Elevated threat

ELEVATED modified

Despite being an accountant, Elaine still has a personality. “There’s something very wrong with this picture,” she fumes. “I can only say that this will end badly, and I fear it’s coming to an end soon.”

The burr under her saddle comes from watching people with no money make seriously bad decisions, thanks to seriously bad laws.

“Why do I live in a country where Client A can walk into a bank, get a mortgage for almost $1 million, with $50k down, even though he has never made more than $50k per year in his life? (And yes, true story, right now he’s making the monthly mortgage payments by renting out rooms-essentially he operates a rooming house-is this what CMHC intended when they said their mandate is to help provide affordable housing)?

“Meanwhile, Client B is a couple with $2.5 million in net worth. They wanted to buy a commercial building, with a $400k downpayment, for $1 million (mortgage = $600k). Three big banks later, the answer was a resounding NO. They said the banks actually sit down in a committee meeting, and evaluate whether or not the property in question is worth it. Really? Banks doing their due diligence? As far as I can see this doesn’t happen in the residential mortgage market where you can get a mortgage for nearly anything, anytime, anyplace.  Because the CMHC does not operate in the commercial market so the bank knows it’s got it’s ass on the line (ie-actually has to worry if it will lose money or not, imagine that!).”

Elaine’s totally correct. When it comes to handing out first mortgages for residential real estate, the bankers are poodles. But try to get financing to expand your welding shop and hire four more people, and they turn into rabid pit bulls. The risk in giving fat house loans to people who can’t manage their sock drawer is wiped away by CMHC. And this is how we precisely how end up with the condo economy.

“As an accountant I can see there is something very wrong with this picture. Sadly, too many of my clients have made big mistakes when it comes to residential real estate. Too much debt, too little equity, too many crazy hopes of getting rich quick. It’s gone on far too long and has dragged far too many people into bad situations.”

Well, Elaine’s not alone. She’s got me. And the Bank of Canada. Again.

That’s what this means: “Our analysis shows that household imbalances remain the most important vulnerability and could amplify the impact of external shocks. Despite some signs of a soft landing, valuations are stretched and there are signs of overbuilding. Canadian households are highly leveraged. Household debt-to-income ratios remain at historically high levels despite a recent moderation in the growth of mortgage credit and continued low-interest payments on mortgage debt.”

As I mentioned earlier this week, bank boss Stephen Poloz has delivered his SHTF report, detailing what he and the missus stay up at night worrying about. The top threat is overvalued housing and all of the billions in debt (a trillion, actually) that families have taken on so they can live beyond their means. For example, if China blows up (his example, not mine), we’re in deep trouble, with a severe impact because of falling commodity prices. And won’t that be fun in Edmonton and Calgary, where they think real estate will always go up? Or the shock could come from Europe, where things are so bad interest rates have been dropped to almost zero.

Such a threat was ‘moderate’ back in December, according to Poloz. Now is it ‘elevated.’ In fact the bank’s Financial System Review has just (for the first time) warned of a ‘sharp correction’ in Canadian real estate values.

So, add in our central bank to all those (like the OECD, The Economist and the IMF) who think millions of Canadians are sleepwalking into a financial smackdown. But this time the thinking is that it won’t take a spike in interest rates or a surge in unemployment to prick the bubble. External events, over which Ottawa has zero control or influence, could easily do the job.

Which, I think, is Elaine’s point. By letting the banks shift all the risk for dumbass real estate loans to the taxpayer, we’ve created this giant moral hazard. It’s now in the interests of bankers and their shareholders to encourage rampant real estate speculation and a culture of house lust so personified by yesterday’s heroine. So what if people have historic levels of debt? Or that the economy’s dependent on people selling each other houses instead of actually making stuff? Or that mortgage rates plunge, and real estate bloats? As long as everyone gets caesarstone and Miele, do we really care?

We’re seriously messed up. Lost our way.

I thought about that yesterday as the Forces of Christianity reigned down upon me. They missed.

272 comments ↓

#1 Warren on 06.12.14 at 6:03 pm

Hopefully the fundies from yesterday are still hanging around and can connect the dots between why you used Julia as an example and what it is you are trying to accomplish with this blog. While they seemed to think you were just randomly picking on someone for kicks, the reality is that she was a perfect example for how emotional decision making is riding roughshod over practical realities.

I think a big problem is the trust people have in major institutions. For instance, they don’t question whether the loan they are taking out from the bank is dangerous to their interests because wouldn’t that be against the bank’s interests? And as you tirelessly point out, the bank’s interests are detached from one of the most basic market fundamentals of risk.

#2 Old Man on 06.12.14 at 6:03 pm

That is the latest release of the Cat Drone for spying on your neighbours with a HD video camera and a direct feed to your computer systems.

#3 Firstest With The Murstest on 06.12.14 at 6:04 pm

Ya know, it used to be one would see an empty comment section and be fairly certain that, much to the dismay of some way-too-serious blog readers, one could proudly declare FIRST! and revel in the victory.

But alas, ol’ Garth has learned a few new tricks, and now keeps the first batch of comments in moderation for quite a significant period of time.

Well played Garth, well played.

#4 Jason on 06.12.14 at 6:05 pm

According to the CMHC, they have a Chief Risk Officer named Pierre Serre. Perhaps someone should explain that his job is to manage and limit risks, especially the systemic ones that bring down nations. Maybe his job objectives were lost in translation.

#5 Sandy on 06.12.14 at 6:09 pm

DELETED

#6 mid 20s on 06.12.14 at 6:12 pm

It is sad to see my peers all proud on their Facebook posting about how they are being responsible after graduation by saving for a down payment as the next big goal. It is sad to see how they are confident in this choice to buy a condo because they have reassurance from their bank it can be done, and they are making responsible choices to do so…..

#7 eat pie on 06.12.14 at 6:16 pm

And the band played on…

#8 eyies on 06.12.14 at 6:16 pm

furrrrst!?

#9 Financial Freedom at 40 on 06.12.14 at 6:22 pm

As long as we are liquid, diversified and mobile, hopefully we’re prepared. Still care, but hopefully not adversely affected.

#10 joblo on 06.12.14 at 6:22 pm

Have Harpo and Oli changed the anthem yet?
Owe Kanada

#11 Tim Who'd Axe on 06.12.14 at 6:24 pm

Folks, I am so sorry. :)’

It has come to my attention this afternoon that I may have made a math error. Calculations went awry while I was trying to fight off the lies from the other parties. My attention suffered and it looks like I pressed the wrong buttons on my calculator.

In fact, my program will not create a million jobs.

It will create billions of jobs.

http://www.youtube.com/watch?v=HZmafy_v8g8

Please get out there and vote. There’s still lots of time.

Your friend, the honest one. :)’

#12 Montellino on 06.12.14 at 6:32 pm

Huge govt/taxpyr problem in backing up a trillion dollars half of which is arguably at risk.. this is a serious question now – in Australia the govt raided dormant savings accounts (dormant = 3yrs inactive/interest only) could it happen here????
I dare not think about it but imagine what a kick in the [email protected]@ would that be.. you save for yrs for a downpayment and someone decides that we should all participate in bailing out douchy 0% down rooky homeowners.. seems stupid but just ask the aussies or cypriots

#13 oh yeah baby on 06.12.14 at 6:35 pm

First….suckas!

#14 Mocha on 06.12.14 at 6:41 pm

What? The forces of Christianity reigned down on you yesterday? Now I have to go back and read.

#15 R on 06.12.14 at 6:44 pm

I’m working as fast as possible to pay down all loans and outstanding credit while contributing what I can to my self directed TFSA.

I need to be in shape to be wading into the markets where the huddled masses and God fearing fear to tread.

#16 Godth on 06.12.14 at 6:45 pm

I was just told “our banks are different” not two hours ago, along with all sorts of the usual backslapping tripe about how great we are. The myths are strong in this country for old men.

#17 LH on 06.12.14 at 6:47 pm

Jesus saves

#18 amazona girl on 06.12.14 at 6:47 pm

The first to say that i love you …

#19 4 AM Sunrise on 06.12.14 at 6:51 pm

Poodles are temperamental, snappy creatures. I had a people-pleasing Yorkie with a crooked smile. He’s so adorable that over the course of an hour, he won the affections of a guest from a dog-phobic country/culture overseas.

#20 Smoking Man on 06.12.14 at 6:52 pm

I thought about that yesterday as the Forces of Christianity reigned down upon me. They missed.-Garth
……..

And the Forces of logic defended you, not that you needed any help..

#21 JuliaS on 06.12.14 at 6:53 pm

Yesterday Moodys downgrades Canadian banks to negative and the gubbermint goes into damage control. We’re still special, it’s different here, don’t worry, be happy.

#22 Vlad on 06.12.14 at 6:53 pm

No doubt about it, the government through CMHC has created an enormous future mess that the taxpayers are going to be on the hook for. The banks will, of course, waltz away unscathed. We have to remember that it isn’t only the U.S. government that is the toady of the banking system. Harper and his minions are also bought and paid for.

#23 Ole Doberman on 06.12.14 at 6:54 pm

Mike Maloney on CAD RE:

http://goldsilver.com/video/canada-s-real-estate-crisis-the-china-syndrome/

#24 Nero on 06.12.14 at 6:54 pm

CMHC should insure only 75 percent of residential and 25 percent of commercial lending. Then small business will have lower rates. This would then help the central bank rate policy more efficiently affect the business economy.

#25 4 AM Sunrise on 06.12.14 at 6:58 pm

#17 LH on 06.12.14 at 6:47 pm

Jesus saves

————————————

House-hunters will, too, if that 20% correction that the doomers are calling for pans out.

#26 mitzerboy on 06.12.14 at 7:01 pm

thank Christ those forces of Christianity missed you garth….

#27 Victoria Real Estate Update on 06.12.14 at 7:01 pm

Slow, sluggish sales and sagging prices. This has been the story of Victoria’s housing market in 2014.

House prices across Greater Victoria have been declining since 2010. Surprisingly, Victoria’s price decline has happened in a heavily stimulated environment of lax lending standards and historically low interest rates. Imagine how much house prices in Victoria would have fallen by now if interest rates were in the normal (25-year average) range of about 7%. House prices across Greater Victoria should have been making strong gains with all of that market-strengthening stimulus in effect, but such has not been the case at all.

It’s no secret that there are several examples of above average houses for sale in above average areas of Greater Victoria that have been sitting on the market (with no buyer) at asking prices well below assessed values. Let’s take a look at some examples that I’ve written about in recent weeks:

2738 Foul Bay Road in East Saanich (located here):

* Asking price: $438.888 ($84 K below assessed value)
* Situated on the boundary that divides East Saanich and Oak Bay
* 3 beds, 2 baths, 1853 sq. ft., hardwood floors, large lot

This house is empty and move-in ready. There is absolutely nothing wrong with the condition of this house. It remains on the market at almost $100 K below assessed value.

Grange Road in West Saanich (located here):

* Asking price: $549,900 ($82 K below assessed value)
* 5 beds, 2 baths, large, private lot, water views, water access nearby

There is nothing wrong with the condition of this house either. It, too, continues to sit on the market at almost $100 K below assessed value.

Despite the price correction that has already taken place, Victoria’s housing market remains in a massive bubble as incomes and rents do not support house prices. History has shown us many times that housing bubbles always deflate and that house prices always revert to the mean. The mean is (basically) the level at which incomes and rents provide price support. That level remains far below Victoria’s current price level.

Incomes in Canada and the US are approximately equal so house prices should be approximately equal as well. However, such is not the case as Canada’s housing bubble has been subject to much more interference (stimulus) than the US housing market since 2000. House prices across Canada have been pushed much deeper into bubble territory than house prices in the US were at the peak of their housing bubble.

House prices in many areas of the US are currently not overvalued when compared to incomes and rents. Let’s take a look at house prices in Tucson, Arizona:

House criteria:
* min. 3 bed, 2 bath
* min. 1800 sq. ft. of above ground primary (main) living space
* 2004 or newer
* attached double garage

In Victoria, a house like this would probably cost $700 K or more.

In Tucson, the combined value of these 6 houses (that fit the above criteria) is about $750 K.

$114 K ( 4 beds, 2.5 baths, 1904 sq. ft.)
$117 K ( 4 beds, 2.5 baths, 1865 sq. ft.)
$124 K ( 4 beds, 2.5 baths, 1865 sq. ft.)
$129 K ( 4 beds, 2 baths, 1812 sq. ft.)
$129 K ( 3 beds, 2 baths, 1813 sq. ft.)
$137 K ( 4 beds, 3 baths, 1857 sq. ft.)

There is simply no way to tell if house prices in Victoria will be higher or lower than these prices by the time Victoria’s housing correction has reached bottom. All we know is that major housing bubbles always go through deep, multi-year price corrections.

We know that Canada’s housing bubble is substantially larger than the 2006 US housing bubble was. The Economist noted (in 2011) that Canada’s housing market was (already) more overvalued than the US at its peak, and has grown substantially since then. In general, the bigger the bubble, the bigger the price correction.

Girls and guys, if you buy a house in Victoria now you will forced to deal with years of financial distress and hardship as house prices in Victoria continue to fall. Buying a house now (near the peak of Victoria’s housing bubble) would be financially foolhardy. Renting for now is a no-brainer. Wait for lower prices.

Until next time – Cheers!

#28 Godth on 06.12.14 at 7:01 pm

#6 mid 20s

Travel to India; get the runs and blow your mind. Canadians are so boring. Tattoos, screens, sports, beer and chicken wings are culture. Yee-Haa, where’s my trailer – I don’t think I can walk with my pants around my ankles.

#29 miketheengineer on 06.12.14 at 7:13 pm

Garth et al:

I agree, too little and too late.

How about a scale back on CMHC…move it to 800k next year and then 600k the year after…nice and gentle like. Nothing like a nice gentle slow down.

A sharp correction , is what they say…hmmm. I was hoping that was happening back in 2009. Some economists have been tracking guys like Soros, and there is big speculation as to why he sold off a large amount of his stock holdings. (not sure which ones though, since I really don’t follow these guys). So the speculation is why do these big guys do these things and what do they know. Some speculate that the stocks are going to get another shock…and drop. So would that spark the “sharp correction”. And what do they know?

So the prices keep increasing…and the people keep buying and everyone is happy….except people like me….who still have dreams of detached home….

If the crash happens…it happens….and like in the 1980’s my old man would tell me the stories of the guys at the plant, who lost their jobs, their wives and their homes when the crash happened and interest rates went nuts. So when they say “sharp correction” they are indicating something else?

