm

#12 MF on 04.06.18 at 6:00 pm

Nobody cares about negative cash flow since they only plan on holding on to the units for a few years or less anyways.

MF
__________________________________

…which makes them financially illiterate idiots!

#20 Renter's Revenge! on 04.06.18 at 6:08 pm

Comment #2 TurnerNation on 04.06.18 at 5:46 pm
This blog’s future direction is clear: Go full on Whatca Minnie.

Comment #3 Whatcha Minnie on 04.06.18 at 5:47 pm

Nice.

Got up today at 5:54 am today, a little on the early side. Had my coffee but skipped the sugar as I’m watching my weight. Showered, put my clothes on, socks first, of course. Had a quick breakfast and headed out to work. Saw Dave in the lunchroom. He was miffed because no one had made coffee yet. I started a carafe and we chatted about golf swing technique while we waited for the coffee to brew. Went to Olive Garden for lunch with some friends. I ordered unlimited soup, salad and breadsticks. I ate three whole breadsticks trying to get my money’s worth. We had a blast! Back to work for the afternoon grinding out spreadsheets for new project I’m working on. Excel is amazing. Did you know you can press end and then down and it jumps to the bottom of the column of cells that you’re in? Tonight I’m having spaghetti dinner with the wife and then we’re watching a rerun of Top Gun on AMC. After that we’ll probably call it night. Gotta rest up for tomorrow because we’re doing spring cleaning around the house all weekend. Somebody kill me now, please.

#21 Damifino on 04.06.18 at 6:12 pm

If you were making, say, $80,000 from your job with a 31% marginal tax, then pocketed $100,000 on a condo deal, your rate would jump to 48%.
——————————-

Even if you were lucky and got a capital gain exclusion of 50%, you’d still be paying $24K in tax on the remainder.

The CRA then assumes you’ve become a real smart cookie who will keep making the same kind of cash annually. They’ll pester you to remit $6K quarterly in the following year and start watching you more closely.

They’re like that.

#22 renter in Surrey on 04.06.18 at 6:13 pm

I have heard on CBC that probability of next rate hike is only 20%. Sounds like Bank of Canada wants to keep interest rates as low as possible for as long as it can.

#23 Reximus on 04.06.18 at 6:15 pm

You think the government should build apartments? – Garth

The old, now demolished Regent Park says yes…lol

#24 uh oh!! on 04.06.18 at 6:17 pm

brush up on your bear market tactics boys. the fun is only beginning. the great bull market of 2009 – 2018 is done.

#25 jim on 04.06.18 at 6:18 pm

#13

“Nobody cares about negative cash flow since they only plan on holding on to the units for a few years or less anyways.”

That appears to be a good hypothesis. The odd thing is that if you pick up a book on real estate investing or hang out on BiggerPockets (or other real estate investing sites), one of the first pieces of advice is to view future price appreciation as a side benefit only. Focus on cash flow and profitability instead.

#26 Specuskeptic on 04.06.18 at 6:22 pm

Are there enough moister millenials to fill in for those 48% who are speculators if/when, upon figuring out that subsidising renters is a rube’s game, they decide to sell? And, more importantly, do those mills have the dolla bills to afford such investments? I suspect there aren’t and that they don’t. Can’t say this bodes well for future values in that market either.

#27 lallapalooza on 04.06.18 at 6:27 pm

It’s when the lack of price increases bite into the carrying cost (negative cash-flow is big enough to swallow price increases) of condos will the real show begin. I’ll have popcorn ready!!

#28 Stan Brooks on 04.06.18 at 6:28 pm

#279 Reximus on 04.06.18 at 4:21 pm
Dear Stan..you are off your noodle about Barrie vs Frankfurt

A typical 4 bed in Frankfurt: “Recent price increases mean that a four-bedroom single-family home with a small garden — and “if you’re lucky, a nanny room” — now goes for about 2.4 million euros (or $2.7 million), up from around 1.6 million euros (or $1.8 million) a few years ago.”

https://www.nytimes.com/2017/06/28/realestate/real-estate-in-frankfurt-germany.html

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

Cherry picking much?

Why don’t you pick a place on Champs-Élysées and compare with a shack at the outskirts of New Market and Barry and tell me how much more room the prices here have for rise?

With you logic I can pick up also a house in Kensington or Chelsey in London or most prestigious New York addresses and compare price to price with a stacked townhouse/basement floor in New Market.

No?

Here are examples, I hope you know German, if not, I can translate at the cost of $ 150 per hour.

https://www.immonet.de/angebot/33490768?drop=sel&related=false

https://www.immonet.de/angebot/33491499?drop=sel&related=false

https://www.immonet.de/angebot/33353676?drop=sel&related=false

Note, these are in the actual city, for 350 k Euro you can find decent house 30 min with train from the city centre.

#29 NotLegalAdvice on 04.06.18 at 6:35 pm

Any advice on what quality of dirt we should buy? Or more importantly, where is this Dirt located?? Location location location!

#30 Camille on 04.06.18 at 6:36 pm

Hello. Condos are such a great idea, ruined in practice, like golf is a beautiful sport spoiled by the many people who took up the sport. Likewise, caravans are not cheap, and are a vacation choice rather than the lowest cost form of recreation.
So never buy a condo, short story. And here’s the kicker I have not heard in this blog yet, AirBNB. Yes, like a hotel, they are in and out, using all those great facilities. Ha Ha.
You’re half million against all of them. Good luck! It’s like the wild west.

#31 Life in the Burbs on 04.06.18 at 6:37 pm

Garth

Good to have you back. I thought we lost you for a second.
I am still waiting for another 15 percent in York region if it means anything to you. But that’s down from 25 as a result of your last three posts. I came to my senses.

#32 Eco Capitalist on 04.06.18 at 6:39 pm

I’ve lived in my building for 7 years (new when I moved in) and based on personal observation, the number of units being rented out has decreased over time. I think the amateur landlords learn their lesson in the 3-5 year time frame and bail. On my own floor, 4 of the 9 units used to be rentals, now they are all owner occupied.

#33 Debtslavecreator on 04.06.18 at 6:42 pm

Great point Garth
I have condo owners tell me their horror stories all the time. Condos are a disaster for most in the long run. No land value and rapidly rising fees and special assessments that for one of my clients has totaled over $ 18000 since they bought in the fall of 2015
On a positive note at least condo dwellers don’t have to worry about the snow shovelling and landscaping
With the amount of energy emitted from the sun dropping rapidly to levels not seen in millenia at least these condo owners can stay inside during what we will look back and realize was the start of a multi decade extreme cold period
Enjoy them boxes in the sky folks
No thanks

#34 The Boulder on 04.06.18 at 6:46 pm

Who else feels Garth’s blog was hacked, and now he got the control back.
Yes, real estate is local and today’s blog is more for condos.

#35 april on 04.06.18 at 6:51 pm

According to Steve Saretsky, Vancouver realtor, possibly of the more honest realtors, worth a listen…” Vancouver detached sales hit 20 yr low….” condo sales starting to slow and the new regs haven’t hit yet. Hope you don’t stop Garth… wishing I’d invested with you some 7/8 yrs ago…might still….

#36 Watcha Minnie on 04.06.18 at 6:51 pm

A few days ago my wife bought a whip and I was secretly hoping she wants to spice our dying bedroom life. Alas, she used it on me today to force me take the garbage out and do the dishes. Today she came with a chastity belt. What to do?

#37 Stan Brooks on 04.06.18 at 6:55 pm

And here is a house in Costa Brava

https://www.costadelhome.com/country-house-with-sea-views-for-sale-in-lloret-de-mar-260873

and one in Alicante:
https://www.costadelhome.com/4-bed-4-bath-villa-for-sale-in-alicante-centre-279218

Malaga (same view as to Lake Simcoe in Barrie)
https://www.costadelhome.com/5-bed-3-bath-villa-for-sale-in-malaga-276750

some of the most exclusive Spain resorts.

Cheaper than Barry.

#38 For those about to flop... on 04.06.18 at 7:11 pm

“This supports other evidence that local T.O. families (and the same likely holds true in Van) are at the heart of a run-up in real estate values that foreign buyers have taken the rap for.”-Thor Turner.

I will show you this piece of evidence.

You are a busy guy but let me try to remind you.

Do you remember when my elderly neighbor struggled to sell her detached house after waiting a year or so too long?

She eventually sold after nine months or so on the market and moved back East and another poster wrote me on your blog and told me she passed.

Anyway the developers stayed away and what everyone thought was a young couple with a young child had bought the property to raise a family has revealed themselves to be flippers.

They picked it up for 1.2 in August 2017 and it had just been assessed at 1.45.

