Stages

Friday morning should bring fresh realtor numbers showing national sales have slowed and prices hit a wall. What this blog told you would happen, is. Prices corrected 14-26% in the largest market, sales have toppled in almost all major urban centres, and we’re now into a slow melt phase. This is Stage 3 (more on that in a moment). The next one gets even more interesting.

We also said B20 would matter, and the evidence is now emerging. That Leger survey showing a ton of buyers have decided to stay on the sidelines is part of it. So is the insane jump in condo prices as buyer demand is pushed from detached homes into dreary apartments with mortgages, monthly fees and property taxes. There’s only one reason most of these people are making such a bad real estate choice – it’s all they can afford. They’d all be better off renting, saving, investing and waiting but, alas, they’re daft.

And here’s the latest news confirming one other thing about B20 this blog flagged: nearly half of all mortgages renew in 2018 (this is rare), and it couldn’t happen at a worse time. Rates have almost doubled in the past year and a half, plus B20 is trapping borrowers. Two and three years ago FOMO-addled, financially-stretched buyers opted for short term home loans because (a) they were cheaper than fivers and (b) there was no stress test. Now it’s show time. The loans need to be renewed, and so much has changed.

The new rules (as reported here last year) are crystal: if you stay with your existing lender the regulators will not require you to pass the test (although your lender has that option). However if you leave your bank and start shopping around for a better deal, you’re zapped. You must now qualify at the offered rate +2%, or be declined.

This means a lot of people will be taking loans at higher rates than they’ve enjoyed for the past number of years and (of course) their banks are unlikely to cut them any screaming great deals. CIBC Capital Markets is the latest to make this point, saying 47% of all residential mortgages will be affected this year, when “everything is falling on top of one another.”

Higher monthly payments put more strain on families already shouldering record household debt. At the same time, the wealth effect is fading as it becomes more and more obvious to more and more people (even in BC) the party’s over. Excessive borrowing can no longer be wiped away by windfall gains in house values.

So this is it. Stage 3.

Stage one happened here. This blog (and a very few others, like Ross Kay and Hilliard Macbeth) screamed ‘peak house’ for the last couple of years, warning that any market built on house lust, speculation, debt, FOMO and faerie dust was destined to end badly. The award-winning macroeconomists in the steerage section, plus a hundred thousand realtors in Audi A7s, said pshaw. Ain’t gonna happen.

Stage two is the spreading of peer-to-peer information that real estate is suddenly risky. It can, like, go down. Who knew? How can Justin let this happen? #pissed.

Just as Bitcoin turned on a dime from boom to bust, with the ignorance and greed of its buyers becoming fear and loathing almost overnight, so too is the housing story changing, Social media is feeding that, and it’s only just started. Look at what Mr. Flop has been doing on this blog for months. Every day brings more evidence the realtor-financial complex is zooming you.

Stage three started a couple of weeks ago. The momentum is now thundering. This is when the mainstream media jumps on board with a vengeance.

Remember blog dog Derek, whose story we have followed here for a few months? He sold at peak house, the buyers choked, and our guy just won a $470,000 judgment against them for not closing. The resolution was published here on Sunday, and has now hit every major media outlet. Poor D tells me, “the reporters have been after me now at work, but I just keep dodging them. They called my lawyer too, and even my father.”

Toronto broker John Pasalis (who unwisely dissed me in a Tweet this week) followed up the Derek story with a report claiming almost a thousand homeowners lost $136 million in less than five months in similar failed deals in the GTA alone. Also included were people who bought, realized they paid too much (or more than they could carry) and sold within a year for a loss.

There have been all those media stories about the whiny Mattamy buyers in Whitby and Oakville who are distraught because their unbuilt homes are worth less than they paid during peak house. Many say they cannot now afford those $1.5 million digs, begging the government to intervene. (The politicians told them, correctly, to shove off.)

Closing defaults hit Toronto sellers hard in housing plunge: report,” said the Globe and Mail this week. And it is exactly headlines like this, retweeted over and again, which bring us to this inevitable point.

If you crave a house, really need one and can afford it without gutting your net worth and shouldering an eternity of debt, go ahead. Pick the right area, and you might even score a deep discount. Just don’t try to tell us it’s an investment.

181 comments ↓

#1 FOUR FINGERS WATSON on 04.12.18 at 7:23 pm

Home sales in British Columbia plummeted last month compared with March of last year, but the B.C. Real Estate Association says the decline was not reflected in prices.

Sales figures released by the association for March show 7,409 homes changed hands last month, a decline of 24.6 per cent over March 2017, while average property prices climbed 5.3 per cent over the same period.

A news release from the association says the average home sold for $726,930 last month and it blames persistently high prices on the lack of properties available for sale.

It says total active listings have changed very little since March of 2017, nudging a 12-year low across B.C.

Association chief economist Cameron Muir forecasts prices will continue to climb as long as the trend continues.

#2 For those about to flop... on 04.12.18 at 7:24 pm

I took this photo on Fraser street today.

https://m.imgur.com/bu82JCc

It is one of the main reasons I believe why detached house prices have not sunk further into the abyss in a lot of East Vancouver as yet.A slow grind down ,but no major fireworks.

Land assembly.

Some of these houses used to be some of the cheapest options,being on a main thoroughfare and all that entails.

Now they are going for maybe 2-3 times what they were worth before the low-rise re-zoning and Spring 2016 euphoria took effect.

I think these are some of the houses I took a picture of up on Zolo.
https://www.zolo.ca/vancouver-real-estate/4631-fraser-street

Some of them it appears are only zoned for duplexes at this stage ,but up until 7 years ago there were no modern condo’s in the 25 block strip on Fraser between 18th and 43rd and now there are 5 or 6.( The Century complex is a mix of condos and Townhomes.)

Here is another example of some of the craziness going on in my hood.
https://www.zolo.ca/vancouver-real-estate/3840-fraser-street

They started down the bottom of the hill ,closest to downtown and are now coming up the hill.

It is like what happened on Cambie street in slow motion,without the skytrain aspect to poor fuel on the fire.

If land becomes available,the local pecking order seems to be…

1)Cambie Street
2) Main Street
3 Fraser Street

It is likely Lower Fraser Street will eventually pass Lower Main Street as there is less shops and restaurants in this area for competition of land use ,but this will change in the next 15/20 years as the area densifies.

If you wanna go real big ,Kingsway or Marine Drive.

In-between 20th avenue and 30th avenue on Fraser street ,this is the fourth block that I have seen to be assembled and potentially sold for future condo development as the Hipsterization of the neighbourhood continues.

I will not join them in their crusade.

As a silent protest,I will remain clean shaven…

M43BC

#3 Lost...but not leased on 04.12.18 at 7:25 pm

Numero uno…

#4 Keith on 04.12.18 at 7:26 pm

It’s interesting that the financial institution doesn’t have to require the stress test. You can’t shop your mortgage business around, but your existing bank knows how much money you make, and how much of a payment you can really afford. Time to invest in the big 5?

#5 Ian on 04.12.18 at 7:32 pm

US bond yields turning up and about to skyrocket again.

This time the 10 year breaks 3% comfortably. Should already be at 6%, but we’ll get there.

Just run a MACD on a chart of $TNX and you will see what I’m saying.

$21 trillion pile of US dog poo coming home to roost.

#6 whiny_millennial on 04.12.18 at 7:33 pm

So what’s stage 4?

#7 Tom D on 04.12.18 at 7:36 pm

Hey Garth why all the constant doom and gloom day in day out if you say prices won’t crash? Btw Hilliard says the bubble will burst and min. 50% crash in prices.

#8 Happy Housing Crash Everyone! on 04.12.18 at 7:38 pm

Happy Housing Crash Everyone! You SHYSTERS are lucky Millennials are not the smartest generation. They will learn their lesson on why SHYSTERS are POS.

#9 Life in the Burbs on 04.12.18 at 7:41 pm

Garth

Is it time to do the housing bust happy dance yet? Cause I have the need to cut a rug.

#10 Mark on 04.12.18 at 7:41 pm

Since every mortgage loan written by a Canadian bank must have been ultimately funded by borrowings by the same bank, through GICs, commercial paper, equity, preferreds, savings/chequing accounts, etc., it logically follows that the entities that are extending this credit should have a lot of leverage in asking for higher rates and spreads given such a large number of renewals.

But will people who have been blindly and mindlessly rolling GICs and using their TFSA’s literally as cash “savings” accounts actually grow a pair and start requesting reasonable rates of return?

Probably not. And as the Canadian economy goes into recession due to diminishing housing sector related activity, the Bank of Canada will likely be forced to suppress the short end of the curve with ZIRP and NIRP. If the GIC owners had backbone, maybe the BoC wouldn’t need to engage in policy rate suppressive policy to force wider spreads.

#11 Lost...but not leased on 04.12.18 at 7:44 pm

A thousand homeowners lost $136 million in similar failed deals over last 5 months in GTA alone…

======

Wow..
….connect the dots.

If that ain’t a trend…

…ouch !!!

#12 ulsterman on 04.12.18 at 7:46 pm

nearly half of all mortgages renew in 2018 (this is rare), and it couldn’t happen at a worse time. Rates have almost doubled in the past year and a half, plus B20 is trapping borrowers. Two and three years ago FOMO-addled, financially-stretched buyers opted for short term home loans because (a) they were cheaper than fivers and (b) there was no stress test. Now it’s show time.

Not sure the affect will be that bad just yet. According to RateHub.ca, 5 year discounted mortgages were about 2.65% during the March-April 2013 period. Now it looks like you can get a 5 year fixed for 2.5%. No big payment shock for these people.

Of course those who locked in for two years (2016) at 2% will feel the heat I wonder what proportion of those renewing fall into this category?

Five-years are around 3.3%, and anyone shopping gets B20ed. – Garth

#13 Zapstrap on 04.12.18 at 7:49 pm

But all you mentioned is “back east.” It’s not all paws up out on the western coast … not yetly …

#14 crdt on 04.12.18 at 7:53 pm

WHOT? Price down???? This is what the crew at GF have feared for so long. To see your financial life shredded, followed by your marriage then your peace of mind getting obliterated. I guess Scotia Bank should put an ad out now “You are poorer then you think….” or “You were richer then you are…” followed by “We are not as friendly as we were…”

#15 Our pal Val on 04.12.18 at 7:54 pm

Wow talk about an article on steroids

#16 Spectacle on 04.12.18 at 7:55 pm

Um…

#garths rule of 90

Would solve/prevent such a dire predicament in the First place. Hmmmm

#17 Lost...but not leased on 04.12.18 at 7:56 pm

#2 Flop

Re: This assembly craze…..

Many of these assemblies are beyond the Official Community Plans..or over the Regional Growth Strategy…aka they were NOT designated as Multi Family zoning….but a whole cottage industry has grown via realtors assembling properties with current SFH zoning and applying for zoning amendments.

The rationale appears to be their locale on arterial routes.

IMHO this latest realtor tactic it is out of control, these assemblies are showing up everywhere….it defies what “planning” is all about.

#18 Kaif on 04.12.18 at 7:56 pm

The house on 21 Cartier Cres, did not close when sold last year ,the seller renovated and spen $$$ and finally sold for $1,118,000, hopefully will be closed this time, let see …

#19 Frances on 04.12.18 at 7:57 pm

Regarding Joey’s tweet – doesn’t the buyer pay land transfer tax? So wouldn’t the total minimum loss for the seller be 425k (not 451k)?

#20 Vancouverless on 04.12.18 at 7:58 pm

@FLOP

>As a silent protest,I will remain clean shaven…

There is a good reason why the Roman army required its troops to shave. The easiest way to avoid killing a friend on the battlefield is to only slash at the ones with a beard (Garth excepted of course).

#21 pay your taxes on 04.12.18 at 7:59 pm

A kid at work had $125k gifted to him from Ma and Pa, bought a 1 bed condo in YVR, lived in it for 13 months and last week netted 190k profit for his troubles. Hasn’t even turned 27 and never heard of this blog.

