Shocks

ROCKER modified

What makes people buy houses? Nope, it’s not cheapo mortgage rates. Not hormones. Not even a spouse who promises to garrotte you if you stay a renter. It’s confidence – and that comes from having a paycheque.

So the latest employment report should be a wake-up call to anybody who thinks this condo economy can last. Our jobs numbers suck. While the US has been churning out well over 200,000 new positions a month, our economy has well and truly stalled. And nobody should be surprised.

So, how do you think the housing market will respond in an environment like this?:

  • In all of Canada last month there were 200 new net jobs created. Ouch.
  • The unemployment rate went down a titch because over 35,000 long-term unemployed people said ‘screw this’ and stopped looking.
  • So, the labour participation rate has just dropped to 65.9%, which means 34.1% of the people who could work, aren’t.
  • This is the worst level in 13 years.
  • We lost 60,000 full-time jobs last month (most with benefits and pensions), and replaced them with 60,000 part-time positions (mostly without).
  • In fact, so far this year, hardly any net new full-time jobs – just a 0.4% increase. The ones we lost in July wiped out all the new FT positions created so far this year.
  • Overall employment growth in 2014 will probably be the worst since the recession. Or are we still in it?
  • The dollar slumped on the news and economists dismayed. Said the chief economist at Nomura Global Economics: “Overall, the report is negative. It shows that job creation has stalled. Moreover, the continued decline in the participation rate over the past year suggests that the unemployed are losing confidence in the labour market. The stalled labour market suggests that consumer spending could weaken in coming quarters.”

Face it, outside of Alberta jobs are scarce. The retail sector is shrinking. Sears Canada is for sale while newcomers like Target wish they’d stayed the hell home. In the last decade our manufacturing output shrank 11.5% while Americans pumped out 23% more. Now the condo element of the economy – real estate, construction and financing – is three-and-a-half times bigger than the entire oil and gas sector. We’ve created a country in which people would rather borrow money to buy real estate from each other, than sell stuff to the world.

And this is the result.

Of course, the house-humpers think this is great. A flaccid economy with no new jobs means the Bank of Canada will be afraid to raise rates lest we implode in our own juices. So they can trumpet cheap mortgages, and entice more people into debt. And around she goes.

Remember: it was not spiking interest rates or sleazy bankers that ultimately cratered the American property market. It was an economic slowdown that bloated a jobless rate of less than 5% during the bubble.

Now, here’s the scary part. Middle-aged, middle-class Canadians are in serious trouble, if you believe the Royal Bank. The 35-to-44 crowd – those who have spent the last few years fighting bidding wars, having babies and buying Audis – are pickled in debt. Compared to their parents at the same age, this group has racked up a massive mortgage bill, are paying it down more slowly (despite cheap rates) and are using houses as ATMs to back lines of credit.

Worse, of all the increase in net worth since 1999 for everyone over 35, more than 60% has come from one source – real estate. For those under 45, this rises to almost 100%. In other words, these people are not saving or investing more (or even earning more), but instead have a one-asset strategy that brings with it dollops of risk, plus structural debt. In contrast, these are the prime years in which their parents started to seriously save, since they bought houses at a fraction of the cost with far smaller mortgages.

And, they feel entitled. Big mortgages haven’t stopped the spending. “There has been a shift in preference for current consumption at the expense of future consumption, resulting in less saving,” says the bank survey. And all this means the group of people who should be in mid-career and powering the economy could become its roadkill.

Says the bank: “Where we get a bit more concerned is in terms of more vulnerability to so called … economic shocks. An unforeseen sort of development like a marked falloff in housing prices or a sudden spike in interest rates or a big bump up in terms of the unemployment rate. With this age category being more extended in terms of the debt they’ve taken on, relative to the other age categories, it makes them more vulnerable to that kind of shock.”

Well, come to your own conclusions. I have. This won’t end well.

236 comments ↓

#1 Curious on 08.08.14 at 6:12 pm

What is the Bank of Canada going to do if job creation is stalled and the Americans start raising rates?

#2 jas on 08.08.14 at 6:13 pm

Canadian real estate is expensive!

#3 crowdedelevatorfartz on 08.08.14 at 6:18 pm

But Italians Love real estate.

#4 T.O. Bubble Boy on 08.08.14 at 6:18 pm

Worse, of all the increase in net worth since 1999 for everyone over 35, more than 60% has come from one source – real estate. For those under 45, this rises to almost 100%.

Phew – glad I could help keep that under 45 number from becoming 100%!

#5 enthalpy on 08.08.14 at 6:18 pm

It’s different here , duh

#6 Boomin Doomer on 08.08.14 at 6:21 pm

I’m an American who moved during the early RE boom (2007) and found Toronto too risky to invest in then, having lived in foreclosed Ohio. I moved to Liberty Village before a single condo building had gone up, and laughed at the size of Toy Factory rooms when the first of the new products arrived. Now it appears these were intended to be the bigger condos in the “Village.”

We couldn’t sell our Ohio home till last year, as it took 5 years for prices to recover, and we sold at peak last year, mostly by luck of timing. The same house has declined back (Zillow) from $350 to $300K in 6 months.