You tell me Garth is there going to be a crash?

Some one tell me this is dream…give me a good pinch so I can wake up now.

#30 AngryMan127 on 06.12.14 at 7:13 pm

“But try to get financing to expand your welding shop and hire four more people, and they turn into rabid pit bulls…”

It’s so sadly ironic that Harper is an economist.

#31 Lala on 06.12.14 at 7:14 pm

I guess you missed this:
http://m.thetelegram.com/Business/2014-05-16/article-3729093/IMF-advises-Ottawa-to-trim-CMHC&rsquo%3bs-mortgage-activities/1

#32 Nemesis on 06.12.14 at 7:15 pm

#VerilyDothThisWorkOnSoManyLevels. #SubtextGalore!

http://youtu.be/hSgjjb2K8h8

#BonusZen. #JesusSavesButBabyFaceNelsonWithdraws.

http://youtu.be/akvj7IraD3s

#33 Teacher's Ass-istant on 06.12.14 at 7:15 pm

That’s telling. People smart enough to seek the advice of an accountant only to cast it off if it isn’t what they want to hear.
It’s very true that the banks won’t help small business. Maybe some of the CHMC money should be redirected toward something along the lines of the Economic Devolpment Bank with a mandate help successful business expand and those who want to start and have a decent business plan to get going. They really should more strongly promote what is already available if you have a decent business plan.
I had my own business, dealt with the same bank for over twenty years. Then I got seriously injured. A couple of months after the money quit going in and out of my accounts was the first time the bank ever called and asked if there was anything they could do for me and it wasn’t concern about the injury. The guy who called wasn’t even from the branch, he was at some business office downtown I’d never met or heard of before. That’s not a smoking fool story it’s 100% true.

#34 Maxamillion on 06.12.14 at 7:17 pm

The world is laughing at Canadians but they can’t hear a thing.

#35 randman on 06.12.14 at 7:20 pm

Godth #16

There is no country for old men!

#36 Monsieur Obvious on 06.12.14 at 7:20 pm

#4 Jason

“According to the CMHC, they have a Chief Risk Officer named Pierre Serre. [….]. Maybe his job objectives were lost in translation.”
———————————

Maybe his job objectives are redefined daily by the Prime Minister.

#37 Godth on 06.12.14 at 7:24 pm

#29 AngryMan127

It’s not ironic that Harper is an economist – it’s normalcy bias. Economists are a really obtuse crowd. One only needs to understand a couple of the basic (false) assumptions that they operate within, or what the ‘externalities’ of their models are to understand that they’re nuts.

It’s all pie in the sky. Except we’re on planet earth.

#38 TurnerNation on 06.12.14 at 7:25 pm

Yield Hounds, the next div play is STB.TO. Might be sustainable. Consult with your Avarice Advisor. Shall not be a YLO :)

#39 gladiator on 06.12.14 at 7:25 pm

And so? What is Poloz gonna do about it? He is in C-czar’s pocket just like the big Owe. He’ll just sit on his ass and later when tshtf he will remind us about what he said recently about an external trigger of our crisis. Dirty politics at its best. Disgusting.

#40 'Now Is The Time To Prepare For Next Crisis' Says World Bank As IMF Warns Of Housing Crashes on 06.12.14 at 7:27 pm

“The World Bank warned that the anticipated rise in interest rates will hit global growth this year – and presumably house prices too.”

Hahaha-hahaaahaha-hahahaaaahhhh!

Now that is funny. If they say long enough, they actually start believing it.

aaahhhh, I’m exhausted from all that laughing.

#41 Old Man on 06.12.14 at 7:28 pm

Someone put up a big sign outside a voting poll with a picture of Kudak which for any Star Trek fan is the alien creature in Deep Space Nine called “one little ship”. The sign said he was a Hudak supporter.

#42 Dominoes Lining Up on 06.12.14 at 7:28 pm

Iraq government is now BEGGING the U.S. to conduct air strikes.

http://www.washingtontimes.com/news/2014/jun/12/desperate-iraq-asks-for-us-airstrikes-as-us-prepar/

The rebels are easily overrunning the army, which has thousands of sympathizers in its ranks.

This is exploding right in our path and WILL involve the west.

Expect a major price hike in gasoline within a couple days, if not hours.

Gold will shine through all this.

#43 Mike T. on 06.12.14 at 7:31 pm

‘External events, over which Ottawa has zero control or influence, could easily do the job.’

I agree that this is ultimately what will bring the house down (pun intended).

Not that I put too much stock in Clif High’s Webbots, but it has proven to be useful in the past.

The narrative of external forces bringing an end to the house porn in Canada has been written into the lexicon of the mass media for a few years.

TPTB won’t hang H or the late F or even the now departed C for this mess…..sure blame China or Europe…not the policymakers, who knew what they were doing.

#44 Daisy Mae on 06.12.14 at 7:34 pm

GARTH: “Wafting money this cheap into the hyperventilated real estate market is like passing out crack at Toronto City Hall. How do you possibly expect people to do anything otherwise than freebase their way to excess?”

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

So this mess goes full circle and comes back to CMHC — Steven Harpers’ federal government. Our nations ‘leader’.

We can blame the ‘virgins’ for their stupidity and greed….but CMHC made it all possible.

#45 observer on 06.12.14 at 7:38 pm

This whole country here is making me sick.
I wish I’d immigrated to the US instead !!!

#46 Happy Renting on 06.12.14 at 7:39 pm

Almost $1M mortgage with only 5% down and $50k annual income? That is crazy.

Besides, if I spent a million on a shack I would want strangers to keep their dirty mitts off it!

#47 Shawn on 06.12.14 at 7:40 pm

When the US had a housing correction that inevitably turned into a recession they dropped interest rates. Our rates are already at record lows, where do they go when our correction happens ? If the states continues their slow recovery can we keep our rates so low ?

#48 DreamingInTechnicolour on 06.12.14 at 7:45 pm

https://ca.finance.yahoo.com/news/real-estate-crappy-investment-shark-tank-pro-212328020.html

#49 Daisy Mae on 06.12.14 at 7:47 pm

“Or that the economy’s dependent on people selling each other houses instead of actually making stuff?”

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

This is so very frightening. We are useless! We could be self-sufficient — we have it all here in Canada. What a colossal waste.

#50 4 AM Sunrise on 06.12.14 at 7:47 pm

#6 mid 20s on 06.12.14 at 6:12 pm
It is sad to see my peers all proud on their Facebook posting about how they are being responsible after graduation by saving for a down payment as the next big goal. It is sad to see how they are confident in this choice to buy a condo because they have reassurance from their bank it can be done, and they are making responsible choices to do so…..

————————————————

That’s the funny thing about your generation. (By some measures, I’m considered a Millennial, too.) With no wars, an uncertain job market, and upended dating paradigms, all the normal goalposts of adulthood have been removed. But we humans like markers, so we (and our parents) choose real estate as the new goalpost.

And there’s nothing “wrong” with saving for a down payment! It’s responsible. And up until recently, unless you’re a complete dink, you could save up for a down payment and be ready to buy by your late 20’s or early 30’s. Ah, that marker of adulthood! What’s sad is that saving up for that down payment today is a punishing exercise, even for DINK couple. And the hurt continues with the mortgage. Pride in pain, perhaps? Stockholm Syndrome?

#51 Godth on 06.12.14 at 7:49 pm

#30 AngryMan127

btw, this policy has all been coordinated from the Bank for International Settlements. It’s really a credit (debt) bubble as that’s what keeps the whole game afloat – exponential debt creation. The policy gets customized by each country but it’s essentially the same policy implemented various ways – housing bubbles all around! Yeah! Debt, debt, debt- let’s mine the future! Screw the children, I want, I want, I want it all now!

I should write a song: Pigs at the trough of debt. Or maybe just “debt pigs” but then it’s too derivative of “war pigs” which is essentially the same thing.

#52 Daisy Mae on 06.12.14 at 7:52 pm

“I thought about that yesterday as the Forces of Christianity reigned down upon me. They missed.”

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

Of course they did….it’s all such nonsense. ;-)

#53 Smartalox on 06.12.14 at 7:52 pm

# 33 You beat me to the point!

When it comes to handing out first mortgages for residential real estate, the bankers are poodles. But try to get financing to expand your welding shop and hire four more people, and they turn into rabid pit bulls. The risk in giving fat house loans to people who can’t manage their sock drawer is wiped away by CMHC.

I was going to say that there should be a government entity equivalent to CMHC that could insure loans and reduce risk for commercial ventures seeking bank funding, in much the same way that CMHC absolves the banks of risks associated with sub-prime residential mortgages.

And then it occurred to me, that there was exactly such an entity, Export Development Canada, (http://en.wikipedia.org/wiki/Export_Development_Canada) complete with an ad on the back of the latest edition of a trade magazine I have on my desk – an ad that touts the expansion of someone’s welding operation (very prescient, Garth!)

And who was the leader of EDC while CMHC was dropping its inhibitions and creating the Canada’s “Condo Economy”?

Stephen Poloz – yes, the very same Poloz that is now the Governor of the Bank of Canada, and who continues to do NOTHING to address the housing bubble, or attempt to diversify the nation’s economic base, save for adjusting his tie while murmuring a warning about Canadian’s personal debt levels.

#54 Londoner on 06.12.14 at 7:53 pm

BOE is considering a cap on mortgage lending as a ratio of income. We don’t have an equivalent of CMHC. Help to Buy works a bit differently.

http://m.bbc.co.uk/news/business-27825643

Btw – short term pull back in S&P underway but remember the intermediate term structure is still positive.

#55 TheRealTruth on 06.12.14 at 7:57 pm

Garth, I sold all my RE holdings in this spring market!

Momentum was everything.

What I have learned on internet blogs the last 5 years? That there is NONE that gives you advice on how to make money. That you have to figure out yourself.

#56 Godth on 06.12.14 at 7:57 pm

#44 Daisy Mae

Our debtlords are hardly virgins yet they’re some of the most vile creatures on god’s green earth. At least they aren’t bragging anymore. In fact I hear very little bragging any more around here from anyone. What a relief, the reality is yet to sink in though but at least the hubris is aware nemesis exists.

#57 Strathcona on 06.12.14 at 7:57 pm

I went looking at new homes yesterday. Premium finishes, granite, hardwood, stainless steel.

And OSB floor joists! The houses were going for top dollar. Why not build a house with steel joists, steel framing, and lino in the kitchen and cheap countertops?

It’s because people are stupid. And visual. I know I could custom build a proper home, but noone is doing that in this inflated market, and the bare land price is too high.

#58 sideline sitter on 06.12.14 at 8:00 pm

Garth, love your (recently for me discovered) blog… I’m living outside of the maple leaf now and hoping to time a re-entrance to the west side of the west coast (yikes). Clearly now is not that time. My question for you is: were it up to you, how would you manage the current impending crisis with the levers available in govt.? should CAD pull the band-aid or tear it slowly?

#59 Jto on 06.12.14 at 8:01 pm

As a lender for years, I still do occasional cmhc/genworth deals. I started lending in 99 when you needed 25 % to avoid cmhc. It quickly became obvious what this scandal was all about. It is a massive subsidy from taxpayers to senior execs in the FIRE sector and a clever way to tax the population by the government. While the average person thinks they are getting rich, they are in effect being taxed heavily as excessive mortgages transfer enormous wealth. Property taxes are higher than necessary as RE is inflated. The scheme also helps transfer massive wealth to grandpa and many boomers as home prices have been unnecessarily elevated mostly at the expense of the younger ones. It gets better: when the eventual bust comes and losses increase, the cost will be borne by young Canadians and our children.

So cmhc / Nha is a great way to show how major gov’t manipulation along with central banks negatively affects our economy and when the downturn comes, these people then complain about how markets do not work. Etc, so they can then further ” regulate” things and screw us even more.

Thankfully, 90% plus of my clients never use this and make great money. I do educate the insured borrowers and am very frank with them. Not on commish

#60 Old Man on 06.12.14 at 8:03 pm

#42 Dominoes – the US will do nothing as its a Saudi operation with Iran in the background. This is tribal warfare at best making a move to consolidate a belief system.

#61 Trevor on 06.12.14 at 8:03 pm

Garth,

I have 2 friends who have combined 100 and 120k a year salary and with 5% down could not get more then 500k. please release your source from this info. because I am getting called out hard for referencing this apparently fabricated story.

Trevor

#62 Joe2.0 on 06.12.14 at 8:08 pm

Cat a strophic ?

#63 Smoking Man on 06.12.14 at 8:12 pm

#38 TurnerNation on 06.12.14 at 7:25 pmYield Hounds, the next div play is STB.TO. Might be sustainable. Consult with your Avarice Advisor. Shall not be a YLO :)
…..

Had to rub it in… Bastard. :)

#64 observer on 06.12.14 at 8:12 pm

Global vancouver reports a vote on a 7.5 billion on transit expansion on the lower mainland.
New light trains in surrey, skytrain to arbutus 6 lane tolled patullo etc etc.
GOOD GRIEF.
Do i smell a whole new real estate boom in van city all built on never ending growth of DEBT.
I AM OUT OF WORDS.

#65 Uh Oh Canada on 06.12.14 at 8:13 pm

#6 mid 20s.

Sad. When I was in my 20s, I travelled the world. Made me who I am today and I cherish the memories. One good perk about this house horniness thing is at least the money stays in the country.

#66 Godth on 06.12.14 at 8:18 pm

#35 randman

ain’t that the truth. I’m not even an old man – hell, I’m barely middle aged but I’m not ignorant of my ignorance, I’m aware of my ignorance! The best thing about this so called civilization is that we have a record of all the ‘outsiders’. It’s generally called culture but most of the people who created it are dead, or are killed.

I see zombies. Lots of corporate cyborgs.

#67 4 AM Sunrise on 06.12.14 at 8:18 pm

#4 Jason on 06.12.14 at 6:05 pm

Maybe he’s a mall cop like the rest of ’em.

#68 Old Man on 06.12.14 at 8:28 pm

I must be a good Christian as watched a movie last night starring George C. Scott called Hardcore on my computer. I never use google as mirror it with another search engine as wanted more info about this movie. So entered the words Hardcore Movie which was blocked as was on a family mode setting.

#69 Jimboruni on 06.12.14 at 8:28 pm

? I’m from Vancouver, and I’m a believer in the correction, I really am. I sold years ago and made a bunch of money on my condo. If I had held I probably would have made 3x as much today – no joke 3x more.