#22 Debtslavecreator on 04.12.18 at 8:01 pm

Very likely too early in most areas
Most A lenders seeing about 15-20% declines in new mortgage applications and there’s little doubt the market in most areas is going to slide at least into the late fall
Be careful out there – it won’t take much to see a further 10-15% decline

#23 Mattl on 04.12.18 at 8:04 pm

Sorry but Ross Kay has been calling peak house for ten years. He doesn’t get to claim victory when houses revert back to 2016 prices or even 2012 prices. For guys like Ross to be proven right we would need to see homes revert back to at least somewhere near where they were calling for homes to correct. Even thats problematic – if I bought in YVR for 500k with leverage and free money am I really a loser when 8 years later my home is worth 800k and I owe 250k? And my mortage payment is 1400 a month for a place in the city.

Same goes for the dow 30k guy. I mean at some point he will be right but he was wrong for so long that he won’t be vindicated when the dow finally hits 30k

#24 TurnerNation on 04.12.18 at 8:09 pm

The weekend lads here on this Mansplaining, Manspreading, yet Sustainable Sourced weblog called the Commodities and Overseas markets.
(Let’s call them EMs & PMs.)
In JJG.US and JO.US

Seeking alpha with zero hedge.

#25 Ace Goodheart on 04.12.18 at 8:10 pm

1.12 million for that Richmond Hill bungalow is not a deal. If you actually had 1.12 million, you would never live in that house. There is a lot more downside in the home markets right now. That 1.12 million bungalow realistically would be worth, in a 5% normalised mortgage market, $500,000.00. $500,000 is steep, but it would be around the right price for that house.

#26 Homeless in B.C on 04.12.18 at 8:11 pm

Trudeau, Horgan and Notley to meet re; Kinder Morgan. Whatever these clowns decide is irrelevant as they have not included indigenous leaders. Supreme Court has ruled indigenous rights and title shall not be infringed. Nine old men that wear wigs and dresses can’t be too far wrong.
Thousands dying from fentanyl- no meeting about that. Hundred of missing murdered native women, girls – no emergency meeting about that. Farmers can’t get their grain to market, no talk of gov’t buying and repairing the railroad line to Churchill. Why is a Texas company so important? Richard Kinder and Bill Morgan are the offspring of Enron. Do you think they care about what happens to Canada or Canadians?
Notley threatening to shut off the oil to BC. Does she not understand that once the bitumen comes out of the ground, Alberta doesn’t own it anymore! The foreign oil companies do.
After a recent post about KM I got a response from a poster called “A” He accused me of being a follower of Saul Alinsky. Well “A” I am flattered to be called a disciple of Mr.Alinsky. Read his books when I was 14 years old. Brilliant man.
“A” suggested to all and sundry that a video called “A Wolf in Sheeps Clothing-Alinsky should be mandatory viewing. Well if you want a rotflmao moment you need to watch this moronic propaganda put together by evangelic whack jobs and corporate America. It makes “Reefer Madness” seem serious. Ha ha I get a laff whenever I think of it.
Thanks to Garth and a good evening to everyone.

“Power is not just what you have but what the enemy thinks you have” -Alinsky

#27 Unhinged Trader on 04.12.18 at 8:12 pm

Looks like America’s war-hungry permanent ruling class is not so bold when they are directly confronted by a determined foreign power with cutting edge missile technology…

Time is against them as well since the OPCW investigation will likely uncover the staged hoax by the Oscar-winning crisis actors called the “White Helmets”, who masquerade as rescue workers, in Jihadist-occupied Syria.

This is chemical hoax #3, and likely the last chance for America and Israel to destroy the Syrian state, since their pet Jihadists no longer occupy any significant ground after Liberation by the joint Syrian-Russian force.

#28 TurnerNation on 04.12.18 at 8:14 pm

And let’s talk Condo build quality. Stoner city here.
The kids are alright?

https://www.thestar.com/amp/news/gta/2018/04/12/eglinton-crosstown-construction-site-shut-down-after-resident-complains-about-workers-smoking-pot.html?

#29 TRUMP on 04.12.18 at 8:14 pm

Value Village got books for sale.

Picked up ALL of Garth’s novels.

If you all would have read his books you wouldnt be in the trouble you are now.

#30 dosouth on 04.12.18 at 8:16 pm

Here will be one to follow in the Nanoose Bay area/Fairwinds upper snooty area. Bought by a local for 1.25 mil in October 2017 and now he’s trying to flip it for 200+ K. Canary in the local coal mine time.

3520 Shelby Lane, Nanoose Bay, BC

#31 David on 04.12.18 at 8:19 pm

Falling knife!

#32 Gyga on 04.12.18 at 8:21 pm

Who is the fool that paid 1.12 for that in the centre of the universe Richmond Hill?!

#33 young & foolish on 04.12.18 at 8:22 pm

Keep in mind blog dogs, that relentless money creation means today’s $1 million is not too long ago’s 500K.

#34 Elcaminokid on 04.12.18 at 8:25 pm

Ha! Got out of it at the right time. Renter here now after owning RE for 20+ years…email a form to landlord…lightbulb out please come and replace at your earliest convienience…Lol! Life is good now!

#35 Show me the Money on 04.12.18 at 8:28 pm

Garth you mentioned last week it could be a good time to jump into the housing market i believe it was ” the last post”. You said “maybe you should take notice, and take action”. I’m just wondering if you still stand but that statement.

For the areas I identified, nothing has changed in a week. – Garth

#36 Whatcha Minnie on 04.12.18 at 8:28 pm

I want to develop my skill set. At the end of the next five years, I want to know how to use software like Photoshop or InDesign. I want to have a better understanding of social media and video marketing. Plus I’d like to get into project management. I would like to learn on the job. Regardless, I want to look into online or evening courses.

#37 Ex-Cowtown on 04.12.18 at 8:29 pm

#6 whiny_millennial on 04.12.18 at 7:33 pm
So what’s stage 4?

As with all Stage 4’s, it’s terminal.

#38 Reynolds531 on 04.12.18 at 8:31 pm

Can someone please link to an external source saying the bank has the option of stress test at renewal? Is that without adding to the loan?

When a mortgage term ends. it ends. The lender can do whatever it wants. Read your mortgage. – Garth

#39 Willy H on 04.12.18 at 8:33 pm

Millenials and Gen Z for the most part have chosen to shun mainstream media in droves.

If you surveyed this group, I would imagine very few would have any idea that the market is changing, and most couldn’t care less either way.

TMZ, Reddit, Youtube and and myriad of social media sites are the platforms they gravitate to.

Sadly, social media has not matured in terms of journalistic integrity and it is saturated with info-tainment and fake news (like the other posts here!).

Very difficult to separate the chaff from the wheat.

These folks don’t share a common media experience as previous generations, reading the same newspaper daily and watching the same nightly news broadcasts.

Stage 3 is going to take sometime to penetrate this demographic!

#40 DRew on 04.12.18 at 8:41 pm

Take it easy folks, inflation will save us all from our debts and make us all millionaires…

#41 Ian on 04.12.18 at 8:44 pm

Doomsday Clock at two minutes to midnight.

It’s time to teach Russia, and their client Syria, a lesson.

#42 Asterix1 on 04.12.18 at 8:50 pm

The person who bought that bungalow for 1,120,000$ made a huge mistake!

That place could be worth 800,000$ in mid 2019!

#43 Blacksheep on 04.12.18 at 8:59 pm

Mark # 10,

“Since every mortgage loan written by a Canadian bank must have been ultimately funded by borrowings by the same bank, through GICs, commercial paper, equity, preferreds, savings/chequing accounts, etc., it logically follows that the entities that are extending this credit should have a lot of leverage in asking for higher rates and spreads given such a large number of renewals.”
——————————
Wrong, wrong and wrong.

Sockpuppet much?

Yer such a tool Mark.

Not even worth correcting….

#44 mike from mtl on 04.12.18 at 8:59 pm

#25 Ace Goodheart on 04.12.18 at 8:10 pm
1.12 million for that Richmond Hill bungalow is not a deal.
///////////////////////////////////////////////////////////////////

Exactly. I wouldn’t consider even half of that, let alone strap myself with debt, paying property taxes, and so on to do so.

‘correction’ or not, it’s a long way to go to even go from idiotic to just plain ripoff.

The disease of RE is very strong here and that will not change overnight.

#45 Hans on 04.12.18 at 9:03 pm

So Garth, I read the tweet criticizing you, did you respond? Pasalis, as a Doctorate candidate, should know that his “research” isn’t very professional. Looking up sales prices etc. without some kind of rigorous process is essentially opinion because we really don’t know what information he excluded or how many didn’t fit his “thesis” (or “idea” since this really doesn’t qualify as research). He could very well be correct, but he should know better than to add gas to the fire without being professional about how he works the numbers, especially when he’s adding “doctoral candidate” to the conversations with media.

#46 ShawnG in TO on 04.12.18 at 9:08 pm

FOMO isn’t gone. it just moved from houses to boxes “because that’s all they can afford”. you know what? no capitulation, no bottom.

that tweet from Joey, which you screen captured, is old. he has more dirt on real estate since, including how a major bank is still giving out ninja loans. Joey’s twitter friends have many many similar stories (pretty much includes all big banks).

there is no housing market if there’s no mortgage market. and the mortgage market is beginning to stink. harold-the-jewelry-buyer isn’t the only one peddling subprime mortgages under the radar here.

maclean’s just questioned Canad’s mortgage market might be a cesspool

http://www.macleans.ca/economy/realestateeconomy/canadas-mortgage-market-might-be-a-cesspool-the-federal-government-just-warned/

hey Mark,
what if a lot of the mortgages are sold as MBS’s? how does that impact your prediction?

#47 Nonplused on 04.12.18 at 9:11 pm

“The award-winning macroeconomists in the steerage section, plus a hundred thousand realtors in Audi A7s, said pshaw. Ain’t gonna happen.”

I’ve been in the steerage section since “Greater Fool” came out in paperback back when there was still paper, and I haven’t ever argued there was something seriously wrong with housing, although I’ve argued some of the finer points.

I, for one, would rather live in an RV than a condo. For $160,000 you can get a smoking hot Class 1 or fifth wheel and diesel truck, and it’ll be as nice as any condo and you can move it. Plus the truck is multi-purpose. The only problem is there aren’t enough places that cater to RV living year round in Canada. There are a few though. Hmmmm… business idea.

I mean some of these RV’s have a washer and dryer in them, unlike many apartment. They have gas fireplaces. They are as big as some condos. And they move. You don’t even need to pack, just pull out. Oh sure, they will never appreciate in value they depreciate like a car. They won’t ramp up in price because the manufacturers will just ramp up production. But I am not quite sure why more people don’t consider this option, especially if you don’t have any kids. Heck some of these RV’s are so big that they have a garage in the back big enough for your motorcycles, one for your, one for your girl, and a dirt bike too. All you need is a place to park it with full hook ups, which is my business idea. Although the problem is that most of your customers will head for Nevada come winter so you need to bake that into the occupancy calculations.

Garth, is there any land around the Belfountain that might make for a good full hookup year round campground?

#48 Duke on 04.12.18 at 9:15 pm

The new owner of the bungalow may think he/she got an excellent deal but it will turn out to be losing $500~600k in two years.

The right answer is, just don’t buy any RE for next two to three years.

#49 tccontrarian on 04.12.18 at 9:15 pm

#41 Ian on 04.12.18 at 8:44 pm

Doomsday Clock at two minutes to midnight.

It’s time to teach Russia, and their client Syria, a lesson.
————————————————————

I see you’ve been buying into the disinformation, budd! The chemical weapons attacks, if the actually occured as reported, are much like the Iraqui WMD of the 90’s. Or the incubator babies of Kuwait around the same time.
The sole purpose of ‘news’ like these is to dehumanize the opposition (so that the West can justify their murderous bombing raids of sovereign nations).

How many freakin times do YOU need to be fooled before you get who the ‘bad’ guys are?
Russia has the capability to defend themselves and their friends, and to neutralize much of the US weaponry. But an empire in decline that USA is, makes it a very dangerous time, IMO.
Hopefully, nothing major develops from this stand-off and things roll along so that we can all witness the collapse of the CDN RE market…peacefully.