The depth of risk denial across Canadian society is alarming. Its the same blindness to history that was evident in the constant shatter about real estate you’d hear in California during the period Bush called the “Ownership Society.” There was a reason the government called it that – RE investment was their way to pull short-term jobs out of an empty productivity hat as the real economy was in a slow secular decline over the period. While the US has been in a slow and mixed recovery, Canada looks it believes “we’re different”, like Wiley Coyote walking on thin air for a while before the fall.

The macro shocks are happening – for some reason (QE, cough) they just haven’t hit the financials yet.

#7 Drill Baby Drill on 08.08.14 at 6:21 pm

West Texas Intermediate Oil today is priced at $97.00 US.That is a drop of $9.00 US in 2 weeks. All the while the US today is bombing ISIS forces in Iraq and yet oil prices are not spiking. Calgarians can you hear it ? What is that low rumbling sound ? Naw it can’t be so. It is different here on the banks of the Bow.

So many here in Cowtown have never seen a real old fashioned BUST.

#8 Supreme on 08.08.14 at 6:22 pm

Any predictions on what changes are coming in the fall aside from the expected?

#9 High Plains Drifter on 08.08.14 at 6:24 pm

S and P dropped a dime on the banks, so it is game on. Please real-estate fanatics, put off your costly divorce til this plays out. Mean while in Alberta, “badges, we don’t need no stinking badges”.

#10 james on 08.08.14 at 6:42 pm

Let us not forget that a significant percentage of those new jobs are going to TFWs, not Canadians. A lot of that money leaves the country.

#11 jsan3377 on 08.08.14 at 6:46 pm

Good article, the author pretty much nailed it.

First off, I am Conservative and I voted for Harper. I also voted for Paul Martin. Why? Because at the time he appeared to be the most fiscally sound candidate. I honestly say Harper has been a disaster. How in the world he allowed this colossal Canadian housing bubble to form while across the border the US bubble was crumbling is beyond any rationale? Sure, Canadians may be celebrating their house values doubling, tripling or more under his watch but I can assure you it will be a short lived celebration. It has fostered massive debt thanks to the wealth effect for those who have seen their house values rise and it has created a generation of debt Serfs for those who are buying at these lofty levels. It has also pulled future economic demand into the present leaving the future void. THIS WILL END VERY BADLY I hate to say.

“The Myth of Harper’s Economic Competence”

http://www.huffingtonpost.ca/sean-casey/harper-debt-economy_b_3976972.html

.

#12 Fred on 08.08.14 at 6:51 pm

Hey! I’m under 45, I rent and save, save, save so how am I lumped in to the 100%? This could be my chance at being in the 1% club. Come on, give me a chance for once at being a 1%er.

#13 coastal on 08.08.14 at 6:54 pm

Well blimey, the Brits are panic selling their over priced digs. I thought they were such a conservative bunch who would have a cuppa or two before hitting the panic button. Cheerio suckers !!

http://www.businessinsider.com/panic-selling-in-london-and-uk-housing-bubble-2014-8

#14 LH on 08.08.14 at 6:54 pm

Where are the good high paying jobs now? Outside of the resources sector, good jobs are becoming more concentrated in downtown cities, Toronto uber alles.

Banking, law, medicine, tech, creative class, all of these positions are ditching the soulless suburbs for downtown. For this reason prime central RE is still safe as houses, so to speak :)

LH

#15 JO on 08.08.14 at 6:56 pm

In the last 12 months we have essentially no job growth outside of Alberta and Sask. I see it on the front lines: the illusion of our debt based economy. The majority of these first time buyers are effectively broke and most cannot survive more than a month without a paycheque.
Make no mistake : Canada is flirting with recession and if we are very lucky, we may buy ourselves another year or two but a major recession and economic depression is most likely no later than 2017.

Our rate if growth on debt has been slowing down in a big way but over the last 12-14 yrs, junk debt growth, mainly RE backed, has been the major driver of our GDP. This is not really growth although it looks and feels like it.

Thanks to a collapsing euro zone and japan where the interventionists are printing or planning to print, US and Canada/Australia might live to breathe a little longer but will not avoid what is coming.

Who cares if I can lend you debt for 5 yrs at 2.95, if you cannot work and pay it back, it won’t matter how cheap your mortgage is. Selling a house in a bear market is hell on earth.

The sooner this corrupt system collapses the better off we will all be.

#16 miketheengineer on 08.08.14 at 7:02 pm

Garth et al:

I don’t mean to be all doomy and gloomy…but….

This is interesting:

“Putin’s next move will be to wait for winter cold to cut off Europe’s natural gas. Also, they will cut off uranium and palladium. And World War III will lead to the end of the age of travel. And by the way, that’s one of our longstanding predictions.”

And here is the link:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/8/8_Gold,_World_War_III_%26_The_End_Of_The_Age_Of_Jobs_%26_Travel.html

p.s. I personally believe PM’s will drop like a rock, back to historic norms….like mortgages returning to historic norms….reminds me of the 80’s all over again.