Like I said they got it at a decent price because the developers stayed away and the amount of work needed would have turned a few off.

8 months later they have it back on the market for 1.54

I know the elderly neighbor and her realtor fought hard for every dollar as she was moving back home and now the money most likely because their inheritance after her passing.

These guys probably begged to get such a discount ,probably playing on the fact that they were going to raise a family there and not bulldoze the house that she spent a large portion of her life in ,and probably brought her comfort of the memories of her husband who passed away many years early.

This is all fair game if you don’t mind stabbing a dead lady in the back.

Where am I going with this?

I dunno.

All I can do is reiterate what I have stated on here before.

During the past 16 years in Canada working on luxury detached houses here’s some similarities in all the people I have worked for:

European developers….greedy.

Chinese developers……greedy.

Canadian developers….greedy.

All the same,all want to maximize profits, no one wanted to be blamed for driving up prices.

They took the risk.

I took the paycheque.

I do not spend any of my spare time with these people.

I seemingly prefer to spend my time helping strangers on this blog…

M43BC

https://www.zolo.ca/vancouver-real-estate/904-e-37th-avenue

#39 zee on 04.06.18 at 7:11 pm

If 50% condos are sold to investors(likely homeowners using helocs to finance it) does this change your opinion from yesterday regarding gta home prices.

Would the condo market not slow down when homeowners cant any more equity out when homes prices are going down and rates going up etc.

Would seem like it would change things both on condos as well as sfh.

#40 waiting on the westcoast on 04.06.18 at 7:12 pm

Garth says… “It’s estimated that 14% of all GTA households now own multiple properties – mostly condos financed with HELOCs on principal residences.”

I would like to know what the percentage is in south coastal BC?

#41 RW_Z on 04.06.18 at 7:13 pm

“Rent, save and invest, kids. Then buy dirt.”

I rented, saved and invested for 10 years and I’m now about $1 million further away from buying the patch of dirt I was saving for than if I had walked in there and deposited my loose change on it as a down payment on my way to school in the beginning.

Are there risks in buying a shoddily-built condo or not thinking ahead? Yeah. But the extreme caution advised by Garth on this blog is coming from a man who hasn’t got any stake in the advice. He’s light years removed from any risk of the downsides that many of his readers are (or were) at risk of.

You have to filter your advice based on who you’re getting it from, and weigh the pros and cons based on the consequences to you personally.

You can make a lot of bad decisions trying to feel morally superior to people. They’re making uninformed decisions, so they should be punished for it (doesn’t mean they actually will be punished). I’m not entitled to low prices just because I was born here, so I’ll let someone else who’s equally not entitled (and who moved here yesterday, who has no personal attachment to the place) buy at the low price and sit here and watch disapprovingly for years…

#42 morrey on 04.06.18 at 7:27 pm

“How a generation of Canadians bit into home-equity lines of credit and ended up renting their homes from the banks, living beyond their means and sacrificing their nest eggs”

#43 X on 04.06.18 at 7:28 pm

RE#6 Canadian in LA on 04.06.18 at 5:54 pm
‘You really should stop trying to include lost opportunity costs in your real estate investment analysis. I could buy that argument on principle residence, but not on investment properties.’

I would argue that is exactly when you should include the lost opportunity cost. To assess how much money you would make would you not compare the potential of one to the other.

#44 GVRD Why ever live here? on 04.06.18 at 7:28 pm

People who claim Vancouver is one of the most beautiful cities and BC “the best place on earth” just need to get out more and see the rest of the world. Can’t stand the smugness of BC’ers about their stupid province and the gawd awful and ugly cities they’ve built.
No great career prospects and job or business options there either. Why do people want to live here and pay a premium for their place under the rain is beyond me. As if the weather wasn’t bad enough, the infrastructure is beyond stupid. There’s no way they can ever catch up to 21st standard for roads or transit options.

#45 Howard on 04.06.18 at 7:31 pm

I quite enjoy Whatcha Minnie’s humourous daily vignettes.

#46 Ben Dover on 04.06.18 at 7:32 pm

no sympathy for the house horny….

https://www.thestar.com/business/real_estate/2018/04/05/oakville-homebuyers-purchased-at-their-own-risk-housing-minister-says.html

#47 X on 04.06.18 at 7:33 pm

re #22 renter in Surrey

Pretty sure that is for the next meeting as a singular event. Not a long term forecast. Expect higher rates moving forwards.

#48 Flint on 04.06.18 at 7:38 pm

How do you feel about townhouses, Garth? Are the condo variety as worthless as condo apartments?

#49 Reximus on 04.06.18 at 7:44 pm

Sorry Stan…you’re a clown

What difference does it make what a house in New Mexico, Mexicali or North York have to do with the real world

#50 Gramps on 04.06.18 at 7:44 pm

Re#1-Tom
Remember that ya don’t really own it, even if you buy it.
Your rent is now property tax. Stop paying–get the boot.

#51 Newcomer on 04.06.18 at 7:50 pm

This is a little off topic, so I apologize, but can someone explain to me why Bitcoin is still above $100? Is there a technical reason that keeps prices from falling faster, or are there really people out there who are buying it because they think it’s a good idea?

#52 'flowing red' on 04.06.18 at 7:51 pm

thought for sure it was about the markets!!!!

#53 SoggyShorts on 04.06.18 at 7:56 pm

#251 Mattl on 04.06.18 at 1:16 pm

I’d love to see a rent vs buy calc that factors in absolutely everything too. Last year I asked pops what his house has cost him the last 25 years, and it’s pretty crazy.
Bought it in ’92 for 150K, and over the years he put in another 150K for kitchen, windows, 2 bathrooms, the roof twice, outside paint twice inside once, furnace twice and a few others I forget. Not including property taxes.

It’s worth ~450K now, which isn’t much considering 25 years of inflation.

Sure they own it free and clear, but what would things have been like if he rented it instead, and sunk all that extra cash + down payment into a portfolio? Would that portfolio be throwing off more income than he is saving in rent from now on?

Of course renting+not saving is a long-term fail vs buying, but you have to assume the exact same level of spending in both cases- one spends everything on mortgage+expenses, the other spends less by renting, but invests the difference. Any other assumption is dishonest and unfair.

If you find such an in-depth calculator, please share it.

#54 lance on 04.06.18 at 8:01 pm

to anyone sitting on some dirt.

this in an unbelievable loan geared to building rental housing.

50 year amortization??

https://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/mupr/upload/rental-construction-financing-product-highlight-sheet.pdf

#55 n1tro on 04.06.18 at 8:02 pm

#16 SJW Canadian Millenial on 04.06.18 at 6:05 pm
Selling properties for profit should always be taxed. It isn’t fair that a single African-American mother pay the same regressive sales tax as someone who owns an entire floor of luxury penthouses in downtown Toronto.

It isn’t fair that single mothers in Toronto are unable to afford basic necessities such as shampoo and sanitary napkins because it’s HST taxable, while Canadian-born Baby Boomers deduct their basic needs on their tax returns.

Speculators who purposely resell houses and condos for profit should pay their taxes. It’s unbelievable that high-rise condos are growing like weeds in the slums of Toronto, pushing up rent prices and causing crime to pay the pills. Shame on you 1%ers!
———————————————————–
So what your are saying is that there are incentives to be a 1%er, both on top and at the bottom!? I’m closer to the top so I’ll keep heading that way to pay little to no taxes on my ill gotten wealth!

As for the single moms…maybe reflect on your life choices?!

¯\_(-.-)_/¯

#56 Ian on 04.06.18 at 8:05 pm

Thank you Garth! Blog is back to normal.

It felt like a Happy Housing inspired realtor hacked your account the last few days.

The world is all good again and I can enjoy my weekend!

Keep renting folks!!

#57 Russ on 04.06.18 at 8:06 pm

Hey Guys,

Anyone think that “Watcha Minnie” might be “Freedom First”, after rehab?

There are a lot of similarities…

Cheers, R

#58 ww1 on 04.06.18 at 8:09 pm

#5 FOUR FINGERS WATSON on 04.06.18 at 5:52 pm
The CRA has one of its infamous ‘projects’ in place and is busy telling people who bought, owned for a while then sold that their gains will be considered to be business income. Yeah, baby, 100% tax. That means all the appreciation collected at closing must be declared as earned income in that year. If you were making, say, $80,000 from your job with a 31% marginal tax, then pocketed $100,000 on a condo deal, your rate would jump to 48%. Ouch.
…………………………
Retroactive to when ? And is it even enforceable ?