TCC

#50 40 Something Family Man on 04.12.18 at 9:16 pm

#33 young and truly foolish

You haven’t heard? In roughly 12 months, QE will give way to net QT.. in US alone, potential QT is set to be upwards of $1Trillion.. Fireworks boys

#51 N on 04.12.18 at 9:23 pm

For the “Happy Housing Crash” person –

Zillow said Thursday it will purchase homes from consumers…. renovate them and aim to flip them within 90 days…..
Zillow executives said they aren’t looking to get rid of real-estate agents, who generate revenue for its listings business by purchasing ads and customer leads. Instead, they say they have handpicked agents to work on the transactions in its “Zillow Instant Offers” business.

https://www.wsj.com/articles/zillow-intends-to-buy-and-flip-homes-1523581268

#52 Blacksheep on 04.12.18 at 9:23 pm

Ian # 41,

“It’s time to teach Russia, and their client Syria, a lesson.”
————————–
Putin called the deep states bluff buy openly stating:

“They will destroy any missiles sent into the sovereign state of Syria along with the vehicle involved in their launching”

Putin’s got the high ground and Trump knows it. The US would be held to account for intentionally starting world war 3. No one wants that, on their tombstone.

All the twitter yapping is just Trump, being Trump.

#53 Angry Bird on 04.12.18 at 9:25 pm

#27 Unhinged Trader – You’re spot on!

#41 Ian – Stop watching CNN and learn something!

#54 rental property math on 04.12.18 at 9:26 pm

#34 Elcaminokid on 04.12.18 at 8:25 pm
Ha! Got out of it at the right time. Renter here now after owning RE for 20+ years…email a form to landlord…lightbulb out please come and replace at your earliest convienience…Lol! Life is good now!
————-
That’s one way to make sure you get the max rent increase every year. What was that Doug said about removing rent control? As if any landlord would drive 5 minutes out of there way to do this. Your reply if anything, will be a I’ll get at you when I get at you.


It’s actually getting hard to go a month without getting rent. Tenant leaves, roll a couple walls and have a look around with my caulking gun. 1st of next month someone else is in and paying more. I’m pretty confident yearly rent increases won’t compromise my positions when I renew some mortgages next year and in 2020.

#55 Blackdog on 04.12.18 at 9:26 pm

Garth needs to get over his ‘reefer madness’. If SmokingMan swapped weed for booze, he’d live longer and he might spell better. Alcohol causes so many problems. If cannabis could be used to encourage people to drink less (science has proven that the two are apples and oranges with regard to harm), how would that be a bad thing?

#56 rental property math on 04.12.18 at 9:30 pm

#38 Reynolds531 on 04.12.18 at 8:31 pm
Can someone please link to an external source saying the bank has the option of stress test at renewal? Is that without adding to the loan?

When a mortgage term ends. it ends. The lender can do whatever it wants. Read your mortgage. – Garth

———
My lender just called me up and said we can renew you at 2.84% and will email you a form and if that works for you sign it and send it back. Last time I’ll have to do that because it’ll be paid for free and clear when the term is done. Thank you Hamilton and thank you tenants.

#57 Unhinged Trader on 04.12.18 at 9:33 pm

@Ian

>It’s time to teach Russia, and their client Syria, a lesson.

You strike me as a consumer feeding at the trough of the Security State Apparatus propaganda.

Fortunately, you have no influence on the situation whatsoever, but what is more terrifying, the orange orangutan at the White House has about the same savvy as the typical retail consumer of regime change propaganda that you just demonstrated, and he’s got the launch codes to those ICBMs.

#58 Daryl on 04.12.18 at 9:33 pm

#20
Vancouverless

Beards were shorn so the Alexandrian’s couldn’t grab them to lift their chins and slash their throats.

#59 Mark on 04.12.18 at 9:39 pm

“According to RateHub.ca, 5 year discounted mortgages were about 2.65% during the March-April 2013 period. Now it looks like you can get a 5 year fixed for 2.5%. No big payment shock for these people. “

With stagnant/falling prices, an increasing quantum of individuals have minimal or negative equity, and do not qualify for those extremely discounted rates. But rather are only being offered renewals at “posted rates”, with very little ability to shop their business around. So I would not use websites like “ratehub” or similar, and the best rates on those sites as a definitive determination of the financing conditions the average Canadian mortgage borrower is experiencing. Banks are all too willing to lend enough money to create calamity, but when the cycle turns and they want it back, they’re ruthless.

My lender just called me up and said we can renew you at 2.84% and will email you a form and if that works for you sign it and send it back. Last time I’ll have to do that because it’ll be paid for free and clear when the term is done.

Not unusual for low LTV business such as your situation obviously is, but if your LTV was up there in the 60-80% range, and prices drop 20%, you would, like many Canadians these days, have a big problem on your hands. Which, at the very least, would see you paying a higher spread.

#60 NoName on 04.12.18 at 9:47 pm

Blacksheep on 04.12.18 at 9:23 pm
Ian # 41,

“It’s time to teach Russia, and their client Syria, a lesson.”
————————–
Putin called the deep states bluff buy openly stating:

“They will destroy any missiles sent into the sovereign state of Syria along with the vehicle involved in their launching”

Putin’s got the high ground and Trump knows it. The US would be held to account for intentionally starting world war 3. No one wants that, on their tombstone.

All the twitter yapping is just Trump, being Trump.

You are correct about high ground on the, but technology that russian army uses is old. Remember their tanks from year year and a half ago, the slashed order dramatically and used money to “refurbish” t72.
Their only strength is big ka boom and dirty politics. Read the mitrokhin archive: the kgb in europe and the west, and it will be clear to you what exactly put in is do ing.

No standing army is good as us army when it come to conventional conflict. Print that and put it on fridge.

#61 not so liquid in calgary on 04.12.18 at 9:48 pm

@ Homeless in B.C on 04.12.18 at 8:11 pm
Trudeau, Horgan and Notley to meet re; Kinder Morgan. Whatever these clowns decide is irrelevant as they have not included indigenous leaders. Supreme Court has ruled indigenous rights and title shall not be infringed. Nine old men that wear wigs and dresses can’t be too far wrong.
Thousands dying from fentanyl- no meeting about that. Hundred of missing murdered native women, girls – no emergency meeting about that.

————————————————————————————-

there actually was an inquiry into MMIW. here’s a link for ya:

http://www.mmiwg-ffada.ca/

#62 Screwed Canadian Millenial on 04.12.18 at 9:49 pm

Nothing short of Jesus Christ is going to improve Drinking Man’s spelling. Or brain power.

#63 Myra Andrews on 04.12.18 at 9:54 pm

Greater Vancouver Stats from realtor Paul Boenisch

April 12 New 199 Sold 112 TI:9748
April 11 New 248 Sold 101 TI:9709
April 10 no posting from Paul
April 9 New 382 Sold 117 TI: 9450

April 6 no posting from Paul
April 5 New 268 Sold 164 TI: 9264
April 4 New 324 Sold 154 TI: 9204
April 3 New 538 Sold 131 TI: 9104

Mar 26-29 New 793 Sold 455 TI: 9032
Mar 19-23 New 1041 Sold 617 TI: 8916
Mar 12-16 New 1147 Sold 682 TI: 8743
Mar 5-9 New 1101 Sold 542 TI: 8510

#64 Blackdog on 04.12.18 at 9:57 pm

Hey Garth, re: #55

I doubt you will change your perspective, but thanks for allowing mine to be posted on YOUR blog.

#65 Danny on 04.12.18 at 10:02 pm

Great reporting.
Looking forward to more truths about real estate market…because this is a very closed….not transparent market at all.

I trust you and the FBI to reveal truth…..and actually porn stars and door men…..who were paid “hush money “….

Keep it up……the public depends on your cause for honesty….compared to an organized misleading….spin….. real estate board and developers.

#66 Vision on 04.12.18 at 10:08 pm

36 Whatcha Minnie on 04.12.18 at 8:28 pm

I want to develop my skill set. At the end of the next five years, I want to know how to use software like Photoshop or InDesign. I want to have a better understanding of social media and video marketing. Plus I’d like to get into project management. I would like to learn on the job. Regardless, I want to look into online or evening courses.
—————
I need to understand your posts. What do they have to do with this blog.
Did you delete your facebook account?
Go back to facebook and post there.

#67 Bibi on 04.12.18 at 10:14 pm

Yeah, that dump in frozen tundra north of TO is a real steal for $1.12M. This country has become a total joke.

#68 A on 04.12.18 at 10:19 pm

#26 ” Homeless “in BC
You either did not watch ” A Wolf in Sheeps Clothing” about Alinsky, or you are so far gone that you have no clue what you are mixed up in.
Hopefully you grow up before its too late.

#69 Gyga on 04.12.18 at 10:26 pm

#27 Putin troll detected

#70 Dee on 04.12.18 at 10:26 pm

Sentiment may be changing but dont think for a second that the bulls have turned bearish. It just has not happened yet. There are many very bright, educated people that dont foresee prices declining. I was all around that on easter. Executive types and most still bullish.

This bubble has lasted so long that people really do think it’s the new normal. A bubble this big and this long can have a few deep price drops in it. I wouldnt bet on just a melt going forward. As I said, most people do not expect prices to drop….especially with listings being so thin in the gta right now. I think we”ll still see some big drops as ppl have not begun to panic at all.

#71 Reality is stark on 04.12.18 at 10:35 pm

As usual everyone is missing the real pain coming for GTA homeowners. Property taxes have to double in the next 8-10 years. It is essential.
The province is broke and needs to curtail any benefits to municipalities. Municipalities will see an erosion of land transfer tax revenue. The unions will not allow staffing cuts and wages will continue to rise for their members. Money will be extracted from those who still have some, homeowners. The panacea that was home ownership will quickly die. The government’s job is to find out what you owe and make you pay even if it kills you.
Without housing to provide you with artificial wealth you will actually need to learn to invest to make money.
Most Canadians can’t even read a financial statement nor do they understand tax policy.
All they know how to do is vote for increased taxation.
The other mantra Canadians believe without question is that you borrow your way to prosperity.

#72 Mr_Silbergleit on 04.12.18 at 10:40 pm

Homeowners lost an average of $140,200 in property value over the 4.5 months it took them to find a second buyer later in 2017/2018.
https://www.theglobeandmail.com/real-estate/toronto/article-closing-defaults-hit-toronto-sellers-hard-in-housing-plunge-report/

#73 Lucky SoB on 04.12.18 at 10:41 pm

So at what point will it be a good idea for investors to get back in? Suppose you could buy a deal right now in cash, with the intent to rent out and resell when it turns profitable again, without hurting your net worth. Is it worth it yet?

#74 Ian on 04.12.18 at 10:50 pm

It truly is sad to see so many Russian bots / sympathisers on this blog tonight.

Can you define a ‘declining society’ better than they have? Give it a go.

#75 Ian on 04.12.18 at 10:51 pm

Garth…why is SCM on here again?

#76 Ian on 04.12.18 at 10:54 pm

#57 Unhinged Trader

Allow me to help you…I think Russia is evil personified.

The End.

#77 Barb on 04.12.18 at 10:58 pm

Scrap the Speculation Tax online petition:

http://scrapthespeculationtax.ca/

#78 notagreaterfool on 04.12.18 at 10:58 pm

Blog Dawgs – If I sell my house, and select to use MLS Agreement (vs. Exclusive Agreement), must the listing be published on mls.ca right away or can I negotiate the publish date?

#79 Welcome to Slurrey on 04.12.18 at 11:00 pm

#12 , #38 , #58 …………….. I just finished the broker course in BC. Lenders are constantly changing there policies as of recent. A lot of the low rates you see on ratehub are insured rates -> monthly payments still ending up being higher due to the premium. Lowest uninsured rate I see right now is 3.64% for a 5 year fixed. And as Garth mentioned -> I am seeing 3.24 % for a 5 year fixed insured. Lower insured rates come with negatives such as high prepayment penalties……..

#80 For those about to flop... on 04.12.18 at 11:08 pm

Pink Snow falling in Burnaby.

These guys just took 200k of the ask.

They are on the hook for 1.9

Were asking 1.99, they just took it off and put it up all shiny and new trying to fool people.