While i am a believer, like many, i am starting to wonder when when when this will happen. So far, through all this mess, there was a minor correction a few years ago in Vancouver, and now we are back to all time highs. Yes, Vancouver has high taxes, yes Vancouver cannot support an iota of the job market of a NY or SF or LA, but yet, the real estate is amongst the most expensive in the world. How? Bubble, correction, fundamentals point to over valued market, yet things continue to rise rise rise. When will this happen? Is Vancouver a boutique city like San Francisco now and will always hold its value?

Let’s be candid, if you avoided buying 5-7 years ago, you got screwed in Vancouver, you could have double or tripled your money through an upgrade or a sell, yet we have been talking bubble so long. It honestly feels like it will never happen.

Van prices have not tripled in seven years. Get a grip. Besides, only those who crystallize gains make money. As you did. — Garth

#70 Warren on 06.12.14 at 8:28 pm

#60 Trevor

When I was fresh out of law school with $60k debt and making $80k a year RBC offered me $360k and TD Bank (through a mortgage broker) offered me $400k (I didn’t end up buying – my debt is paid off and I have $50k in assets, while the place I would have carried for double the cost of rent hasn’t moved up much at all based on other units in the building). So your friends must have a ton of hidden debt they aren’t discussing or an abhorrent credit history.

#71 Godth on 06.12.14 at 8:33 pm

#59 Old Man

The Western Oil Corps. (largely) have just got the Iraqi oil flowing faster than in the previous 30 yrs. It only took 1 million dead and who knows how many refugees – 4 million? These radicals are O.K. in Syria but apparently the Sunni-Shia divide knows no boundries. Arm them in Syria, fight them in Iraq.

Black Flags Over Mosul
http://www.counterpunch.org/2014/06/12/black-flags-over-mosul/

#72 TRT on 06.12.14 at 8:41 pm

Trevor,

Those mortgages were available about 4-5 years ago.

I know a guy who bought 30 houses. If rent covered the mortgage, you were approved. Many people got in this way and then these same people started supporting increased immigration.

That guy with the 30 houses, he has not sold any. I guess he thinks he is smarter than the data.

#73 Picketty Pocket on 06.12.14 at 8:42 pm

Anyone have an opinion on PSA.TO? It’s a high-interest savings account ETF that pays 1.35% and charges 0.1%. I want to park cash, but noted on the prospectus that the deposits aren’t CDIC insured. The fund’s deposits are held at National Bank and Manulife – not the soundest banks. Is the return too low for the risk? Thanks.

#74 Freedom First on 06.12.14 at 8:43 pm

Relax Garth. The Forces of Christianity were not raining down on you. It is people who go off the rails of the Christian spiritual path. Of course, it is always God who takes the blame, but it is people who practice the 7 deadly sins, and, of course, the banks. Banks=Psychopaths. Same behaviors.

#75 Unumizer on 06.12.14 at 8:50 pm

What I don’t understand is if CHMC is “insuring” the banks money why does the client pay the premium and not the bank?

You want the loan or not, kid? — Garth

#76 Chickenlittle on 06.12.14 at 8:53 pm

No, no, no. You have it all wrong. Jesus would want you to save and invest. Read the parable where he praises the wise investors. Jesus was the first Garth and he probably had a beard, too. He rode a donkey, not a Harley, though.

Some of you must have invested your money in Heritage USA. Tammy Faye’s eyelashes had a hypnotic effect on a lot of people.

#77 Chickenlittle on 06.12.14 at 8:55 pm

#74 Freedom First

Well put!

#78 drydock on 06.12.14 at 8:57 pm

Just when you thought you were safe!
Anti gravity cats.

#79 juno on 06.12.14 at 8:59 pm

That right, its called risk. Under CMHC, taxpayers take 100% risk the banks 0%.

Its like going top Vegas and gambling away. All loses covered by the tax payers all winning goes into the banks pocket.

Pretty sweet DEAL!

You think that once CMHC cannot cover Glenworth and the other insurance company will jump in and cover these High Risk Mortgage. No bloody way. They have to be responsible for the tax payers and will probably go back to the days where you have to have proof of employment and etc before they will open up their purses

#80 eddy on 06.12.14 at 8:59 pm

There are often comments on this blog regarding low standards of materials in new homes: wafer-board, particle board or composite wood chip beams etc.

Ask yourself one question:

Who is the better builder, the one who builds the best house or the one who makes the most profit?

#81 Babblemaster on 06.12.14 at 9:01 pm

#45 observer

“This whole country here is making me sick. I wish I’d immigrated to the US instead !!!”

————————————————————-

It’s not too late!!!

#82 Godth on 06.12.14 at 9:01 pm

You want the loan or not, kid? — Garth

He who has the gold makes the rules…or they who create credit make the rules (modern day, or post-post-post modern day).

What’s that called? It’s certainly not democratic.

#83 juno on 06.12.14 at 9:02 pm

Its interest how the banks were saying no foreseeable housing correct last winter. Now the are saying a bit of a correct. no major collapse.

For them to even mention it, you know there’s something they know that is not told to the masses.

They know its coming, but is trying to ease in the info. But once the ball get rolling, you know theres no stopping it. And when its over and done, they will once again say, Golly Gee never seen that coming. No one could of predicted it. But these guys are ecomonist, they seen it but its not politically correct to say the “B” word

#84 Flawed on 06.12.14 at 9:14 pm

#21 JuliaS on 06.12.14 at 6:53 pm
Yesterday Moodys downgrades Canadian banks to negative and the gubbermint goes into damage control. We’re still special, it’s different here, don’t worry, be happy.

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

So much for EVERYONE saying how sound our banks are.

#85 jess on 06.12.14 at 9:19 pm

pathetic

http://firebrandprogressives.org/oklahoma-tea-party-candidate-calls-for-homosexuals-to-be-stoned-to-death/

#86 Old Man on 06.12.14 at 9:20 pm

These early returns are looking good. Might have been the ‘Joker’ gig with Who Dat running away from the hospital laughing which turned the tide. I wonder who thought that one up.

#87 Nemesis on 06.12.14 at 9:20 pm

#ForOldMan. #&OtherPragmaticRomanticIdealists. #George’sFinestHour.

http://youtu.be/nse8jE_Mb8I

#88 Mark on 06.12.14 at 9:25 pm

As I wrote here on a number of occasions, it is scandalous that residential RE borrowers can borrow for a net 2.5% (after commissions are deducted) on a 5-year term mortgage, while a firm like BCE has to pay 3.51% to borrow a billion dollars for 5 years.

No wonder we are a nation of RE speculators, but decent private sector jobs are disappearing. CMHC subprime credit guarantees have completely distorted and perverted the market.

#89 Mark on 06.12.14 at 9:27 pm

“Maybe some of the CHMC money should be redirected toward something along the lines of the Economic Devolpment Bank “

Or maybe the government should just butt out of trying to pick winners and losers in the economy. Instead, let the private sector, savers and investors, perform that function.

Almost any time you have government involved, things are going to get distorted and not in a good way.

#90 45north on 06.12.14 at 9:33 pm

Unumizer : What I don’t understand is if CHMC is “insuring” the banks money why does the client pay the premium and not the bank?

You want the loan or not, kid? — Garth

pretty funny

here are the hoops the Government has to keep in the air:

employment The Government has to keep housing going to support real estate industry, home renovation stores like Home Depot, the construction industry and banks

CMHC cannot run out of money. If the Government had to present supplementary estimates to bail out CMHC the opposition would crucify them. ( Christian image )

image of supporting the working man/ woman/ family CMHC dropped insurance of houses costing over $1 million. This worked because they are outside the range of the working man/ woman/ family. There is still room to tighten. For example 10% downpayment on houses costing more than $900,000. This is outside the range of the working man/ woman/ family.

#91 Flawed on 06.12.14 at 9:36 pm

#64 observer on 06.12.14 at 8:12 pm
Global vancouver reports a vote on a 7.5 billion on transit expansion on the lower mainland.
New light trains in surrey, skytrain to arbutus 6 lane tolled patullo etc etc.
GOOD GRIEF.
Do i smell a whole new real estate boom in van city all built on never ending growth of DEBT.
I AM OUT OF WORDS.

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

BC – the province with the leastest for the mostest. My wife and I are finally planning an exit strategy from Canada. It’s just getting too ridiculous. Imagine what is going to happen when taxes go to 70% in order to pay for the 600 billion in public sector pensions in the next few years. So sad.

#92 Old Man on 06.12.14 at 9:40 pm

#87 Nemesis – lets see if you are man enough to watch DeVour (2005) from beginning to end. This involves the dark side, and is not for the weak at heart. Give it a shot before going to bed and sleep well because if your a gamer watch out for the pathway or the next young woman you meet.

#93 Ray Skunk on 06.12.14 at 9:41 pm

Hoping I’m wrong, but looks like Ontario has committed fiscal suicide.

Galling, even for the spouse of an Ontario government employee. I’d sooner see Mrs Skunk take a pay freeze for a couple of years than have her pension raided when it’s time to pay the piper.

It’s going to be messy. How long until the downgrade?

#94 Smoking Man on 06.12.14 at 9:44 pm

#86 Old Man on 06.12.14 at 9:20 pmThese early returns are looking good. Might have been the ‘Joker’ gig with Who Dat running away from the hospital laughing which turned the tide. I wonder who thought that one up.
………….
Congrats old man, bye bye private sector jobs….

Thank God I saw this coming and protected my stash..

Question for me now is..
Nevada, California, or Florida…

#95 Ret on 06.12.14 at 9:50 pm

Lots of rooming houses around McMaster in Hamilton. CMHC backs loans for 3-4 student houses for slumlords who don’t make $60000 a year combined with both of them working. How does that happen?

I would love to see the mortgage income verifications on what is going on around Westdale/West Hamilton. I doubt that any of the student rents are even submitted as income.

Students get student loans and the CRA can’t even be bothered to ask who the student will be paying the rent to. What a circus.

When RE craters and the SHTF, don’t even think of asking me to make it all better for the banks or tax cheating slumlords.

#96 Old Man on 06.12.14 at 9:52 pm

#94 Smoking Man – find a place that manufactures cake as you will be eating lots for not backing a winner.

#97 Dean Mason on 06.12.14 at 9:56 pm

North America with Obama and now Liberals in Ontario, B.C etc. and next year Canada, federally, it is going bankrupt and get ready to be like Greece, Argentina, U.S.S.R., Venezuela, Cuba, Zimbabwe etc.

Your stocks can be worth 100%, 200% more in 5, 10 years but when your money is devalued, debased and worthless by inflation, taxes, over regulation, nanny state policies then good luck.

Have your laugh now lefties because you all are going to lose your pensions, benefits and your jobs. Keep cannibalize your economy by higher taxes, spending, borrowing, debt and you will lose everything!!!!!!!!

#98 Jonathan on 06.12.14 at 9:57 pm

Hudak is being crushed.

Thug Holyday loses his seat. Good riddance to another Ford enabler.

Think about this: Hudak is charismatic compared to Harper.

Harper will be so totally crushed in the same way in 2015, for much the same reasons.

I would lay even odds that he might find a way to retire first.

#99 Dean Mason on 06.12.14 at 9:58 pm

Confiscation of all your property is next if they needed more money.

Liberalism is a mental disorder, disease, sickness!!!

#100 LIBERIALS WIN on 06.12.14 at 10:01 pm

NDP voters did the right thing. LIBERIALS WIN bye bye HUdak you dummy

#101 Mr. Frugal on 06.12.14 at 10:01 pm

Garth,

You’re depressing the hell out of us, here. I hope the leg is doing well and you’ve been able to get out on the bike now that the good weather is here?

#102 rosie "moving forward" in the knowledge that, "this won't end well" on 06.12.14 at 10:02 pm

She ran a very good campaign. Hudak and Horvath were pitiful. Here comes the taxman.

#103 LIBERALS WIN on 06.12.14 at 10:02 pm

LIBERALS WIN LIBERALS WIN

#104 Dean Mason on 06.12.14 at 10:05 pm

Get ready to pay 45 cents a kilo watt like Japan which means a $1,000 a month electricity bill in Ontario.

All you fools that bought big houses, cottages or 2 of them are really done for.

Those that have 2 or 3 cars, get ready for another 10 cent a liter gas tax increase and $2.00 a liter gas. Your $100,000 pay checks are worthless!!!!!

Car insurance, 50% higher in the next 24 months, count on it. You will see the red blood letting from your pockets as what the color of your party really means.

Go watch your world cup because in 4 years, you will be lucky if you have any money left to survive!!!

#105 Keith on 06.12.14 at 10:07 pm

We are still a long way away from the lending practices from the U.S. housing bubble. From Michael Lewis’s as always excellent book, The Big Short.

“Long Beach Savings, specialized in asking homeowners with bad credit and no proof of income to accept floating- rate mortgages. The housing blogs of southern California teemed with stories of financial abuses made possible by these so-called thirty year payment option ARMs, or adjustable rate mortgages. In Bakersfield California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $724,000.

@#69 Jimboruni – Vancouver prices have tripled in the past decade. Can they triple in the next ten years? Some crazy real estate consulting firm recently made that prediction by projecting the trend from the last ten years forward for another ten. Apparently no-one in that firm has ever been an investor enjoying a nice bull market run, projected their juicy returns forward for a few years, and been brought down to earth by one of the stock market’s corrections – or crashes – or lengthy stretches of moving sideways.

The robust prices in Vancouver have nothing to do with local incomes, which I will repeat are 22nd in Canada with a median household income of about $69,000. Garth claims that foreign money is insignificant in this market, but fails to offer an explaination as to the extra credit being granted in the Vancouver market where the prices are not 22nd in Canada, but to a spectacular degree number one.

Not only are Vancouver prices shockingly high compared to local incomes, the numbers of Audis, BMW’s, Mercedes, Ferraris and Maseratis running around town, and the new dealerships selling said vehicles springing up all over the lower mainland also aren’t supported by jobs in the local economy. We won’t mention the age, sex, and ethnicity of the drivers of most of the exotic cars we see tooling around Vancouver, but the square green sign with the letter N in the middle certainly gave me pause when I saw it for the first time.

#106 Muttley O'Toole on 06.12.14 at 10:07 pm

#12 Montellino on 06.12.14 at 6:32 pm

” Huge govt/taxpyr problem in backing up a trillion dollars half of which is arguably at risk.. this is a serious question now – in Australia the govt raided dormant savings accounts (dormant = 3yrs inactive/interest only). . .”
True, but if you find your money gone you simply apply to the govt. and it is refunded.
It used to be 7 yrs. inactive but the previous govt. got greedy.
Perhaps the day will come when you wont get it back?
Lets face it all govts. seem to be either up shite creek or paddling hard in their barb wire canoes to get there.