Really? Is math that hard? Try to keep up …

Canada has a progressive rate tax system. As you make more taxable income, the rate goes up on successive dollars. Your first few dollars are tax free, but as you make more the tax on additional income goes up – but only on the additional income. So if you are at a point (in Garth’s example) where each additional dollar is taxed at 31% federal (plus provincial) and you get an additional $100,000, some large percentage of that will be taxed at an effective rate of about 48% (federal+provincial). Your total income is not taxed at 48% but each additional dollar of the $100,000 is.

Also, when Garth says “100% tax”, he means that most of your $100,000 capital gain would be taxed at your top marginal rate of 48% if it’s business income – rather than the much lower capital gains tax rate.

So yes, it’s enforecable and it effectively happens the moment you sell (payable next April). No retroactive needed – that’s been tax law for a long time now. Looks like the CRA is just starting to pay more attention to it.

#59 SoggyShorts on 04.06.18 at 8:13 pm

#16 SJW Canadian Millenial on 04.06.18 at 6:05 pm
Selling properties for profit should always be taxed. It isn’t fair that a single African-American mother pay the same regressive sales tax as someone who owns an entire floor of luxury penthouses in downtown Toronto.
******************************
What does race or gender have to do with this? Are you saying an African American can’t own penthouses? Or a Woman?

If you want to say “poor person who made poor choices” then just say it, they come in all shapes and colours.

#60 easy on 04.06.18 at 8:17 pm

Now, combine those ownership negatives with the fact that half of all tenants (says the study) are being subsidized by their landlords, and it begs the question… why would anyone buy when they can live in the same unit as a tenant for less? And no risk. No downpayment. No mortgage debt. Huh?

………..

easy. The renter can be thrown out. Bye bye. Look for a new place.

some people just dont like that, especially if they have small kids.

#61 SimplyPut7 on 04.06.18 at 8:19 pm

#16 SJW Canadian Millenial on 04.06.18 at 6:05 pm

African-American?

It’s okay to say black people, my preference is Canadian.

#62 SunnyDays on 04.06.18 at 8:31 pm

Rent, save and invest, kids. Then buy dirt.

In theory, this is sound advice. Doesn’t work in Toronto anymore though. The solution to improving your standard of living is to leave for greener pastures.

Most people are unable to save enough to invest. Cost of living is outpacing earnings. Even the new aristocracy, the public sector workers are feeling the pinch.

Official inflation in Canada is 15% between 2008-2018. Useless number. In Toronto, everyday expenses are more like 75-100% higher during that timeframe (for example, the price of take-out lunch has doubled, a cup of coffee and property taxes are 50% more expensive).

Even if one’s salary is growing every year by the official inflation number, our money’s purchasing power is eroding even faster.

If you have savings, your best chance of preserving your capital’s purchasing power in the past 10 years was with:
1. a balanced portfolio – 80% increase at 6% annual compound growth
2. a house – average Toronto house price increase was 117%

Jim Balsillie, former chairman of RIM, says “60% of Waterloo’s computer graduates are leaving Canada”:
https://www.bnn.ca/video/balsillie-trump-s-pro-business-stance-attracting-talent-away-from-canada~1360938

Smart kids. They did the math.

#63 SimplyPut7 on 04.06.18 at 8:31 pm

Rent, save and invest, kids. Then buy dirt.

————-

This is the best advice you have given in days.

Welcome back.

#64 Fuzzy Camel on 04.06.18 at 8:35 pm

Garth, you ain’t seen nothing yet. Word in the asian community is Canada has no opportunity, the lambo-driving kids are selling their houses/condos and moving back to the mainland. They feel the new petro Yuan will open up tons of opportunity to do well in China.

If this trend continues, the lambo dealers will be in a world of hurt. Expect more supply to enter the market.

#65 Sherlock on 04.06.18 at 8:38 pm

#24 uh oh!! on 04.06.18 at 6:17 pm
brush up on your bear market tactics boys. the fun is only beginning. the great bull market of 2009 – 2018 is done.

“Elementary, my dear Watson”

This man speaks the truth. Let the Bear market begin.

#66 Ken from BC on 04.06.18 at 8:40 pm

Friday March 30, 2018: Yaa so I bought this Cosmos Condo in ’16 and made like 200% and still going up. I’m basically a financial genius. Thinking about picking up an Audi.
Friday April 6, 2018: WTF! It’s not fair. I’m a victim of a corporate monster. What about all my “profit”. The government must repay me.
Are you f’n kidding me? Suck it up buttercup, you get your deposit back and have learned (hopefully) a valuable lesson in life (priceless).

#67 KAC on 04.06.18 at 8:44 pm

#33 Debtslavecreator

“Condos are a disaster for most in the long run. No land value and rapidly rising fees and special assessments that for one of my clients has totaled over $ 18000 since they bought in the fall of 2015“
———————————————————————————

Wow, this gets tedious, but let me explain it again.

Actually, every condo I’ve seen is built on land, except for some houseboats on water lots.

The land is owned by the strata corporation which is owned by the individual unit owners. Hence, condo owners own their proportionate share of the land under the condo. One might question which piece of land is likely to appreciate the most, a SFH lot in a distant and undesirable suburb or a lot surrounded by 5 star hotels and upmarket shopping in the heart of a vibrant city?

Sorry about the client who got stuck with $18K in special assessments, but I’ve spent a lot more on replacing my detached home’s roof, boiler and wiring. And don’t even ask me how much I’ve paid the gardener for planting and maintaining a garden which is nowhere near as nice as my neighbours. Fortunately I’m told the crack in my foundation is nothing to worry about …. yet.

Houses and condos come with their own sets of pros and cons, I’ve enjoyed living in both but neither is perfect.

Buy a detached crack shack in the wrong neighborhood at your peril, similarly, buy a tiny, generic shoebox in a bad condo building and you could be screwed.

The three most important considerations for a home purchase are location, location, location, but still do your due diligence on all the other factors.

FWIW, I fully expect YVR condo prices to eventually stop rising and follow the depreciating trend already so clearly evident in our detached market.

#68 Whatcha Winnie on 04.06.18 at 8:46 pm

Got up today after the coffee was perked. The female owner of this house that I’m living in for the week gets up at 5:50, while the male sleeps in.

He’s warm, so I lie with my butt near his nose. He’ll eventually wake up, and by then the female will be sitting on the couch with a coffee and the couch will be warm. He did, and it was.

Ate breakfast. I’m on painkillers, but the female is slowly reducing them. I might feign a back spasm again to get more food. Maybe I’ll leave it for later when I’m bored. My real female is away for 10 days. I like this vacation house. I can sit on the back of a couch and watch the traffic go past, and bark when someone walks by, especially if they pee on my tree. The male is ok, as I have him under my control. The other dog is ok too; when I first started coming, he never barked, but now I can get him to bark on command, which brings the male or female close and he gets into trouble.

Burped after breakfast. Female went to work, and took me with her. I have my own chair at the office I sleep in. I do have a sleep pod, but it is used for storing toys. Sometimes I bark when new people come in, but generally, I save the barking for those who tease me. Sometimes the couriers bring me treats.

Ate lunch. Mooched some sweet potato slices from the female in the front office, then my female who was doing something and did not notice my first mooch.

Slept. Drove home. I like to sit in the passenger seat looking for something to bark at. At home, I went to the back yard, and barked at a rabbit and then the two dogs behind the hedge started barking, so I barked back. The female told me “NO BARK” but I ignored her. As usual.

Went inside. The other dog, the black one, was there with the male. But it’s ok – he’s a wuss, and I can steal his toys when he’s dragging his butt across the carpet. Had something to eat. Burped. Decided to have some water; I like to get my muzzle deep in the bowl so that I drip water down the hardwood as I pretend I’m wearing stiletto heals like us females like to do. I notice that the male wears slippers, and the other dog has big feet and is quiet, except for when he’s dragging his butt around.

Female went out with shopping bags. Sitting on couch with male, and on the other side of him, the other dog is snoring. Male is reading something by Bandit’s male. Must be interesting, as he’s moving his fingers fast.

On Monday, my main female wants me back. That’s ok – it’s nice to have a bit of vacation.

I think I’ll whine for more sweet potato. I have this male’s frequency honed in – three high pitched whines and he’ll get up and get some sweet potato.

#69 Long-Time Lurker on 04.06.18 at 8:46 pm

#38 For those about to flop… on 04.06.18 at 7:11 pm

I seemingly prefer to spend my time helping strangers on this blog…

>Tireless efforts, Flop. I’m sure you’re helping people.

#36 Watcha Minnie on 04.06.18 at 6:51 pm
A few days ago my wife bought a whip and I was secretly hoping she wants to spice our dying bedroom life. Alas, she used it on me today to force me take the garbage out and do the dishes. Today she came with a chastity belt. What to do?