They forgot about Mr Flop…

M43BC

4891 Mckee Place, Burnaby paid 1.9 May 2016 ass1.65

Now asking 1.79

Nov 17:$2,168,000
Feb 9: $1,997,000
Change: – 171000.00 -8%

https://www.bcassessment.ca/Property/Info/QTAwMDAzV0YzRg==

https://www.zolo.ca/burnaby-real-estate/4891-mckee-place

#81 Smoking Man on 04.12.18 at 11:15 pm

Unhinged Trader on 04.12.18 at 8:12 pm
Looks like America’s war-hungry permanent ruling class is not so bold when they are directly confronted by a determined foreign power with cutting edge missile technology…

Time is against them as well since the OPCW investigation will likely uncover the staged hoax by the Oscar-winning crisis actors called the “White Helmets”, who masquerade as rescue workers, in Jihadist-occupied Syria.

This is chemical hoax #3, and likely the last chance for America and Israel to destroy the Syrian state, since their pet Jihadists no longer occupy any significant ground after Liberation by the joint Syrian-Russian force..

……

All the white helmet clips ate on you tube. 100% staged events. No way anyone will attack Syria now that is all been exposed. Don’t expect to see those clips on msm.

Enough. – Garth

#82 Yorkville Renter on 04.12.18 at 11:21 pm

I find it funny that people ask Garth very specific investment questions (is now the time to buy in x neighbourhood)… would you seriously take advice based on you providing 3 lines of text on a blog?

#83 Lifexprt on 04.12.18 at 11:25 pm

Surprised how many actually see through globalist propaganda when it comes to the middle east, maybe all hope is not lost.

Ask yourself what does assad have to gain from this? Nada

is fecit cui prodest

#84 Reynolds531 on 04.12.18 at 11:27 pm

Ok fine, you made me do it. I pulled out the legal package for my mortgage.

It says, and I quote..
1. I must shut down the meth lab on my property.
2. At renewal, you either into an agreement to renew, we will decline the renewal, or at our option if we cannot contact you we will roll you into a six month fixed at posted rate.

Strictly speaking you’re right. They can do whatever they like. The vast majority of terms are there to protect them not the borrower. Even the rate on the fixed is only mentioned casually.
But I think if we get to a point where banks are stress testing renewals on loans that are performing, credit conditions in Canada would point to bigger problems. Like zero new credit. And every second house up for sale. And how many beans, bullets, and bandages I have stocked away.

#85 NotLegalAdvice on 04.12.18 at 11:30 pm

Was hanging with the lads this evening, having a few drinks. The real estate market was brought up during our convo. No surprise there.

Two of these guys purchased condos last year (still being built) in downtown tdot. Assignment clause allows them to “assign” it over. I advised they should sell off as soon as possible because their salaries will not allow them to pass the B20 stress test, and like why are they buying condos?! However, they are confident this market will continue and that they’ll get approved for a mortgage.

No matter what, there will always be a greater fool.

And……what’s stage 4?

#86 Winnipeghostage on 04.12.18 at 11:32 pm

I think yesterday’s title would’ve fit better above today’s picture.

#87 Deplorable Dude on 04.12.18 at 11:35 pm

#47 Nonplused….

Chicks dig guys who live in a Condo…….not an RV…..

Neat idea though…I’d go for it if I was single and didn’t mind being celibate….;-)

#88 renter in Surrey on 04.12.18 at 11:40 pm

#85 NotLegalAdvice

And……what’s stage 4?
———————————————–
Stage 4 is when BOC drops rate to 0 again, amortization will be extended to 40 – 50 years, and RE prices will continue this unstoppable ascent

#89 Smoking Man on 04.12.18 at 11:48 pm

SCM

Watch and learn kid.

https://youtu.be/YIMdEiK_oiI

#90 PastThePeak on 04.12.18 at 11:55 pm

whiny_millennial on 04.12.18 at 7:33 pm
So what’s stage 4?
+++++++++++++++++++++++++++

When people remember that not only does RE not always go up, but unemployment rates don’t always stay low.

#91 Duke on 04.13.18 at 12:07 am

#75 Ian on 04.12.18 at 10:51 pm
Garth…why is SCM on here again?

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

Why do you care? This is not your blog.

#92 oncebittwiceshy on 04.13.18 at 12:09 am

renter in Surrey: “Stage 4 is when BOC drops rate to 0 again, amortization will be extended to 40 – 50 years, and RE prices will continue this unstoppable ascent”

<<<<<<<<<<<<<<<<<<<<<<<<

Yes, that worked so well in the USA that our Government will be all over it. Lololololol.

Do you guys even think before you type?

#93 Brett on 04.13.18 at 12:28 am

#pissed made me ROTFL, great blog post Garth.

#94 Two-thirds on 04.13.18 at 12:31 am

“Stage 4” sounds frightening. When will this pathetic blog cover it?

It will be interesting to see what actually happens to most loan renewals at higher rates. A squeeze to households’ finances should be a mathematical certainty, with a higher rate now vs. before. However, some households will be in much worse shape (i.e., HELOC-happy ones) than others (i.e., those who made extra-payments regularly and avoided HELOCs). Not to mention, the balance at renewal should be lower than before (in most instances), so will the monthly payments go higher still?

The question is, other than being underwater and cutting expenditures, what will the impact be of renewing mortgages under B20? 5% rates is what is often quoted, which is not a high rate, historically speaking. It seems to me, the big winners will be the lenders, having a captive share of the existing mortgage market, raising the rate with impunity, but not beyond their clients’ ability to pay. Extend and pretend comes to mind… Renewal at a higher rate? For sure. Client complaints monthly payment is too high? Offer a longer amortization, which will ultimately bring more profit to the bank and keep the poor suckers, err… valued clients happy, plus B20 prevents them from leaving. What is not to love if you are a bank/lender?

Analyzing the situation in comparison to the 80’s and 90’s when mortgage rates were 10% or more, did mortgagees default en mass? This time around, households are more indebted, for sure, but how many will choose to walk away if doing so means paying the bank to be able to sell the house? Will banks really push customers who do not pass B20 at renewal, to sell? Or would they rather keep them captive and bleed them slowly over a longer period of time?

Vultching sounds like fun, but how many carcasses will there be in the coming year or two? Based on the only historical mortgage rates vs. arrears graph I was able to find, not many. Perhaps a blog dog with better and more recent data could create a similar chart to this, to give us an idea:

http://www.canadianmortgageadvisor.ca/blog/2010/09/residential-mortgages-in-arrears-in.html

So, lots of pain to come for the indebted, for sure. Lots of fire sales to come for the rest? Less assured, but it never hurts to keep powder dry…

#95 NoName on 04.13.18 at 12:37 am

36 Whatcha Minnie on 04.12.18 at 8:28 pm

I want to develop my skill set. At the end of the next five years, I want to know how to use software like Photoshop or InDesign. I want to have a better understanding of social media and video marketing. Plus I’d like to get into project management. I would like to learn on the job. Regardless, I want to look into online or evening courses.

Hey Whatcha Minnie, how about we make fate trade, would learn me with to write like you do, and I’ll learn you Photoshop and I’ll put enfasys on dodge and burn tool, and spend some time with liquify tool, verify important that one.
And as a project management I know scattered plot and gnant chart and most importantly I have 20 yrs of experience in finger pointing.

#96 FOUR FINGERS WATSON on 04.13.18 at 12:53 am

#88 renter in Surrey on 04.12.18 at 11:40 pm
#85 NotLegalAdvice

And……what’s stage 4?
———————————————–
Stage 4 is when BOC drops rate to 0 again, amortization will be extended to 40 – 50 years, and RE prices will continue this unstoppable ascent
………………………
Who told you? Who spilled the beans? That is classified information !! Who’s the rat ?

#97 NoName on 04.13.18 at 1:48 am

I know it’s not breaking news but trupm is going back to tpp, why that doesn’t surprise me…

#98 Sit down before you click on link on 04.13.18 at 1:55 am

https://toronto.listing.ca/real-estate-price-history.htm

You all may want to keep the cork in the champagne bottle for a while longer. Prices up 400-500% since the year 2000 and about 250% since 2008 in Toronto and I’m fairly sure the same amounts in most other regions of the GTA.

Current average selling prices take us back to the “bargain” prices of the fall of 2016 for detached only in Toronto and maybe early 2016 in surrounding areas. I seriously doubt low balling “desperate sellers” is going to get you back to anything remotely affordable when using sensible metrics. There is really no 3-stage victory here, not yet anyway. We are seriously reaching and getting more creative (desperate) than Realtors with our statistics if that’s what we are claiming.

Sorry Garth, I have always been on your side and I realize that this may not be over just yet, but the score is brainless buyers from 2000-2015… 10, renters… 0, thus far, even with this pathetic little pull back.

I wonder if Trump is accepting Canadian refugees.

Silly comment. It’s not a contest between a house and other assets. Rational people try to have both reasonably-priced accommodation plus liquid assets to provide them income and future security. Renters spend less to live than owners – fact. Houses are expensive, costly to maintain and take huge leverage to buy. When the market turns this creates extreme risk that a renter avoids. Try to maintain balance and, by the way, superimpose a chart of the Dow or the S&P over the real estate graph. – Garth

#99 Tony on 04.13.18 at 2:55 am

Re: #77 Barb on 04.12.18 at 10:58 pm

They need to increase the speculation tax not scrap it. As well in Ontario a petition needs to be floated warning the public about the repercussions of electing Rob Ford and how the abolishment of the foreigners’ tax will push real estate prices sky high in the GTA.

#100 Dolce Vita on 04.13.18 at 3:02 am

#89 Smoking Man

The title held so much promise.

And then, Monotone Man started to talk and after 2 min. I glazed over.

Though, nice coiffed hair and a shaven goatee.

The red and black plaid lumberjack shirt has to go or was that just Monty Python subliminal?

#101 Tony on 04.13.18 at 3:05 am

Re: #73 Lucky SoB on 04.12.18 at 10:41 pm

No where in the GTA, the last city was Peterborough but only if you bought in the extreme South East part and picked the right street like Farmcrest Avenue. Even if you bought in April 2017 rents in certain places there hadn’t seen big increases back then. That’s changed now as rents spiked a lot higher.

#102 jane24 on 04.13.18 at 3:25 am

What a great column Garth. Hits every nail on the head. My experience from the 1980’s was that the final nail was people losing their expected wealth effect. Losing their belief that yes it was totally correct that homes should earn more than their owners each day. Once you no longer wake up every morning feeling richer due to RE value increases over-night, then you feel scared. Very scared.

#103 JettaFlair on 04.13.18 at 4:19 am

@#2 Flop

Land Assemblies all along Renfrew, Broadway, 22nd Ave next to The fire Station. Most sitting there waiting. Houses behind 29th Ave station rezoned. Along Boundary road for ages. Parts of Burnaby seeing it now.

Some assemblies move faster than others. Some haven’t. Take a drive in Grandview/Collingwood if you have a moment. It stings, but I hope the practice dies down if the market in Van actually does. People wonder why some schools don’t meet attendance requirements. I digress. Cheers.

#104 Gravy Train on 04.13.18 at 6:00 am

#89 Smoking Man on 04.12.18 at 11:48 pm
“Watch and learn kid.”

That’s funny, coming from you, Smokey! You’re incapable of learning.

You’re ignorance personified. Do you even know what that means, Smokey? Hint: It means you’re the living embodiment of ignorance! :)

#105 Ds on 04.13.18 at 6:24 am

Radio-canada report price increased by 8% in montreal

#106 bitcoin on 04.13.18 at 7:30 am

as the buyers barge in;

from $6500 to $8000

thought it was dead?

#107 Hamsterwheelie on 04.13.18 at 7:43 am

So – I ask again, any of ya’ll out there in the lending biz? As in, are you lending money out to folks who don’t qualify for traditional mortgages? Don’t worry- I don’t want you money – I’m wondering if you’re enjoying that 11% or more return on your loan? (Payable in full at the end of term = not a mortgage) if borrowers default you get some real estate. Have been looking at backing brokers with money once we cash out (in a few years or when we feel timing is good) sure, its not stocks or ETFs but it is a market that exists and i don’t see anyone talking about it.