#17 the jaguar on 08.08.14 at 7:02 pm

I agree with #7 – Drill Baby Drill
Lots of statements about jobs in Alberta, but I would like to know where they are being created. Several oil companies have tightened their belts or laid off staff over the past few years, Fort Mac projects have been ditched or put on hold. Lots of urban sprawl which creates low paying jobs in the service sector and Alberta has the highest number of temporary foreign workers. And now shiploads of goods (pork,etc) are to be turned back from Russia because Canada is prepared to kiss up to any demand of the US in order to curry favour to get the green light on the Keystone Gateway Pipeline. Dummy up Canada. It’s not ‘different here’.

#18 renting & lovin it on 08.08.14 at 7:03 pm

17% of condo owners in Toronto, Vancouver bought for investment
– More than half of condo investors rent out their secondary unit

Almost one out of five condominium owners in Toronto and Vancouver have bought another unit in order to use as an investment, according to a new Canada Mortgage and Housing Corporation (CMHC) survey.

The 2013 Condominium Owners Survey was released Friday indicating that 17.1 per cent of households surveyed are condominium investors – meaning they own a primary residence and reside in it while also owning at least one other condo unit.

More:
http://www.cbc.ca/news/business/17-of-condo-owners-in-toronto-vancouver-bought-for-investment-1.2731289

So let’s imagine what will happen when these people owning 2 (or more) condos has to survive:
a) interest rates rising;
b) condo values decreasing;
c) a re-financed mortgage (on each condo) that has a higher monthly cost.
d) rents that can’t cover the monthly costs;
e) tenants that can’t /won’t pay rent for months until the eviction paperwork is completed and they are gone.
e) same tenants that have a ‘trash the place’ party before moving out.

#19 Slim on 08.08.14 at 7:04 pm

The Target store here is always so quiet you can hear a pin drop. It will only be a matter of time before they close the curtains.

#20 Sean on 08.08.14 at 7:05 pm

Logically, the $C is going to be a victim of almost any path forward… and it is already showing considerable weakness. With the Canadian economy in the crapper, and with continued crappiness in the forecast, there is no way we will be able to maintain any sort of interest rate differential vis a vis the US, which would be supportive of our dollar. Add in the likelihood of the Canadian taxpayer ending up on the hook, via some form of bailout of underwater homeowners (whether partial bailout of CMHC or otherwise) and the outlook is just bleak.

#21 ILoveCharts on 08.08.14 at 7:08 pm

I got out of the big city (Vancouver,) recently to visit some very small towns. I saw houses for sale and out of curiosity looked them up on MLS. I was blown away by the prices. It’s one thing for a house to go for $1,000,000 in Vancouver (jobs, a real city, climate, foreign communities, land constraints, etc.) But $300,000 for small houses in tiny backwoods communities?!!!

We have more wood and land than we know what to do with…. housing should be practically free here.

#22 Bucketshop on 08.08.14 at 7:10 pm

Garth – when do we get to hear you finally retract your “rate hikes are just around the corner” meme? :) 6 years of “emergency” level rates…and counting.

I recommend everyone go take a look at the historical chart of the overnight rate….declining since 1982. Remember, the trend is your friend :)

I hope you locked in. — Garth

#23 Mark on 08.08.14 at 7:11 pm

Thing aren’t very rosy in Alberta either. Employment prospects are turning down for jackscrews, and are just outright dreadful for professionals (as they have been for quite a few years now!). If you’re waiting tables, sure, you can still find a job, but don’t expect it to pay more than $15/hour. Same deal in Saskatchewan, even modest engineering jobs are getting 100 qualified applicants and the helpless HR clerks are overwhelmed with inquiries.

Is it not now obvious that the BoC is way behind the curve in lowering policy rates?

Banking, law, medicine, tech, creative class, all of these positions are ditching the soulless suburbs for downtown.

Not really. Everyone is looking to stick it to the REITs who have spent the past number of years jacking up the rents. Banks are increasingly coming to the realization that they really don’t need the prime real estate, when everything they do is electronic these days. And tech in Canada is just dying.

#24 What conclusion? on 08.08.14 at 7:12 pm

“Well, come to your own conclusions. I have. This won’t end well.” Have you, really? Sometines you say there will not be a serious crash, just a long slow decline by 15-25 percent, but at other times it appears from your wordings that you so expect something much more severe and faster. Which is it?

#25 What conclusion? on 08.08.14 at 7:13 pm

so –> do

#26 bigrider on 08.08.14 at 7:14 pm

#14 LH- “Banking, law, medicine, tech, creative class, all of these positions are ditching the soulless suburbs for downtown. For this reason prime central RE is still safe as houses, so to speak :)

LH ”

You make me laugh.

Correction : Jobs in downtown Toronto are Builder, real estate agent, in-fill builder, mortgage broker and if you are especially lucky, a condo huckster for Brad Lamb corporation.

Toronto is a one trick, one horse town.

#27 Freedom First on 08.08.14 at 7:16 pm

What’s coming to Canada could be epic.

The bullets in today’s post describe what happened to all the countries in the run-up to their recent history RE implosions. Ended up financially bankrupting or crippling millions of families world wide as well as financially devastating their Governments, which are still trying to recover from their own reckless feeding of the RE monster.

Being vulnerable means you are bent over. Be like a squirrel and always keep your nuts out of harms way.