>Diversify. Don’t forget to balance, as well.

Garth, your advice can be applied in so many different ways!

#70 mike from mtl on 04.06.18 at 8:47 pm

Again I go back to why RE of any kind is taxed like we’re in the 19th century and everything else 21st?

Sell a primary RE? zero records who cares? Don’t claim that .1c on your T3? taxed retroactive – F YOU!

If there’s not an incentive to but RE at ANY price . GOV says I don t know.

#71 paulo on 04.06.18 at 8:47 pm

A Interesting observation,in north east Barrie Ont:
in mid April decided to make a list of properties for sale on my normal drive from the office to home. was curious to see how many would be sold by the end of April, the generally accepted end of pre approvals obtained prior to January 1,the B20 implementation.
14 property’s 11 sfd’s 2 semi’s and 2 condo town house all average about 40 years old
As at last Monday 10 of 14 had SOLD shingles.
Today i noticed that 8 of 10 solds had apparently returned to the market very curious. the 2 condo town houses,low end of the price range still seem to be sold.
maybe old ron has a theory on this?.

#72 mike from mtl on 04.06.18 at 8:52 pm

Honestly I m very close to throwing in the towel.

It’s very clear the 90% own and who cares about the rest? GOV policy is clearly slanted towards paying the various taxes and fees.

Having ‘money’ here just means you’re one of the stupid ones who will be taxed to death.

#73 Fake News Again on 04.06.18 at 8:59 pm

“Turns out it wasn’t Chinese guys in Lambos. Or even a phalanx of musty millennials. Instead it was speculators – of the kind who’ll pack Toronto’s big conference centre on Saturday for the ‘Real Estate & Bitcoin Pitbull-Rocky Orgy’ – who goosed the prices”

So folks replace wasn’t with was and Toronto with Vancouver and speculators with foreigners…..and you pretty much have it right.

#74 Lost...but not leased on 04.06.18 at 9:01 pm

Re CRA, Capital Gains etc.

My understanding re RE sales and CRA is it is adiscretionary call.

When the market was “hot”, at least in BC, one could build a home, live in it for approx.one year…sell…repeat..(principal residence exemption)…..the point being that too many were doing this,so a relative benchmark was set.

Perhaps all levels of gov’t did not want to upset the cash cow at the time.

However, when things slow down, CRA may wish to use its powers to re-define what is deemed capital gains or not…aka major crash grab.

PS Such a change via CRA may be a backdoor indicator that the economy is changing aka tanking aka an new cash grab.

That’s all changed. It’s why the PR exemption form now is part of the tax package. – Garth

#75 Brian Bourbon on 04.06.18 at 9:04 pm

So we’re talking about how bad it would be to make $100k, and pay either no tax, $25k, or $48k worst case? Most small condos in TO past 2 years up closer to $250k

#76 -=jwk=- on 04.06.18 at 9:10 pm

That means all the appreciation collected at closing must be declared as earned income in that year.

LOL, this never happens. ever. its all pure profit. there isnt’ even a mechanism in place to report this. you sell. you close. you get a cheque. the end

Note, these are in the actual city, for 350 k Euro you can find decent house 30 min with train from the city centre.

This is true of every major city in the world, I have posted examples from san fran and manhattan previously. The exception is toronto, and vancouver-ish as van doesn’t really have much of a core CBD. toronto will come back, with the 905 taking the brunt of it.

Careful. I used to run the CRA. – Garth

#77 Mattl on 04.06.18 at 9:14 pm

#53 Soggy – your dad spent 150k in repairs including 2 roofs and 2 exterior paint jobs in 25 years? I agree he should be a renter. Home ownership isn’t for everyone.

#78 Where's The Money Guido? on 04.06.18 at 9:17 pm

I thought I’d post this again from yesterday as I feel it’s important. Didn’t think Garth was doing any more posts…..I’d rather Garth post this one instead of the teary eyed one from y’day, hehe
Re:
#38 Stan Brooks on 04.05.18 at 6:56 pm
#14 kommykim on 04.05.18 at 6:49 pm
RE:#4 FATLADY on 04.05.18 at 6:15 pm

This quote from the article sums up the psychology of those buyers nicely:

“It’s not something (the government) could have forgotten about. It’s something they dismissed,” said Khan. “There’s some level of accountability with everybody and nobody’s stepping up.”
…..+
==========================
#56 MF on 04.05.18 at 7:24 pm
#39 Looney Baloney on 04.05.18 at 7:09 pm
“We knew the FIRE industry was too big to fail and so policy makers need to pander to these legit scum bags.”

You think a notion that he was misled by government/lending institution/real estate cartels won’t stand out in court?

I beg to differ.

We need to identify the responsible and put them in jail. Period.
+++++++++++++++++++++++++++++++++++++++++++++
Update from previous post—-No. 3,004 April 2nd, 2018 #103 where’s The Money Guido” on 04.03.18 at 12:53 am
I’ve always said it must be gangs laundering money, BUT, let’s take a look from another angle.
Who has the most money and who stands to gain the most from RE transactions and prices rising, whether rates are low or high?
THE BANKS!!!!!! And the FIRE industry…….
Who has the deep pockets to hold properties empty to get the best price.
THE BANKS!!!!!!
How close are the realtors and mortgage brokers connected to these banks? Answer: they are joined by the hip and all flows through THE BANKS!!!!!!
I could be wrong but hasn’t all Canadian banks been tied to money laundering with Manulife just paying a paltry $1.5 million to atone for admitting to laundering.
I’m thinking it’s all a plan to tie bank obligations for life for ALL hard working Canadian serfs.
Somebody please prove me wrong as I’m losing all faith in the FIRE industry especially banks since my “bank” Coast Capital CU in BC went against my wishes to opt-out and installed a program run by MX Technologies out of Lehi Utah (https://craft.co/mx-technologies: a small $50 million company; now why would a multi-billion $ bank award a huge contract to such a small company?), a short 15 minute drive to the huge US-NSA data center in Utah’s Silicone Vallley.
My financial info is now, without my permission, out of the country thereby possibly bypassing ALL Canadian privacy laws.
After speaking with BC Privacy Office, BC/Canadian law says MX has to adhere BUT when have banks and their partners adhered to laws not in their best interest, just look at HSBC in the US:
https://www.marketwatch.com/story/netflix-documentary-re-examines-hsbcs-881-million-money-laundering-scandal-2018-02-21 and
https://www.telegraph.co.uk/business/2017/12/11/hsbc-spared-us-money-laundering-sanctions-battles-clean-act/. The story say it all.
Who will do a documentary on Galen Weston and Loblaw’s $404 million Canada Revenue battle that includes setting up a bank in Barbados and being the only customer:
http://www.cbc.ca/news/business/loblaws-cra-glenhuron-bank-barbados-tax-1.4490564
If you have a money manager running on your bank account owned by a foreign-US company, I believe you too have sent your info out of country, maybe whether you agreed to it or not and it “might” be shared with many companies that don’t have your best interest in their plans and out of the purview of Canadian laws.
Just look at the main investors in MX, venture companies and a huge insurance company conglomerate run for military personnel. USAA is a Texas-based Fortune 500 diversified financial services group of companies including a Texas Department of Insurance-regulated reciprocal inter-insurance company. We know how Texas regulates, just look at the Bushes, Enron, too many to mention. Just watch the movie: Patent Scam……Make sure you don’t have a small company that would prevent you from fighting patent infringements, because small companies in the states are being sued for using cell phones!!!!! You have to watch that movie, it’s coming to Canada now that they have all your info!
Coast is denying I opted out and have gladly “disabled” that money manager but only after all my info has already been given to MX.
Something smells really bad in Canada and we serfs are being lied to left and right.
So Coast’s Privacy Commissioner initially tells me that they didn’t send info offshore but then admitted that they “only” send transaction data info to MX.
Now insurance conglomerates have purchasing info from which they can ascertain your lifestyle and use that info against you for a myriad of FIRE conglomerates, after you pay your premium obviously.
Hope you are prepared for more rip-offs coming down the pipe as that huge data center with all our Canadian financial info pukes out plans to divest us of our money and put us further into debt, just as their connected companies devise ways to eliminate our jobs.
I concur with Stan Brooks on the jailing of the upper crust miscreants who created this soup bowl of servitude and who blatantly wave their “better than thou” formula of driving most well meaning people into the poorhouse while chomping on the spoils of OUR hard work. And this includes most politicians-bureaucrats-all oligopolies since I graduated high school 40+ years ago and started caring how my hard earned money got STOLEN.
Rant off…

#79 Honey Dripper on 04.06.18 at 9:17 pm

Yes,
Rent, save, invest, buy dirt and then you’ll retire don’t forget to plan. Do you want a free book?
https://thestockmarketspeculator.blogspot.ca/2018/04/retirement-income-for-life-by-fred.html

#80 What do I not know? on 04.06.18 at 9:20 pm

So what? As a seller, I’d like that. – Garth

————————————————–

Garth, you are so full of it. In regards to your constant public denial regarding the foreign influence on GTA housing prices and the tax implications of capital gains in condos.
The fact is foreign money has had a huge impact on GTA housing prices. Also, nobody reports condo capital gains to the CRA. I know plenty of people who haven’t and they are not in jail.