#108 dharma bum on 04.13.18 at 8:17 am

“Closing defaults hit Toronto sellers hard in housing plunge: report,” said the Globe and Mail this week.
——————————————————————–

This blog warned everyone that it wasn’t going to be fun once the music stopped!

https://www.wikihow.com/Play-Musical-Chairs

#109 crowdedelevatorfartz on 04.13.18 at 8:17 am

@#20 Vancouverless, #58 Daryl

Sadly you’re both mistaken.

Roman soldiers shaved so they would never , ever be mistaken for a millenial

#110 Alex Johnson on 04.13.18 at 8:26 am

Reading about RE for about a year now and I still can’t help but to think that there will be a very sharp collapse due to the common denominator which is your “average folks.”
But as been said, markets can remain irrational for a very long time, so what do you do? Do you buy and just play the long game hoping that by the time you sell and your kids grow up you will be up? But I just can’t do that, I like my cash money and a roof over my head is just that, I see it as a service for which I pay.
But one thing that is clear to me on this blog at least is that the folks here or even Garth is not quite in touch with your median salaries people out there…or maybe you lot are, I’m not sure.
Reading the posts on here, and the emails that Garth gets its fairly easy to conclude that the folks here and the one’s that Garth gets mail from are far above average in their incomes. I keep reading about early 30s mills with 200k family incomes or just below, and the fact that many of us ended up on this blog would hints that there is above average education here and people who don’t make decent money do not seek out investment and real estate advice. What the common folk do is read the papers and listen to real estate agents on the TV who are telling them to buy. But, I feel like if the perception is that “hey people bring in around 200k a family” that the current prices are more or less here to stay.
And keeping in mind that when you go out there and walk the streets of Toronto outside of Bay street and downtown core, that person you are looking at is likely making 45k +-~10k, and so does their partner, all of this, won’t last forever.
These people are living paycheck to paycheck paying 100$ for the wireless bills, high car insurance oh and they have to pay for food as well.
So, it’s quite simple to me, houses will plateau and not correct much further until the government allows debt to swell, because with 100k family incomes and damn near 800k condos out there, everything is just a giant debt bubble. Canadian’s have made it clear that they will live with no savings, keep going into debt until bankrupt, all to own a house/condo. It has to be an odd cultural thing, with the strange thing being is that everyone feels that way within our borders, from 5th generation Canadians to immigrants from Sri Lanka.

#111 crowdedelevatorfartz on 04.13.18 at 8:28 am

Not sure what “Stage 4″ but in responce let me quote Einstein when he was asked what type of weapons would be used in WWIII.

” I dont know. But in WWIV….we’ll be using sticks and stones.”

As for “Phase V” ….thats when the ants take over the world.

https://www.google.ca/url?url=https://en.wikipedia.org/wiki/Phase_IV&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwi83PLHn7faAhXnhlQKHeL8DfkQFggUMAA&usg=AOvVaw3CNtp-jR4l3qqJzQTZMDeU

#112 crowdedelevatorfartz on 04.13.18 at 8:35 am

@#103 Gravy Train.

Have you ever tried Smoke flavoured gravy?
As repulsive as it sounds….its quite good.
There’s also smoked salmon, smoked meat, smoked cheese, …..
Smoked is good! And with gravy! You have a winning combination!
You two should combine names, ideas and rename as Smoking Mans Gravy or Smoked Gravy Man or Manly Gravy Smoke…..
The possibilities are endless

#113 Steven Rowlandson on 04.13.18 at 9:03 am

Stages.

First they laugh at you.
Then they violently attack you.
Then you win.

This I think applies to many situations.

#114 Tater on 04.13.18 at 9:18 am

Regulators might not require a stress test at renewal, but IFRS 9 can lead to banks asking you for much more information that has been typical in the past.

#115 Victor V on 04.13.18 at 9:26 am

Home prices fall in key markets, but buyers ‘shouldn’t hold their breath’: Royal LePage

https://www.bnn.ca/home-prices-fall-in-key-markets-but-buyers-shouldn-t-hold-their-breath-royal-lepage-1.1055028

“We are experiencing a broad-based, residential housing correction in Canada, triggered by federal and provincial intervention,” said Phil Soper, CEO of Royal LePage in the report on Friday.

“Strong house price gains in the first half of 2017 mask some of the recent market shifts when comparing year-over-year home value trends… Regulators were concerned primarily with the large GTA market, and it is there we are seeing the most pronounced short-term changes.”

But Soper goes on to warn that the declines in the market will be short-lived as the tide turns in the second half of the year.

“Those looking for this slowdown to translate into material year-over-year home price drops shouldn’t hold their breath,” he said. “The demand for housing is so strong that the rate of home price appreciation is expected to pick up again in the second half of 2018.”

#116 Smoking Man on 04.13.18 at 9:27 am

104 Gravy Train on 04.13.18 at 6:00 am
#89 Smoking Man on 04.12.18 at 11:48 pm
“Watch and learn kid.”

That’s funny, coming from you, Smokey! You’re incapable of learning.

You’re ignorance personified. Do you even know what that means, Smokey? Hint: It means you’re the living embodiment of ignorance! :)
……

Somewhat I guess. Not a bad place to be. Much better to be me than a school created, cultist conforming zombat.

Look in the mirror babe. You can only prosper in a safe controlled environment of expected outcomes.

What I find astounding is the pure unfiltered arrogance of the schooled whos only achievement in life has been to conform, memorize and regurgitate on demand in order to obtain a very expensive obidiance certificate.

I do just fine in a world of chaos. Bring on the zombie appocslypis, were grammar and spelling skills become totally useless. :)

Dr Smoking Man
Phd Herdonomics.

#117 Ronaldo on 04.13.18 at 9:30 am

#6 whiny_millennial on 04.12.18 at 7:33 pm

So what’s stage 4?
——————————————————————-
That’s the one that those underwater buyers will be hopping on to get out of Dodge.

#118 Oft deleted much maligned stock.picker on 04.13.18 at 9:33 am

‘Non Prime”…..the new name for sub prime makes for sa great opportunity for private mortgage lenders. After all, when those underwater moisters have to refi …..who ya gonna call?

https://www.cnbc.com/2018/04/12/sub-prime-mortgages-morph-into-non-prime-loans-and-demand-soars.html

#119 Stan Brooks on 04.13.18 at 9:34 am

Snow storm, freezing rain in Ontario in the middle of April.

T2’s fight against global warming works. Fantastic achievement. Worth every penny of his taxes.

To add to the pleasure gas prices are going up this summer to a pretty much guaranteed new record. More expensive than when oil was 120 USD/barrel. The explanation is that loonie is cheap while oil goes up. At the same time loonie is claimed to be correlated to oil that has rallied lately.

No inflation here, I guess according to Mark who misses external financing and bond issuance in his mortgage financing theories.

The prices in the frozen tundra at 4-5 multiples of real value, if such truly exists considering quality (card board particles crack shacks, glass wall condos), fees (condo), joint ownership with bunch of strangers (condo), joint ownership with many more strangers (municipal property taxes).

First cracks in the ultra-subprime-lairs-mortgages start to show. Much more to come. Banks are worried. They should be.

An absolutely adorable place not be be in the next decade or two.

#120 Ronaldo on 04.13.18 at 9:37 am

#36 Whatcha Minnie on 04.12.18 at 8:28 pm

I want to develop my skill set. At the end of the next five years, I want to know how to use software like Photoshop or InDesign. I want to have a better understanding of social media and video marketing. Plus I’d like to get into project management. I would like to learn on the job. Regardless, I want to look into online or evening courses.
——————————————————————-
That’s really good to know.

#121 Stan Brooks on 04.13.18 at 9:39 am

Ah, I missed the wonderful ‘free’ health care that we Canadians enjoy. Except it is not free/it is paid by our taxes and is not wonderful, the least of people I personally know who almost died due to very simple miss-diagnoses of basic conditions which a nurse should be able to perform but ‘trained’ doctors can’t (but hey they are for sure ‘well rounded’ individuals) was extended last week with the kid of a close friend of mine. Almost got killed by doctors inability to diagnose a very, very simple condition.

And there is not even an option to pay for a second opinion.

Absolutely pathetic.

#122 Tater on 04.13.18 at 9:44 am

#46 ShawnG in TO on 04.12.18 at 9:08 pm

hey Mark,
what if a lot of the mortgages are sold as MBS’s? how does that impact your prediction?
—————————————————————–

I’m not Mark, but the MBS market in Canada is dominated by insured mortgages. There have been attempts (and a few sales) on non-insured, but it has been very small.

The interesting thing will be when defaults occur, how aggressive CMHC is in adjudicating.

#123 Ronaldo on 04.13.18 at 9:49 am

#76 Ian on 04.12.18 at 10:54 pm

#57 Unhinged Trader

Allow me to help you…I think Russia is evil personified.

The End.
————————————————————
That is what they would like us to believe.

#124 Gravy Train on 04.13.18 at 9:56 am

#112 crowdedelevator on 04.13.18 at 8:35 am
“The possibilities are endless….”

You cracked me up! If you’re not in comedy, you should be; your talents are being wasted!

I’ll ease up on Smokey. There really isn’t any fun in confuting a straw man.

#125 Terry on 04.13.18 at 10:24 am

Does this Pasalis guy know who he’s messing with! Is he aware that Garth has an army of vicious trolls at his command? Beware John boy, there might be a target on your back! Lol

#126 Giggz on 04.13.18 at 10:24 am

“nearly half of all mortgages renew in 2018 (this is rare)”

—–

Where can we find this data? Would be interesting to look into.

CIBC Capital Markets report, as stated. – Garth

#127 Terry on 04.13.18 at 10:38 am

Stan Brooks, I agree with your comments on our health care system, if you’ve got a condition they refuse to admit exists, your paying for nothing. End up paying again for treatment out of country or from alternative docs.
I see oil spiking again here soon, several years of record low discoveries. Without energy and other primary assets, the money central banks print is worthless. If our dollar drops and oil spikes from the petro-yuan market competing with USD, and we see gas prices hit $2/litre, that’s the end of life as we know it here. Deep recession, and likely financial crises. We’re already squeezed too hard with costs of everything in Canada, when oil goes up, so does everything else, including personal debt. $150 oil played a major role in the GFC, and will again as we see the jagged peak play out over the next few years

#128 SilverSon on 04.13.18 at 10:40 am

#121 Stan Brooks on 04.13.18 at 9:39 am

Excellent comment. Many of the Americans I know envy the “free” health insurance in Canada but they have no idea that the quality of service is nowhere close to as good as it should be relative to what it costs Canadian taxpayers. It is far from “free” as stated. As expensive as US health insurance premiums are, I can add those premiums to my income tax and that total (as a percentage of income) is right along the same lines as the income tax in Canada. Except, when I go to a hospital in the US they recognize me as a customer and treat me as such. From registration to a doctor seeing me is 15-30 minutes unless there’s been a huge pileup on the local Interstate or something like that. If I’m not happy with their service, they have trouble getting paid. If they can’t save my life, they might not get paid at all – the health insurance company might string them out indefinitely. The only people in Canada actually getting healthcare for free are those that reside in Canada and evade taxes or don’t pay income tax because they have no income upon which to pay tax.

#129 Smoking Man on 04.13.18 at 10:42 am

What these SJW don’t get. They want to tax the crap out of the 1%. To pay for everything.

They have zero clue that the 1% can move all their money and their families to another jurisdiction with a mouse click. And just like that those left behind become Greece or Venezuela.

https://youtu.be/ztSmt7XBktI

#130 Sit down before you click on link on 04.13.18 at 10:45 am

98 Sit down before you click on link on 04.13.18 at 1:55 am
https://toronto.listing.ca/real-estate-price-history.htm

You all may want to keep the cork in the champagne bottle for a while longer. Prices up 400-500% since the year 2000 and about 250% since 2008 in Toronto and I’m fairly sure the same amounts in most other regions of the GTA.

Current average selling prices take us back to the “bargain” prices of the fall of 2016 for detached only in Toronto and maybe early 2016 in surrounding areas. I seriously doubt low balling “desperate sellers” is going to get you back to anything remotely affordable when using sensible metrics. There is really no 3-stage victory here, not yet anyway. We are seriously reaching and getting more creative (desperate) than Realtors with our statistics if that’s what we are claiming.