#28 Mark on 08.08.14 at 7:21 pm

“So what are the addresses and the prices of the identical houses your are typing about Mark?”

The whole idea of identical properties is rooted in statistics. After all, no individual property is identical to another in its interior finishings, wear-and-tear, size, location, buyer optimism/distress, Realtor skill in marketing, etc.

For this, you have to look at the median relative to the mean. And the evidence is fairly strong that over the past year, the median sale has risen at a rate dramatically higher than the mean sale. In other words, the sales mix has changed to higher-end properties, which explains a significant amount of the change in the mean in and of itself.

This is intuitively obvious when you look at the real-world impact of the Budget 2013 changes to CMHC subprime mortgage insurance. First time buyers have been largely excluded from the market. First time buyers typically buy in the lower quartile of units on the market. Hence, the disappearance of such a demographic will allow the traditional upper quartiles to dominate. All taking place in a backdrop of prices that are actually falling.

So the Realtors are not being dishonest when they claim that prices on the properties they happen to be selling (very important!) may still be slightly rising. But their sampling of the market are different today than they were a year and a half ago because the sales mix has changed.

Any predictions on what changes are coming in the fall aside from the expected?

I believe the cost of mortgage credit specifically, as a spread against the GoC bonds and BoC policy rates, is going to rise. In response to diminished credit-worthiness of Canadian residential mortgage and retail borrowers.

#29 MissisaugatoVancouver on 08.08.14 at 7:21 pm

Re: #15. Canada has always raised it’s rates in lockstep with the US.

The US will raise it’s rates in Q2 2015, to curtail inflation and to further stimulate economic growth in the US market.

Canada will be forced raise otherwise its currency will be devalued (ie. that is inflation with rise in Canada).

#30 saskatoon on 08.08.14 at 7:23 pm

the real (modern) economic unfolding began september, 2001.

#31 Realties.ca » Shocks on 08.08.14 at 7:23 pm

[…] Source: http://www.greaterfool.ca/2014/08/08/shocks-2/ […]

#32 Brian Ripley on 08.08.14 at 7:24 pm

I just updated my Canadian Yield Curve chart with an overlay of the TSX Real Estate Index plotted Y/Y.

http://www.chpc.biz/yield-curve.html

…and the cash buyers of TSX real estate have been losing momentum since 2010 despite the spike up in the most recent reach for a gain and despite 5.3 years of ZIRP. Real estate investment momentum in the TSX cash index is in a downtrend as banks wholesale credit at sub 3%.

Low rates do not appear to be stimulative at this stage.

#33 Ben on 08.08.14 at 7:24 pm

Here’s what will happen. The boomers+ are the main voting block. The govt will underwrite housing in any way necessary to force the young to buy in at peak prices enacting to transfers:

1. wealth from young to old
2. votes from old to politicians

The fiscal drag will be legendary.

#34 Pooh on 08.08.14 at 7:46 pm

The dark side of Canada’s renovation boom:

http://www.macleans.ca/economy/realestateeconomy/the-dark-side-of-the-renovation-boom/

#35 nonplused on 08.08.14 at 7:51 pm

I suggest a new strategy: Borrow all you can, live high on the hog, and then default. If there’s no jobs and the banks are still lending money, why not?

The really crafty people might even maximize their HELOC, by an RV, quit work and move to Arizona and live in said RV.

Screw work, it doesn’t pay!

#36 renting & lovin it on 08.08.14 at 7:55 pm

17% of condo owners in Toronto, Vancouver bought for investment
– More than half of condo investors rent out their secondary unit

Almost one out of five condominium owners in Toronto and Vancouver have bought another unit in order to use as an investment, according to a new Canada Mortgage and Housing Corporation (CMHC) survey.

The 2013 Condominium Owners Survey was released Friday indicating that 17.1 per cent of households surveyed are condominium investors – meaning they own a primary residence and reside in it while also owning at least one other condo unit.

More:
http://www.cbc.ca/news/business/17-of-condo-owners-in-toronto-vancouver-bought-for-investment-1.2731289

So let’s imagine what will happen when these people owning 2 (or more) condos have to survive:
a) interest rates rising;
b) condo values decreasing;
c) a re-financed mortgage (on each condo) that has a higher monthly cost.
d) rents that can’t cover the monthly costs;
e) tenants that can’t /won’t pay rent for months until the eviction paperwork is completed and they are gone.
f) same tenants that have a ‘trash the place’ party before moving out.

#37 Sheane Wallace on 08.08.14 at 8:00 pm

Harper is not a disaster, he is an idiot

#38 East Coast Dave on 08.08.14 at 8:04 pm

You really nailed this one. It’s about jobs- and decent paying ones. It really always has been. I don’t see a whole lot of improvement on that since 2008.

One curious point: is RBC (and the rest of them) not guilty of outsourcing many good- paying jobs to India and other places as a cost-saving measure? It temporarily looks great on the balance sheet but are they unaware of the longer-term repercussions?

So when they predict doom and gloom, are they not part of the problem?

So many questions; so little time.

#39 Randy on 08.08.14 at 8:10 pm

If you are lucky and have home insurance, can you get rid of your house and mortgage if your SMART Meter burns down your house ?