Uninformed comment. And get a better quality of friends. – Garth

#81 Lost...but not leased on 04.06.18 at 9:30 pm

GARTH..re my comment #74

Re Principal Residence exemption
…what is the current cut off time for residing in residence before one is taxed at a higher rate?

one year?

2 years???

At CRA discretion. Just don’t be cute. – Garth

#82 Dobermanduke on 04.06.18 at 9:33 pm

#45 Howard on 04.06.18 at 7:31 pm
I quite enjoy Whatcha Minnie’s humourous daily vignettes.
——————————————————–
Wasted time, like a few others that just want the attention, I just scroll on by

#83 waiting on the westcoast on 04.06.18 at 9:59 pm

And so the crying continues…. I do feel for these people as they pushed forward recklessly but they did not know of some of the programs brought forward by government. Nevertheless, they took enormous risk and this time it did not pay off…

https://www.thestar.com/opinion/star-columnists/2018/04/06/lower-your-expectations-is-good-advice-for-real-estate-and-life.html

#84 Julian on 04.06.18 at 10:08 pm

Men, should go the MGTOW Way. It’s giddy women that usually talk their boyfriends / partners / Husbands into buying an overpriced condo or home.
Especially during a Sellers market!
The best thing people can do is subscribe to the concept of minimalism. Quit buying useless stuff you don’t need, with money you don’t have, enslaving you to jobs you hate.
Reduce your bills, Reduce your debt. Rent. Or buy….if you live in an affordable town or province.

#85 Yorkville Renter on 04.06.18 at 10:20 pm

For those who are thankful the blog is “back to normal” I have a question – are you here for advice and ideas, or an echo chamber?

#86 Leo Trollstoy on 04.06.18 at 10:31 pm

In terms of capital value, condo buyers have done largely okay. Per-foot values have shot higher along with demand over the last five years

Detached peaked in price last year but condo prices are still goin strong

Wonder how this will end

#87 Reximus on 04.06.18 at 10:33 pm

#78 Where’s The Money Guido?

BWAHAHA How long/much did you smoke before that rant?>

#88 Comic Book Guy in YVR on 04.06.18 at 10:40 pm

Cracks are starting to show in the high end condo market in Vancouver http://vancouversun.com/business/local-business/lower-mainland-condo-prices-soar-but-there-are-signs-of-softness-at-the-top-end. This year is Peak prices for condos here in YVR. I bet that we will start seeing YOY price declines in low end YVR condos by the end of this year.

#89 crdt on 04.06.18 at 10:49 pm

HOLY MOLY 48%…. That means that those poor souls competed against phantom demand. Speckers drove prices up, and quality down. Builders built to speckers, who were not very demanding; most never intending to own the poor workmanship. Wonder if speckers would have been so eager to spec if they knew that almost half went to straight to the real estate casino?

#90 ben dover on 04.06.18 at 10:52 pm

#83 waiting on the westcoast on 04.06.18 at 9:59 pm

And so the crying continues…. I do feel for these people as they pushed forward recklessly but they did not know of some of the programs brought forward by government.

——————————————————————

there are folks that don’t follow the daily news – Ben

#91 rightleft on 04.06.18 at 10:53 pm

my relatives sold houses which they never lived in and found someone who got them exempted from CRA tax, for a fee, happened in span of two to three years back, they are bragging about this, I conclude this third world country called Canada would be near the top of the corruption ranking list

I think that’s called ‘fraud’ and your family are the corrupt ones. – Garth

#92 LivinLarge on 04.06.18 at 10:57 pm

“LOL, this never happens. ever. its all pure profit. there isnt’ even a mechanism in place to report this. you sell. you close. you get a cheque. the end”…no there didn’t used to be a mechanism, last year the Libs began requiring the reporting of real estate transactions. Nothing done with that new data base yet but we all know what it’s there for.

#93 Ian on 04.06.18 at 11:00 pm

I am literally and figuratively torn between Garth’s two best comments ever.

‘Careful. I used to run the CRA’

AND…

‘This blog scares the bejeesus out of me.”

Smoking Man, fire up your Twitter vote mechanism thing to get me a result, you know, after you get back from the beach that has a few empty JD items lying around in the sand lol. Miss you in Toronto man, hope all is good with you

#94 Steve French on 04.06.18 at 11:01 pm

Update on my self-organised balanced, diversified and fully liquid ETF portfolio, following Garth’s basic advice:

After a very solid 2017 (12 month returns Dec. 2017-Nov. 2017 = 10.9%)….

the Trump moron factor is pulling me back down in 2018 (Dec 2017 – April 7 2018 returns incl. dividends are a paltry 0.5%).

How are the rest of you doing?

– SteveO.

#95 Steve French on 04.06.18 at 11:03 pm

Correction! Please use this one..

Update on my self-organised balanced, diversified and fully liquid ETF portfolio, following Garth’s basic advice:

After a very solid 2017 (12 month returns Dec. 2016-Nov. 2017 = 10.9%)….

the Trump moron factor is pulling me back down in 2018 (Dec 2017 – April 7 2018 returns incl. dividends are a paltry 0.5%).

How are the rest of you doing?

– SteveO.

#96 Tony on 04.06.18 at 11:11 pm

Re: #4 Dave on 04.06.18 at 5:51 pm

Tariffs push up input costs, then those input costs eventually push up inflation. The higher inflation rates push up interest rates in America and strengthen the American dollar. The spillover effect is the higher interest rates in America push up Canadian interest rates which will sink Canadian real estate. This will also push down the value of the Canadian dollar making Canadians poorer and that too should also push down the value of real estate prices in Canada.

#97 Tony on 04.06.18 at 11:21 pm

Re: #95 Steve French on 04.06.18 at 11:03 pm

I got very lucky I saw all the data days before the U.S. jobs report and concluded the jobs numbers would come in extremely hot. The DOW had also gains about 1,000 points so I bought HVU.to Thursday for a day trade Friday because hot job numbers should have sunk all the major indexes the DOW to a lesser degree. The opposite happened but the wage gains came in, in line. I got lucky because last year every jobs report day the market always seemed to get pumped the day of the U.S. jobs report. I swear the jobs report was changed Friday morning after the so called Trump tweet on twitter.

#98 NVLandlord No More on 04.06.18 at 11:23 pm

Owning an old condo in a fine complex is great for us… We own outright. Maintenance fee (strata fee) is less than $300.00/month – includes electricity, heat, hot water, parking, garbage disposal etc. We pay for our phones! oh and and have daily newspaper delivery. It’s like being in a hotel.
We are financially independent, love to travel, love to watch the gardeners, love to watch the sun set, and to hear the seagulls fighting for their breakfast. It’s easy to lock the door and travel. Love it.
BUT when we want to have the whole family, including the great grands, over for a festive or seasonal dinner, we have to plan ahead to reserve a large table in a hotel restaurant dining room. An occasional big dinner bill sure beats having a huge mortgage and all the expenses of house repairs.
Remember: There is a season for everything…

#99 Scotty on 04.06.18 at 11:27 pm

“The CRA has one of its infamous ‘projects’ in place and is busy telling people who bought, owned for a while then sold that their gains will be considered to be business income. Yeah, baby, 100% tax. That means all the appreciation collected at closing must be declared as earned income in that year. If you were making, say, $80,000 from your job with a 31% marginal tax, then pocketed $100,000 on a condo deal, your rate would jump to 48%. Ouch.”

I hope this only applies to people with a 2nd property. People who sold a primary residence still get the capital gains exemption, correct?

#100 rightleft on 04.06.18 at 11:29 pm

RE: I think that’s called ‘fraud’ and your family are the corrupt ones.

I think there is difference between family and relatives and my point why is there no system in place to punish and why don’t we hear this in the Media I bet everyone in the real estate business knows about this, keep pushing things under the rug GT

#101 Tony on 04.06.18 at 11:48 pm

Re: #64 Fuzzy Camel on 04.06.18 at 8:35 pm

I’ve ‘read the exact same thing on youtube in the replies section from Asians. The dates are very recent.