Sorry Garth, I have always been on your side and I realize that this may not be over just yet, but the score is brainless buyers from 2000-2015… 10, renters… 0, thus far, even with this pathetic little pull back.

I wonder if Trump is accepting Canadian refugees.

Silly comment. It’s not a contest between a house and other assets. Rational people try to have both reasonably-priced accommodation plus liquid assets to provide them income and future security. Renters spend less to live than owners – fact. Houses are expensive, costly to maintain and take huge leverage to buy. When the market turns this creates extreme risk that a renter avoids. Try to maintain balance and, by the way, superimpose a chart of the Dow or the S&P over the real estate graph. – Garth

——————————————————–

Do you seriously want me to superimpose and perhaps include a spreadsheet of a GTA dweller investing all of their $100,000 – $200,000 cash savings in the Dow (something you don’t remotely recommend) in 2007 or 2008 while spending $300,000-$400,000 in rent in the past 10 years vs GTA a buyer using half those savings on a down-payment and closing fees on a home that has almost tripled in value and while a significant portion of mortgage payments have gone to paying it down in the past decade? It won’t be pretty regardless of how you twist the numbers to suit your narrative. In most cases the saver/renter’s initial $100-$200K will have more than doubled with perhaps a renter being able to save more monthly for the 1st 5+6 years, but watch their rent skyrocket in the last 4 or 5 years while owner has watched their mortgage payment and balance actually decline while detached home equity up $800,000 + with similar overall living expenses over same period even when you add $50,000 – $60,000 in property taxes and home insurance over that decade. Admittedly, their portfolio would presumably be worth less than 1/2 of the renters due to extra costs of annual ownership of a detached home. The price of a detached home could actually crash, which is highly unlikely, wiping out the huge chasm between the two scenarios but then again the Dow could crash like it did back in the late 2008 into early 2009 or several other times in history, which is slightly more likely. Not all homeowners that bought 5 years ago or more, are flat broke and do have a portion of their money invested. And not all renters are Financial geniuses that maximize growth on every dollar they might save over owning.

My comment is not silly. It’s a hard reality and reality bites for sideliners at this moment in time, even with the small correction we’ve seen thus far. I don’t suggest for a single minute that the insane prices of Real Estate make any sense but I can admit that buying has been hugely rewarding over the past 15 years. Hindsight is 20/20… foresight, not so much.

To extrapolate the past rise in real estate, due to aberrant interest rates, over the future of normalized rates is, well, nuts. Putting all your money in a single asset and leveraging it up by a factor of ten or twenty is a risky proposition. Comments like yours make young people think buying a house is a guaranteed ticket to security. That is irresponsible, even for a realtor like you. – Garth

#131 SilverSon on 04.13.18 at 10:47 am

Further to my last comment – that’s not to say there aren’t some excellent nurses and doctors in Canada. When I’ve had to go to the hospital in Canada I found (after 6-8 hours of waiting) that the people there were actually very good. The problem is that there’s no enough of them because everything is overcrowded (because it’s “free”) and they lack the resources to deal with the volume. It seems like the process by which healthcare is administered in Canada is poor and sucks up far too much money.

#132 crowdedelevatorfartz on 04.13.18 at 10:51 am

@#116 Smoking Man
” Bring on the zombie appocslypis, were grammar and spelling skills become totally useless. :)”
++++++

I’m not so sure about that Professor.
I’m pretty sure the “literati” would survive longer than the illiterate just for the simple fact……
Hand made warning signs declaring “Zombies inside” might be interpreted as “Free Food” to a person that cant read…..

#133 Ian on 04.13.18 at 11:06 am

10.41am on wires: “Fed’s Bullard says he sees no need for further interest-rate increases”

Here we go folks. I predict no more rises this year by the US Fed. Stock market in trouble, GDP slowing, Powell keeping rates low to help Trump…it all is adding up.

I think we are done with the rises.

#134 Re: Rental Property Math on 04.13.18 at 11:11 am

My lender just called me up and said we can renew you at 2.84%

Curious, which lender are you with?
I want a deal like that.
(600k principle left on 2.5M)

#135 Ian on 04.13.18 at 11:13 am

Michigan consumer sentiment just out, three month low:

https://www.marketwatch.com/story/university-of-michigan-consumer-sentiment-index-slips-to-three-month-low-on-trade-fears-2018-04-13

US Q1 GDP goes below 2% folks. Bank on it.

#136 Sprawl on 04.13.18 at 11:23 am

Been thinking about the Pyramid Graph you posted awhile back. The one with the two traps, one on the way up and another on the way down. Kinda curious where folks are at. I pity those with mortgages renewing without the capacity for market mobility. Trust companies will be at their throats. Teachers pension plan will be pleased.

#137 For those about to flop... on 04.13.18 at 11:29 am

Recent Sale Report/ Realtor Assistance Needed.

Hey Broadway,wanna do a session for old times sake?

Here are some sales in my folder from March,might have snuck one or two in from late February.

The thing that stuck out for me ,was only one sale on the Westside of Vancouver out of all my cases ,as they refuse to let go and ride the market down…

M43BC

1585 Dansey Avenue, Coquitlam paid 1.17 June 2016 ass 1.23 sold for?

1315 SOBALL Street, Coquitlam paid 1.33 ass 1.28 asking 1.53 sold for?

1285 Sherman Street, Coquitlam paid 1.08 May 2017 ass 1.12 asking 998 sold for?

2891 Pandora Street, Vancouver paid 1.39 asking 1.39 sold for?

2831 Venables st. Vancouver paid 2.41 November 2015 asking 2.39 sold for?

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 ?

6008 6th st ,Burnaby.Paid 2.42 Feb 2017 asking 2.58 now 2.38
Sold for 2.20 Pink Snow

215 Princess St,New Westminster paid1.17 June 2016 ask 1.25
Sold for 1.15 Pink Snow

493 Shannon Way, Delta paid 1.62 March 2016 ass 1.3 now asking 1.35
Sold for 1.32 Pink Snow

#138 millmech on 04.13.18 at 11:41 am

The banks are raising the fixed rate mortgage today, only 10bps-15bps, anticipating another 25bps on the 18th so a continuous 40bps rate increase.

#139 rental property math on 04.13.18 at 11:44 am

#134 Re: Rental Property Math on 04.13.18 at 11:11 am
My lender just called me up and said we can renew you at 2.84%

Curious, which lender are you with?
I want a deal like that.
(600k principle left on 2.5M)

———–
https://www.rmgmortgages.ca/ but I’m pretty sure you have to go through a mortgage broker to get set up with them. They called me up directly to renew. This was on december 22 and my mortgage term expired mid march.

#140 Newcomer on 04.13.18 at 12:10 pm

#88 renter in Surrey on 04.12.18 at 11:40 pm
..,
Stage 4 is when BOC drops rate to 0 again, amortization will be extended to 40 – 50 years, and RE prices will continue this unstoppable ascent
——–
Sure. It worked in Japan, houses there cost millions (of yen).

#141 Blacksheep on 04.13.18 at 12:31 pm

Renter # 88, New # 140,

“Stage 4 is when BOC drops rate to 0 again, amortization will be extended to 40 – 50 years, and RE prices will continue this unstoppable ascent”
—–
“Sure. It worked in Japan, houses there cost millions (of yen).”
————————————-
Demographics. Night and day.

Garth’s, moist Millennials would be on that, like flies on shit….

#142 Tater on 04.13.18 at 12:32 pm

#121 Stan Brooks on 04.13.18 at 9:39 am
Ah, I missed the wonderful ‘free’ health care that we Canadians enjoy. Except it is not free/it is paid by our taxes and is not wonderful, the least of people I personally know who almost died due to very simple miss-diagnoses of basic conditions which a nurse should be able to perform but ‘trained’ doctors can’t (but hey they are for sure ‘well rounded’ individuals) was extended last week with the kid of a close friend of mine. Almost got killed by doctors inability to diagnose a very, very simple condition.

And there is not even an option to pay for a second opinion.

Absolutely pathetic.
—————————————————————
You could go to the Cleveland Clinic, Medican or Mayo Clinic if you want to pay for a second opinion. Add that to the pile of things you don’t know.

#143 Obedience Certificates on 04.13.18 at 12:35 pm

#116 Smoking Man on 04.13.18 at 9:27 am
104 Gravy Train on 04.13.18 at 6:00 am
#89 Smoking Man on 04.12.18 at 11:48 pm
“Watch and learn kid.”
That’s funny, coming from you, Smokey! You’re incapable of learning.
You’re ignorance personified. Do you even know what that means, Smokey? Hint: It means you’re the living embodiment of ignorance! :)
………………………………………

Somewhat I guess. Not a bad place to be. Much better to be me than a school created, cultist conforming zombat.
Look in the mirror babe. You can only prosper in a safe controlled environment of expected outcomes.
What I find astounding is the pure unfiltered arrogance of the schooled whos only achievement in life has been to conform, memorize and regurgitate on demand in order to obtain a very expensive obidiance certificate.
I do just fine in a world of chaos. Bring on the zombie appocslypis, were grammar and spelling skills become totally useless. :)
Dr Smoking Man
Phd Herdonomics.
…………………………………………………..
Is not your inglorious leader Donald J Trump whom you have utmost adoration a school created, cultist conforming, zombat who was schooled with an expensive obedience certificate?
Trump began his higher education at Fordham University and after two years, he transferred to the Wharton School of the University of Pennsylvania, because it offered one of the few real-estate studies departments in United States academia at the time. He graduated in May 1968 with a Bachelor of Science in economics. So yes I can see the unfiltered arrogance weakness and stupidity of all the losers out there with a very expensive obedience certificate like your supreme leader Donald J Trump. Oh and your right grammar and spelling skills become totally useless when listening to the President. Sure its better to be you, right, sure, hold on for a bit I’m still laughing at you. Ok I’m done :)
Is the marriage with your lover now on the rocks?

#144 Ace Goodheart on 04.13.18 at 12:40 pm

RE: #130 Sit down before you click on link on 04.13.18 at 10:45 am

“My comment is not silly. It’s a hard reality and reality bites for sideliners at this moment in time, even with the small correction we’ve seen thus far. I don’t suggest for a single minute that the insane prices of Real Estate make any sense but I can admit that buying has been hugely rewarding over the past 15 years. Hindsight is 20/20… foresight, not so much.”

This comment makes no sense.

Anyone who bought a house 15 years’ ago would have bought it with a five year fixed mortgage rate of roughly 9%.

So yes the price they paid was much cheaper, but the interest was more than four times as much.

So yes, 15 years’ ago, with hindsight developed by having a time machine and going forward into the future to February of 2017, a person could have predicted “if I can keep up with the mortgage payments, property tax and maintenance for 15 years, then there will be an economic crash and subsequent recovery, which will involve very low interest rates, and government policies designed to stimulate house prices”.

There is no way to predict that the above situation will happen again.

What is likely to happen now, is a slow and relentless downward slide in home prices, as interest rates rise, banks restrict credit and we head back into a normalized rate environment.

I guess the question to ask yourself would be “what could the average middle class person afford to pay for a house, if interest rates were 9%?”

The answer to that question may frighten you. That is the price of a house, in our future.

#145 Mattl on 04.13.18 at 12:51 pm

Steven Rowland says:

“Stages.

First they laugh at you.
Then they violently attack you.
Then you win.

This I think applies to many situations.”

Steve – must suck to be stuck in stage 1 for so long! Hey at least you have stage 2 to look forward to.

#146 Ian on 04.13.18 at 1:01 pm

#138 Millmech

That is sure interesting Mill, because I don’t think the BoC raises on the 18th.

FXC has rocketed up to 78.25 so I feel they should hold off. We shall see…

Thanks for letting us know!

#147 Newcomer on 04.13.18 at 1:03 pm

#141 Blacksheep on 04.13.18 at 12:31 pm

Garth’s, moist Millennials would be on that, like flies on….
——

I can see them now, swarming down to talk to [email protected] with their 50K T4s. Cute!

#148 Smoking Man on 04.13.18 at 1:05 pm

#143 Obedience Certificates on 04.13.18 at 12:35 pm.

School is totally redundant with the internet. You would need to be a total mental case to spend one dine in school to learn a programming language.