#40 Daisy Mae on 08.08.14 at 8:17 pm

“There has been a shift in preference for current consumption at the expense of future consumption, resulting in less saving,” says the bank survey.

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

Seniors, also, are opting to cash in their portfolios in favor of ‘high interest’ savings accounts, much to the dismay of their advisers –thus freeing up their savings so they can spend their money on vacations, upgrading, new purchases.

#41 Goldie on 08.08.14 at 8:21 pm

Labor participation rate should be always be mentioned along with employment rate.

Same goes for true inflation.

#42 Ebola now in Toronto... on 08.08.14 at 8:22 pm

What will this do to house prices? Maybe CMHC can take in all the worlds Ebola families and give then special mortgages??

Let’s wait and see what Kenney does.

That was ugly. — Garth

#43 Lawboy on 08.08.14 at 8:28 pm

Perhaps Mark, Devil’s Advocate, Ralph Cramdown and Smoking Man could all just leave the building?

Getting a little tiring having to scroll past all these empty narcissistic bleatings from those who seem to need to see their names in print so often.

#44 JimH on 08.08.14 at 8:42 pm

#32 Brian Ripley

http://www.chpc.biz/

Thanks for your much appreciated work in documenting so clearly and concisely what is going on!

The writing is clearly on the wall.

#45 Mister Obvious on 08.08.14 at 8:45 pm

#35 nonplused

“The really crafty people might even maximize their HELOC, by an RV, quit work and move to Arizona and live in said RV.”
——————————

Nice try, but no. The Americans will make it a very inhospitable environment for broke Canadians who try to park their butts longer than the maximum 180 days per year. Just as we might reasonably do to them.

#46 rainclouds on 08.08.14 at 8:46 pm

But I see faded billboards with bullet holes touting the Reform Party “economic action plan”. The Chinese TFW’s walk past it on their way to work at the fish plant here in double digit unemployed PEI

Stellar leadership. …….

#47 Happy Renting on 08.08.14 at 8:59 pm

Garth, you said the magic word: confidence. Our family has done increasing well post-GFC vs. pre-GFC, but the optimism that the economy will be better tomorrow than it is today (or, at least, no worse) isn’t there. We save like it’s going out of style where the economy would benefit more from us increasing consumption. When the average debtor loses confidence we’ll be truly screwed, but in the meantime if the average lender feels too insecure to spend things will not get better.

#48 SilverMeridian on 08.08.14 at 9:01 pm

SilverMeridian Greater Ottawa surReal Estate Update

Ottawa RE Board is celebrating “Second highest July sales on record”!
Ottawa, August 7, 2014 – Members of the Ottawa Real Estate Board sold 1,445 residential properties in July through the Board’s Multiple Listing Service® system, compared with 1,336 in July 2013, an increase of 8.2 per cent. The five-year average for July is 1,317.

It is kind of difficult to argue with numbers supplied to us by OREB, but somehow it doesn’t match with what I see is happening in real life… My hood has number of houses for sale sitting without action for a prolonged period of time, some of them been on the market for two straight years. In the last The Real Estate & Mortgage Show, that was aired on August 2nd, realtors have used expressions like “July market was a little bit slow”, “it’s OK to have a quite month” and “there is lots of stress in the market right now”. Due to this, half of the regular participants were not even in the studio, sometimes participating in the show over the phone from the cottages, and yet Ottawa RE Board somehow manages to pull “Second highest July sales on record” out of the hat. There is not much I can do about it other then set an Outlook reminder to review these numbers sometimes next year, just in case if Ottawa’s RE Board decided to utilize methodology employed by the Toronto RE Board, such as announcing increases in sales and average prices and quietly revising it later on.

Here is another set of number that OREB “forgot” to include in it’s report: Residential new listings were up by almost 300 units last month in comparison with last year, Active Listings is currently sitting at 8600, up from 7500 last year. Lets see how this all going to workout.

#49 Smoking Man on 08.08.14 at 9:03 pm

#43 Lawboy on 08.08.14 at 8:28 pmPerhaps Mark, Devil’s Advocate, Ralph Cramdown and Smoking Man could all just leave the building?

Getting a little tiring having to scroll past all these empty narcissistic bleatings from those who seem to need to see their names in print so often.
……….

Dogs here’s a perfect example of someone who’s owned..

Narcissistic, is complimentary….. Less of course you brought your teacher an apple a day…. Swallowed the programming…

Show me a millionaire and I will show you a Narcissist..

Now go cut the grass lawn boy..

