If you need any more evidence what Vancouver real estate can do to the human brain, just check out Brent Robert’s ride. The Surrey realtor not only bought a $256,000 Lamborghini Gallardo to tool around in, he then paid Jeremie and Teri Webber, of Sapphire Design, to cover it with sticky plastic and turn it into a rolling billboard for their house-flogging business.
Here’s how it looked yesterday when blog dog Don snapped this picture on a downtown street:
And here’s how it was when it left the Webber shop in Abbotsford, looking so hot and fine that it’s now immortalized on the company web site:
Now, I’m sure Brent earned it. But the sorta-paunchy, kinda-bald, semi-wrinklie Boomer realtor, who brags that he closes one house deal every day, isn’t exactly the typical Lambo owner. And it would probably be a way better chick magnet if it didn’t have a URL on the bumper and a phone number for a back window. But maybe back at the Royal LePage office that’s a total turn-on. Let’s not judge.
But are the days numbered for rock star realtors? True, sales and prices ticked up last month in Vancouver, as they did in Toronto, but there continue to be worrying signals this market is snorting fumes. Despite cheapo mortgage rates (variable loans are available for 2.5% or less and five-year money is just a point more) sales are running 17% below the five-year average, and ex-realtor-turned-watchdog Ross Kay estimates 2013 will finish with 100,000 fewer sales nationally than the record year of 2007.
But why have prices held in nosebleed territory? Kay says it’s all about a declining band of buyers chasing a shrinking number of listings. “It has been a very trying year for home buyers and September only further added pressure to the home buying experience as prices continued to rise disproportionate to historical norms,” he says. “To put it in perspective, in 2007, the peak year on record for resale homes sold, average prices increased 8.8% from January to September, while in 2013, average sale prices have increased 8.7% even with 100,000 fewer sales being recorded than in 2007. Similarly in 2012, 2011 and 2010 all years with stronger sales than 2013, the changes were 2.0%, 2.2% and 0.7% respectively.”
Why’s it different now?
Maybe it’s a housing fascination which has gripped the media and turned real estate into a mass cult. Every time prices rise, you can be sure that somewhere there’s a Global news anchor having a cow. Maybe it’s the real estate boards over-reporting sales, quietly revising numbers, allowing double-listings or publishing Frankenumbers which mask real trends. Or perhaps it’s that series of hikes in mortgage rates which jolted property virgins, while realtors whispered into their moist little ears, ‘Buy now, or buy never!’
Whatever it is, rest assured there are no economic fundamentals propping it up. Prices have climbed while incomes have not and debt’s exploded. More and more net worth is being shovelled into a single asset by mobs of people convinced they’ll get rich selling each other houses. By every measure, including price-to-rent or price-to-income ratios, we’re coming unglued from reality.
While the media meme is a housing market rocking like a parked Gallardo, the reality’s something else. Condos are in trouble. The top end is flaccid. New housing’s a mess. In fact the latest numbers out of the country’s biggest market are more pathetic than this sorry blog. New-build sales in the GTA so far in 2013 total just over 19,300, which is a 26% plunge from last year and an amazing 44% collapse from 2011. Condos? Don’t ask. So far this year ten thousand have changed hands, which is a drop of 50% from two years ago, and almost a third from last year.
No amount of lipstick will cover that. It’s a porker. Developers have already slashed their building plans for the year by 31%, which is not great news in a country where a quarter of the whole economy is now made up of real estate activity.
What’s it mean? In a word, risk. Buyers today are absorbing far more risk than those in years past as prices detach from fundamentals. It’s one reason why this blog yesterday gave you a dozen pointers on how to buy real estate, even when you know you shouldn’t.
Let’s hope Brent leased.
147 comments ↓
Dude I just finished posting on yesterday’s blog.
Bullish! I’m in the company that makes the tool that gets the tool into and out of his Gallardo.
http://www.prismmedical.ca/patient-floor-lifts.html
First
“More and more net worth is being shovelled into a single asset by mobs of people convinced they’ll get rich selling each other houses.”
Remind you of the Dutch Tulip Bulb smash?
Prisoners………
Off topic again but I feel like sharing, been a tough week for me.
Via the art and practice of creativity an individual can move to higher planes of spirituality, overall wellness and the felling of specialness. This is the key ingredient and secret sauce to being happy. And you don’t need to spell well to get there.
If one is always aware of the group, the gang, and always acting and behaving in a pleasing or even displeasing mannerisms, it leads to un happiness, un fulfillment, depression and all the bad things that go with it.
The worse thing a human can do is to try and fit in to the group or unified consensus.
Groups suck, they may evolve with good intentions but as always the most ruthless un creative alpha in sheep’s clothing eventually gets control of the herd and make the rules and everyone else ends up miserable, well I should not say everyone.
There are people out there that love being tail wagging obedient dogs, they are trained from birth, mom, dad, teacher, and preacher.
Now pretending to be a dog, and actually being a happy dog are two different things.
Breaking out of that mould and into the light is not an easy task, a belief system once set is like trying to get a PC behave like a Mac.
I have met many people who have hit rock bottom, and the most notable characteristic in my observations. Lack of personal creative expression void of judgment worries.
Happiest people you ever meet draw there own pictures and don’t care what anyone thinks.
I don’t care how high sellers price their houses and how much they think they deserve, I’m not buying it. Someone else can ruin their life making the mortgage payments from buying at the top, not me.
See you poor, misinformed in 30 years when your misery is over. Actually, I won’t see you because I’ll be too busy enjoying my life and disposable income while you can enjoy the asset that you’ve spent most of your adult life paying for. Hope it was worth it.
Thanks for today’s post Garth. A fresh breath of truth and reality in a crazy Canada which is only recreating the financial havoc of the housing collapses that have recently happened world wide. It will happen.
Reminds of 2 sayings I heard from TV interviews I saw of Warren Buffett. This is not verbatim, but easy enough to google if anyone is inclined to. Warren: “Leveraged RE has caused more bankruptcies than every other asset classes combined”. And : “Leverage is fun on the way up, but on the way down, not so much”.
Garth’s talking to us all continually about the action of being leveraged, or simply invested in any 1 asset class, is to be putting us in an extremely precarious/dangerous financial situation, is the truth. There is no exception. Act wisely, ignore the people who do not and you will do extremely well over time. Not always easy to ignore the ignorant, the fearful, and the greedy, but it will save your financial a$$ over your whole lifetime. Foreclosure and bankruptcy is not fun. Look at the many, many, millions of people world wide still suffering from foreclosure and bankruptcy right now. Freedom First.
What happened to the big bond crash guys? Wait until the end of the year, lower crappy bond yields and GIC rates.
They do this every 3-4 years. They cut rates 1.00% point and raise them at most 0.75% percentage point.
These bond yields and rates retreat again. Look at a chart or some timeline of every 5 years.
Rates on average at least 1.00% point lower than before. It is the oldest trick in the book.
A 148,000 U.S. jobs in September. Where are the 250,000 to 300,000 needed to just get back to population growth and cut the unemployment rate?
In the Alberta municipal elections yesterday, the real estate developers’ lobby didn’t succeed in stacking Calgary council with their slate. They tried to sneak their candidates through in stealth mode but unfortunately for them someone posted a smartphone video of one of their meetings. The developers knew Naheed Nenshi was unstoppable for Mayor (he was re-elected with 74% of the vote). However, the Mayor is only one vote out of 15 on City Council so they thought they could sandbag him from behind by getting a majority on council. Because they were exposed early in the campaign, Nenshi and like-minded councillors were able to campaign on the side of angels against endless urban sprawl. Da Boyz got one of their people elected despite outspending opponents hugely.
One of Calgary’s newest suburbs in the deep south is Seton. It is closer to Okotoks than downtown Calgary. We’ll annex Okotoks in about twenty years. Whoever buys a particleboard shack, pardon me, a house in Seton had better not be working downtown.