#102 Bekki on 04.06.18 at 11:56 pm

Wild Wild West and East? Do rules really apply in Ka-Nad-Da anymore? Have lost faith in Anyone pretending to give two shistas to anyone born and raised here! Life was so great! N damn last 2 years we were sold!!

#103 Tony on 04.06.18 at 11:59 pm

Re: #64 Fuzzy Camel on 04.06.18 at 8:35 pm

Direct reply from youtube on one of Mike Martin’s videos.

https://www.youtube.com/watch?v=C5WzyRKj5pQ&lc=z22tythq5rebvvrmxacdp435ti2b2lrvhifo4wiefypw03c010c.1522500388117864

Sheila Feng
1 month ago
I TALKED TO MANY MILLIONAIRE INVESTORS IN CHINA THEY DON’T WANT TO EVEN LOOK AT TORONTO OR VANCOVER. THEY HAVE CASHED OUT AND LOOKING AT AUSTRALIA OR WASHINGTON NOW. YOUR GOVERNMENT IS TO BLAME.

#104 Linda on 04.07.18 at 12:04 am

#53 Soggy – you raise an interesting point in the rent vs. purchase debate. Your post doesn’t say whether the initial purchase amount of $150K was paid in cash or whether a mortgage was on the property. If there was a mortgage one must add in the cost of interest paid over the term in addition to the cost of property upgrades/maintenance & of course, property taxes. A rule of thumb for mortgage terms used to be that if one paid off a mortgage in 15 years that the interest paid would equal the initial purchase price. Thus the actual cost of the house would be $150K purchase plus $150K interest = $300K actual cost. Add in the $150K for maintenance & the estimated current value of $450K essentially equals the money spent over the past 25 years.

It seems to me that a fair comparison of rent vs. purchase would have to use the rental of a comparable space. So if the purchased property was a 1600 square foot 3 bedroom house then the rental unit used for comparison purposes would need to be a 1600 square foot 3 bedroom house. Doing that might yield a more accurate result when debating renting vs. purchase.

#105 guru on 04.07.18 at 12:25 am

those with mls access, check out 33 & 35 Terracotta, Richmond Hill. One bought in May 2017 and the the other in Mar 2018…. Same style house, same size, same lot, price difference????…… $430k lower this year.

#106 My Wife Loves Garth on 04.07.18 at 12:53 am

#16 SJW Canadian Millenial
I never knew there were African-Americans in Canada?
Do they have passports and visas?

#107 Julian on 04.07.18 at 12:54 am

I think that everyone should report their capital gains on their Real Estate. How else can the Federal Gov. pay for all of their wasteful pet projects?

#108 Smoking Man on 04.07.18 at 1:05 am

Last time I was in Laughlin 2 years ago. Place was a shit Hole for the nearly dead. It’s now a boom town.

I’m in disbelief. Subdivisions going up all over the place. Can’t get on a slot machine or a table. Long casinos.

Trump did it. Cut taxes and the money flows.

#109 Smoking Man on 04.07.18 at 1:13 am

My dogs got VIP dog harnesses from Harras Laughlin.
In a center suite with a bag of milk bones.

My dogs must know people.

#110 Chaddywack on 04.07.18 at 1:26 am

I have a dork above us who stomps around all day.

I can’t move (Even though I want to)…..I have 10 months left on my lease before it goes month to month. If I were to leave I’m liable for a whole year’s rent, which is probably the same as the commission if I had bought and sold it.

It is more liquid though, I’ll give it that!

#111 Bob in India on 04.07.18 at 1:29 am

Canadians have no idea how much they are blessed. Currently I’m in Mumbai and the housing extreme here is self evident. Only the very, very wealthy can afford the nicer places while the rest of the population live in what Canadians would consider to be slums. Yet, these slum dwellers can’t move…no options available to them.

I could not afford Toronto…but I could afford Hamilton. Options and perspective…we seem to forget that in Canada in 2018.

#112 Karma on 04.07.18 at 1:57 am

#32 Eco Capitalist on 04.06.18 at 6:39 pm
“I’ve lived in my building for 7 years (new when I moved in) and based on personal observation, the number of units being rented out has decreased over time. I think the amateur landlords learn their lesson in the 3-5 year time frame and bail. On my own floor, 4 of the 9 units used to be rentals, now they are all owner occupied.”

Yup, this is normal. Owner-occupiers usually don’t plan 2-3 years in advance when looking for places to live in. Investors are looking for capital appreciation so they buy units thinking it will appreciate between initial deposit and completion.

#113 What do I not know on 04.07.18 at 1:58 am

“Beats me. And as the bank points out, there are currently 60,000 condos under construction in the GTA, with the pipeline stuffed for at least three years.” – Garth

——————————————————–

Yes, but what about population growth? What about the 150,000 + immigrants that settle in the GTA every year. The fact is, the GTA is a magnet for immigration and that’s not going to change in the foreseeable future. There will always be a demand for new RE in the GTA.
While I don’t claim to know the future, what I do know is that all the doomer commentaries on GTA RE have been hugely wrong these last 10 years. With rates headed nowhere,they’re going to continue to be wrong. I think that in 10 years time, GTA RE will be worth much more than it is today. So, my advice to anyone that wants RE, is to, just buy now and don’t look back.

#114 Hamsterwheelie on 04.07.18 at 4:02 am

I think the whole point of all this is to live within your means. Maintain a good quality of life; rarely found by buying maximum house/condo & working all your life to pay it off. I haven’t seen anyone buy their way into happiness yet – it can make some things easier, for sure. I saved only a little after living most of my life as a Toronto renter – but it was enough to buy a house, in the right city, (not Toronto) at the right time, with the right person. We were pretty giddy at the amount of house we bought, impressed ourselves for a few years and then sold since it wasn’t actually what we needed- too big & too much cleaning (no kids, not hoarders) Houses were such a deal we bought three more over the next 5 years. The market has changed – much harder to get financing now, I could whine about it but I just have to adapt in the same way I adapted to making a profit. This also means not whining about the cost of real estate in whatever expensive city you’re choosing to live in – I quite like the ocean, I think I’ll look into living out east where prices seem reasonable. So here’s the trick, correct your course before you’re forced into it, make a decision to be happy each day, live within your means.

#115 Dolce Vita on 04.07.18 at 6:05 am

Todays Blog: concise, too the point – excellent, just excellent.

Too late for most though.

If the YVR/416 SFH low sales/price drop contagion spreads to Condo’s and it will (always has in the past, cannot see why this time would be any different) we may well end up in a recession with so many vested in multiple negative cash flow properties.

Read what yesterday what you posted about today and could not believe so many have risked so much to make a fast buck.

The immediate gratification crowd will submit soon enough to the Great RE God “Correction”.

Sad, as all will be hurt one way or the other by the reckless actions of a few, same ending, different script, as what happened in Great Recession RE America.

#116 under the radar on 04.07.18 at 6:33 am

When you buy new, you are required to declare under oath whether you are buying to occupy as your own primary residence or not, in order for the builder to take an assignment of the HST new home rebate. CRA gets that information and not only do they check this , they now have the means to cross reference future reported sale of your condo sale. If you fail to report your PR you are liable to be reassessed on that disposition forever.

#117 Dolce Vita on 04.07.18 at 6:36 am

#28 Stan Brooks

So true what you say.

And of course, not to be outdone, try this in Rome (about the same as your Average YVR Condo price and in an “older, mature” neighborhood):

https://www.immobiliare.it/64883306-Vendita-Attico-Mansarda-via-Marco-Aurelio-Roma.html
(steps from the Coliseum, €549K, Top Floor Condo, 1075 sq. ft.).

Or, for the affluent, same “older, mature” neighborhood as the above:

https://www.immobiliare.it/49727293-Vendita-Attico-Mansarda-via-via-DEL-FORO-ROMANO-Roma.html (steps from Coliseum area again, €3.6 million, Top Floor Condo, 4306 sq. ft.).

Or this in Florence, a hop and a skip from Il Duomo, again an “older, mature” neighborhood (Ivory’s “Room with a View” or “Eat, Pray, Love”…except downtown):

https://www.immobiliare.it/64272792-Vendita-Appartamento-piazza-di-San-Lorenzo-Firenze.html (€620K, Top Floor Condo, 1722 sq. ft.).

There you go “World Class” YVR and 416.

As for your seaside or lake views, Italia has 7600 km of developed coastline…and yes YVR, we have gondolas and mountains too…except ours have about 350 ski resorts and about as many Blue Flag Beaches too.