#107 rawdiswar on 06.12.14 at 10:11 pm

# 16 Godth

https://www.policyalternatives.ca/newsroom/updates/study-reveals-secret-canadian-bank-bailout

I’ve put this on here before, but everyone ignored me.

*tear

#108 old phartz on 06.12.14 at 10:12 pm

The other side of the dollar down and a dollar a week dream home is what these properties do to the neighborhood.

I live in the same little 1000 sq.ft.bungalow that’s been on this farm since 1977. Have only done the required upkeep that a house needs…no basement development …no granite etc.

Just got my taxes and see that it is now appraised for 40k more then last year. Phoned the county and got some gobbley gook explanation about all the new builds on the one hectare acreages which my farming neighbors split off from every quarter they own has increased the value of my house.

The icing on the cake is that just about all these 3500+ sq ft. homes built around here in the last two years are now for sale and there is no way in hell that they will get the prices they want…but I bet my taxes won’t go down when the property prices do.

I guess it’s a small price to pay to have your closest neighbor a half mile away but if I had know I would be paying for someone else’s dream I may have jumped on the subdivision pay wagon myself and made a little profit as well.

#109 KommyKim on 06.12.14 at 10:13 pm

RE: #73 Picketty Pocket on 06.12.14 at 8:42 pm
Anyone have an opinion on PSA.TO? It’s a high-interest savings account ETF that pays 1.35% and charges 0.1%. I want to park cash, but noted on the prospectus that the deposits aren’t CDIC insured.

Why would you bother with that? Most discount brokerages have “savings account” funds that cost nothing to trade and are CDIC insured:
http://www.canadiancapitalist.com/high-interest-savings-accounts-at-discount-brokers/

#110 LIBERALS WIN on 06.12.14 at 10:14 pm

Hudak is a loser. Ontario said NO to mike harris and NO to Hudak.

#111 Chickenlittle on 06.12.14 at 10:16 pm

#94 Smoking Man:

Can I come with you? The Flying Nun is going to ruin this province a la Bob Rae…..

#112 Smoking Man on 06.12.14 at 10:17 pm

How the hell can I leave long branch…

A dude, 50ish stagers up to my tree, at first I thought he was going to Wizz on it. Nope.

The left foot up, 5 minutes wobbling, left to right trying to tie his left shoe lace..

An approaching blond senses the danger, crosses the street.

He loses focus on his shoe.. Like a drone camera looking for alkida his head swivels, he lands on his back..

Brushes self off, spends the next 5 minutes working on the right shoe…

Then dose a 180 after the blond, four feet, face plant..

Oh man what to do…. I love it here…

#113 Dean Mason on 06.12.14 at 10:23 pm

Wait until you public sector workers and retirees that have expensive cottages and houses get a 50% increase to your assessments and property taxes.

All the raises you get will never cover it and you all will be losers. The 10,000 suicides since the financial crisis that were reported, it is much higher will be nothing compared in 4 years.

Kathleen Wynne will be known as the premiere that destroyed Ontario and you guys will wish that you were in Greece when all this is all done.

Vampires, parasites die when they run out of blood and socialism dies when they run out of other peoples money.

#114 KommyKim on 06.12.14 at 10:27 pm

RE: #104 Dean Mason on 06.12.14 at 10:05 pm
Those that have 2 or 3 cars, get ready for another 10 cent a liter gas tax increase and $2.00 a liter gas.

If you are paying $1.90 per liter for gas in Ontario today then you are the greatest fool.

#115 Cici on 06.12.14 at 10:30 pm

#36 Monsieur Obvious

Thank you for adding that clarification. That was pretty petty of Jason to criticize him based on the fact that he has a French name.

Most Québecois people are at least functionally bilingual guys…

#116 Mr. Frugal on 06.12.14 at 10:30 pm

70 years ago we stormed June Beach and made 20 miles on the first day. Now we can’t seem to balance a cheque book or get through life without bitching about the most minor inconveniences. What the hell happened to this country? How can we ever except to survive the zombie apocalypse?

#117 Old Man on 06.12.14 at 10:30 pm

This win was important as it sends a message for Caesar to resign and ride off into the sunset. His ego is too big to go down in defeat so he might retire while he believes in his warped ideology that he is on top. I say bring on the next reformist to run in the Federal election to become the fall guy for a crushing defeat.

#118 triplenet on 06.12.14 at 10:31 pm

Interesting analysis….. uninformed buyers who do not meet any realistic financing criteria or business acumen and those who analyse real estate values based on average sale prices.
That is funny.
And the real knee slapper begins when they introduce property assessments as a valid unit of comparison.
The gods must be crazy.

#119 randman on 06.12.14 at 10:33 pm

Hey America!

Nice job you did with Iraq! Almost as good as Vietnam

Good thing you liberated that country from the evil dictator Hussain

Now your sh*t trained Iraqi army is in taters and running

Your Muslim extremists will soon take Bagdad

How many had to die? And what for?

You are all scum cowards and bullies …the world can see now how successful your nation building and Imperialism has worked

Sorry for the rant but what a god damn waste of time money and people!

Garth ,you say don’t bet against the USA

But why would anyone in their right mind …bet on it?

#120 TheCatFoodLady on 06.12.14 at 10:36 pm

#6 – mid 20s:

It IS rather sad but maybe they’ll smarten up before they drop that saved money on a down payment. Having just graduated, they’d better hope that a) they can get a job that pays enough to save & that b) their student loan repayments don’t take a bigger percentage of their income than they may have anticipated.

The measuring sticks of adulthood have indeed changed. In my parents’ day once out of school & working for a few years, you cast your eyes towards finding a spouse, married & started having kids. By the time you were 30, you generally had a kid or two crawling around & maybe one more on the way.

In our day, you moved out into a grotty walk up over a dubious enterprise, furnished with milk crates, bricks & 2 x 8″s, scrambled to make sure you had the rent every week or month & partied like there was no tomorrow. You had an adult job though, a car, could take exotic trips to Jamaica & could afford your own recreational drugs & cheap beer.

The pendulum has swung the other way – predictably so & we’re scratching our heads. How did we produce such pedantic offspring. Even those of us who, (mistakenly), encouraged early forays into real estate are puzzled. We didn’t think about that SERIOUSLY adult crap for years. Hell, our brains were so addled, we couldn’t think past our next munchies.

I remember my First Brat, cursed with a brain bigger than his abilities. The little cuss had a streak of independence larger than life. He’d march up proudly, beaming & would pronounce: “I do’ed it MYSELF!” Great intentions but often resulted in me having one hell of a mess to clean up.

Growing up is all about: “I do’ed it myself!” About all we can hope for is that the messes they create doesn’t result in disaster.

For too many, it will do just that. I’m hoping the panting pups, one way or another, see their options for EZ credit closed down before they really get scrooched.

Rent, you young monsters. Sure, save money but be prepared to do other than use it for a down payment. Do at least one wildly stupid thing before you’re tied down – take an open trip to some place way out of your comfort zone. Try living in a tree house or save for a summer. Do a several month long overseas NGO gig. Sleep your way through Sarnia, (with protection), I don’t care. Just don’t be in a hurry to take on the more onerous responsabilities of adulthood. You’re gonna be a grown up for a loooooooooong time.

Stay young & foolish a while longer – in a balanced, diversified way of course!

#121 Dean Mason on 06.12.14 at 10:41 pm

Who started the CMHC? LIBERALS! Who is going to lose all their money from high household debt, LIBERALS?

LIBERALS are going to pay big time and Poloz can go on vacation now because he knows what is coming and is slowly telling all you debt ridden liberals that you are going tom lose everything!!!!!!!!!!!!!!!!!!!!!

Ah, actually the Cons doubled CMHC’s mandate and brought in 0/40 mortgages. — Garth

#122 Dean Mason on 06.12.14 at 10:46 pm

Correction, Liberals are going to lose everything……..

#123 UVZ on 06.12.14 at 10:50 pm

Your recent posts on this subject have consistently hit the mark. The bulls-eye of this analysis is the CMHC as eraser of banking moral hazard.

#124 OZY - this is KANATA on 06.12.14 at 10:52 pm

This is KANATA – people overly positive for nothing -I mean who would vote for the 3 major parties that did nothing for them the last mandate ….

I went to vote just to witness the circus. Everything on paper, not computerized 20y after the internet revolution. It tells you where neo-global-post-colony of Ontario is in the civilized world.

I let the little one choose – he X-ed the FREEDOM PARTY – or the GREEN party.

WAKE-up KANATA!!! The village with tents.

#125 OZY - Liberals WON - house Prices will triple in 5 years on 06.12.14 at 10:53 pm

hahaha, Liberals WON – house Prices will triple in 5 years, it will just accelerate the excesses of last 8 years.

WELL DONE, KANATA

#126 VICTORIA TEA PARTY on 06.12.14 at 10:55 pm

WATCH WHAT’S SOON TO BE LEFT OF IRAQ

A tribal nightmare of Sunnis, Shias and Kurds, all vying for power and control, in the wake of the American Empire’s slow withdrawal is unfolding as it should in Sunni-dominated Iraq tonight.

Images will get even more disturbing as the various factions take up against arms against one another after the Sunni-based ISIS group has finished its sweep through Baghdad on its way to Basra and the Persian Gulf.

No, the Yanks won’t be back and their drones are useless because as every military chap will tell you: to conquer territory you MUST occupy it with a superior military force. Robots bombing parking lots won’t quite cut it here, folks.

AND THERE’S MORE

As this madness goes on Iran is now threatening to come to the aid of Iraq’s minority Shias (Iran is Shia) in what seems to be a Saudi-funded revenge attack on Iraq (Saudi Arabia is largely Sunni with a hefty Shia segment in the oil-rich eastern gulf provinces). This has the earmarks of an uncontrollable regional war; now a virtual certainty.

UP SHE GOES!

What does this immediately mean for oil prices world wide?

Well, they’re going up, eg: English Brent crude, closing in on $114 a barrel US. That’s a stunning recent increase; same relative increase for US WTI crude.

Under these circumstances, very high oil prices will eventually crush demand, thus affecting the US’ desire to be the new world leader in oil production via endless fracking. Never will be number one.

However Russia should do well. As for China, its currently the world hog of available hydrocarbons. It must have known something about Iraqi internal politics that the rest of us have recently missed.

If there is a $150 US a barrel repeat, a la 2008, the stock markets will crater and we’ll all be back in the Great Depression all over again!

THIS WILL AFFECT CANADIAN REAL ESTATE HOW?

Total disaster sooner than we all realize.

Those recent buyers “marrying” their local banks, for the next quarter century with “low cost” mortgages, will be suffering beyond belief. They really have no clue.

MY LOCAL SCENE SEGUE

As #27, Victoria real estate update, mentioned continuing stagnant and falling property prices here will only add further dross to a local economy which seems to be not too vibrant, shall we say.

The meek (the debt free) shall inherit the Earth. But do we really want to? What’ll be left?

#127 Joseph R. on 06.12.14 at 10:57 pm

#99 Dean Mason on 06.12.14 at 9:58 pm
Confiscation of all your property is next if they needed more money.

Liberalism is a mental disorder, disease, sickness!!!

——————————————————

Paranoia is a mental disorder.

#128 Jonathan on 06.12.14 at 10:58 pm

Listening to Tim Hudak’s “concession speech”, I am struck by a few things:

He is completely ungracious and negative, treating the vote as a vote against the Liberals.

What a nasty, entitled chump he is!

Umm…Tim……you LOST. BIG TIME.

He is in denial of his colossal mistakes, with no real humility.

This will be the beginning of the undoing of right wing meanness and stupidity in this country, the robotic lack of anything approaching a human touch. Harper will be next.

Apparently Mike Harris was lurking around Niagara to drop by, just in case. (That really shows what we would have got with Hudak.)

It would be smart politics for Wynne to lay it down for Harper immediately, to improve the CPP or face the voters’ wrath.

Don’t let the door hit you on the way out, Tim.

#129 LIBERALS WIN on 06.12.14 at 11:05 pm

Who started the CMHC? LIBERALS! Who is going to lose all their money from high household debt, LIBERALS?

LIBERALS are going to pay big time and Poloz can go on vacation now because he knows what is coming and is slowly telling all you debt ridden liberals that you are going tom lose everything!!!!!!!!!!!!!!!!!!!!!

Ah, actually the Cons doubled CMHC’s mandate and brought in 0/40 mortgages. — Garth
—————————————————————–

Garth is right it was stupid conservatives who caused this problem. I shouldn’t call them conservatives but rather corporate conservatives who care about the interests of big biz/banks. Garth is a real true blue conservative and Harper HATEs real true blue conservatives.

#130 Teacher's Ass-istant on 06.12.14 at 11:06 pm

My bank loves yes I know
For the teller told me so
Set me with the loans and mortgage creep
And the investment babe
Boy she is sweet

#131 China Study on 06.12.14 at 11:09 pm

After 20 years of Double Digit gains, what if China had an economic recession. Well overdue IMO. A housing bubble in China.
Why are we primed for a Chinese bubble burst?
One child policy… This existed from 1979 to 2009. This means the youngest one child families are turning 35.
Also, many of these one child are men, not women.

China’s population distribution is getting much, much older.

http://www.indianjnephrol.org/articles/2014/24/2/images/IndianJNephrol_2014_24_2_71_127881_u1.jpg

Not enough women in China, males will leave as well…

A Chinese recession will have a huge impact on the global economy.

#132 devore on 06.12.14 at 11:09 pm

Garth, the key behind this recent talk, the trigger, was the downgraded Moody’s outlook on Canadian banks. I quite think the government plan was for Big Owe to be hands off while things unravel, so they can wash their hands as being the cause. This is forcing them into damage control.

#133 Mississauga on 06.12.14 at 11:11 pm

For “LIBERALS WIN”-
Get a life!

#134 Smoking Man on 06.12.14 at 11:14 pm

The vault is open, time to invest in a man purse, a pink shirt and go hunting for tree hugging contracts..

Life is easier when God makes you void of a conscious and gilt.

For every defeat lies an opportunity….

Young and Wellesley here I come…

#135 Luka on 06.12.14 at 11:14 pm

Hi Garth,

Great post tonight as usually. I will appreciate if you will consider writing about controversial Bill C-24. In my view it may have strong economic impact. Looking forward to hear your opinion.

Thank you in advance.