I can’t even begin to imagine how much Brent is paying for insurance haha.
Interesting how home prices are still going up, even around parts of Vancouver, when volume is way down relative to 2007 like you mentioned. I believe the main reason for the upward pressure is this long period of low interest rates, which facilitates 2 risky symptoms.
First, it makes the carrying cost of owning quite comparable to renting. So the current cost of financing a $300,000 condo for example, might still be cheaper than renting a comparable condo, depending on the size of the down payment. The financing cost will eventually go up, but people tend to think in the present unfortunately.
Second, retail investors don’t have a lot of other alternatives. Canadian stocks are at multi year highs, and US stocks are near all time highs. And some say the bond market might be in a bubble too.
I agree that home buyers now carry more risk than ever before. It’s just too bad that the same risk applies to many other asset classes as well. Ah well, best to just keep saving what we can and diversify :)
#5 Smoking Man
Whatever you are dealing with, I sincerely wish you the best.
Also, your post today, I could not have put it better. Thank you.
Media, poor research, writing articles for paid RE advertisers…definitely pumping RE, but not to blame. Just shame.
RE boards fudging and re fudging numbers for their own self interests. Definitely to blame. We can only hope that some form of regulation will be the result of all this.
I do hope that the gov’t wakes up at some point and regulates the RE boards info and/or releases. It is too bad they did not make changes earlier to cool the RE market, perhaps such as increasing the downpayment required or increasing the amount need down to avoid CMHC.
Now it is too late, too many owe too much, and earn too little. The low rates were needed for the sake of the economy, but something should have been done to stop people from blowing their brains out on debt.
Whats next….the gov’t eases on lending rules to pump up the RE market again when it starts to sink. Perhaps that would be easier that making changes to curb debt binging with the RE market, because that ship has sailed.
F failed act in a responsible manner to protect the financially illiterate from being goosed by the media, realtors, bankers offering cheap debt, themselves, in regards to the recent RE market…also to blame.
#8 Dean Mason – why worry about bonds when the interest earned is fully taxable with a negative net return?
Does that mean he can write off the $256,000 Lamborghini Gallardo as a business expense?
When fundamentals don’t make sense, then it’s foreign money moving in, this is Canadian Real Estate, and the US DOW. It’s that simple.
A similar house to ours, on our street in BWV, sold this week for just 4.5% more than we sold ours for 4.5 years ago. In other words, earning roughly what we would have got had we socked it away in a savings account at the bank.
Someone else we know bought a house in Mimico for “a steal” (list is “a steal”????). 30 viewings, theirs was the only offer.
Across from us in Cookiecutterville, the semi that has been on the market for more than three months and was recently reduced by 40K, sold for under asking – less than the neighbour next door paid for his house three years ago.
Doesn’t sound like a buoyant market to me.
Garth what do you think about Condos in downtown Toronto, financial district to be exact. A lot of people want to live there and rents are pretty high.
Now people are scared to buy condos because they may depreciate in price. At the same time builders are cancelling projects. So anyone who wants to live close to financial district will rent deriving up the rental prices. Doesn’t it make sense that rents will increase significantly where home price to rent ratio start to make sense or at least support the falling prices.
Note that I am unbiased as I don’t hold any RE. But my question is based on the fact that my friend rents 2 min walk away from union station. He pays 1600 rent because he got into lease 4 years ago…but a similar unit is going for 1900$ per month …so rent has increased a lot.
There’s a house here in Etobicoke that’s been For Sale since about February. The original price was $980k. It’s nothing special on a nothing-special street on a blah lot. It’s gone down to about $890k. This time the listing actually says on it: “Price reflects upgrades”.
Lol basically they filled up a plain house with marble and shiny things and now they don’t want to lower the price. I hope it sits forever.
I think the media attention on the housing obsession has been eclipsed by our lying Prime Minister, who said he knew nothing about the expense cheque to Duffy, when Duffy has said on camera that he was in a meeting discussing the issue. Unbelievable that Harpo can continue to refuse to answer basic questions on the issue. His conduct has been disgraceful.
Lack of new building is just gonna push prices higher. There is already a shortage in supply. Demand is still there.
Kilt.
Let’s hope that sanity prevails and a cooling begins.
The way irrationality grips this market, ………..I fear Brent will graduate from the Gallardo to the Murchielargo and we’ll all still be waiting for a correction LOL.
Was anyone looking at the new areas in Oakville (Dundas/6th Line)? We were considering it but the pricing is beyond belief. 40 foot lots starting at 800K, not sure if people have gone mad or is it just me.
I received a leaflet in the mail regarding Canary District (canarydistrict.com). Here is what it says:
Buying a Home is as Easy as 1-2-3!
1. Pay only $1,000/month until you reach 5% of the purchase price.
2. Apply for a 10% down payment loan from the Government of Ontario.
3. Congratulations, you can now be a proud new homeowner!
Garth, apart from the obviously predatory lending statement in the step 1, what can you say about the step 2?
Garth, Grant’s Interest Rate Observer by Jim Grant put forth an excellent article about the velocity of money and how it’s affected by interest rates. The article explains the “sticky house price” problem of which you speak. I can’t do justice with a synopsis of the article, but I absolutely understand why prices aren’t failing…yet.
Whatever it is, rest assured there are no economic fundamentals propping it up. Prices have climbed while incomes have not and debt’s exploded. More and more net worth is being shovelled into a single asset by mobs of people convinced they’ll get rich selling each other houses.
Kinda sounds like the DJIA, Nasdaq and S & P 500, no?
Nope. We know why that is. — Garth
Garth
The same thing is occurring in the stock markets. Liquidity is sloshing around all over the place and debt is being thrown around like beers as a frat party. Irrational exuberance mixed with ignoring fundamentals was the same story in 2007.
The hangover is coming. That’s why instead of acquiring debt people should focus on paying it off.
Just wait for the first major industry bankruptcy, maybe legion, maybe fortress. As the debts go bad liquidity will dry up. Then all hell breaks loose.
Mr. R.
Correction. Pic was taken by Curtis, who forwarded it to Don, who forwarded it to Garth. lol
#12 “RE boards fudging and re fudging numbers for their own self interests. Definitely to blame. We can only hope that some form of regulation will be the result of all this.
I do hope that the gov’t wakes up at some point and regulates the RE boards info and/or releases. It is too bad they did not make changes earlier to cool the RE market, perhaps such as increasing the downpayment required or increasing the amount need down to avoid CMHC”
I could not agree more with the above post. When the worm turns the blame game will begin. The public will blame the government, who will turn on the real estate cartel, who will turn on the banks and cmhc, who will run down their rabbit holes because they aren’t allowed to tell the truth. And the truth lies in greed, conspicuous consumption, and the advertising industry who so successfully convinces people that they are nobody without granite countertops.
They all play a part. But all those lining up to point the finger of blame had better look hard into the mirror.
And then there is Garth, playing the part of Moses, parting the Red Sea, trying to save as many souls as want to be saved. I am right here with you, Garth. Amen.
I’m assuming Mr Lambo is writing at least some of the expenses by plastering it with his company info – still incredibly tacky.
If he had bought in Phoenix in 2010 he could have bought two nice homes for the price of the car.
The latest stats from the area show median sales prices up 20-25% from a year ago. Even with the increases, in our neighbourhood a SFH on 1/4 acre lot is not much more than half of a similar SFH in Kelowna. Maybe $ 225K here, at least $ 425K up north.
More importantly… HD sales are way up!
http://www.azcentral.com/business/news/free/20131022harley-davidson-profit-jumps-percent.html
From the 34C heat of the desert, patient as ever…
Cranky –
Sounds like my neighborhood where I rent..
My all time fav is the scam that Minto has going in Ottawa
PDF link
http://www.minto.com/doc/mg/home/ottawa/LP2100-Rental_Rewards_Sheet_cropped.pdf
Rental Rewards..
wow..tally up the big numbers!