Absolutely free online. Lessons way ahead of traditional universities. I learned python in 30 days.

And in this business degrees don’t mean shit. You can either code or you can’t.

#149 Ian on 04.13.18 at 1:06 pm

Not related to finance or housing, but I thought you dogs would find this as fascinating as I did.

DNA can now be used to create photos of suspects!!! How crazy is that?

http://www.cbc.ca/news/canada/british-columbia/is-this-the-killer-images-released-of-suspect-in-1987-slayings-of-b-c-high-school-sweethearts-1.4614700

#150 DM in C on 04.13.18 at 1:20 pm

Anecdote from NW Calgary.

We sold our McMansion in March, closing the end of this month. Sold about 5% under list, but 20% higher than purchase.

My realtor put us on his Active/Pending/Sold notification list — and daily for the last few weeks there are multiple price reduction notifications, very few SOLDs happening. And this is in a very popular, family oriented community.

Could be the stress test, could be the looooong winter. We’ll see.

#151 Gravy Train on 04.13.18 at 1:24 pm

The word kakistocracyis trending on merriam-webster-dot-com.

“Kakistocracy was among our top lookups on April 13th, 2018, rising 13,700% after its appearance in a tweet by former CIA Director John O. Brennan.

“The word is pronounced \kak-uh-STAH-kruh-see\, and means ‘government by the worst people.’”
https://www.merriam-webster.com/news-trend-watch/brennan-your-kakistocracy-is-collapsing-20180413

#152 crowdedelevatorfartz on 04.13.18 at 2:00 pm

When “sellers remorse” ends up in Court

https://thinkpol.ca/2018/04/13/shadow-flipping-realtor-fails-get-case-thrown/

#153 Arto on 04.13.18 at 2:06 pm

#125 Terry

Never tell a Greek he’s got a target on his back

#154 Guy in Calgary on 04.13.18 at 2:10 pm

Go refi at a credit union. No stress test there.

#155 Huh? on 04.13.18 at 2:11 pm

144 Ace Goodheart on 04.13.18 at 12:40 pm

Anyone who bought a house 15 years’ ago would have bought it with a five year fixed mortgage rate of roughly 9%

—————————————–

Ace are you drunk? First of all the example presented was only 10 years ago where interest rates were almost as low as they are now. Secondly 15 years ago in 2003, the prime interest rate was 4.6% with most fixed mortgages at just over 6% with variables even lower than that, where are you getting 9% from? Were you living in this part of the world at that time?

Would you prefer mortgage a $300,000 at 6% for the first five years then renewing at lower rates for the next 10 years or a $1000000 mortgage at 3% for the first 5 years and then rates slowly start to rise after that? And what if you were a cash buyer in 2003? You would be mortgage free buying a $400,000 home and today you have a $700,000 or $800,000 mortgage.

It is you that is not making any sense. The math is not that difficult.

By the way you would have to go back nearly 24 years to the last time where fixed mortgage rates were 9%. A nice detached Bungalow was under $200,000 at that time. when I purchased my large detached back split in 1998, my variable rate was 5.75% and houses prices were about a quarter of what they cost now and I am not gloating, I am disgusted at the cost of housing.

http://www.mtgoptions.ca/mortgageratehistory_000.php

A little bit of research before you post would, go a long way.

#156 SoggyShorts on 04.13.18 at 2:19 pm

#130 Sit down before you click on link on 04.13.18 at 10:45 am
98 Sit down before you click on link on 04.13.18 at 1:55 am
https://toronto.listing.ca/real-estate-price-history.htm

You all may want to keep the cork in the champagne bottle for a while longer. Prices up 400-500% since the year 2000 and about 250% since 2008 in Toronto and I’m fairly sure the same amounts in most other regions of the GTA.

****************************************
Am I reading that wrong, or does it say +131% for the last 10 years?
If so, and if that is the best that has happened to a RE investment in Canada, I’m not really impressed.
I mean, a moderate portfolio got +100% in 10 years.
Also 10 years without sinking any money into maintenance and repairs is unlikely, and the interest paid is not insignificant over that time period.

The only big advantage of the RE is that it was leveraged, so gains are multiplied, but you can do that with investing too.
It’s funny how pretty much no one recommends leveraged investing because it is too risky, except when it comes to RE.

Most importantly, you are kinda cherry picking. Yes, gains were pretty great in TO/Van, but much of the country was crap (e.g. Alberta is basically flat for 10 years now)
Whereas every well balanced diversified portfolio got around 7% returns (100% over 10 years) everywhere in Canada for every investor.

#157 Ole Doberman on 04.13.18 at 2:20 pm

Looks like I called the bottom in bitcoin at 6kish – now it’s at 8k, all aboard the train is about to leave choo choo!

#158 Shortymac on 04.13.18 at 2:32 pm

@silverson

You know nothing about US health insurance, you Canadians are blessed with your healthcare system and it’s significantly cheaper overall for roughly the same or even better quality of care.

I’m a US immigrant, trust me you don’t want the US system. It’s an exceptionally expensive, even for those with insurance.

I pay about 100/mon at 65k salary for OHIP. It’s about another 100/mon for private extended insurance for meds, eyeglasses, etc. So 200/mon.

You cannot get health insurance for 200/mon in the US, either your work heavily subsidies it (thus soaking the excess cost themselves) or your easily paying 1000 or more a month and then paying significantly more out of pocket. This discourages people from starting home businesses and switching jobs.

You’ll also have your insurance company dictating which medications you can take or not, what hospitals, doctors, labs, etc you can use, etc. Significantly less flexibility.

Yes, you also have to wait in the US system, even if you are paying cash. My Mom has to wait months to see her ENT doctor, for example. It’s quite common for specialists.

My best friend had a baby in 2016, despite being insured she had to:

– Put a down-payment on her birth of a few thousand bucks

– Pay for all ultrasounds

– Worked full-time and on the day she gave birth, despite having sky-high blood pressure. This resulted in complications leading to an emergency c-section.

– Had to stay in the hospital for 9 days until her blood pressure went to normal. Then her insurance denied most of her birth and recovery claims because they claimed that was “excessive” despite it being doctor’s orders. Which then the hospital automatically billed the US medicaid for the difference anyway.

– Then only got 8 weeks unpaid medical leave to heal

You don’t know how lucky you all have it. I pay roughly the same amount of taxes that I would back home and get way more back.

#159 Ace Goodheart on 04.13.18 at 2:44 pm

RE #155 Huh? on 04.13.18 at 2:11 pm

The poster indicated: “I can admit that buying has been hugely rewarding over the past 15 years.”

I took that to mean we were to go back 15 years. Perhaps that actually means go back 10 years? Not sure.

Your mortgage chart shows that back in 2002 (which is 15 years ago, because we are only in April 2018), the average mortgage rate for a five year fixed was 6.62%.

But as we all know, the average is not the rate that everyone gets. If you are averaging 6.62% then you have rates which could be as high as around 12% and as low as around 5%.

What you need to look at is the average on your chart over the period of 25 years. The average is 7.37%.

That is the number you are worried about, because it takes 25 years to pay off a mortgage.

So if your strategy is to work, you would have to somehow be able to pick the period of time in that 25 year span, when a mortgage could be had for less than 6%, because 6% is the historical average on a well put together portfolio.

If you are not able to do that (ie “call the market”) then you would be better off without the house.

What you are seeing (and I agree with you) is that over the past 10 years, it was a very, very, very good idea to purchase and hold onto a house.

It is now a very, very, very good idea to sell that house (unless you are in Montreal).

When it will next be a very, very, very good idea to purchase and hold onto a house, is hard to say.

I would venture to submit that the next really good opportunity would be a few years after a financial crash or meltdown of some kind, in the tail end of a recession, when interest rates have been lowered to “stimulate the economy” and when things are picking up.

When that will be is not something I could guess at. It seems it will not be for at least another 10 years or so, and that we have entered a downward cycle in home prices, that will probably persist for at least the next ten years.

#160 Blacksheep on 04.13.18 at 2:57 pm

New # 147,

#141 Blacksheep on 04.13.18 at 12:31 pm

Garth’s, moist Millennials would be on that, like flies on….
——
“I can see them now, swarming down to talk to [email protected] with their 50K T4s. Cute!”
———————————
That’s 100 K per couple, with out rental suite income and don’t forget the bank of mom, or joint ownership.

I found my self in this exact environment (surprise gov. intervention) Jan / 2009 after I sold my Res. the previous summer.

I was dead sure fundamentals were going to kick in and RE would crash. I learned the hard way. Do not underestimate the systems willingness to take any actions required, to avoid a harsh correction.

Look at it this way, who would have ever predicted, RE could get as expensive as it is now. Forget the fundamentals of the past, we are in uncharted waters.

This is why I keep repeating: Don’t fight the system…

#161 LivinLarge on 04.13.18 at 3:03 pm

“Have been looking at backing brokers with money once we cash out (in a few years or when we feel timing is good) sure, its not stocks or ETFs but it is a market that exists and i don’t see anyone talking about it.”…I’m not 109% certain but I’d check out the tax treatment of the income from doing this. If it’s taxed as interest then you’re gonna get whacked at tax time. Seems like there are plenty of other options that deliver tax advantaged income streams without the risks of lending your money to borrowers that the pros won’t touch.

#162 Overheardyou on 04.13.18 at 3:06 pm

#39 Willy H on 04.12.18 at 8:33 pm

It works both ways, I have friends complaining about losing money on their ‘investment homes’. This will spread like wildfire once a couple sparks fly

#163 Mark on 04.13.18 at 3:09 pm

“Am I reading that wrong, or does it say +131% for the last 10 years?
If so, and if that is the best that has happened to a RE investment in Canada, I’m not really impressed.”

Yes RE total returns have been impressive in the 1998-2013 era in Canada, but prices peaked in 2013 and have stagnated ever since. With rents only providing minimal return since which has been handily beaten by the sort of balanced portfolios of financial investments advocated by the likes of Garth.

In the post-2013 era, what has been seen, which certainly isn’t applicable to real estate investors, is a dramatic shift in the sales mix. Hence the problem we’re facing today, in that, investors in RE have basically hit the wall in terms of net cashflows being able to finance mortgages, refinancing opportunities are drying up as lenders more closely examine the value of collateral, and credit lines are drawn to their limits. It logically follows that credit spreads for credit against the specific asset class will widen, which is exactly what has been occurring in the post-2013 era accelerating as of recent.

I suspect the following 10-15 years will be that of mean reversion, where abnormally low returns on, for example, the Canadian stock market, ‘catch up’ with earnings growth and low interest rates, while housing prices fall to more closely reflect actual inflation and depreciation over the same interval. In the 1990s, this meant nearly 400% relative performance of the stock market versus the housing market, and a mere invested housing downpayment was enough for an outright cash house purchase within the decade.

#164 Obedience Certificates on 04.13.18 at 3:11 pm

#148 Smoking Man on 04.13.18 at 1:05 pm

#143 Obedience Certificates on 04.13.18 at 12:35 pm.

School is totally redundant with the internet. You would need to be a total mental case to spend one dine in school to learn a programming language.
Absolutely free online. Lessons way ahead of traditional universities. I learned python in 30 days.
And in this business degrees don’t mean shit. You can either code or you can’t.
………………………………………………………………..
Still laughing my ass off at you Smoking Man…………. You deflected just like Donald J Trump and his band of merry Psilocybin mushroom people. Your beloved glorious leader to whom you have emboldened to be the epitome of all things prodigious is still a school created, cultist conforming, zombat who was schooled with an expensive obedience certificate?
Ahhhh deflection is just like Trump and just like you. You can not bring yourself to admit the truth. The truth is YOUR LEADER WAS SCHOOLED! SO WHY DO YOU FOLLOW A SCHOOLED IDIOT? So thanks for taking the pills Smoking Man and I hope you enjoy the trip. Still laughing…………………:)

#165 Mark on 04.13.18 at 3:15 pm

“I’m not Mark, but the MBS market in Canada is dominated by insured mortgages. There have been attempts (and a few sales) on non-insured, but it has been very small. “

Yes, MBS really doesn’t alter the discussion. The people financing MBS, investors, often banks and institutional investors, have very similar investment criteria as mortgage lenders who hold mortgages on-balance-sheet. When they turn negative towards an asset class, it really doesn’t matter whether they own the asset class of mortgages as a packaged security, or individual loan contracts that they service. Either way, the borrowers will see less availability of, and more expensive credit against their particular asset class systemically.