Luka

#136 randman on 06.12.14 at 11:16 pm

More on the farce of Iraq from Mish…

People are tired of war and warmongering. Rightfully so.
The Iraq war, begun with the U.S.-led invasion to oust Saddam Hussein in 2003, cost 4,490 Americans their lives, according to Defense Department data. The price for U.S. taxpayers was more than $2 trillion, according to the Costs of War Project by the Watson Institute for International Studies at Brown University in Providence, Rhode Island.
I suggest we face the harsh reality: nothing can bring the lives lost or the money spent back. We wasted $2 trillion dollars already. Let’s not waste more.

McCain, as always wants to press on. And since this is a clear case of “Mission Accomplished”, somehow this is all Obama’s fault.

By the way it should be perfectly clear now why elder Bush did not continue on to Baghdad and why it was a huge mistake for baby Bush to “finish the job”.

Read more at http://globaleconomicanalysis.blogspot.com/#yWyjqGC2vt6ejXJO.99

#137 High Plains Drifter on 06.12.14 at 11:17 pm

Alberta is going on a spending spree and all the big guys are behind it. We shall be borrowing the money as nobody seems to know where all the various piggy banks we absentmindedly started are or if they have anything left in them. Boy do we have a spot for some of you hard working underwater home buyers and of course you be needing some new digs, tee, hee.

#138 randman on 06.12.14 at 11:17 pm

More from Mish
“They will shower us with flowers.”

Anyone recall that idiotic line from disgraced Secretary of Defense, Donald Rumsfeld?

Remember any of these lies…

“Oil will flow freely.”
“The war will pay for itself.”
“We know where they [WOMDs] are.”

And with blatant lies and complete ineptitude, the US set about “nation building” in Iraq. It was the neocon’s number one wet dream at the time.

Today the results are in. A few articles will explain how it turned out.

Read more at http://globaleconomicanalysis.blogspot.com/#yWyjqGC2vt6ejXJO.99

#139 Godth on 06.12.14 at 11:18 pm

#113 Dean Mason

Yeah man, we need more neo-con/neo-liberal economic policies in the world. Disaster capitalism all the way…take the social out of society and the commune out of community – privatize the whole damn world. Vive le Market! Vive le Corporation! Everyone for themselves!

#140 Spectacle on 06.12.14 at 11:19 pm

Thnx Garth.

Regarding: #64 observer on 06.12.14 at 8:12 pm
Global vancouver reports a vote on a 7.5 billion on transit expansion on the lower mainland.
New light trains in surrey, skytrain to arbutus 6 lane tolled patullo etc etc. GOOD GRIEF.
Do i smell a whole new real estate boom in van city all built on never ending growth of DEBT.
I AM OUT OF WORDS.

Hi #64 Observer. If you want that whole massive fiscal fiasco explained it’s another one of those planned & destructive $ grabs by , Agenda-21 . Those infrastructure ( useless & up required ) will bankrupt the nation. Apology but I’m a little tired tonight to reference something for you. You will enjoy seeing how quickly and pervasive the takeover of our nations has been. You could Youtbe Rose Koire , she speaks very well about this secretive, international corruption!

Regards all…

#141 Teacher's Ass-istant on 06.12.14 at 11:21 pm

“You want the loan or not, kid? — Garth”

Yeah Tony…uh I mean Mr. Soprano and I promise I’ll pay you back quick.

A true indication of how things are going is how many of these pay day loan places have popped up over the last few years. They are everywhere in my community, one even took over the variety store space beside them. The place is probably nine or ten thousand square feet now. These places are just a shade better than loan sharks but they are booming. I know one of them ran into financials issues, last year I think it was, so it really makes you take note that something beneath the surface can’t be right. I mean at the rates these guys charge and as much demand as their must be to have so many and even they have trouble staying afloat, scares me.

#142 Dominoes Lining Up on 06.12.14 at 11:26 pm

@126 Victoria Tea Party

You said …

———————————————————–
THIS WILL AFFECT CANADIAN REAL ESTATE HOW?

Total disaster sooner than we all realize.
————————————————————

I have to agree. The U.S. can stay out of direct involvement in war.

But there’s no avoiding the economic impacts of this region in such chaos.

Oil could easily fetch $150 this summer with this. Gold will rise with it.

Real estate may be staring into its black swan event for Canada. Areas that are car-dependent will be hit first.

Did I mention gold should do well? ;)

#143 devore on 06.12.14 at 11:29 pm

Van prices have not tripled in seven years. Get a grip. Besides, only those who crystallize gains make money. As you did. — Garth

And if you bought a condo, and dumped money into it, you’re selling at a loss.

#144 Terry on 06.12.14 at 11:30 pm

A Liberal majority???? My GOD Ontario…………how does thou go bankrupt?……….slowly at first………..then all of a sudden! It’s time to begin our plans to leave this province.

#145 Teacher's Ass-istant on 06.12.14 at 11:37 pm

“Maybe some of the CHMC money should be redirected toward something along the lines of the Economic Devolpment Bank “

It’s not. It’s providing guarentees to the banks who provide the finanacing in order to facilitate the expansion and hiring of four more welders in Garth’s example, where the banks otherwise won’t give these people anything. Or start a business once a business plan has been scrutinized with the same kind of guarantees. Makes more sense than covering the banks in full so Martha & Bob and all of their friends and relatives can buy $999,000 houses in the hope they can sell them to each other at a profit in two years basically to each other. At least backing business expansion or starts can be a productive use of the money. My understanding is that development banks also provide other services to their customers to aid in success.

#146 Mark on 06.12.14 at 11:38 pm

“Not only are Vancouver prices shockingly high compared to local incomes, the numbers of Audis, BMW’s, Mercedes, Ferraris and Maseratis running around town, and the new dealerships selling said vehicles springing up all over the lower mainland also aren’t supported by jobs in the local economy. We won’t mention the age, sex, and ethnicity of the drivers of most of the exotic cars we see tooling around Vancouver, but the square green sign with the letter N in the middle certainly gave me pause when I saw it for the first time.”

Amazing what a debt bubble can do, eh? A certain ethnicity, with viable options in terms of ex-patriation from Canada, may very well be treating the Vancouver RE market and CMHC subprime borrowing as effectively non-recourse.

Evidence, of course, remains scant that any meaningful amounts of “money” is coming to Canadian RE from overseas.

#147 Happy Renting on 06.12.14 at 11:41 pm

#73 Picketty Pocket on 06.12.14 at 8:42 pm

I’m using it for short-term cash parking in my Questrade account. Getting small amounts from my Tangerine account into my Questrade accounts takes at least two business days. Amounts $10k+ have taken as long as 6-8 business days as Questrade just holds onto it (and on and on… Must be making some good profit lending it out!) As you said, PSA.TO earns better interest than a money market account. My actual cash allocation will stay in the Tangerine account (probably about 5%).

#148 TurnerNation on 06.12.14 at 11:47 pm

The BEARorist threat level is: Orange.

#149 RayofLight on 06.12.14 at 11:57 pm

#126 Victoria Tea Parties.

I agree that the geopolitical risks surrounding the significant traditional global oil supplies seem to increasing. Iran could submerge to whole area in a civil/regional war. Remember Ukraine? The place where the rebels are smuggling in Russian Tanks and Putin is threatening to cut off the gas to Europe?.
And Yet Obama defiantly dithers on the XL Pipeline that would ensure secure political safe oil supplies for years to come into the US.
I believe Obama’s legacy will be… He Made George W Bush look good, in fact better than good, Awsome

#150 Pope Nosty666adVlad the Snugglebombed on 06.13.14 at 12:11 am

Shocks? Plenty more shocks arriving daily. Here a couple to consider — No jobs combined with Forced austerity and the US war machine.

#119 randman on 06.12.14 at 10:33 pm — “Nice job you did with Iraq! Almost as good as Vietnam.”

Well said. Further, “Following Richard Nixon’s ending of gold convertibility for the Federal Reserve Notes, effectively nullifying the Bretton-Woods agreement, foreign demand for US dollars was kept up through the “Petro-dollar” deal, an arrangement whereby the dollar was used for all international purchases of oil and other raw materials. . . . Then, in 2002, Saddam Hussein obtained United Nations permission to sell Iraq’s oil, not for the US dollar, but directly for Euros. The United States invaded in 2003 under the now-revealed pretext of nuclear weapons, lynched Saddam, installed a puppet regime in Baghdad, and now Iraq’s oil is back on the world market, but only purchasable using US dollars.” wrh.com.

Here we go again — US interference in Ukraine and Oligarchy Corporate profits via stagnant wages have something to do with all this.

#151 Jack Henning on 06.13.14 at 12:24 am

To #129 LIBERALS WIN

Buying bank preferred shares is as bank, corporate as you can get. Liberals are win being idiots!

#152 Mister Obvious on 06.13.14 at 12:55 am

Being “plagued with scandal” has always been a sure fire recipe for winning elections in BC. So too in Ontario, it would seem.

#153 SHELTER THE MONEY NOT THE PEOPLE on 06.13.14 at 1:01 am

#22 Vlad: Well said.

Fact #1. The CMHC is a government owned corporation
Fact #2 Directors are appointed by The minister responsible for CMHC at the time. The link shows who appoints the governors.
http://www.cmhc-schl.gc.ca/en/corp/about/cogo/cogo_009.cfm
Fact #3 The CMHC was purportedly set up in 1946 to address the post war housing situation.

Is it such a stretch to see how like many other institutions today they have lost their mandate and their way?

Would you agree that the moral hazard levels have risen dramatically in the last few decades?

IMHO The CMHC is now driven by political decisions for political reasons. Politicians are driven by bankers who take good care of their friends after they lose an election in many ways. It is a hand in Glove relationship.

#154 domain on 06.13.14 at 1:07 am

So Garth, are you still 100% sure that there will not be a bail-in? And if there was one, do you still think there is no risk to depositors in the event that the systemically important financial institutions (basically all of our banks) become capital impaired? Your ‘hysteria’ post clearly stated your position on the matter, and that you believe that no deposits will be touched during a bail-in in Canada.

Very recently, Moody’s has changed their outlook from stable to negative “on some of the senior debt and uninsured deposits of Canada’s largest seven banks.” The article says they took these actions “in the context of previously announced plans by the Canadian government to implement a ‘bail-in’ regime for domestic systemically important banks.”

Since the 2013 Action Plan made mention to bail-ins that you said people mistakenly interpreted as a risk to depositors, has Moody’s also mistakenly interpreted these bail-in provisions as well?

The article of interest is below, and I am curious what your opinion is:

http://business.financialpost.com/2014/06/11/moodys-downgrades-outlook-for-some-of-canadian-bank-debt-over-bail-in-regime/

No bail-in here. Ever. — Garth

#155 JimH on 06.13.14 at 1:39 am

#119 randman
Hey! Instead of apologizing for a juvenile and mindless anti-American rant, wht not just refrain from making yourself look like an idiot in the first place?

#156 OntarioTaxpayer on 06.13.14 at 1:59 am

Pretty sure I’m screwed.

#157 Lolo on 06.13.14 at 2:13 am

CMHC should only cover a portion of a high ratio mortgage (say, up to 50%), and the banks should be on the hook for the rest. Actually, they should do that for the bulk insured conventional mortgages too.

#158 Cliff on 06.13.14 at 2:14 am

Similar story here. I own a small company with profits of around $500k/year, as well as a holdings corp with a little over $1M in liquid assets. After renting for years, bought a $700k house a few months back with $200k down. (Didn’t want to pull the full amount out of the holdco at the highest marginal tax rate.) Anyway, I went to a mortgage broker (at a large firm), and he literally could not find a lender willing to offer the $500k mortgage. One actually gave the reasoning that “there’s nothing stopping you from spending all that cash in the holdco”. And yet if I had a regular paystub from a $50k/year job and no savings, I’m sure it would have been rubber stamped. Mind boggling. (Seriously, my mind was boggled.) Fortunately our bank was happy to give the mortgage, although at a slightly higher rate than some of the smaller lenders that wouldn’t.

#159 Cliff on 06.13.14 at 2:16 am

Oh, also, some of the lenders did unofficially suggest that if we were willing to *reduce* our down payment below 20% – and therefore pay for CMHC coverage – they could re-evaluate. We’re living in backwards land.

#160 Eddie on 06.13.14 at 2:53 am

I wish I had a dime for every internet blog expert that predicted the ‘bursting bubble’ of the housing market. I would be able to afford a million dollar home in Vancouver.

Bought my first house just over 16 years ago and have been hearing this argument ever since. Was even hoping for it last year so I could pick up a bargain as an investment property.

#161 cynically on 06.13.14 at 3:22 am

Hey #119 randman, don’t piss off the Yqnks because they are all we have to protect this colony from the evil forces out there. They may have screwed up in world politics but they have done a lot of good too and Canada will never be in the position of power to make those mistakes and you must face that fact so don’t be bitter.

#162 Macduff on 06.13.14 at 4:26 am

Wall Street Journal, Europe edition June 13: “Britain Warns on Property Prices”. “Rocketing prices, lax lending and high debt ” (in UK). Carney declares real estate as “the greatest risk to the domestic economy”. This is my favourite part: “On Valentines Day 800 people braved rain, wind and the potential ire of their partners for the chance to buy an apartment…..£2000 on a credit card to secure one of the 336 apartments”. Has the whole world gone flipping nuts?

#163 The real Kip on 06.13.14 at 6:47 am

Tim Hudak to Ontario:
If I’m elected I’ll cut 100,000 jobs.

Ontario to Tim Hudak:
We had in mind one job cut Tim, yours!

So long Timbooo!

#164 Stickler on 06.13.14 at 7:06 am

“… get a mortgage for almost $1 million, with $50k down, even though he has never made more than $50k per year in his life?”

—————————

Great question, and yes sad but true answer…CMHC!

The secret Rastafarian in me is really upset that CMHC doesn’t provide loan assistance for a Ferrari…because I really want one.

I’m going to cry in bed all day while I play bible roulette.

#165 Herb on 06.13.14 at 7:52 am

Garth, how did you ever get that picture of a property virgin in the hands of the FIRE industry and its government backers? And don’t forget to blame the victim when the catcher turns his back.

Perfect example of the pair of virgins I met yesterday when we returned after the home inspection of the place we refused to buy after renting it for three years and they are going to pay over $600 K for and move into right after they get married. All they could see was the orgy-sized soaker tub, master bedroom big enough to add a pool table when the bed gets boring, and “gourmet” kitchen for the two of them. If I were Jesus I’d weep.

The inspector took three hours and looked hard-nosed, but his report will have the same effect as telling the young man not to marry that tall, lithe brunette with the bedroom eyes. Which leaves the bank not giving them a mortgage as their only hope of salvation, so I abandoned hope.