The minto development my friend lives in is filled with “New CDN” families that park 32 cars on the street while 5 full families live inside.
Had a “BBQ” in his “Backyard”
Later that night and a few beers in he says.. go look in that neighbors window over there…
NO NO..LIKE DO IT…
Lights are low in the place..so I walk up the grass a bit and peak in.. he is yelling from across the street..
“I told you!”
3 Beds in the “front living room”
Welcome to Barrhaven or as the folks call it now.. BanglaHaven or ChinHaven
These are liberal people..mixed marriage couples..that laugh and cry at the same time knowing they own a postage stamp/cookie cutter across the street from a refugee camp.
So ya..Sign me up..Ill take the rental bonus and no parking on my street
Hi Garth, what bond etf do you prefer to stuff away in a portfolio right now. I’m trying to Do that thing your always talking about. 60% equity & 40% fixed
Your advice is appreciated.
1000 real estate licenses less in the last two years in Quebec.
http://blogues.lapresse.ca/lapresseaffaires/immobilier/2013/10/22/ecremage-chez-les-courtiers/
#11 Freedom First on 10.22.13 at 9:09 pm
#5 Smoking Man
Whatever you are dealing with, I sincerely wish to you the best.
Also, your post today, I could not have put it better. Thank you.
………………………………………………………
Thank you and It’s all going work out well.
Some one I care about, who played by the rules their entire life, never lied, or cheated. Un-natural kindness to fellow man, Would stand up do wrong doers ferociously and is loved by all that know him.
He had a gift, and amazing creativity and talent. He played the game all in and all out.
An unfortunate event took place just at the time his metaphoric book was going to be a best seller.
In an instant he lost the keyboard, the contract and his Identity.
What was left was some one in extreme physical and emotional pain. And rather than shake it off, rebrand and move on, he found great comfort in the remedy his handlers exposed him to. That wonderful comfort lead to more comfort. Floating on a cloud comfort.
5 years later with this well hidden secret, he made a choice, he came clean and asked for help.
One of the darkest and happiest days of my life.
Will be All good going forward.
#10 Liquid
Interest rates aren’t that low. We are at 2010 levels
Nov 2010 3.5% 5 year
April 09 3.65% 5 year
Also we had 35 year amor rates during those years.
Prices if directly related to interest rates should be declining to 2010 price levels.
Unfortunately for all those hoping for a crash what you needed was tapering to end soon it would have raised fixed interest rates another quarter point or half and that would have brought rates to 2004 levels (4.2%)
Prices seem to be moving suddenly in North Nanaimo. It is an upscale area with beautiful views over the water to the mainland mountains with prices ranging from $400K to $1MM on the water. Most listings are in the $400-650 range compared with the overall Nanaimo average of about $350K. Last year there were few sales and even fewer over $450. This year the market has been steadier all across the price range. Buyers are middle-aged or retired.
I have been monitoring SFH prices in this area for 3 years. Most previous sales have closed very close to appraised value. About two months ago, I noticed sellers starting to list at $50-60K above appraisal. I thought they were dreaming but suddenly sales are closing at these prices and I just saw one that closed $20K over asking. The only explanation I can think of is HAM (Hot Alberta Money) as direct flights from Calgary have just begun. Does anyone have any other thoughts on the matter?
And, He gets to expense the Lambo as advertising.
What a terrible way to treat a Gallardo. Like slapping a bumper sticker that says “Honk if you love Leonardo!” on a print of the Mona Lisa.
At my workplace, banks are calling to get proof that those applying for a mortgage did indeed use their own RRSP funds and did not obtain funds from a loan elsewhere. Restrictions are tightening (Well perhaps not for the sidewalk brokers we saw last week)
Those using the HBP are, for the most part, sucking everything they have out of their RRSP for a down payment. It’s a rare thing that they also have a DB plan to fund retirement. While of course the loan will have to be paid back over 15 years, it’s still only getting one’s retirement fund back to zero. While the program of course is not what I’m criticizing, I’m nervous watching people take 3-7k out for a down payment, leaving a zero balance.
Most of what I hear is call after call to cash out of every possible investment, and paying taxes and fees to do so.
In addition, the calls for divorce division were intense this summer. Perhaps some home sales are simply due to one home families dividing in two, creating a slight increase in housing requirements? Stats Can doesn’t seem to be publishing divorce rates any longer but it might be worth examining the correlation between out of control debt levels, divorce and the unemployment rate over a calendar year. I confirmed with colleagues that this observation was not just my own.
In short, there is a lot of anger and stress out there and it’s entirely changed my way of thinking about money, investing and real estate. It’s been really sad to witness.
I’ve been listening and reading quietly for months but thought it was time to finally voice my agreement.
“Kay says it’s all about a declining band of buyers chasing a shrinking number of listings.”
Does volume always precede price? Hmmm…
#34 Mortgage Man
Unfortunately for all those hoping for a crash what you needed was tapering to end soon it would have raised fixed interest rates another quarter point or half and that would have brought rates to 2004 levels
It won't be mortgage payments that sends many households into arrears or default, rather everything else going up in price while their wages are flat, or declining in real terms by my calculations.
Some just never get it.
#5 Smoking Man
Was wondering where you went! You’re usually SO vocal, LOL!
I have to say, I totally agree with this statement: “Happiest people you ever meet draw their own pictures and don’t care what anyone thinks.”
But honestly, Smoking Man, since when do you really give a rat’s a$$ about what other people think about you?
Isn’t this the guy that goes out of his way not to live near, boat, or hang out with high rollers because they are often pretentious fakes and/or snobs? The guy who likes to blend in with real people, even if they’re missing teeth?
Personally, I think fakes and snobs come from all walks of life, and that you can meet quality people in any neighbourhood and social or income class, but like you, I prefer hanging out with people who don’t need to prove themselves by flaunting excess or grandiose.
You don’t have to let anyone stifle your creativity in this life. But it’s always a good idea to give people a fair chance, even if they seem like overly alpha tyrants. They might not be as bad as you think, and you may actually learn something from them if you manage not to offend them. Trust me, everyone has something of value to bring to the table.
#10 Liquid – Brent is paying about $1,000 per month if he has full coverage on the car. ICBC has special rates for exotic cars in BC . If Brent has no cash he can assume all the risks : buy basic insurance, put a plate on the ride for about $140 a month. Most folks with exotic cars drive with minimum insurance, especially if they have more than one.
“New-build sales in the GTA so far in 2013 total just over 19,300, which is a 26% plunge from last year and an amazing 44% collapse from 2011.”
Which, under current conditions, would tend to make prices for existing SFHs rise. Still. Not happy about it. Just saying.
“It won’t be mortgage payments that sends many households into arrears or default, rather everything else going up in price while their wages are flat, or declining in real terms by my calculations.”
CW, you’re a smart guy. You know that people would sacrifice a great deal in the face of rising costs before giving up their homes. And given how much the average middle-class family spends on ‘junk’ these days, there is a lot of room for sacrifice. From the looks of it, I’d say it could very well take a severe recession with massive lay-offs possibly combined with much higher interest rates––as per the early 1990’s––before defaults really climb.
#19 Timmy
AGREED!
Garth,
I’ve been reading your blog for almost 2 years now. At the time, we were house hunting for a larger home. To begin with, it was exciting but the fun soon wore off. Nothing seemed to satisfy the wife and kids. Then after reading your blog it became apparent to me that trading up was a dumb idea. We have a nice little bungalow that we bought in the early 90s when rates were high and prices were low. We managed to pay it off in about 4 years and have been squirreling away money into savings ever since. After reading your blog for a few months, I decided to put the house purchas on hold and start investing, as you’ve suggested. We setup a balanced porfolio with ETFs in U.S., Canadian and international Equities, REITs and Preferred shares. It’s being doing quite well. The funny thing is that I really don’t much care for this “big house thing” anymore. I would much rather have a big porfolio churning out free money! Thanks for your efforts. In spite of all the negative flak you seem to get, there are a few of us who really appreciate your help. Keep up the good work.