#118 Here for a Baloney Sandwitch on 04.07.18 at 8:50 am

Patience dogs. This is not going to be a V shaped recovery. More like multiple W’s. RE prices are sticky. Buy only when you see lefty journalists writing stores about personal bankruptcies in the Toronto Star.

#119 Rational Observer on 04.07.18 at 8:55 am

#91 rightleft
>>my relatives sold houses which they never lived in and found someone who got them exempted from CRA tax, for a fee, happened in span of two to three years back, they are bragging about this, I conclude this third world country called Canada would be near the top of the corruption ranking list
—————————————————
I think that’s called ‘fraud’ and your family are the corrupt ones. – Garth

———-

Garth, perhaps you could inform the great unwashed how it is that the CRA actually enforces a fraud judgement against a foreign national…..

If you respond, please remember that the CRA is on record saying they deliberately target Canadian small businesses because “it is like taking candy from a kid”, and that they deliberately avoid auditing foreign nationals because “it is too hard”.

There was no reference to foreign nationals. – Garth

#120 Asterix1 on 04.07.18 at 9:23 am

To #113…….Yes, but what about population growth? What about the 150,000 + immigrants that settle in the GTA every year….

1. “Population growth isn’t driving Toronto house prices. So what is?”
http://www.macleans.ca/economy/economicanalysis/population-growth-isnt-driving-toronto-house-prices-so-what-is/

You then wrote: ….. I think that in 10 years time, GTA RE will be worth much more than it is today. So, my advice to anyone that wants RE, is to, just buy now and don’t look back.

2. Wow! That might be the dumbest advice you could give someone. I think that in 100 years time, RE will be higher, so hurry up and buy it!!

#121 johnny on 04.07.18 at 9:43 am

I just find it a bit hard to believe thats all you expect now in terms of a real estate drop Garth?? I am puzzled..after years and years of telling us how over priced real estate is now after a brief barely one year drop you are telling us it over???
I dont believe that one of the biggest housing bubbles in the world is going to end that easily..I still see both Toronto and Vancouver seeing another 20-30 percent knocked off their prices over the next few years from rising mortgage rates and a weakening canadian economy. Other markets will do better but at most I doubt most other markets will do much better than tread water over the next few years.
I still believe you and many analysts are missing the picture when it comes to how phony this latest economic expansion has been..its basically been the Fed printing money out of thin air and then buying treasuries to artifically keep interest rates at emergency levels for 10 years which has just ramped up speculation in the stock market, in housing, and so on.
This massive debt bubble will not just quietly end with a whimper..we are in for some nasty times..likely by the end of this year.

Nope. There is no recession on the horizon. But wait and see. In areas where prices have dropped substantially, this might be an opportunity missed. In areas where no real correction has taken place, wait. – Garth

#122 Precon Condo Nightmare on 04.07.18 at 10:10 am

http://toronto.citynews.ca/2018/04/06/condo-cancellation-leaves-buyers-with-questions/

1100 units cancelled due to “financing”! this should be interesting…..

#123 Mountain_camper_in_tent on 04.07.18 at 10:19 am

Greetings from Red Deer

I read these comments from people mostly GTA and VC area.And I feel bad for working folks in these places.No good jobs,expensive homes,lots of tax.IMHO young couple’s should move to Calgary or Red Deer,if ok with smaller city.I was so lucky to move out from Mississauga in 2006 and land in Red Deer.

Yesterday news had two positive items on Alberta.
1. Unemployment in AB is around 6%…middle of the pack among all provinces.Down from 9% in 2014.
2.T2 showed up and promised that he will build pipelines which are lifeline for Canada.

Another positive is houses are highly affordable.You can have 1800 SF two storey with double garage for under 500k.

And best of all…..we provide you magnificent Canadian Rockies in your backyard.Banff is only an hour from Calgary..imagine that! I have been to many places in North America and I can tell you the drive between Banff and Jasper ..icefield parkway…is the best.No matter what season it is.

So Go West you kids and make a great life. Enjoy great outdoors .

#124 mathman on 04.07.18 at 10:36 am

The Oakville Mattamy wankers are a microchasam of everything that is wrong in this country and Canadian competitiveness. I have less than zero sympathy for these d-bags who drop over $1 Million to live in particle board shacks on small lots and then have the gull to blame their situation on the gov’t and the builder who is living up to their end of the bargain. Congratulations to the losers that were quoted in the media, you just google risked yourself out of the next job you apply for.

Math

#125 NoName on 04.07.18 at 10:37 am

Interesting read
I posted something similar way back, but now that program is being rolled out, its interesting read to see social engineering at its best. What’s next camps?

https://foreignpolicy.com/2018/04/03/life-inside-chinas-social-credit-laboratory/

#126 Brian1 on 04.07.18 at 10:43 am

I don’t know why everyone on this blog is so worried about buying a house or having lots of money. When you get old you don’t really need much money and you really don’t do that much. I mean look at Garth. He doesn’t vacation that much and ultimately the government will take care of you anyway.

#127 Brian1 on 04.07.18 at 10:45 am

As to the weather I would like to get that groundhog, who predicted an early spring, and make sanwiches out of him.

#128 rental property math on 04.07.18 at 10:47 am

Since there is no housing crash anymore, and I bought rentals in Hamilton. Detached and freehold towns. It looks like I am the millennial genius of this blog.

#129 ben on 04.07.18 at 10:49 am

Agree 100% with every single word of this post.

When you do the math on renting vs buying, including maintenance, property taxes and heating (yes my landlord pays this!), it’s *way* more. Many landlords who got into the game 20 years ago are of course making a killing, but people joining in now? They just don’t understand how prices are set. There is no capital gain coming as rates reverse.

However the sad fact is that because of how our system is setup rents are taking too much of the average worker’s income. We still need to move to land value tax to reduce this burden and to make wealth creation (not wealth appropriation) pay.

Countries that do this will see productivity sky-rocket. Countries that stick to the old UK establishment model of soaking the serfs will sink without a trace. Exhibit A: the UK with it’s food banks, stabbings, low population replacement rate, low literacy, high inequality, stagnant productivity and political instability.

People who try to maintain the status quo for their own benefit might not want a world like this, they might not understand that their actions are enabling it. But they are selfishly working to that end.

We should be in a country where people who add the most value have the most disposable income. Not people who capture rent seeking vehicles to appropriate value from wealth creators.

#130 mathman on 04.07.18 at 11:20 am

re #130 Herb

Its called capitalism.

The argument has nothing to do with the building materials. The private company offered to deliver goods at X point in the future for Y price today. That was agreed upon in good faith and all the parameters of the transaction were as well. Lot size, home size – width of the streets etc.

What the other party to the transaction is now doing is using and wasting tax payers money going to local municipal and provincial politicians with their unjustified and frankly embaraasing complaints.

the Mayor of Oakville wasted his time writing a letter to the builder etc.

Although it is besides the point I’ll take the bait – anyone with an IQ > 90 knows how mattamy builds their homes and their development playbook. Not unlike any other major developer in the GTA, they just make more sexy news stories because of their size.

Math

#131 Doug in London on 04.07.18 at 11:30 am

You’re not the first one to mention negative cash flow. An article in Friday’s Globe and Mail said the same thing. Meanwhile, sales of condos is still strong. Does that make any sense? If you own one of those condos you need to get a hold of the Ontario Lottery and Gaming Corporation and cash in that winning lottery ticket RIGHT NOW! So where will you live? That’s easy, in a condo where the owner subsidises you to live there! Seems quite simple to me.

#132 Mattl on 04.07.18 at 12:03 pm

The folks posting homes for sale in Italy and Spain as of they are data points…

What is the median family incomes, employment rates, tax rates, immigration, etc. Great, a home in Spain is cheaper then Barrie. Barrie is at full employment, Spain has 16% employment. Median household income is 30k. So ya, homes are cheaper, as they should be based on local conditions.

We complain that the average Canadian can’t afford to buy in Van, well the average Spainard can’t afford Madrid and the average Italian can’t afford Rome. Unaffordability for the middle class is not a uniquely anadian problem. The fact that an educated Canadian can find a good job and cheapish housing in other countrys doesn’t tell much of a story.

#133 Zapstrap on 04.07.18 at 12:17 pm

#127 Brian1 on 04.07.18 at 10:45 am

As to the weather I would like to get that groundhog, who predicted an early spring, and make sanwiches out of him.

Too late … he already drowned out here on the left coast.

#134 Smoking Man on 04.07.18 at 12:45 pm

That’s it. Enough is enough.