As we used to sing back in the days when we had an army that drank, swore and sang objectionable songs: “Jesus saves his money at the Bank of Montreal … Jesus saves, Jesus saves, Jesus saves” etc. (He also walked on water and was the life-guard at our pool.)

#166 TurnerNation on 06.13.14 at 8:08 am

Yus bin had. The elites’ computer simulations won out. Higher levels of the pyramid.

If 1-in-5 Ontarians work in the public sector and out of the blue puppet B suddenly pledges to decimate their ranks they scurry to puppet A. Done like dinner.

#167 pbrasseur on 06.13.14 at 8:11 am

At least Ontario avoided the worse possible outcome: A Liberal minority backed by the NDP!

Still the next few years will be fascinating, the big question is where will Ontario find true sustainable growth? Certainly public debt and consumer credit based growth cannot last much longer now, what else is there? And unless it takes action soon to control its budget the agencies are about to downgrade the province and we all know household are near if not already tapped out.

Same (or uglier) situation in my home province of Quebec, together they make up 60% of our economy, with the exception of Alberta the rest of the country is more of the same, at the mercy of a commodity shock.

Garth has been telling you to buy into the US recovery and he was right about that, but you know what, it’s still time to do that because things can get worse here, much worse.

#168 maxx on 06.13.14 at 8:25 am

CMHC.

Just another variety of CDO, imposed upon the taxpayer. The original variety was for purchase, this one is not.

Phenomenal stupidity.

#169 NYCer on 06.13.14 at 8:41 am

Dean Mason

Stop blaming Liberal voters and blame those who didn’t even vote!

And it’s entirely possible for public servants to be renters and not have to pay utilities (included in my rent which has not increased by more than $30 in the last 3 years). Have no car and insurance worry.

#170 Bobo on 06.13.14 at 8:54 am

Please actually read the BoC’s FSR. Just because they talk about it does not mean they are “warning” of a sharp correction. Probability is low in their mind. Geezus.

#171 Millenial on 06.13.14 at 9:01 am

Garth,

Just saw a house in Riverdale profiled in the G&M: 148 VICTOR AVE., TORONTO.

Price history:
$374,000 (2000)
$605,000 (2004)
$815,148 (2011)
$1,247,700 (2014)

Pretty amazing, huh?

#172 Millenial on 06.13.14 at 9:04 am

Scratch that, it wasn’t a “house” it was a semi.

#173 Dupcheck on 06.13.14 at 9:12 am

With the Lib’s winning now we can see an extended inflation of the RE gas bag. They probably do not want it to blow on their face too early.

#174 Dupcheck on 06.13.14 at 9:13 am

We never see the numbers of people that voided their ballots! That should be a results category in a democratic election. Electing the least of the evils will not cut it any longer.

#175 Shawn on 06.13.14 at 9:24 am

What Explains High NEW Home Prices???

In a reasonably competitive market the price of new homes and condos is driven by the cost to produce. (Presumably the profits are reasonable but not outrageous.)

We seldome or never see analysis on what has driven up the cost of a new suburban home to twice or tree times the price of say 20 years ago.

Where is the extra money going:

Raw land costs?

Land development costs? what part of that? surveing and grading? Is it levies and permits from municipalities and utilities for roads, sewer, water, electricity, gas, cable tv and telephone?

Construction materials? what part is up 100% and 200%? lumber? concrete, drywall? hardwood versus carpet? roofing shingles?, windows?

Labour costs? are they up 100% and 200% in 20 years?

Bathrooms and kitchens? the granite, the fridge / stove?

And the thing is if house prices are to drop much will new home prices drop as well? and if so which of the component costs or profits on a house will drop?

Same questions apply to Toronto Condos. What components drive the costs?

Toronto condo prices could drop a LOT if there is glut on the market, but at some point new builds will be needed and if the cost is $300 or $400 per square foot or whatever then the prices will presumably be above that to allow for profit.

Some of you have insight on these questions, I suspect.

#176 Smoking Man on 06.13.14 at 9:27 am

Why does the ussr national anthem keep playing in my head, anytime I visualize Queens Park.

#177 Holy Crap wheres The Tylenol on 06.13.14 at 9:48 am

#206 Holy Crap Wheres The Tylenol on 06.12.14 at 10:30 am
Voting day………………………..

Which way are we going?
Left?
Right?
Straight?
Same old same, most likely!!!!!
Down the crapper, very likely!!!!!!!!!

Probably most people are so dam apathetic that they wont even vote!
Good luck Ontario.
Tune in to the same Bat Channel, Same Bat Time later tonight, details at 11:00.
_____________________________________________
Well I was wrong! The voters were less apathetic than I thought, they actually increased a few percent. But on the other hand my prediction was bang on!!!!
Ontario we are about to go down the crapper!
A Wynn win is a cessation of honest government. Hudak screwed up large and who cares about whats her name from the commie pinko party. I hope the OPP can forget thier union commitment to the Liberals and prosecute whoever is in the gas plant scandal!
Oh who the hell am I kidding “Honest Government” hell that’s like semi boneless ham or sort of pregnant.
By the way everyone who supported your new “leader” welcome to hell for the next four years. Don’t come bitching to me about your taxes going up and services going down!
WTF is wrong with Ontario?

#178 housedoc on 06.13.14 at 9:48 am

In Toronto, I’m afraid that I am witnessing the creation of my political nightmare trifecta of Wynne, Chow, Trudeau.

If only it comes with backyard chickens and legalization.

#179 Castaway on 06.13.14 at 9:49 am

#94 Smoking Man on 06.12.14 at 9:44 pm
#86 Old Man on 06.12.14 at 9:20 pmThese early returns are looking good. Might have been the ‘Joker’ gig with Who Dat running away from the hospital laughing which turned the tide. I wonder who thought that one up.
………….
Congrats old man, bye bye private sector jobs….

Thank God I saw this coming and protected my stash..

Question for me now is..
Nevada, California, or Florida…
—————————

SM,

Florida with Latino culture rocks, but too many hurricanes.
California great but too much like Canada. Left leaning and tax hell.
Nevada, two word, Vegas Baby.

#180 Bubblicious on 06.13.14 at 9:52 am

Is it just me or does anyone else think that Kathleen Wynne bears a striking resemblance to Orville Redinbrocker?

#181 thebarold on 06.13.14 at 9:57 am

In most cases stupid people can hang onto jobs. Stupid people running their own businesses rarely stay in business… (my version of the Bank’s risk model)

#182 T.O. Bubble Boy on 06.13.14 at 9:58 am

@ #162 Macduff on 06.13.14 at 4:26 am
Wall Street Journal, Europe edition June 13: “Britain Warns on Property Prices”. “Rocketing prices, lax lending and high debt ” (in UK). Carney declares real estate as “the greatest risk to the domestic economy”. This is my favourite part: “On Valentines Day 800 people braved rain, wind and the potential ire of their partners for the chance to buy an apartment…..£2000 on a credit card to secure one of the 336 apartments”. Has the whole world gone flipping nuts?
———————————–

but… but… but…. the buyers were all from China, right?

#183 T.O. Bubble Boy on 06.13.14 at 10:01 am

@ #176 Smoking Man on 06.13.14 at 9:27 am
Why does the ussr national anthem keep playing in my head, anytime I visualize Queens Park.
———————————————-

Let’s hope Wynne doesn’t actually believe the “mandate” crap… Liberals got 1% more of the votes, and only because Hudak is a gigantic moron who campaigned on unicorns and pixie dust in his “race to the bottom” economic plan.

If they pass 100% of the stuff in that budget, Ontario will get it’s debt rating cut within 1-2 years.

#184 Bubblicious on 06.13.14 at 10:03 am

Liberals Wynne- get ready for some “Revenue Tools”

#185 Bubblicious on 06.13.14 at 10:05 am

Today’s photo= Hover-cat

#186 Tim Hudak's Math Tutor on 06.13.14 at 10:11 am

Hold on there a minute, people.

Don’t jump to hasty conclusions.

Tim and I are looking at the election results so far and based upon our mathematical expertise we expect to have some very good news for you all shortly.

Stay tuned!

#187 Old Man on 06.13.14 at 10:13 am

#176 Smoking Man – the Commies are looking for you now and its off to the labour camp. It has been ordered that you are an enemy of the State.

#188 miketheengineer on 06.13.14 at 10:23 am

Garth et al:

A really neat graph showing the velocity of money, from the US Fed Reserve. Notice the big drop in 2014.

Here is the link.

http://urbansurvival.com/wp-content/uploads/2014/06/image15.png

#189 Doug in London on 06.13.14 at 10:23 am

Would Paul Martin be interested in coming back to Ottawa on a 6 month contract, possibly followed by another 6 months in Queens Park? We could use the sensibility he had while in office.

#190 maxx on 06.13.14 at 10:56 am

” #10 joblo on 06.12.14 at 6:22 pm

Have Harpo and Oli changed the anthem yet?
Owe Kanada”

:-) Your comment deserves its numerical rank number- out of 10. Such truth in that lovely bit of humour!

#191 Hillbilly on 06.13.14 at 11:01 am

T. O. Bubble Boy – comment # 183

try 1 to 3 months first downgrade, followed by at 1 or 2 more in the first 12 months, with more if interest rates rise in the USA at all in that time frame

Ontario is cooked, could not possibly chosen a worse time to elect a tax and spend regime with a majority.

Ontario should get a downgrade today based on the stupidity and gullibility of the populace alone.

#192 Italians love real estate on 06.13.14 at 11:04 am

Yesterday’s landslide victory for the liberals says it all.

Socialists, public sector employees, unions and others who are dependent on the free public trough want the hard working public sector to ” keep a payin ” !

Greece here we come

#193 yo on 06.13.14 at 11:08 am

100% agree with Elaine. It baffles me the gov’t has created a system like this. I use to be in bond trading/private equity. We had to do to our due diligence when we invested in a bond or made a loan to an entity – but if a third party insured against our losses (and the borrower paid that insurance), 99% of our work would not be required. None. Its insane. Shouldn’t it be the Canadian banks that “pay” for the insurance since they are made whole if the debtor fails to pay? At least get the banks to put some kind of skin in the game.

I know a few people at work who have bought houses with CHMC insurance even though they had enough for a full downpayment. They just wanted to use the extra cash to re-invest. In essence, there are people (using a term from my days on the trading floor) “arbing” the system.

I tell you right now as a former finance guy, there is no way that bank in Elaine’s example would loan them that money if there was no CHMC insurance. Not even 50% of that loan. There is no way.

#194 TJ on 06.13.14 at 11:10 am

Great post Garth. Exposing the abomination that is the CMHC for what it is can’t be done often enough.

The people who profit from this situation are far smarter than the regulators / policy makers. They play the game and they win. Every time. Period. The CMHC is used and abused by these people who extract vast amounts of wealth from it for themselves.

For those out there with honest jobs, working long hours, grinding out a living (I’m obviously not talking about anyone who’s a member of a public sector union). I’m sorry, but you lose. These guys make your annual income on a good day, and when the party ends the bill will be on you.

#195 Hillbilly on 06.13.14 at 11:11 am

Millenial – comment # 171

Not pretty amazing dude, but pretty sickening if you understand the wider economic implications.

#196 Old Man on 06.13.14 at 11:11 am

A few words about Wynne as she must be respected because a hider she is not unlike many on the Hill. This woman has a challenge on her hands and she will rebuild Ontario step by step. This might take a little pain to regain some financial stability for all in the Province of Ontario so be patient. This woman can answer questions openly; speak without reading a script and reporters are not gagged – she is no reformist. The men have messed things up, so give this woman a chance.

#197 Smoking Man on 06.13.14 at 11:18 am

#187 Old Man on 06.13.14 at 10:13 am

I have a product I’m going to sell the commies, if successful should net about million or two….

Do you know where I can buy a pink shirt, and a man purse.?

#198 randman on 06.13.14 at 11:19 am

JimH

Please explain the part that was juvenile, mindless and idiotic!

Can you dispute anything that I said about the USSA in my rant?

I’ll be waiting patiently ..thanks

#199 Finally on 06.13.14 at 11:20 am

I can’t handle it anymore, friends and family sending me links to houses that are overpriced dumps. 1.1 million for a 80 year old house in east van house on a 33×100 lot. However, been semi-renovated 5 years ago, woopee! In their comments, they say ‘prices haven’t gone down, time to buy’. Hate listening to friends that bought last year and now they say, their house is worth more, we made money.

Yes, I’ve been wrong so far, been saying prices will go down for the past 3 years, hate beeing wrong, hate waiting for this correction to happen.

#200 Italians love real estate on 06.13.14 at 11:20 am

#171 millenial

Looks like a factor of 3.3 or up 230%.

Same thing in the suburbs. Townhomes which we’re selling for 170 in year 2000( I know I bought one for investment) now worth 550 to 600 give or take.

Increases have been relatively uniform across the GTA within 10% or so

#201 randman on 06.13.14 at 11:24 am

Cynically #161

Yes there has been a lot of good , and originally well intentioned…but now the ignorant, sheep have pissed away the constitution and allowed a boatload of NEOCON/MARXIST criminals to hijack and overthrow their government.

Don’t think for a second they are our friends anymore..It wouldn’t surprise me to see them come take our resources by force one day …easier than invading Iraq

#202 Mister Obvious on 06.13.14 at 11:49 am

#169 NYCer

“Dean Mason

Stop blaming Liberal voters and blame those who didn’t even vote!”
——————————

Those who did not vote are either passively protesting democracy or too dumb to pound sand down a rat hole. In either case, they do not belong in a voting booth.

#203 Old Man on 06.13.14 at 11:52 am

#197 Smoking Man – there is a three level men’s shop with a broad selection at 551 Church Street for all your clothing needs. Good luck with your potential sale, and if you give me a cut might be able to open a few doors for you. Lets call it a finders fee.

#204 Daisy Mae on 06.13.14 at 11:55 am

#101 Mr. Frugal: “Garth,You’re depressing the hell out of us, here.”

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

Yeah…but we need to know what’s going on. So we can brace ourselves.

We can pat ourselves on the back because we’re paying attention. We don’t have our heads in the sand like millions of others. . ;-)

#205 Mister Obvious on 06.13.14 at 12:30 pm

#200 Italians love real estate

I quite like your handle and agree, Italians do like real estate.

The north east section of Vancouver (say around the PNE area) has many Italian home owners. They are very house proud. I don’t mean big opulent mansions but extremely neat city lots with fairly modest but extremely well maintained places, nice gardens and of course, lots of fine brickwork. All in the price range of about $1M, I might add.