This post makes me feel great, elated in fact.
Most of my life I have worried about my penis being to small but now I see that a realtor in Vancouver has a dick that is obviously microscopic, hence the Lamborgini.
Yes Brent Roberts, also known as the “house pimp” of Surrey.
My brother was going to deal with him, but did not care for his mannerisms. I suppose if you have a lambo though who cares about manners!
This is the stuff that create epic corrections. All the RE talk on buying yesterday bringing out many proud voices of the unknowing contrasted with the headline we never saw.
“New home sales hit record low at end of Q3”
Less jobs, mortgage brokers playing candy crush, bank stocks way up as shorts cover daily and rates at record lows. Add that its almost too late to sell. In many areas it’s been that way for a while.
Oh record debt levels and barbers that own four condos.
It’s cookies and striped candy for everyone.
47
NOW THAT WAS FUNNY
Hurry, buy now!
http://victoriarealestateexpertblog.com/2013/10/15/foreclosures/
#31 Invest4life
If I have to repeat myself, I will. By the way, the book sells for around $20.
#43 Invest4life
First, if you know and follow Garth at all, he doesn’t recommend individual securities. Not for free, anyways.
Second, he doesn’t recommend investing in just one type of bond security or fund. To “do that thing” right, you’ve got to diversify.
If you can’t figure it out yourself, you can pay someone 1% until you get some experience (but you’ll need upwards of 6 figures to invest). Go back and check his posts on how to find an advisor.
If you don’t have that much, go back and read some of his posts on asset allocation/portfolio weightings, rebalancing, and non-registered vs registered accounts, so you know where to stockpile each type of asset class to minimize your tax burden.
Read these posts to start:
http://www.greaterfool.ca/2012/12/12/the-advisor/
http://www.greaterfool.ca/2013/06/17/emotional-baggage/
http://www.greaterfool.ca/2011/02/25/geezernomics/
http://www.greaterfool.ca/2010/11/26/how-to-invest-2/
Then go back and read some more posts, and take notes. Then buy Money Road, it’s probably well worth the small “investment.”
What a weirdo, might as well of wrapped a Fiero and been eligible for collector plates. I hope he has good contacts with the banks as foreclosures are definitely on the rise here in BC, by the time it hits the news and becomes mainstream, it’ll be too late, she’ll be all over but the crying. Sell now and buy in 2-3 yrs for way less
#35 Andrew Woburn
Nanaimo and upscale in the same sentence?
No more cocaine, crime and seasonal workers?
“The only explanation I can think of is HAM (Hot Alberta Money) as direct flights from Calgary have just begun. Does anyone have any other thoughts on the matter?”
There is only one flight a day.. and it’s a prop-job, not a 737. Besides, what kind of delusional Albertan would want to own a house in dreary damp Nanaimo.
#38 Callgirl
Welcome to the club and thanks for the insights! Just what I had suspected.
Even Brad J Lamb doesn’t self-promote on his cars… what the heck is wrong with this realtor, ruining a car like that.
Buy a Smart Car or a Beetle or a f***in Ford Flex if you want to decorate it with novelty advertising.
@ #31 Invest4life on 10.22.13 at 10:21 pm
Hi Garth, what bond etf do you prefer to stuff away in a portfolio right now. I’m trying to Do that thing your always talking about. 60% equity & 40% fixed
Your advice is appreciated.
—————————-
Bond ETFs may be riskier than individual bonds these days (since you can’t just wait for the bond to mature and get the principal back). On the flipside: for retail investors, the rates on individual bonds are skewed… yet another reason to work with an advisor (they can get you better rates on the same bonds).
Think about it carefully, what does a realtor actually do to earn their commission? Once you sign the papers, the list it on the MLS and the local RE channel and put the listing up on their realtor network. Then they might have an open house. Thats it. You could probably get about the same exposure advertising in the classifieds.
But it is also one of the few safe professions. I mean who wants to sell their home themselves. That would mean taking calls from losers with no money and having strangers walk through your house everyday. Its just one of those things people do not want to do themselves.
When the CEO of Netflix comes out and says his stock is a bubble and way too expensive then you know the game is up. Hot money chasing overpriced stocks is like the hot money chasing overpriced houses. We all know how the former ended last time around.
#35 Andrew Woburn
They wanna put the clipper style fast passenger ferry back from downtown Vancouver to Nanaimo. Someone wants to cash in?
Thank You Garth
The word ” Fundamentals” reminds me too of #4 #15 the Dutch tulip event!
The “fundamentals” of real estate are marketed as being “different” here in BC, but I think we all smell Tulips!
Had a neat discussion with a risk management client of mine from “**BC ” today, (Large Banks name withheld to protect me…) He told me they had just been in a large process of running numbers for a 13x Stress test for Default on Canadian mortgages. It’s under 1.5ish now. Ummm, that’s right…just a random stress test, for laughs, and he suggested they thought the target number in the real future to be 15% default stress! Didn’t hear it from me, don’t quote me.
Ps: insurance on a lambo is about $10,000 per year in BC, you “apply” for it, and have a $10,000-$20,000 deductible ! Are his clients BUDDing Gardeners?
This is one way that Brent got some of that lambo cash.
The crazy thing, this is only what they were able to catch him with. I can only imagine what he has been able to get away with in his real estate business.
http://www.recbc.ca/2013/03/brent-stephen-roberts-royal-lepage-brent-roberts-realty-surrey/
Compliments to Garth.
The last 2 days of posts have revealed a great deal about sentiment towards this asset class.
Your posts and people sharing their thoughts may have called the turn this week.
Before this I was going to give the credit to century 21.
I have to balance this with my feelings on the societal costs that anecdotally appear today in Callgirls post. There is a lot of blame to share here but unfortunately families will be hurt the most.
Victoria house foreclosures at 15-20% ! Wow, the media missed the boat on this one in spades, but the advertisers wouldn’t be too thrilled would they ? This agent is one of the better ones in Victoria.
http://victoriarealestateexpertblog.com/2013/10/15/foreclosures/
Interview half way thru.
http://www.cfax1070.com/Media/CFAX-Podcasts/Frank-Stanford/October-22-2013-9am
Received a mailing in “My Hood” today from a “Couple” who are full service of realtors.
Will sell your home for “$999”. There was a CYA proviso regarding the Commission from the purchasing Realtor.
This was from one of the Larger Realtor Companies which I thought was surprising….
Perhaps “Times are a changin”
…”rocking like a parked Gallardo…”…. HonGT
Trust me on this, AuldPol – but the ‘rocking’ would be WayMoreFun in a ClassicVWBeetle [please don’t ask… but yes, I do know].
Oh! I almost forgot… Speaking of which [sorry about this, LamboBoyz – but you really ought to know]:…
http://en.wikipedia.org/wiki/Lamborghini
PS: In LAX the PropertyGuyz drive these – more room for Buyers… among other things…
http://www.themotorreport.com.au/content/image/2/0/2014_maserati_quattroporte_overseas_01-1205.jpg
I know I’m going to regret this… but… [PunchLine @ 03:24, after which – it will all make sense]
http://youtu.be/KajqgEG1PY4
BonusZen:
http://youtu.be/Xz8A3LZbzZA
#19 timmy
Thanks for bringing this up. The Duffy/Harper thing is reminiscent of a wonderful scene in the 1970’s BBC production of “I Claudius”.
The Roman emperor Tiberius had given one of his henchmen clear instruction and permission to poison a rival. This was written in letters that bore the emperor’s seal. Later, this execution turned out to be highly unpopular among the general population and they screamed for revenge.