#50 Vanectdotal on 08.08.14 at 9:07 pm

Garth for Office! Great post, naillled it. I can relate some of these observations. My previous line of work involved exporting a product to international markets. Most of the business costs including payroll, were primarily bankrolled by large, multinational, or US corporations. This is also, incidentally, a taxpayer subsidized industry. By the mid 2000s, I was, for the first time, starting to be asked to do the work of 2 different paid positions, instead of just one. Then, in the following years, I was often requested to do the work of 2 – 3 different positions/job descriptions, but get paid for one position, and at a new lower rate. Competition for these jobs however, kept increasing, and the employers used this to their advantage. (Each new project required a new contract with new terms). This continued until this new way of hiring became more or less the norm in this industry, with increasing wage concessions on each new contract. After a steady slide downward it was no longer financially feasible to stay in that line of work, so I left. This is a pretty typical experience of my generation, not just in this line of work either, including the highly trained / skilled / educated amongst my peers. When we had an entire department, except for a couple supervisors, staffed by full-time TFWs on the last project, (first time in 14 years I’d ever encountered this phenomena), I knew it was time to roll the dice, start over, and try a new career path. These are companies that are subsidized by the government, as an incentive to create local jobs. How ironic. I suspect the unemployment numbers will be going up, up, up in the near to mid term, even as labour participation drops as more people give up and stop looking for work. This one aspect alone, never mind all the additional economic factors in play, will be enough to have a measurable effect on the housing market, as people become tapped out and are forced to sell their homes to relocate to where the decent paying jobs are. The average Joes and Josies are quickly running out of credit to keep the ponzi scheme going, at least in the spendy Lower Mainland. People are living on credit just to stay afloat, nevermind having anything left over to save for retirement, this, as the study indicates, is during whats supposed to be the prime earning years. Strange days indeed.

#51 Smoking Man on 08.08.14 at 9:10 pm

LawnBoy I’m drinking jack tonight so forgive my aggressiveness…

I had 900 people read a bit of chapter 2… I got the most unreal beauty comment from Swade…..

Said it was Brilliant and Redculise…

Exactly what I’m striving for… My writing skills are evolving, another few years at this, it’s going to be who’s Hunter S Thomson, who’s Hemingway…

Eat your heart out….. LAWNBOY

#52 NostyVlad the Snugglebombed on 08.08.14 at 9:12 pm

“In all of Canada last month there were 200 new net jobs created. Ouch.
“The unemployment rate went down a titch because over 35,000 long-term unemployed people said ‘screw this’ and stopped looking.
“So, the labour participation rate has just dropped to 65.9%, which means 34.1% of the people who could work, aren’t.
“We lost 60,000 full-time jobs last month (most with benefits and pensions), and replaced them with 60,000 part-time positions (mostly without).”

Speaking of before-, after- and regular shocks, add in #140 Blacksheep on 08.08.14 at 5:20 pm — “What’s become obvious is we have painted ourselves into a corner.” plus Europe, Seattle and other states min. wages might be going to US$15 / hr., but who cares? The latest Robot Technology coming in means no wages will be needed at all. So much for McJobs.
*
#85 Spectacle on 08.06.14 at 1:00 am — cite>”Also, thanks NostyVlad , your input is saving me much investigative time/effort.”,
#97 CP on 08.08.14 at 11:32 am — “Gotta say, next to Garth’s posts I come here for Nosty’s replies.”,
#125 Big Brother on 08.08.14 at 3:18 pm — “MKULTRA says what about our Smoking Man, we programmed him to make those comments.
[Good lord! Are you inferring there are / is more of me?!]
— plus —
#85 Holy Crap Wheres The Tylenol on 08.08.14 at 9:16 am — “Canada could take advantage of the valves turning off in Russia. Export our oil and gas to Europe with a nice profit margin.”

Hello my friends and welcome to the show that never ends! Besides, none of what happens here amounts to a hill of beans, because no one can do anything about these events anyway.

HCWTT, agreed Canada could put something together, but how long would it take? Depends on what province is closest and has shipping ports available. Russia (and China) are not going to stand idly by and wait for sunshine and ponies to magically appear.

R and C don’t need gold- or silver-backed currencies, nor Bretton Woods (the petro-dollar), and neither do a whole bunch of other countries. They are quite capable of setting their own versions of trade up to suit themselves.

BTW — BRICS Food Bank (bypassing GMOs?), BRICS, Iran’s Iron Dome, ISIS / MI5 / ISIL / al CIAeeda, Bullseye! Illegal immigrants and ebola and Ebola — Follow the money.

#53 Blacksheep on 08.08.14 at 9:17 pm

Mister Obvious # 45,

#35 nonplused
“The really crafty people might even maximize their HELOC, by an RV, quit work and move to Arizona and live in said RV.”
——————————
Nice try, but no. The Americans will make it a very inhospitable environment for broke Canadians who try to park their butts longer than the maximum 180 days per year. Just as we might reasonably do to them.
—————————————————–
The border is way more porous than most realize. Their also talking about extending the six months, to eight months I think for canadians.

#54 Mark on 08.08.14 at 9:26 pm

Logically, the $C is going to be a victim of almost any path forward…”

I disagree. A slowdown of debt expansion, or even a contraction in debt, debt deflation, in a very productive export-driven economy is almost always highly supportive of the currency. Look at Japan as an example, for instance. Every central bank in the world is trying to depreciate their currency right now. Canada, due to domestic deflation, is likely to be a proverbial ‘loser’ in such, unable to suppress its own currency.

The flip-side of this, however, is that for Canadians that actually saved and have CAD$ assets, the CAD$ could go to $1.5-$1.6 USD. A complete inversion of the 2000-2001 bottom.

Canadians who think they’ll be able to pay off their loans in depreciated dollars are going to be mightily disappointed.