Many grow grapes and make their own wine. East Vancouver sometimes gets a bad rap but these Italian areas are quite pleasant to walk around in. I do appreciate the obvious civic pride.

However, none of that changes the fact that, in Vancouver, houses are extremely overpriced and on the verge of correction.

The ‘at risk’ groups (mentioned continually on this blog) are still those who are completely weighted in real estate and are depending entirely on the equity contained within, and… those very foolishly overextending themselves to get in at the top.

#206 bill on 06.13.14 at 12:43 pm

I see the cat has its tail in the ‘hard right rudder’ position.
bit of a cross wind on the landing area?

#207 Gregor Samsa on 06.13.14 at 12:43 pm

I was cheering for a Hudak victory in Ontario because his reckless policies showed a lot of promise for imploding the Ontario economy and kickstarting the end of the housing bubble.

But a Liberal win probably means things get dragged out a bit further. Make no mistake though, there are serious challenges facing Ontario that need to be dealt with at some point.

To me the election was really about how Ontario wanted to take their pain: a quick “band-aid rip” with Hudak, the “slow peel” with the Liberals, or the “just leave it alone and hope for the best” of the NDP.

#208 Peter on 06.13.14 at 12:57 pm

Had a chance viewing the BoC Q&A from yesterday. Basically, the gist of housing is a risk but not as big as people think. The probability of it to blow is pretty negligible since the worst case scenario is base on external shocks. If history is any indication, worst case scenarios never really plays out.

Remember the talk of US default? Greek exiting the Eurozone? Nothing happened. A blip in history.

#209 Nuke on 06.13.14 at 1:05 pm

Liberal Ontario majority. Expect lots of strikes by public unions this summer to try and recover from years of clawbacks and freezes.

#210 Joe2.0 on 06.13.14 at 1:07 pm

World Bank recommends that Canada increases taxes on foriegn investors to help cool down housing bubble.

#211 chapter 9 on 06.13.14 at 1:09 pm

Stephen Poloz”If China blows up,we’re in deep trouble.” He forgot to mention Russia. After all when he attended the Bilderberg conference this was front and centre one of the main topics. Russia is not a third world shithole that can be invaded,bombed,intimidated without serious consequences for the whole world. Obama and his lacky buddys are playing with a nuclear and military super power and the last thing you want to do is piss them off cause Russians don’t forget,forgive or give up!!

#212 Second Home Smoke on 06.13.14 at 1:10 pm

Similarly, if I were to walk into the bank and inform them that I would like a loan to leverage myself 5x to invest in blue chip companies with growing profits, international diversification, pricing power, etc. (i.e. barely any Canadian companies), they would throw me out on my ass but not before placing a mortgage pamphlet in my back pocket offering 20x leverage.

#213 Smoking Man on 06.13.14 at 1:11 pm

#203 Old Man on 06.13.14 at 11:52 am#197 Smoking Man – there is a three level men’s shop with a broad selection at 551 Church Street for all your clothing needs. Good luck with your potential sale, and if you give me a cut might be able to open a few doors for you. Lets call it a finders fee.
………

10% you must have an HST Number… You must remember keysme, well I have an industrial strength version that gets married to ms outlook, or Lotus notes… Self generates a new algo every week..

#214 Blacksheep on 06.13.14 at 1:21 pm

Mister O #202,

“In either case, they do not belong in a voting booth.”
—————————————–
Passive my arse.

There are some, whom through experience, realize faux democracy is mere appeasement for the Cattle.

Your vote means shit. As long as you play along, you give this system legitimacy. I choose not to.

Corporate influenced politicos, rarely act in the best interest of the herd. Why do election platforms usually involve voting to remove someone, rather than a shinning new hope? Repeated disappointments=reality.

http://www.youtube.com/watch?v=xIraCchPDhk

#215 Habs76-79 on 06.13.14 at 1:21 pm

#199 Finally,

Hate listening to friends that bought last year and now they say, their house is worth more, we made money.

______________________________

Your (so called) friends have NOT made any money on their real estate purchases until they SELL what they based on your posting just recently bought and do all the math, such as cost they pay/paid and deduct costs of original purchase, interest paid, along with taxes they have had to pay since buying as well any renos and maintenance they have had to pay for on said housing. Only then can they be able to say IF they made any money or not.

As to friends, no friends will without you asking inundate you with listings info of houses for sale while they try to rub your nose in it. Tell them to STFU!

#216 Blacksheep on 06.13.14 at 1:28 pm

miketheengineer #188,

“A really neat graph showing the velocity of money, from the US Fed Reserve. Notice the big drop in 2014.”
————————————————-
No ropes will be pushed. The System needs a reset. Debt jubilee anyone? Some in France are murmuring about how its debts are illegitimate, only owed to themselves, so what the hell, wipe it clean.

http://www.theguardian.com/commentisfree/2014/jun/09/french-public-debt-audit-illegitimate-working-class-internationalim

MMT rocks!

As I said in a recent post, debts and $’s are not the same thing as they were, 50 Years ago.

#217 Old Man on 06.13.14 at 1:42 pm

#211 chapter 9 – Poloot was indeed there but since I have reviewed this list for the past 20 years when we had mail delivery discount him completely. You missed the red flag in the equation as focus upon what is important in the soup mix.

#218 Mark on 06.13.14 at 1:44 pm

“I know a few people at work who have bought houses with CHMC insurance even though they had enough for a full downpayment. They just wanted to use the extra cash to re-invest.”

Incredibly tax inefficient. And not very common.

#219 Italians love real estate on 06.13.14 at 1:51 pm

#205 mister obvious

You are correct in your assessment of Italian neighborhoods . You should visit Woodbridge here in Vaughan (GTA) sometime. Perfectly manicured homes, regardless of value size or location. The “home is where the heart is ” is a cliche most deeply held to them.

I would add that houses and RE are the cornerstone of their financial planning . 1 at generation and even most. 2nd generations haven’t got a clue about financial asset products and don’t care to learn.

After all they really believe that RE only goes ” uppa” as Bigrider likes to say.. LOL

#220 Holy Crap Wheres The Tylenol on 06.13.14 at 1:53 pm

#178 housedoc on 06.13.14 at 9:48 am
In Toronto, I’m afraid that I am witnessing the creation of my political nightmare trifecta of Wynne, Chow, Trudeau.
If only it comes with backyard chickens and legalization.

_____________________________________________

I would based on the fact that we all appear to be in the Matrix agree with you on the above.

The chickens that is!

#221 Holy Crap Wheres The Tylenol on 06.13.14 at 1:56 pm

Smoking Man why the pink shirt and purse? Real commies use suits, ties, and Kalashnikovs.

#222 happity on 06.13.14 at 1:57 pm

In a galaxy far far away, there was the

DEATH STAR

Today, the universe looks at our planet and sees a

DEBT. STAR

#223 Holy Crap Wheres The Tylenol on 06.13.14 at 2:03 pm

We’re seriously messed up. Lost our way.
I thought about that yesterday as the Forces of Christianity reigned down upon me. They missed.
_____________________________________________

Me thinks that you were not the target yesterday Sir Garth!

Alas, poor Tim I knew him, Horatio, a fellow of infinite
jest, of most excellent fancy. He hath bore me on his back a thousand times, and now how abhorr’d in my imagination it is! My gorge rises at it.

#224 bdy sktrn on 06.13.14 at 2:06 pm

many Italian home owners. They are very house proud. I don’t mean big opulent mansions but extremely neat city lots with fairly modest but extremely well maintained places, nice gardens
————————————-
my next door neighbour is exactly this – he paid 1.1 for his house. 1.1 ten thousands, that is, or 11k. he is up exactly 100x.(since 1967)

kids left, wife passed 5yrs ago – alone in a big house, does not want to go travel. will be there till the end.

not bad for an ex-janitor. i think he owned or still owns other re as well.

Sad story. — Garth

#225 Gab on 06.13.14 at 2:21 pm

Our housing is out of control. In my view there are 3 main reasons and suggestions.

1- The MLS should be public knowledge. The Canadian taxpayer should have the right to access that information. When the deal is finalized the lawyer should be the one obligated to send the info to a Canadian government.

2- CREA should be audited. Their present system artificially increases the prices as everyone refers to the last price and offers a little more.
That is not unsustainable is also artificially increases the price, taxes and the commissions. If only salaries worked that way. Sports athletes do the same thing.

3- CHMC: This is the biggest problem. They need to put boots on the ground and appraise the property that they are backing. Sellers should be obligated to get a CHMC appraised certificate assuring that the price that is being sold insured. If the banks was on the hook I can guarantee that they would send someone to appraise the home. I heard of one case where the bank decided to offer 30K less to the borrower. The bank thought that the buyer overpaid.

Lastly track foreign investment. Every Canadian should have the right to know who is buying what.

#226 Jack Henning on 06.13.14 at 2:27 pm

To #139 Godth

Wait until you get sick and get some disease like Cancer and have a few weeks or months to live.

See how much your socialism and liberalism will work for you. It is called healthcare not healthcure.

The only thing the socialists, communists, liberals etc. know how to do is trick people into believing that they actually care about by stealing other peoples hard work, time and money.

Don’t pay your mortgage or rent, utilities, credit card bill, car insurance etc.

See how much you will get. Meanwhile, your public sector buddies are raking in $80,000 to $150,000 a year and you are going to live in some social housing rat hole.

#227 };-) aka Devil's Advocate on 06.13.14 at 2:34 pm

As Garth says; “Elaine is totally correct”. But there are things you can change and things you cannot change.

I wish I could believe that, what for all intents and purposes appears to be, a market dynamic of exponential real estate price increases is not on the horizon. I did not enjoy the last period of irrational exuberance and I’m not particularly looking forward to the next. I’d much rather see a slow steady moderated growth. But human nature being what it is I am convinced, based on current market dynamics, that substantial price increases are in the cards by six months’ time. Those price increases will motivate more buyers to rush to beat even higher prices so demand grows more heated and prices follow. The growth curve grows ever steeper until it pushes and pushes sooooo hard it breaks and comes crashing down wiping out 50% of the equity gains between now and then.

The gains are never completely clawed back and so anyone who buys right now enjoys such an equity gain in the process that they are still miles ahead when it does finally come crashing down for, again, it never claws back so much as it gained. No, it’s not a rule carved in stone. It just happens that way, time and time again it happens. People are creatures of habit. And we wonder why; when we do the same thing over and over again expecting a different result we don’t get it???

On the moral hazard thing; what’s the difference if CMHC has more liability than asset in insuring the banks against loan default or, should it all come crumbling down, the government bailing out the banks. Either way the burden is borne by the taxpayer.

Investment is a long term strategy. Speculation is always a risk. There’s speculative money to be made in the next couple years but you gotta know when to hold them and know when to fold ‘em. Some people, as always is the case, are going to get a serious financial slap upside the head in a few years’ time. Pigs get slaughtered. Others who “invest” for the long term will be smiling all the way to the bank as their mortgage to value ratio shrinks. Think about where those who bought in 2003 are today… 7 to 10 years SHIFT happens };-)

C’est la vie

#228 Daisy Mae on 06.13.14 at 2:34 pm

#132 Devore: “I quite think the government plan was for Big Owe to be hands off while things unravel, so they can wash their hands as being the cause. This is forcing them into damage control.”

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

Well, the cons have screwed everything up so badly, what CAN they do except stand back and watch it all unravel? Too late to turn back.

We will not forget the “seriously bad laws” come election time.

Some think Harper, the economist, will resign soon? Well, that IS the cowards’ way out….

#229 Jack Henning on 06.13.14 at 2:44 pm

In 4 to 5 years Canada will be have to be bailed out by the IMF when Kathleen Wynne, Justin Trudeau make Canada into Cuba.

#230 Godth on 06.13.14 at 2:49 pm

#216 Blacksheep

It’s the private debt that’s the real problem according to MMT.

We need a couple more planets or something very real is coming our way.

#231 sciencemonkey on 06.13.14 at 3:04 pm

Perhaps protest the broken system by declining the vote? It’s what I did. It shows you care enough to show up, but you think all candidates or indeed the system itself is broken.

I can’t find numbers on how many people declined their votes yesterday.

Nobody possibly cares. A useless, irresponsible gesture. — Garth

#232 randman on 06.13.14 at 3:10 pm

#226 Jack

..hahaha …well said sir!

#233 Shawn on 06.13.14 at 3:12 pm

Debt Star and net debt

(Not) Happity at 222 said:

Today, the universe looks at our planet and sees a

DEBT. STAR

*****************************************
Nive word play, I like that.

But, of course, no debt of earth is owed any other planet. Net debt of earth is always zero.

Net worth of the earth is vastly positive. We have “improved” the earth greatly and in the net 100% of that is already paid for since earth did not borrow from other planets nor from the future.

In law, improvements to land include buildings, drainage, factories. I count all capital investments as improvements. Paving paradise to put up a parking lot is an improvement in this sense. (We needed someplace to park our hummers afterall).

If you don’t like earth, join the Mars project with the one-way tickets.

#234 Flawed on 06.13.14 at 3:18 pm

And you people laugh at bitcoin. It’s the only “decentralized un-corruptable” option. The same people laughing at Bitcoin laughed at this stuff from the 90s:

Audio can’t be streamed over the net.
Then they said “quality audio” can’t be streamed over the net.
Video can’t be streamed over the net.
Then they said “quality video” can’t be streamed over the net.
Purchasing goods and services could never go over the net.
Banking could never go over the net.

The days of “Hi I’m from the Govt and I’m here to help you” are going the way of the dinosaur. Global connectivity and now a global decentralized means to pay for goods and services can be managed just fine by WE THE PEOPLE OF EARTH thank you very much.

See ya later corrupt govt and banks and corporations etc etc etc.

Bitcoin is a joke. — Garth

#235 Blacksheep on 06.13.14 at 3:23 pm

Godth #230,

The debt jubilee is for the peasants.

#236 Smoking Man on 06.13.14 at 3:25 pm

#220 Holy Crap Wheres The Tylenol on 06.13.14 at 1:53 pmI would based on the fact that we all appear to be in the Matrix agree with you on the above.

The chickens that is!
……..

There is a bright side to every horror show.

If the 3 commies get it… Weed and short term rentals will be legal….

#237 Godth on 06.13.14 at 3:26 pm

#226 Jack Henning

You know it’s a very funny thing…our debtlords have completely bought into this housing market speculating on 5+ properties. They preach competition, yada, yada and are completely capitalist when it comes to us paying our rent for their (the banks) property but suddenly turn communist when it comes to ‘borrowing’ our property without asking when it’s convenient for them.