Tiberius decided to let the henchman take the rap by disavowing authorization for the killing. Although the letters were proof Tiberius’ complicity the seal of the emperor made them privileged and therefore not subject to disclosure under pain of death.
The henchman was sent to trial but chose to bring the letters with him. He was discretely reminded by his council that he could not read them in court. Said he:
“No matter. It is enough that I keep them by my side. The jury will be well aware of their content”
9 Dale – Where will people moving to Calgary live? Please
state the preferred solution and give your reasons. Also could you tell us what type of housing you currently live in and do you own or rent?
November 1st is fast approaching. How will the “sell in May and go away”-ers do this year?
To #13 Old Man
Earning 4.34% in TFSA’s is not a negative return. RRSP’s are 0% taxed on the first $11,000 federally and $9,300 provincially in Ontario.
RRSP’s are taxed at most 21% on the from $11,000 to $43,000 federally and $9,300 to $38,000 provincially in Ontario.
RESP’s are taxed at almost 0% today on the first $11,000 federally and $9,300 a year provincially in Ontario.
#17 Ray
First, the projects being cancelled have not yet gotten off the ground. Utterly irrelevant to prices today. Many are already under way, there is still very significant inventory under construction and coming online over the next 2-4 years.
Second, I’d like a more reliable source for rents than “some unit is going for” anecdotes, whatever that means, whatever the source (don’t say Craigslist, the home of wishful landlord thinking, where stale listings are put out to pasture). A rental index or a survey would be handy. I don’t doubt rents are high, if incomes are there to match. This is how real estate is supposed to work. High incomes, high prices. In TO, even with supposed crazy high rents, you’re still hard pressed to find an investment-worthy condo that is not the size of a postage stamp (as square footage decreases, rental returns improve markedly).
Finally, the extent of “shadow” inventory and vacant units is unknown. Speculators who were hoping for a quick flip are finding themselves with unsellable condos, which eventually find their way into the rental pool. With the 10s of thousands completing, the situation will not get any better.
The pattern of real estate deflations is well documented. Lots of units enter the resale and rental markets, driving prices down. People move in with family, etc, household formation slows down as the economy shrinks and is not able to support the expansion, and units under construction complete and go wanting for occupants. Eventually trends reverse. Prices fall to a level supported by rents and incomes, and investors begin to cherry-pick inventory. And a new housing boom begins, as housing shortages, real and speculative, start to drive prices up again.
Rinse, repeat.
Hey look, it doesn’t always go up, it’s cyclical! Shocking.
#54 Cici on 10.22.13 at 11:35 pm
Nanaimo and upscale in the same sentence? No more cocaine, crime and seasonal workers?
=======================================LSounds like you haven’t been here for 20 years. North Nanaimo is not old industrial Nanaimo. It’s a newer area, more like Parksville, with hillside ocean views that rival West Vancouver. Most people never see it, they just power through the ugly commercial district on their way to Tofino. That’s like driving down Kingsway in Vancouver and thinking you’ve seen the city.
===================================================================
#55 A Yank in BC on 10.22.13 at 11:37 pm
Besides, what kind of delusional Albertan would want to own a house in dreary damp Nanaimo.
===================================
Nanaimo has a better climate than Victoria. Half of my neighbours are refugees from Alberta same as in Qualicum where the only reason the provincial Liberals won a seat was the right wing Alberta transplants. We like to watch whales, dolphins, eagles and cruise ships from our waterfront decks and watch the sun set over the islands and mountains. We are ten minutes away from major shopping centres and a large hospital in a city of 100,000 people with one of the lowest unemployment rates in BC. When we get bored with this we can walk some of the most beautiful parks in BC, hop the ferry to Vancouver or drive two hours to Victoria, Tofino or Courtenay or we could go skiing at Mt Washington. We love our little delusions. Please keep telling people not to come.
I’m sure someone has already posted this, but just in case …
http://www.cbc.ca/news/canada/gen-y-struggles-in-expensive-housing-rental-market-1.2102109
The comment section is particularly interesting.
@ #34 Mortgage Man
That’s a good point. I’m surprised the slashing of the 35 year amortization didn’t have a larger impact on prices. Although 5 year fixed mortgage rates have been falling since 2009 according to the Canadian Association of Accredited Mortgage Professionals, we have recently seen an increase over the last few months. I would say we’re at around the 2011/2012 levels now, but if the short term momentum continues, the rate could easily reach 3.5% again :)
http://www.ratehub.ca/5-year-fixed-mortgage-rate-history (bottom chart)
@ #42 Joe
Thanks! I live in BC and I didn’t even know ICBC offered that option :)
Hey, all you Stephen Hawkings wannabes! The market volitity is because of the advent of condos. In arcitechual terms, they’re a relatively new form of living space. Ever see them before 1950? They are so many now pop up, in a short time and designed for short term living, people have no emotional connection. People trying to get on the property ladder, divorcees, or never-married only occupy these spaces. It creates turn over, skews the numbers. The only number you need to worry about is the SFH. They’re great places to rent, if you fall into one of those catergories mentioned above, but a SFH home, offers a little more emotional anchors that stats don’t justify (Some handsome young lad has continually quoted that average familes move every 7 years? I can dress up those stats like a guy from Barrie spending the weekend in Toronto on Halloween.)
Like I said, condos will be the new slums. Oh, and I also said I’ll be at the Keg this Friday. “Can I buy you a beverage?”
http://www.youtube.com/watch?v=Mb_y4agvt_g
Smoking Man:
Here is your answer, dude.
http://dudeism.com/
The Religion of Dudeism:
http://www.youtube.com/watch?v=2kL_cm7UOAo
Follow the Middle Path of the Dudely Lama.
#33 Smoking Man
The person you care about. Let them know they will be ok and that recovery is for everyone. I consider myself spiritual, not religious, and I do pray, as I have already for you and the person you care about. There is lots of people like Garth, people who actually care. I am also one, also I know that Garth can also see the people who use and abuse, as he publicly outs them. What a great blog. Special. #1, like the award at the top says.
Real estate agents go to university for 8 years right? I mean that’s why they make so much money that they can afford $250,000 lambos, right?
http://www.youtube.com/watch?feature=player_detailpage&v=Pe5lFPoyPXY
Stefan Molyneux on why home ownership is not an investment.
#79 Freedom First on 10.23.13 at 5:41 am
Speaking of Garth, would have loved to be a fly on the wall in his living room yesterday when all hell broke lose on TV.
The emperor outed, Duffy Wallen, and the other guy, say it like it is.
Garth probably formed a grim, a smirk, thought about adding his two cents on the next post. But decided serves you right control freak.
Feeling bad for his buddy F.
Hey, if Brent Roberts can afford that Lamborghini, or even if he can’t , I’m happy for him. After all ; envy is one of the 7 deadly sins!
Now if he gets into financial trouble, and asks the government to help him with his car payments.. now that’s a different story
#78 Steve French on 10.23.13 at 5:30 am
Smoking Man:Here is your answer, dude.http://dudeism.com/
…………….
Live it, I’m signing up………..
40 Canadian Watchdog
My point was the cost of new people borrowing money not the cost of renewing. When you factor in the new amor rate it is the same as it was around 2010.
Those who renew will still get a cheaper rate and have a smaller principle. The 2009 5 year fixed rate was around 3.6%.
Also when renewing a half point rise in your mortgage rate will NOT make your higher because princple should be lower. Use some free online mortgage calculators.
Your arrears graph is more like a unemployment graph.
W2633484
Initial asking price: 3189000
Relisted for 2599000
DOM 191
Sold for 2090000
That is 66% of the initial asking price. I guess the magic 888 has changed to the devilish 66
Not all Canadian banks are systemically TBTF; which begs the questions:
Why do bankers, who are overly focused on their own self serving stock valuations, having little problem sleeping at night?