The interesting thing will be when defaults occur, how aggressive CMHC is in adjudicating.”

I’ve written in the past, this will be a game of chicken between the CMHC and the banks, with the banks being reliant on the CMHC for solvency and confidence, while the CMHC being reliant on the banks for continued lending into the market to prevent prices from crashing and exposing long-term CMHC insolvency. The Cold War era theory “Mutually Assured Destruction” or “MAD” is highly applicable here.

#166 PastThePeak on 04.13.18 at 3:30 pm

#155 Huh? on 04.13.18 at 2:11 pm

Would you prefer mortgage a $300,000 at 6% for the first five years then renewing at lower rates for the next 10 years or a $1000000 mortgage at 3% for the first 5 years and then rates slowly start to rise after that? And what if you were a cash buyer in 2003? You would be mortgage free buying a $400,000 home and today you have a $700,000 or $800,000 mortgage.
++++++++++++++++++++++++++++++++++

Your predictions of the past seem OK…

What is your view now – buying a house now? Is purchasing a $1M fixer-upper at 3.5% 5-year fixed mortgage a good plan? Vs. how a balanced portfolio will perform over the next 10 years.

You had a good summary of what someone from the past would do with the knowledge of the future. So, what now?

#167 soost on 04.13.18 at 3:38 pm

I really am at a loss in figuring out what is happening in Toronto’s luxury segment. A lot of inventory sitting but not much price movements. Any insights or predictions?

#168 RL on 04.13.18 at 3:46 pm

This argument that borrowers are going to be stuck with their banks and taken advantage of when they renew/refinance – I’m not so sure? So B20 requires borrowers to qualify at the BoC rate +2%. But once the borrower qualifies, what’s to keep banks from competing with each other with promo rates to win that business. It’s not like the borrower actually *pays* that higher rate. So the only borrowers who might be stuck at their bank (although, remember, there are credit unions too) are those that can’t qualify under the new B20 rules, and I would be interested to know what percentage of borrowers that actually is. These would have to be borrowers who are pretty close to taking on a mortgage they can’t afford. Does anyone have stats on that?

#169 James on 04.13.18 at 4:18 pm

Michael Cohen, President Donald Trump’s personal attorney, has been “under criminal investigation” for months in New York because of his business dealings, the Justice Department said Friday.

#170 Mattl on 04.13.18 at 4:19 pm

Soggy – balanced ports have done well, buying the SP 500 has done real well and buying RE in Van or GTA has done insanely well. Leverage has allowed people to turn 50k downpayments into 500-700k tax free gains over the past decade. And , you get to live in it, and you are now ten years closer to never making another mortage payment.

Yes, not all markets have gone up, houses require a level of maintenance, and other assets have also benefited from the injection of cheap money into the economy. But RE has been an insane tax free wealth generator for lots of people in Canadas major markets. There is mainstream that would outperform the 22k I put into real estate in 2006. Leverage and free money is a beautiful thing and I feel bad for the folks that missed out, there is no math in the world that makes most homesin most markets in Canada a bad buy in 2008.

#171 Mark on 04.13.18 at 4:36 pm

“But once the borrower qualifies, what’s to keep banks from competing with each other with promo rates to win that business. “

Nothing keeps the banks from competing with each other. However, with declining equity, loans that were formerly sufficiently capitalized will, absent significant repayments into equity/principal, become undercapitalized. LTVs, instead of systemically falling as they have with rising RE prices up until the 2013 peak, will start to systemically rise with falling RE prices, even with ordinary principal repayments.

The net effect is that a lot of people, particularly at the higher LTVs, will be ‘trapped’ with their existing lender upon renewal. The effect of this ‘trapping’ being that the existing lender will offer a renewal at the ‘posted rate’ (or worse), instead of the deeply discounted rates that people have grown so accustomed to.

(although, remember, there are credit unions too) a

Credit unions aren’t exempt from the same fundamental rules of availability of capital, cost of capital, cost of borrowing, etc. If anything, due to the systemically higher cost of capital for credit unions, they will be even less of an option than the major banks. I wouldn’t look to the Credit Unions as being some ‘magic bullet’ against credit tightening. If anything, many Credit Unions are likely extremely fragile and their continued viability probably in question going forward given their metrics and relative lack of diversification.

#172 robert james on 04.13.18 at 4:39 pm

#164 Obedience Certificates on 04.13.18 at 3:11 pm I am hoping that “Pee Boy ” is the first pres. to leave the White House in handcuffs but just impeachment will be fine too..

#173 Mark on 04.13.18 at 5:05 pm

“But RE has been an insane tax free wealth generator for lots of people in Canadas major markets.”

Yes, but that’s in the past. Housing is now priced in Canada at 45X trailing earnings if you calculate it using the same math a corporate P/E ratio would be calculated. You can buy the TSX for a trailing P/E of roughly 14X and much higher historical growth rates in ‘earnings’ than housing. It logically follows that at some point in the cycle going forward, the relative valuations will invert.

If the TSX went to 45X earnings, perhaps accompanied by a mania in a specific sector, and housing went to, say, 14X earnings, you’d have quite a swath of wealth transferred from the homeowners to the stockowners. The ‘math’ works out to the TSX outperforming housing by a factor of nearly 1000%, ie: a mere typical 10% down-payment being enough to buy a house outright, in cash, once the reversion is complete. Similar to the situation in the 1990s when a typical downpayment in 1990, approximately 25% (CMHC was just for people on welfare back then), grew, invested properly, to be enough for an outright purchase in cash within the decade.

#174 SimplyPut7 on 04.13.18 at 5:06 pm

#167 soost on 04.13.18 at 3:38 pm

The speculators who built the luxury homes thought the GTA would be the next Vancouver, except Ontario is not running out of land that can be used to build homes and some of the homes were not built in the best neighbourhoods. Some speculators would buy an old home, tear it down and build a bigger home in it’s place. And ask for twice the price of the older homes listed in the area, and forget multi-millionaires want to live in areas with other multi-millionaires, not with working class families.

The idea of buying a limited supply of luxury housing (that always goes up in value) only works if there is a limited supply, not when there are 3,800 of homes listed for over $1.5 million in the GTA, and prices are decreasing. So far, the longer buyers wait, the better the quality of the home coming to market, asking less money than the homes listed the previous month wanted.

Unless these homes are in specific neighbourhoods in the GTA and these homes were bought with cash so there’s no worry about future mortgage renewals or rising interest rates, these speculators are bankrupt like the Mattamy homeowners, and just don’t know it yet.

#175 lost money? on 04.13.18 at 5:12 pm

Is the estimate on lost money people who actually bought and sold in a year?

If not, it is just paper losses.

If it is, and you are buying and selling within a year, that is the definition of a speculator (except for people who had unforeseen circumstances like a job move, divorce, or death). If it a speculator, I don’t care if you lose your shirt.

#176 Penny Henny on 04.13.18 at 5:22 pm

#159 Ace Goodheart on 04.13.18 at 2:44 pm
RE #155 Huh? on 04.13.18 at 2:11 pm

Hey Ace try saying it this way.
“I was talking off the cuff and the numbers that I was spewing were way off”
“Good for you Huh for catching my mistakes”
“My mistake everyone”

And one more thing Ace, you forgot to sign off with your tagline ” I am usually right”.
Man oh man, some people who comment on this blog are so full of themselves it’s un frickin believable!

#177 Stan Brooks on 04.13.18 at 5:47 pm

True that RE has yielded significant gains in the last decade or two in Vancouver and GTA and allowed for nice leverage of very small down-payments to result in significant 10, even 20 fold gains if you sell now/or at the peak.

No question about that.

There is also no question that bitcoin for example drove thousands of times more appreciation that Real Estate, i.e. better ‘investments existed.

There is a price to pay though for the RE becoming more expensive:

1. You realize leveraged profit only if you sell. Otherwise, if you don’t sell you only get a kick of living in an expensive house and feeling superior/the small dick syndrome that is explainable considering the cold weather.

2. Destruction of currency.

3. non retirement for almost everyone

4. destruction of the economy due to capital miss-allocations/chasing speculative quick gains vs. long term real economy investment, profit extraction vs. investment.

5. flight of talent away/who will ever be able to afford a home in frankly otherwise pretty shitty places.
Remember that when you can not find a doctor or service/trades man to do even simple but decent job that you require.

And in long term:
Don’t forget that 70 % of these jobs in Vancouver/GTA will be gone in 10 years due to automation.

It will probably (with very high likelihood) in a decade turn out to be much better idea to buy a home in rich people resorts vs. working class cities.

Many people, supported by unjustified hope for finding well paid jobs overestimate the expected outcome from investing in real estate in working class neighborhoods in long run.

Once this hope disappears, watch out.

#178 dan on 04.13.18 at 6:05 pm

Well, I have to correct some citizens of US asshole, here.
USA on they own defeated only Grenada. They were there against a company of Cubans and lost number of aircrafts there. USA is going down fast, this is chaos phase right now and chaos (western democracies) cannot win against dictatorship (China). And Hitler would win against western pussies if he wasn’t stupid enough to attack USSSR. Now take it to the bank.

#179 Ace Goodheart on 04.13.18 at 6:37 pm

RE: #176 Penny Henny on 04.13.18 at 5:22 pm

Thanks, I usually am right.

I don’t mind if you don’t believe me. I have been making money off of people who don’t believe me, for years now. It is actually better to have a healthy group who see things differently.

I see that the age of making money in real estate is now over, and will be so for at least ten years. However one golden age ushers in another.

For those who like to make money off of other people’s problems (they call this group of people “investors”) there will be as always some golden opportunities coming up.

Just stay out of housing.

Unless you are in Montreal.

I’m usually right (aren’t I annoying you right now?)

#180 Huh? on 04.14.18 at 1:13 am

166 PastThePeak on 04.13.18 at 3:30 pm
#155 Huh? on 04.13.18 at 2:11 pm

Would you prefer mortgage a $300,000 at 6% for the first five years then renewing at lower rates for the next 10 years or a $1000000 mortgage at 3% for the first 5 years and then rates slowly start to rise after that? And what if you were a cash buyer in 2003? You would be mortgage free buying a $400,000 home and today you have a $700,000 or $800,000 mortgage.
++++++++++++++++++++++++++++++++++

Your predictions of the past seem OK…

What is your view now – buying a house now? Is purchasing a $1M fixer-upper at 3.5% 5-year fixed mortgage a good plan? Vs. how a balanced portfolio will perform over the next 10 years.

You had a good summary of what someone from the past would do with the knowledge of the future. So, what now?

—————————-

All I wanted to say was that sideliners cannot claim victory or even come close to claiming victory just yet. I would like to think there is a huge correction ahead of us but we’ve been saying that for over a decade and truthfully I don’t have the first clue what the future holds.

But let’s not good to creative with our figures to claim that we were right about real estate in the GTA and the Lower Mainland since this blog began. In my book, there is nothing wrong with admitting that we were just plain wrong.

#181 SoggyShorts on 04.14.18 at 2:38 am

#170 Mattl on 04.13.18 at 4:19 pm
there is no math in the world that makes most homesin most markets in Canada a bad buy in 2008.
**********************
Are you sure? 75% of homes are not in the GTA or LM after all.

I can’t seem to find data for all 10 years, but here’s the last 5:
https://www.statista.com/statistics/587661/average-house-prices-canada-by-province/

Everywhere in Canada except Ontario, BC, and PEI were crap the last 5 years, and probably not much better the last 10. That’s “most” houses in “most” markets.

Even if the numbers are different specifically for 2008 purchases, so what? Almost every single stock pick was too, that’s what happens when a recession ends.

You mentioned a 50K downpayment turning into 500K.
A 3x leveraged ETF could have done that too, and better yet it could have done that in every single city in every part of Canada.

Unless your mortgage interest+ maintenance+ taxes+ realtor fees+ everything else was significantly cheaper than renting for those years, it’s just not that impressive a gain, and it would have been a loss in much of the country.