…not so different from the banks on the macro.

I agree it’s screwed up all the way around but I know I don’t want to live in a world that’s completely privatized…but that’s where we’re headed.

Let’s watch what happens when this credit/debt (housing) bubble pops. We’ll be vulnerable to the predators like never before.

#238 Old Man on 06.13.14 at 3:26 pm

#228 Daisy Mae- “If I’m scared and I’m a coward, why do you want to see me (Caesar) fight.”

– Floyd Mayweather Jr.

#239 Jack Henning on 06.13.14 at 3:43 pm

You see. BlackRock today issued a high alert downgrade for Ontario debt, bonds.

You see what you socialists, liberals have done and they are not in Queens Park for another 20 days.

This could cost a 1.00% point increase to interest rates. This is a current 2.75 billion a year in annual interest.

The H.S.T. part of Ontario is supposed to generate $3 billion a year in tax revenue and that is going.

H.S.T. 20% coming soon!

#240 };-) aka Devil's Advocate on 06.13.14 at 4:04 pm

#225 Gab on 06.13.14 at 2:21 pm

Dude you are so misinformed. It’s not a conspiracy. It’s nothing more than simple human behaviour.

Buyers set prices, not Sellers nor real estate agents. It is BUYERS who set prices. Buyers ARE “the market”. We bring the product TO the market (Buyers). If Buyers are unwilling to PAY THE PRICE then Sellers have to adjust to a price at which Buyers are WILLING to pay. If another Buyer is willing to pay more for something you want then you better be prepared to PAY MORE for it too or walk away. It’s really just THAT simple. Everything else is superfluous – seriously.

#241 King Frugal on 06.13.14 at 4:12 pm

#158 – Cliff:

That is concerning. Another example: before realizing I was better off renting, I was approved by TD Bank in November 2013 for a $400k mortgage on a yearly salary of only $55k (no debt but also no additional income).

That boggled my mind.

#242 Godth on 06.13.14 at 4:22 pm

#235 Blacksheep

I like Steve Keen and Michael Hudson too but I’m not holding my breath.

Pentagon preparing for mass civil breakdown
Social science is being militarised to develop ‘operational tools’ to target peaceful activists and protest movements
http://www.theguardian.com/environment/earth-insight/2014/jun/12/pentagon-mass-civil-breakdown

#243 Second Hand Smoke on 06.13.14 at 4:57 pm

Smoking Man:

There is a bright side to every horror show.

If the 3 commies get it… Weed and short term rentals will be legal….

———————————————————-

I am not so sure, Smoking Man. Ontario socialism really isn’t about permissive hedonism. It’s more about economic control and guilt trips.

I would welcome the descent towards Euro-socialism if we had Euro perks in the form of better food and drink, attractive people, vacation time, proper transit, etc. but instead most of the spoils will go to the unions.

#244 sciencemonkey on 06.13.14 at 4:59 pm

I also don’t believe the super high mortgages, at least not that they are available currently.

I posted a few days ago how I have no debt, paid for new car, a DP equal to 0.8x of my gross, and the bank would only lend me 4x my gross.

#245 Old Man on 06.13.14 at 5:00 pm

Andrea Horwath was showing her hand of deception with her rant on no coalition. Did you notice the buzz word over and over again with 100,000 as her only complaint. Now if Who Dat had won she would have thrown in her hat with him by compromising the number downward to save face. I suspect the fix was in before the debate with a deal.

#246 Conservatives HATE free markets on 06.13.14 at 5:18 pm

Jack #229

You conservatives are either ignorant or just uneducated. Harper doubled CHMC Which is something ONLY a socialist would do. Not even the NDP would do what Cuba socialist Harper has done. That is a cold hard fact you typical conservatives can not handle. Harper is socialist number one. Harper hates the free markets. George Bush called those who hate free markets a TERRORIST. Yes harper maybe one according to George bush

#247 devore on 06.13.14 at 5:25 pm

#193 yo

I know a few people at work who have bought houses with CHMC insurance even though they had enough for a full downpayment. They just wanted to use the extra cash to re-invest. In essence, there are people (using a term from my days on the trading floor) “arbing” the system.

Arbing the system? I don’t know what that means, but I do know your friends are math challenged.

#248 Godth on 06.13.14 at 5:39 pm

#239 Jack Henning

So why don’t the provinces borrow from the Bank of Canada – you know the way it used to be. Oopsie, can’t talk about that.

#249 Rob on 06.13.14 at 5:48 pm

#224 bdy sktrn on 06.13.14 at 2:06 pm
many Italian home owners. They are very house proud. I don’t mean big opulent mansions but extremely neat city lots with fairly modest but extremely well maintained places, nice gardens
————————————-
my next door neighbour is exactly this – he paid 1.1 for his house. 1.1 ten thousands, that is, or 11k. he is up exactly 100x.(since 1967)

kids left, wife passed 5yrs ago – alone in a big house, does not want to go travel. will be there till the end.

not bad for an ex-janitor. i think he owned or still owns other re as well.

Sad story. — Garth

HOW IS THAT SAD GARTH.
IS IT SAD BECAUSE HE ISN’T RENTING SOMEONE ELSE’S BASEMENT INSTEAD ?????
The only sad part to me is that his wife/life companion is no longer beside him.

PLEASE EXPLAIN.

The goal of our existence is not to dwell in a big, empty house, go nowhere and live the same day repeatedly. That’s sad. — Garth

#250 chapter 9 on 06.13.14 at 5:53 pm

#217 Old man
Curious–Did Ralph Klein ever attend a Bilderberg meeting?

#251 Warren on 06.13.14 at 5:54 pm

@ #245 Old Man

That’s called playing both sides of the fence and if you side with the NDP it’s just smart politics. If it’s clear you will not win a majority then you may as well exert your influence and push your agenda with the winning team. Hudak could have got some austerity while the NDP could have at least pushed through a few pet projects.

#252 Rob on 06.13.14 at 6:03 pm

#250 Rob on 06.13.14 at 6:02 pm
PLEASE EXPLAIN.

The goal of our existence is not to dwell in a big, empty house, go nowhere and live the same day repeatedly. That’s sad. — Garth

WHEN YOU’RE OLDER YOUR HOUSE IS YOUR LIFE AND THE LIFESTYLE OF TRAVELING THE WORLD IS NOT ONLY FRIGHTENING BUT ALSO EXTREMELY DIFFICULT AT BEST.
FOR AN ITALIAN HAVING COME TO CANADA FROM EUROPE IS ALL THE TRAVELING THEY’LL EVER WANT.
I DON’T THINK YOU QUITE UNDERSTAND THAT YET.

Your comment is awaiting moderation

ALSO, THE HOUSE HAS ALL THE MEMORIES OF HIS WIFE AND THOSE MEMORIES NOW ARE WHAT’S KEEPING THIS GENTLEMAN ALIVE.

#253 Retired Boomer - WI on 06.13.14 at 6:19 pm

Accountant, eh? Where were the accountants when the CHMC gas bag was inflating? Nobody looked south to see the same gas flowing into Fannie Mae and Freddie Max in the US?

Ours blew up with attendant tax payer bailout, bungled only by the FED who inflated their own balance sheet.

Hey, I am ALL FOR higher taxes to pay down the crazy debt, but I am a minority. I am ALL FOR housing losing 1% a month for a couple years to get back to a saner position. No federal help for housing period, you want one buy it.

I am all for a doubling of gas prices through the tax man, screwing greedy geezers with their raises tied to overall wage increases, a repeal of the minimum wage, and a maximum tax rate of 99%, and telling the young to piss off if you can’t PAY for your own education.

Guess that makes me an unknown political party?

#254 };-) aka Devil's Advocate on 06.13.14 at 6:19 pm

“The goal of our existence is not to dwell in a big, empty house, go nowhere and live the same day repeatedly. That’s sad.” — Garth

I’m sure many, like me, have been to small towns where if you ask some of the locals about something going on the other side of town they’d respond “don’t know, been a few years since I was there last.”, in whatever language they speak from Ozark to Mozambique. They seem perfectly happy to me, but then I doubt so many of them live in McMansions they can’t afford.

On the big house thing, interesting fact: Historically the incidence of North American divorce increased along with the average size of homes.

#255 Bill Gable on 06.13.14 at 6:23 pm

“The risk in giving fat house loans to people who can’t manage their sock drawer is wiped away by CMHC.”

Classic “Garth-age”. ROFL.

#256 devore on 06.13.14 at 6:35 pm

#234 Flawed

The same people laughing at Bitcoin laughed at this stuff from the 90s:

Who said that? Well, I’m sure someone said these things, but no one cares about those people.

The reason those people are certifiable idiots is because all the things you listed reduce to Moore’s Law. They will all be possible at some point in the future, because capabilities are constantly increasing.

You’ve presented a non-sequitur. Bitcoin has nothing to do with these things.

#257 OttawaMike on 06.13.14 at 6:50 pm

#231 sciencemonkey on 06.13.14 at 3:04 pm

There is evidence that the Cons encouraged the spoil movement to help their cause.

#258 4 AM Sunrise on 06.13.14 at 6:55 pm

The goal of our existence is not to dwell in a big, empty house, go nowhere and live the same day repeatedly. That’s sad. — Garth

————————————————-

Not necessarily. There’s a lot of old people in my town, and some of them find joy in chilling out and puttering about the garden, knitting, baking… Depending on how old our ex-janitor is, his body might be too creaky to really go anywhere. Travel insurance providers get nervous and ask lots of questions once the insured is above age 65.

#259 Rob on 06.13.14 at 7:20 pm

YOU ARE SO WEAK MAN.
SAY SOMETHING U DON’T LIKE OR AGREE WITH AND BAM, DELETED.

I deleted nothing. And stop yelling. — Garth

#260 hehehe on 06.13.14 at 7:43 pm

re:
“#178 housedoc on 06.13.14 at 9:48 am
In Toronto, I’m afraid that I am witnessing the creation of my political nightmare trifecta of Wynne, Chow, Trudeau.

If only it comes with backyard chickens and legalization.”

***************************
and my political trifecta nightmare is Hudak, Ford and Harper :)

different strokes for different folks, I guess

#261 Daisy Mae on 06.13.14 at 7:56 pm

#249 ROB: “HOW IS THAT SAD GARTH.
IS IT SAD BECAUSE HE ISN’T RENTING SOMEONE ELSE’S BASEMENT INSTEAD ?????
The only sad part to me is that his wife/life companion is no longer beside him.

PLEASE EXPLAIN.

The goal of our existence is not to dwell in a big, empty house, go nowhere and live the same day repeatedly. That’s sad. — Garth”

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This man should at least, be down-sizing. Spending some money…on travel, or whatever makes him happy. “We only go ’round once”…and life is so damn short. If you’ve got it — enjoy it!

#262 Willy H on 06.13.14 at 8:07 pm

” … it won’t take a spike in interest rates or a surge in unemployment to prick the bubble.”
___ ___ ___ ___ ___

Energy inflation will trigger a housing bust long before interest rates when one considers the Europe and North America’s central banks chronic addiction to almost “free money”.*

*The Greenspan Syndrome!

#263 Rob on 06.13.14 at 9:16 pm

Sorry about that Garth.

#264 b on 06.13.14 at 10:50 pm

What the hell is “caesarstone”? Should I be happy or sad that I don’t know?

#265 Jack Henning on 06.13.14 at 10:54 pm

To #248 Godth

One of the main parts of the Communist Manifesto is a central bank. Bank of Canada is a central bank.

You just made my point. You are communists, socialists, liberals etc.

Look at all the countries that had and have high inflation like in Chile in the 1970’s, 1980’s, 1990’s etc., 900% annual inflation.

Don’t forget about Zimbabwe which is the king of hyperinflation.

They are socialists, dictators, communists, liberals in power. Look at Venezuela today. What a train wreck!

The higher taxes, inflation, regulation, confiscation, the more socialist, communist, liberal they are.

Lawyers and school teachers, professors that have no clue about economics, fiscal and monetary policy are the liberals that ran Canada for the last 85 years at least.

#266 Jack Henning on 06.13.14 at 10:57 pm

To Willy H #262

Don’t forget much higher water bills, property taxes, home and auto insurance, repairs and maintenance and of course, new and higher sales, income taxes, tolls, user fees.

#267 wallflower on 06.14.14 at 2:20 am

ALSO, THE HOUSE HAS ALL THE MEMORIES OF HIS WIFE AND THOSE MEMORIES NOW ARE WHAT’S KEEPING THIS GENTLEMAN ALIVE.
– – – –
What is the point of this pathetic existence?

#268 Roland on 06.14.14 at 4:13 am

CMHC coverage should have been linked to the _national_ median housing price.

1. That would have eliminated the positive feedback effect in the metropolitan regions.

2. It would have put a cap on speculative effects.

3. It would have maintained a reasonable level of government support for new entrants to the housing market.

4. It would have kept taxpayer exposure within safe limits.

But since the fed gov is hostage to the finance sector, and since local/prov govs are hostages to the real estate developers, I guess smart policy never had a chance.

#269 Doug in London on 06.14.14 at 10:31 am

@Conservatives HATE free markets, post #246:
Well said. I went for another trip into the time tunnel, this time back to the Soviet Union pre 1989, seeing a parallel to the socialist make work programs of that era with the present.

#270 Gab on 06.14.14 at 12:37 pm

#240 };-) aka Devil’s Advocate
Spoken like a true agent. Of course you don’t want to see the entire scheme fall apart. Seriously the only ones that will lose if this happens are the agents because their commissions are based on the over inflated prices. Without the MLS agents are nothing. The seller wants what the neighbor sold for. The buyer is blinded by the information that the agent provides. If agents want to boycott the sold by the owner lists they will. You see it’s not a conspiracy it’s a monopoly and a mafia style business model.

#271 april on 06.14.14 at 11:01 pm

Can this be true? I heard it on the Michael Campbell MoneyTalks program, CKNW, June 14. Governments Seize Dormant Bank Accounts in the US, Australia, England and I think Japan. Canada?

Banks have turned over dormant bank accounts to the Bank of Canada for custodial purposes for decades. “When there has been no owner activity in relation to the balance for a period of 10 years, and the owner cannot be contacted by the institution holding it, the balance is turned over to the Bank of Canada, which acts as custodian on behalf of the owner. Balances are transferred to the Bank of Canada once a year, on 31 December.” — Garth

#272 Godth on 06.15.14 at 11:52 am

#265 Jack Henning

“Competition is a sin.” – John D. Rockefeller