Is it due to their total disregard of recommendations from their Risk Management Teams; simply because global liquidity flows continue to eye Canada as a darling of semi – safe haven status?
Or, have the RMTs also been lulled into a false sense of security?…
#85 Mortgage Man — “Also when renewing a half point rise in your mortgage rate will NOT make your higher because princple should be lower. Use some free online mortgage calculators.”
If you renew at a higher rate, your payment WILL be higher. You seem to be confusing (deliberately or otherwise) renewing with a term extension refinance. That’s only available to people with more than 20% equity and, for most lenders, fewer than 25 years to go on their original amortization schedule. And of course it means they’ll be paying the mortgage for longer. Depending on the debtor, the creditor and the collateral, this is either “a cash flow management solution for well-qualified borrowers” or “extend and pretend.”
#73 Devore
Well there is no pricing index for condos in financial district in Toronto. But given I have been looking to rent for some time now, the rent is creeping up. Last year lots of 1 bedroom were 1500, now similar ones are for 1600-1700.
I am just saying that US went through price adjustment as well but Manhattan barely felt it. There was this article in NYtimes which mentioned that rental prices actually skyrocketed there after the overall house prices fell because no one was building anymore and people still wanted to live there. So what I am thinking is that condos 5-10 min walk from financial district in Toronto may experience something similar where rents may skyrocket (in 4-5 years) because people want to move in and there is no more supply coming online.
Just want to see if my logic makes sense? I am obviously not looking to buy but discussion about it should be good. Garth you want to write about it sometime?
Re yesterday’s blog about Jim and other guys bullied by their wives or girlfriends into buying a house. You uxors are whipped as an overpriced cappuccino. Ain’t no good enough to go into debt up to your eyeballs for. Pathetic.
Wow didn’t expect the BoC to drop its tightening bias. Shocker.
So we’re in for the BoC overnight rate at 1% until…2015 or so? Welcome to Japanada.
1.6% growth rate for 2013 and not much better for 2014 and 2015. Better flip eachother some more houses!
Didn’t see this coming…..will be decades….just like Japan. Deny it all we want, but this is the facts and as the weeks turn to months turn to years…well.
“The Bank of Canada is abruptly abandoning an explicit warning that its key interest rate is headed higher in the face of a much gloomier economic outlook.
Cautioning that Canada is likely to grow much more slowly than it thought in the summer, the central bank now acknowledges that its next move is just as likely to be a rate cut, as an increase.”
Yes, CUT.
I have twice now seen downtown Toronto condos that had a “price change” where the price went UP instead of down. Most recent one being C2745459, which was initially listed for $425K but is now $430K. What’s up with that?
Sounds like RE in England up 10%, Carney already working his magic.
If I’m a client and my contractor shows up in a Lamborghini, my first thought is I’m paying him too much.
“Whatever it is, rest assured there are no economic fundamentals propping it up.” I don’t know about that, Garth. It seems to me the new economy of the Western world is all about propping up or creating bubbles — in every sector, but real estate is a particular fave.
Temporary stimulus is not an economic fundamental. — Garth
Clicked on Global BC this am (I like mindless drivel while waking up) back to back ads appeared…….
1st: Condo development at 1st and Quebec flogging the dtown lifestyle ( currently has 6 cranes, and apparently few purchasers?)
2nd ad: Bankruptcy assistance………….
seeing many incentives for half completed condo’s in the LM local Fishwrapper. ….. bad things are percolating below the surface on the delusional wet coast.
#89 Ray on 10.23.13 at 10:07 am
Please never compare Toronto to Manhattan, ever. I mean that, it really makes anyone who does it sound ridiculous. And I love Toronto. But Manhattan is not a comparable city by any measure.
You are kidding right?
Posted as sold today in 416+905
Sold under:72
Sold over:4
Sold for asking:5
C2587168
318800
reduced to 269800
sold for 260000.0
82%
150DOM
W2742361
358800
reduced to 309900
sold for 305000.0
85% of asking
157DOM
Look at those interest rates drop!
US 10 year treasury pounded below 2.5%, and the chart says its going back to 2.2 at least, maybe 2.0 as the strength of the global economy has been greatly exaggerated.
Still a terrible time to buy a house, but a good time to buy Canadian REITS, or US MREITS for that matter, that benefit from lower interest rates.
Boomers dreaming of a nice safe 5% GIC ever again in their lifetimes can probably go back to sleep.
BOC is telling us today what is the next.
Not exactly. It never does deal in specifics. — Garth
#89 Ray on 10.23.13 at 10:07 am
“Just want to see if my logic makes sense? I am obviously not looking to buy but discussion about it should be good. Garth you want to write about it sometime?”
Hi Ray,
Let’s look at it backwards from my perspective, a part-time landlord. As a rule of thumb, I want minimum 8%-10% rent to price from a property that I might buy. Since this is a condo, there are condo fees that eat into my profit, so I want minimum 10%.
1900 a month equals 22,800 a year, divided by 10% equals $228,000 asking price. That’s for a rental ready property with no repairs required, and the condo fees better be reasonable.
Any asking price higher than that, I wouldn’t even dig further into the property.
What are the asking prices for properties in this district? Are the landlords here serious about the job, or are they ‘investors’ who should have bought REITs but are now stuck with cash flow negative holdings?
#97 Toronto_CA
Please never compare Toronto to Manhattan, ever.
****************
Sure, no comparison directly however Toronto is Canada’s Manhattan.
There’s a constant rain cloud of Money over Toronto, it’s just the nature of economics for Canada.
#88 Ralph Cramdown
No!
Lets your mortgage was 500K in 2009 @ 3.65%-30y your monthly cost is $2280 – five years later your principal would be 450K.
Plug that in this formula 450K @ 4.2% 30y is ($2200 per month)
that a half a percent increase in your mortgage and the monthly cost is still less
For a crash you will need a spike in interest rates or unemployment
#86 – Where on earth are you referring to?????
Bank of Canada just said NO INTEREST RATE HIKES. Economists have pushed the date back to 2016.
Then they will push it back even further.
No correction happening anytime soon
Just to clarify. That is a pre-lp gallardo. So probably an 08 or older. So if it is the really old ones you can probably get them for 80k to 90k. So while it isnt cheap it really isnt that expensive. This would make sense as to why he would vinyl wrap so much crap on it. I imagine his own car would be much nicer…this is probably to impress the laymen and sucker them in as it still looks reasonably exotic.
Comment @ # 96-
“Temporary stimulus is not an economic fundamental”
Except, of course, when the U.S. Fed is doing it, right Garth?
Yesterday Canada skills shortage a myth
http://www.ctvnews.ca/mobile/business/labour-and-skills-shortages-a-myth-td-economists-say-1.1507463
Today the government is giving 472 Irish permanent residency
http://www.irishexaminer.com/ireland/canadian-unions-slam-irish-recruitment-drive-247038.html
A modern day slave trade to sell more Canadian homes?
“But Manhattan is not a comparable city by any measure”
——————————————-
nationally each is; largest city, financial center, cultural center, retail center , etc..
very similar in terms of it’s position/relation to it’s nation.
both are a grim prospect to most any west coaster :(
…..
and how ’bout them rates – i agree with the japanada comment – and usa is no better – QE goes up not down , it’s getting weird…like an addict, the markets are becoming totally dependant and need their fix just to be ‘normal’
…………
however the sales/prices/infill const goes on full speed around here on comm dr. prices as high as ever and nothing lingers.
#74 Andrew Wolborn
Wow, cool. That’s my kind of life. How fast can I move there? Are there good paying jobs or do you need to be retired or semi-retired, and stinking rich? I still have at least 25 years of servitude left before I can retire in style
:-(
I’m trying to work it down to 15, but if I succeed, I’ll need to be VERY frugal…
As bond rates slump once again , and boc is going nowhere, does that mean mtge rates are also going lower again ?