#55 X on 08.08.14 at 9:30 pm

2 more months and the jobs number could be far worse, as summer ends and many head back to their employment searches….oh yeah a little thingy called QE could also be ending then. 2 countries with employment and economies heading in opposite directions.

#56 Smoking Man on 08.08.14 at 9:34 pm

Years and years of schooling, the perfect blade of grass on the lawn we call world, no for dandy lions..

For acceptance and respect we should all stair at our shoes, head down, humble and hope prey that someone we’ve convinced ourselves is above us notices, and rewards our good behaviour…

My wee 55 years on this shit whole planet has taught me that’s never going to happen…

The dog with the hardest bite, gets all the bitches and all the milk bones…

The others that went to doggie obeisance training.. Well they’re just dogs…

Fetch….

#57 Playing4fun on 08.08.14 at 9:36 pm

Came back from a weeks vacation at Wasaga Beach. Had not been there for a few years. I was shocked to walk down to the main strip on a Monday night and see it deserted. A number of bars locked up tight and some for lease signs in windows in the prime of summer.
Spoke with a former owner of one resort who said a number of condo developments have gone belly up and this was the first summer in years he had noticed vacancy signs even on weekends. Seemed everyone was putting on a brave face but something is definitely troubling if you cant make a go of it at the height of summer.

#58 young & foolish on 08.08.14 at 9:37 pm

Centrally planned economies (and Canada is one of them) have made it possible for capital to move freely around the globe, while workers are being left behind. Finally, the revenge of the 1% against the peoples for having the gall to enact the welfare state!

We see where this is going …. it’s easier to bring the 3rd world to the 1st than the the other way around. So, expect more precarious employment, prohibitive regulations, more “free trade” agreements, and a growing gap between the haves, and the have-nots.

We might be “screwed” but were all getting “screwed” together.

#59 Mark on 08.08.14 at 10:02 pm

“. Finally, the revenge of the 1% against the peoples for having the gall to enact the welfare state! ”
..

We might be “screwed” but were all getting “screwed” together

Its not hard, especially these days, to become part of the 1%. Use a little bit of common sense, don’t leverage up to buy declining assets like houses, buy the Garth balanced portfolio using the lowest-cost investment vehicles possible, take some risk when you’re young, and chances are, barring a divorce or other personal catastrophe, by the time you’re middle-aged, you’ll be in the 1%.

I personally have zero sympathy for those who are loaded up with overpriced and minimally productive assets, like houses at P/E = 35, complaining that the so-called “1%” are getting rich with stocks at P/E = 15. If anything, the housing bubble has left many other asset classes extraordinarily cheap historically speaking and ripe for picking if you want to be a member of the future 1%.

#60 Macrath on 08.08.14 at 10:02 pm

“In Canada, there are no restrictions or disclosure requirements with the result that Toronto and Vancouver housing costs have been driven up artificially due to frenzied buying by anonymous foreigners.” ~Diane Francis

http://business.financialpost.com/2014/08/08/chinas-anti-corruption-crackdown-threatens-to-spill-over-into-canada/

Diane blames it all on HAM, corrupt HAM and a complicit Canadian Government.

She’s wrong, and famously so. — Garth

#61 Randy on 08.08.14 at 10:03 pm

“For Ontario to have a jobless rate higher than the rest of Canada for seven-and-a-half years is not acceptable,” said Haldimand-Norfolk MPP Toby Barrett. “Not only is this is an indication of the failure of the Liberal government’s job creation scheme, but it also shows the current high-tax environment is not conducive to attracting new business and industry.”

#62 rainclouds on 08.08.14 at 10:07 pm

#45
Bang on dude. US customs denied an acquaintance (self employed house painter) No Canadian assets ,owns a house in Phoenix. (His version of a retirement plan)

After several tries and MUCH documentation they relented and gave him 90 days visitation , apparently the USA doesn’t need broke Canadians with no tangible attachments. Now flagged in the system.presumably forever.
Canada would do the same the other way……poverty sucks

#63 Bill Gable on 08.08.14 at 10:11 pm

That scraping, crunching sound, is the Titanic hitting the iceberg.

This post is a damning indictment of HELOCS and entitlement.

My Parents were middle class and we so we had a middle class life (The Navy Officer pay was puny – trust me) – but we didn’t seem to notice.

Now in this new “Age of the Selfie” – it’s all NOW,with people caking like a spoiled kid who wants a lolly.

Well, the ship is sinking and you better have some plans, or you are going to learn to swim.

#64 Spaccone on 08.08.14 at 10:19 pm

#3 crowdedelevatorfartz on 08.08.14 at 6:18 pm
But Italians Love real estate.

It’s an unwavering obsession. Even though she knows my stance a day doesn’t go by that my Italian mother doesn’t mention buying a cottage or a house as an investment [and maybe status symbol] (“easy money just wait until they finish building then flip it for an easy, juicy profit”, yadda yadda) or about one of her coworkers that does this as a big income supplement.