I’m calling for the confiscation and banning of all cars.

https://www.zerohedge.com/news/2018-04-07/car-rams-group-pedestrians-german-city-least-3-killed

#135 Tbone on 04.07.18 at 12:46 pm

I think I am the only fool that paid capital gains when selling my rental
Properties , I thought everybody did . You know , do the right thing.

Then the following year I get a request from CRA to make a six figure
Payment in installments , because they think I sell a rental property every year.

I send them a 10k payment and sort it out when I get my taxes done .

You are not legally obligated to make quarterlies in such a situation. – Garth

#136 AGuyInVancouver on 04.07.18 at 1:19 pm

#133 Mattl on 04.07.18 at 12:03 pm

…We complain that the average Canadian can’t afford to buy in Van, well the average Spainard can’t afford Madrid and the average Italian can’t afford Rome. Unaffordability for the middle class is not a uniquely anadian problem. The fact that an educated Canadian can find a good job and cheapish housing in other countrys doesn’t tell much of a story.
_ _ _
Both Madrid and Rome are the “first cities” and capitals of their countries. Vancouver is neither, so it is your analogy that is flawed.

#137 Mattl on 04.07.18 at 2:28 pm

Lol what does capital cities have to do with anything? Point remains, prices in those places relative to employment rates and median income are as insane as Vancouver. Its a global real estate market, you can keep denying Van as a world class city but the world disagrees. The middle class will not be buying homes in Van, Rome or Madrid, that ship has sailed.

#138 Tony on 04.07.18 at 2:46 pm

Re: #123 Mountain_camper_in_tent on 04.07.18 at 10:19 am

With rents in Alberta falling every year and home prices falling every year seemingly forever that $500,000 figure soon will be $250,000. I’ve seen properties in Alberta slashed 60 to 70 percent in price and still sit on mls for 3 or more years.

#139 45north on 04.07.18 at 3:21 pm

What do I not know: While I don’t claim to know the future, what I do know is that all the doomer commentaries on GTA RE have been hugely wrong these last 10 years. With rates headed nowhere, they’re going to continue to be wrong. I think that in 10 years time, GTA RE will be worth much more than it is today.

You don’t know the present – rates are up. Bank of Canada has consistently raised rates over the last two years. Effective borrowing rates are higher again because the banks are asking a bigger spread.

The US Fed has consistently raised rates and will continue to raise them. The Bank of Canada will follow, however reluctantly.

#140 dgb on 04.07.18 at 3:21 pm

I’m thinking that ‘Howard’ and ‘Watcha Minnie’ should get married and move to “Facebook” !!!!!!!!!!!!!

#141 Linda on 04.07.18 at 3:22 pm

When comparing renting vs. buying (& of course, comparing similar sized digs) it is like any other purchase – timing makes a difference. I added up the initial purchase price of our home, plus mortgage interest, property taxes, utilities & home maintenance/improvements. When I compared the total to what it would have cost us to rent a similar sized space over the same period of time, to my surprise I discovered that the difference between the two totals was the equivalent of the grand total paid in property taxes. I then estimated the costs of paying rent vs continuing to live in our home for another decade & surprise, surprise – the estimated expenditures for rent vs. the cost of ownership was roughly the same. The difference a decade from now for us in the rent vs. buy scenario is that we will have an asset we could presumably sell, but will not have actually spent more than what we would have paid in rent over the same time period. That having been said, our situation is the result of when we purchased (1984) & the due to our having remained in the same place, so no additional costs for selling, moving or buying another property. Obviously this kind of outcome would be affected by such activity & especially if land transfer taxes as a result of such activity were factored in.

#142 45north on 04.07.18 at 3:22 pm

can we go back a day:

Garth: For years the warning has been the same: there will be a correction, then a melt. But no US-style property Armageddon. No 50% decline. No 70% Phoenix-style Hoovering.

Wolf Richter says pretty much the same thing about US housing but there is an important difference between US and Canadian housing.

Wolf Richter: talking about US housing: As for housing, I think what we’ll see is not a dramatic selloff of double digit percentages that we had last time. I think we’ll see a long, drawn-out, much more difficult process. At first, it won’t even look like a sellout. I think on housing on a national basis, housing will continue to look strong even though the selloff will start in particular cities. You will have some cities that are turning around, but overall, nationwide the numbers are still stable. And so the Fed won’t even be worried about it because they’re looking at the nationwide numbers, and they’re saying, “Oh, it’s still okay, it’s just declining a little bit” or it’s “plateauing” whereas house pricing may be coming down pretty sharply in some of the most bubbly cities.

https://www.peakprosperity.com/podcast/113902/wolf-richter-era-fed-put-over

Wolf says “house pricing may be coming down pretty sharply in some of the most bubbly cities.” If the most bubbly cities include Vancouver and Toronto, the US Fed is not going to care. At least not very much.

So here’s a theory: US housing can better withstand higher interest rates than Canadian housing. First of all debt levels are lower in the US. Second the US economy is more resilient. Money can move around easier and faster. Third, there’s more housing. Higher interest rates are going to severely depress Canadian housing prices. The Bank of Canada is going to try to resist higher interest rates to protect the housing markets of Vancouver and Toronto while defending the Canadian dollar. Kind of impossible.

#143 The other Doug, in London on 04.07.18 at 3:40 pm

@Zapstrap, post #134:
Or maybe he drowned in downtown Chatham or Harris Park in London in the flood following the freak rain storm in the third week of February.

This cooler than average spring isn’t all bad. The extra gas required for heating demand is more revenue for my pipeline stocks.

#144 The other Doug, in London on 04.07.18 at 3:47 pm

@Tony, post#139:
That’s EXACTLY the kind of mentality that’s present when it’s a good time to buy. I know that because that mentality was present in 1994-95 during the real estate bust in Ontario. I recall reading something about that time that said a man’s home is his hassle, suggesting most people had given up on a house as an investment. If you’re interested in buying, look around and put in a lowball offer on a place you like. Best to do so before the spring rush, so you may be too late for the best deals to be had.

#145 Mountain_camper_in_tent on 04.07.18 at 4:22 pm

Tony #139

I don’t know where you are looking but prices have not gone down at all….they have stabilized.My house purchased in 2012 for 440k can easily be sold for 480k.Rents of houses or townhomes have been stabilized as well. Only thing that has become cheaper is apartment rents.

There are always desperate people who are either moving or lost jobs etc…but mostly things have stabilized.I have even seen people buying 600k+ homes recently,of course they are with good jobs.

I hope T2 keeps his promise and let pipeline built.

ALBERTA will be booming again……mark my words.

Long live Alberta
Long live Canada.

#146 Midnights on 04.07.18 at 6:43 pm

To help back Garth up. Not that he needs it’s.
https://www.google.ca/amp/s/www.cbc.ca/amp/1.4607880

#147 NEVER GIVE UP on 04.07.18 at 9:51 pm

#20 Renter’s Revenge! on 04.06.18 at 6:08 pm
Comment #2 TurnerNation on 04.06.18 at 5:46 pm
This blog’s future direction is clear: Go full on Whatca Minnie.

Comment #3 Whatcha Minnie on 04.06.18 at 5:47 pm

Nice.

Got up today at 5:54 am today, a little on the early side. Had my coffee but skipped the sugar as I’m watching my weight. Showered, put my clothes on, socks first, of course. Had a quick breakfast and headed out to work. Saw Dave in the lunchroom. He was miffed because no one had made coffee yet. I started a carafe and we chatted about golf swing technique while we waited for the coffee to brew. Went to Olive Garden for lunch with some friends. I ordered unlimited soup, salad and breadsticks. I ate three whole breadsticks trying to get my money’s worth. We had a blast! Back to work for the afternoon grinding out spreadsheets for new project I’m working on. Excel is amazing. Did you know you can press end and then down and it jumps to the bottom of the column of cells that you’re in? Tonight I’m having spaghetti dinner with the wife and then we’re watching a rerun of Top Gun on AMC. After that we’ll probably call it night. Gotta rest up for tomorrow because we’re doing spring cleaning around the house all weekend. Somebody kill me now, please.
===================================

I have repeatedly told my kids that if I ever get to be an old geezer walking down the street in shorts or beach wear with Black socks and shoes on, that they have carte blanche to kill me!

#148 Munchy on 04.08.18 at 2:25 pm

This is my first comment on this blog. My friend from Calgary recommended that I start reading this blog to learn more about money, housing etc.

I am a 32 year old renter living in Hamilton and have a gf pressuring me into buying something. I don’t know if I should buy a house, condo or continue renting and invest all that money. There are just too many factors to decide on such as location, cost, size, time to buy, city, type of place. I will continue reading this blog and the comments and appreciate all the advice.

Thank you