If so the RE crash/melt/correction is already over.
A wholly incorrect assumption. As I’ve been saying here for a month, five-year rates will decline, but not back to levels of last Spring. — Garth
#80 Tony
Real estate agents go to university for 8 years right? I mean that’s why they make so much money that they can afford $250,000 lambos, right?
————————————————
15 years ago, locomotive engineers earned guaranteed minimum $100,000 / year (overtime included)
Now they should earn around 150,000$.
Requirements for the job: kindergarten level degree + 2 weeks training.
Now, try to get hired for the job if you can!
#108 Westernman on 10.23.13 at 12:55 pm
Comment @ # 96-
“Temporary stimulus is not an economic fundamental”
Except, of course, when the U.S. Fed is doing it, right Garth?
________________________________________
no.. Garth is correct.. the Stimulus in the US is permanent now, not temporary.
#35 Andrew Woburn
I would guess it at least partly has to do with Victoria’s nose bleed prices. I know several prairie people who want to retire to the coast but are shell shocked by the ever increasing prices in Victoria’s choicest areas.
Areas like Oak Bay and Fairfield have continued to appreciate to crazy levels over the past 5 year so that to buy a nice 3 bedroom bungalow you’re now paying $750-$900K. Some newer houses are trying for over $1 million for 3 BDRMs!
So people have started looking up island. Why not go to Nanamio which has everything plus better ferry connections for 50% less.
#17 Ray
I can confirm that based on GTA Craigslist rental data I track monthly: In September, median 1 bed rental prices (offers only) rose to $1499, up 15% y/y and prices for 2 beds reached $2,050, up 24% for the same period. However these numbers can vary on a monthly basis. On a Quarterly basis, the average 1 bed was up 11.6% y/y in Q3 while 2 bed increased by 13.3% y/y for the same period. Craigslist GTA Average Rental Price Index
Now if one adjusted prices per square foot with many tiny new condo rentals coming on the market, real rental prices are probably rising even faster at about 15-20%.
Rising rents is a major drag on economic growth as it takes more income to pay for shelter (even while StatsCan lowered rental weights in their shelter CPI basket this year), and with condo cap rates practically flat with no surplus and average prices declining, more rental income will go towards servicing mortgage debt and not spent or reinvested into the economy. Thus, less jobs are created and less money is spent at wholesale and retail outlets, driving business sales lower, cutting more jobs and so on…
Does anyone know why bitcoin is going parabolic, is this the coming new currency of the NWO?!
http://bitcoincharts.com/charts/
Garth do you know anything on this subject matter?
thx
> 104 Mortgage man
Your calculation states on 5Y fixed rate mortgage renewal, mortgagee is re-doing new amortization of 30Y.
(= refinancing, approval required)
What #88 Ralph Cramdown said is correct.
With normal mortgage renewal, your amortization maturity stays, so, need to do $450K @ 4.20% / 25Y Amor. When renewal rates are up, your monthly payment will be up.
And you know, some are not qualified for re-financing on current conditions.
#115 omg – forget the west coast as price and a superior lifestyle lies in the Maritimes; the best bet is Nova Scotia to live the good life in my opinion. Its a different world that one could fall in love with, and oh the food options.
“Whatever it is, rest assured there are no economic fundamentals propping it up. Prices have climbed while incomes have not and debt’s exploded. More and more net worth is being shovelled into a single asset by mobs of people convinced they’ll get rich ”
Well that describes the USA stock market perfectly!
I’m really don’t know where they get their numbers because I receive listings every week most of them price reduced here in Vancouver! Nor do I know anyone who is buying or is planned on buying anytime soon.
I don’t think I can wait any longer for the housing market to correct in Vancouver. Been waiting almost 2 years. I’ll be buying a house next year. :(
http://ca.finance.yahoo.com/news/bank-canada-drops-rate-hike-talk-due-weak-140417465–business.html
I’ll use Garth’s tips from the last post. Please talk me out of it!!!
#117 Doberman
Bitcoin started rising when China's largest search engine, Baidu, announced that it would be accepting bitcoin payments. That's a pretty credible move for the bitcoin community. But even so, it's overbought and will crash (again) as soon as some fat finger decides to pull the trigger.
Mind you, Bitcoin's YTD performance blew every other asset big time. Chart I guess risk pays afterall.
Does anyone know why bitcoin is going parabolic?
Chinese Central Bank buying.
#119 Old Man on 10.23.13 at 1:52 pm
#115 omg – forget the west coast as price and a superior lifestyle lies in the Maritimes; the best bet is Nova Scotia
———————————
as they say down in the ‘cape ‘fill your boots’ !
plenty of beautiful seaside in ns.
my family is all in hfx area but i grew up in the far prettier pei, it’s too bad both places both suffer from winter and lack of mountains. My strongest memory of several summer visits to NS over the past 20yrs, is the urgent panicked scream of ‘CLOSE THE SCREEN DOOR!!!’ as the nightly swarms of everything from blackbugs to junebugs made relentless invasion attempts. i’ll keep our screen-less windows and lack of a real winter wardrobe thanks.
For a crash you will need a spike in interest rates
This is the biggest myth on the internet right now. I closed on my last flip (one flip to far as it turns out) in the U.S. at 6.875%, 30year fixed in 2005. Two years later I could get the same loan for 4.5% As the market crashed rates DROPPED throughout. Ditto Japan for 20 years of 1%. Ditto Spain. Ditto everywhere. Rates go DOWN, market still crashes. Rates stay the same, market still crashes. Rates go up, good lord that would be a crash and half. Oversupply is oversupply, exhausted buyers are exhausted buyers. Rates are irrelevant.
or unemployment
Also a myth. Unemployment spiked in US *after* the crash was well underway as all the banks, mortgage brokers, lawyers, construction workers etc ran out of work. From 20+% GDp back to the natural 9%. It was not a cause.
Things that trigger crash: availability of credit. When the banks tighten their standards, that’s when to bail. if the CMHC starts to actually enforce paperwork requirements, look out!
#89 Ray
I am just saying that US went through price adjustment as well but Manhattan barely felt it
Huh?!? When were you living in Manhattan? Because when I went there the price drops were brutal. Some co-op boards (most condos in NYC are actually co-ops) refused to approve sales because they didn’t want to set such a low standard. Projects took forever to get off the ground, and some conversion were abandoned – Converting office space to condos was making huge $$$, when the prices plunged they went back to leasing the office space again….
It rebounded faster, but it was definitely a few very dicey years there.
Toronto is a one stop light village compared to New York. Not even close folks, not by an measure.
BoC finally coming to her senses and declaring this economy all but dead in the water. Slow to no growth for the coming years. Not good news for any industry, certainly not the real estate industry. No growth will lead to layoffs across all sectors and especially the last bastion of Canadian employment, the cherished public service sector. Deep cuts are coming as budgets need to get balanced. Cost of financing is cheap but governments already up to their eye balls will have to pay premiums on debt.
Buckle up Daisy, it’s going to be a long grinding ride to the bottom. “What’s there?”, she asks. Either a massive debt restructuring, haircuts or even a currency reset. We’ve been here before Daisy and the last time, your Grandma was in the passenger seat.
And All The Kings Horses… and All The Kings Men… couldn’t Put ‘Humpty’… together again:
[UK Telegraph] – Hyde Park Barracks sale raises concerns over price of Government sell-offs
…”It is perhaps ironic that it was Napoleon – whom the Life Guards regiment and my own Grenadier Guards helped to defeat in 1815 at Waterloo – who branded Britain a “nation of shopkeepers”. The Government now appears to have permanently hung the “bargain basement sale” sign above every national treasure that foreign investors would care to buy.”…
http://www.telegraph.co.uk/finance/economics/10400041/Hyde-Park-Barracks-sale-raises-concerns-over-price-of-Government-sell-offs.html
[UK Guardian] – Google’s London HQ architects to design Metropolitan police building: Allford Hall Monaghan Morris wins Royal Institute competition to create Whitehall replacement for New Scotland Yard
…”By selling outdated and impractical buildings like New Scotland Yard that are costly to maintain, we can reduce property running costs.”…
http://www.theguardian.com/artanddesign/2013/oct/14/google-london-architects-metropolitan-police-building
[UK DailyMail] – Police station closed down? You’d better head to Tesco: As one in five shut their doors to cut costs [*OldNews, but invaluable context]
http://www.dailymail.co.uk/news/article-2167690/Police-station-closure-shock-One-shut-public-budget-cuts.html
[UK Telegraph] – Chinese companies to buy big stake in next generation of British nuclear power: George Osborne announces Chinese companies to be able to buy into next generation of British nuclear power – and even be allowed to own up to 100%
http://www.telegraph.co.uk/finance/economics/10400041/Hyde-Park-Barracks-sale-raises-concerns-over-price-of-Government-sell-offs.html
#122 Finally
Use the Rule of 90
Buy in a neighborhood that is sought after
Buy the cheapest house on the street
Buy the house that needs fixing up
Calculate the affordability of your mortgage balance in 5 years @ 6% interest
I am confident that this is DIFFERENT from any other “blip” in Canadian Real Estate
Canada is now permanently plugged into the Global Community.
Our natural resources with immigration, foreign investments, stock market lag behind the US, house horny / investment ignorant citizens, savvy HGTV / Real Estate Market and complacent Government will definitely prop the industry for many years.
Canadian History will show this as the start of the “change in guard” from a Euro Centric to Asian Centric nation. 3 Billion Asians (India, China, Pakistan etc…) with ambition, determination and desire to immigrate to Canada to double our population so we can keep up to world demand for our resources.
It’s going to be a fun ride once this engine get humming
#127 -=jwk=-
Toronto is a one stop light village compared to New York.
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True… but….
Toronto is Canada’s Manhattan therefore the demand for Toronto will far exceed any other Canadian city and Real Estate here will be unlike any other city.
It is Different here and it is Different this time and so far no one has proven it’s not…
Condo shmongos…. They are still being built and no one will ever tear them down. The skyline is forever changed and this will be a magnet for humans to live (even if it’s renting) therefore all the local shops will have customers e.g. dry cleaners, convenience stores, department stores etc… There will be no doughnut effect in Toronto like Detroit.
Garth, when are we going to see a correction in Calgary? Pls respond.
#131 TnT on 10.23.13 at 3:38 pm
Such hubris is amusing.
Toronto is not the Manhattan of Canada. Canada does not have any sort of Manhattan equivalent. Toronto is Canada’s Chicago.
@ #131 TnT on 10.23.13 at 3:38 pm
… Condo shmongos…. They are still being built and no one will ever tear them down…
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You’re right – no one will need to tear them down, because they are built so poorly that they will fall down on their own.
@ #124 Ralph Cramdown on 10.23.13 at 2:14 pm
Does anyone know why bitcoin is going parabolic?
Chinese Central Bank buying.
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Or, maybe the Winklevoss Twins selling their Facebook stakes and pumping their bitcoin fund?
@ #98 Toronto_CA on 10.23.13 at 11:30 am
#89 Ray on 10.23.13 at 10:07 am
Please never compare Toronto to Manhattan, ever. I mean that, it really makes anyone who does it sound ridiculous. And I love Toronto. But Manhattan is not a comparable city by any measure.
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Exactly… Manhattan can only be compared with other major global centres like London and Singapore. Even 2nd tier locations like Sydney Australia are reaching another level beyond the Torontos of the world, because they are both tourist destinations AND financial centres.
#115 omg on 10.23.13 at 1:35 pm
Areas like Oak Bay and Fairfield have continued to appreciate to crazy levels over the past 5 year so that to buy a nice 3 bedroom bungalow you’re now paying $750-$900K. Some newer houses are trying for over $1 million for 3 BDRMs.
We just moved into a suite in Oak Bay…beautiful house, really nice area with tree lined streets. My newest hobby is sitting looking out the back window watching the RATS..yes rats, not squirrels going about their daily lives. One even comes right up to my back door but I never have the camera ready…sneaky little guy. Actually he’s not that little..bigger then the average squirrel. Gotta love it.
U.S. recovery is real
Westernman asked, rhetorically:
“Temporary stimulus is not an economic fundamental”
Except, of course, when the U.S. Fed is doing it, right Garth?
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Economic fundamentals are real whether impacted by Fed or not.
If houses are built due to low iterest rates, the houses exist. THAT is funamental. Debt is real but in some ways not as real as houses. Houses are tangible. Once built they exist and house people whether they ever get paid for or not.
But actually partly as a result of FED stimulous there are jobs and Americans are paying their mortages and default rates are WAY down.
Call it fake it you want but many of us have made a big pile of money in U.S. stocks including (in my case) Toll Brothers and Wells fargo and Berkshire Hathaway and Bank of America. The icing on the cake is a lower Canadian dollar which boosts our returns on U.s. stocks.
No one can accurately predict if the U.S. economy will stumble when the stimulous is taken away. FED seems determined to keep pouring gas on the fire until the big logs light and can stay lit without the gasoline.
Never bet against the Fed.
#94 The Prophet Elijah
Sounds like RE in England up 10%, Carney already working his magic.
lol! Man, you made me laughs with that one!
Toronto may not be Manhattan, but Calgary is. No one would argue this.
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@ #98 Toronto_CA on 10.23.13 at 11:30 am
#89 Ray on 10.23.13 at 10:07 am
Please never compare Toronto to Manhattan, ever. I mean that, it really makes anyone who does it sound ridiculous. And I love Toronto. But Manhattan is not a comparable city by any measure.
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Exactly… Manhattan can only be compared with other major global centres like London and Singapore. Even 2nd tier locations like Sydney Australia are reaching another level beyond the Torontos of the world, because they are both tourist destinations AND financial centres.
TnT..are you OK?
CBC Ottawa blowing the lid off of poor Condo sales..
http://www.cbc.ca/news/canada/ottawa/ottawa-condo-surplus-causing-prices-to-drop-1.2159075
Video should be up soon..will send to Garth
“One [rat] even comes right up to my back door but I never have the camera ready.”
With respect, if you had the air rifle ready, you’d have lots of time to fetch the camera.
#143 Ralph Cramdown on 10.23.13 at 6:40 pm
“One [rat] even comes right up to my back door but I never have the camera ready.”
With respect, if you had the air rifle ready, you’d have lots of time to fetch the camera.
Ouch…I say live and let live. Besides, this is a demand area where people pay outrageous prices, lol. House across the street is for sale and the one right next door was listed 2 weeks ago. One open house and I think I think I did see two viewers over the 2 weeks. The sign came down already…yesterday?? Did it sell…I don’t know. I wonder if you have to list rats in the hood on the discloser?
Shawn @ # 138,
A stock market goosed up on free fake stimulus is not in any way indicative of an actual recovering economy anymore than T.V. is indicative of real life…
#138 Shawn
No one can accurately predict if the U.S. economy will stumble when the stimulous is taken away.
You don't need to predict anything when we've just seen what happens when the Fed mentioned a $20 billion tapering cut. They own 90% of MBS and 30% of treasuries, meaning, on the short end, they've taken every ounce of risk away creating the impression that there is zero risk out there.
Credit spreads are razor thin. Junk bonds and securities are trading as if they're AAA rated. Investors (like you) have taken their profits and thrown it right back into stocks. What can possibly go wrong here should the Fed pull back?
Temporary stimulus is not an economic fundamental. — Garth
How long has the stimulus lasted so far ? 2007, 2008, 2009, 2010, 2011, 2012, 2013 ?
How long will it last ? 2014, 2015, 2016, 2017………………….