Have family in Italy trying to pitch me an old apartment in a medieval, dilapidated beach town in the deep, deep South as well…they have no inkling how impractical it would be for me to buy it at what it’s “supposed” to be worth…granted it’s a million dollar view of the hills and ocean a couple km inland, and 1/4 the price/ft2 (10% of my NW) compared to what I sold my condo for in Toronto (double the price for something closer to the ocean), but I would never be able to turn around and sell it and it would be dead money for a place I don’t know how often I’d stay or visit.

#65 Sheane Wallace on 08.08.14 at 10:20 pm

# 54 Mark,

Every central bank in the world is trying to depreciate their currency right now.
………………………..
I am very confused, why would then gold go down if everyone is depreciating their currencies?

It should go up, right?

I deleted six of your gold-pumping posts yesterday, and will do so for every one in the future. — Garth

#66 ED on 08.08.14 at 10:20 pm

The grocery clerk

I was in California in 2005, just before the bubble burst, attending a conference. I remember the bus driver saying how he had traded up to a house in the central valley, then worth almost 3/4 of a mill. How could someone do that on 12$ an hour, I thought. A few weeks ago the grocery clerk telling me that he was happy to get his first house, to get in the market now as housing in Nanaimo is set to take off. Kind of think it might take off, but in the other direction, if history is correct.

#67 Sheane Wallace on 08.08.14 at 10:24 pm

I deleted six of your gold-pumping posts yesterday, and will do so for every one in the future. — Garth
……………………………….
I respect that Garth,

I acknowledge I went too far considering the fact that I own no gold, just found the whole gold bashing theme
very strange and interesting at the same time.

#68 Entrepreneur on 08.08.14 at 10:42 pm

#109 Toronto_CA…”Cheap easy credit is a devil.”

I agree and politicians are quilty too. There is so much debt that the fundamentals are being ignored. And so are the people that live here.

#50 Vanectdotal…our daughter works as a RN and the managment have taken away one day off a week plus she has nurses-aid (that only have a 6-month course under their belt) that are constantly asking her questions. Even my husband who had a stroke noticed the difference in nurses-aid performance. He got out as fast as he could.

Fear is only fear itself. This is when critical thinking comes into play.

#69 young & foolish on 08.08.14 at 10:43 pm

“the current high-tax environment is not conducive to attracting new business and industry”

It’s widely accepted now, that we have to lure industry here, as opposed to industry begging us to operate/sell in our jurisdiction. Nobody seems to question this any more. Nobody asks anything of industry. Even Obama commented on how now corporations account for only 7% of tax earnings in America (down from 25% some years ago).

To challenge this is heresy. Everybody knows that “free trade”, and near zero capital controls bring improvements to quality of life, right? And it is true. Care to guess for who?

#70 supermike on 08.08.14 at 10:46 pm

#8 Supreme on 08.08.14 at 6:22 pm
Any predictions on what changes are coming in the fall aside from the expected?

—————————
Nothing would change. Until the next federal election. The current government would do whatever they need to do to keep the RE bubble. Because so many people are in this game. They don’t want to disappoint those voters.

And for sure, there will be consequences. But the politicians wont’ care as long as they can stay in power. Politicians have fat pension. They are actually DIFFERENT! We hard-working Canadians would take the consequences!

#71 Tiger on 08.08.14 at 10:47 pm

43 law boy
That’s what they do, cause what else do they have except a very sad existence!
Trailer trash boys!

#72 Led on 08.08.14 at 10:58 pm

I am trying to imagine the scenario where the govt starts to increase rates,,,wouldn’t that mean we start to actually do well, are approaching full employment, maybe some inflation thrown in there? This economy sucks and it aint getting better.

The only thing I can consider is that the govt starts to infuse money directly into the public hands. Maybe that would get some inflation once people had money to spend?

By the way, you portray the gen x crowd in a bad light – our parents paid off their houses in a few years due to inflation – we get million dollar homes and the price of the home is the only thing inflated – certainly not our wages!

#73 Tiger on 08.08.14 at 11:00 pm

49 smoking man
I cut your grass a long time ago remember you wouldn’t do it I did and just smoked by you!
You are still the same person and will never change,
You still traumatized buy getting kicked out of school and no job opportunities with a grade 2 education

#74 Macrath on 08.08.14 at 11:03 pm

She’s wrong, and famously so. — Garth
—————————————————–

A proof is a proof. What kind of a proof? It’s a proof. A proof is a proof. And when you have a good proof, it’s because it’s proven.
Jean Chretien

Things might get interesting when Xi Jinping comes looking to extradite and repatriate the HAM .

#75 Chickenlittle on 08.08.14 at 11:08 pm

OMG….I’m middle aged according to Garth’s blog.

#16 miketheengineer:

I hope you are wrong but it wouldn’t surprise me if that happened.

#35 nonplused:

Sounds great. Let’s go to the casino and double our money.
Screw the States! Brazil or one of the banana republics is where it’s at.

………………….

I work at a school and I always worry about my job. I think everyone should.
Having said that, I make exactly what I made 12 years ago, and I worked fast food and serving!
Things aren’t better now like I so naively thought they would be.

#76 No Joke on 08.08.14 at 11:09 pm

Patient at Ontario hospital with Ebola-like symptoms, but no diagnosis yet

BRAMPTON, Ont. — The Canadian Press

A patient at a hospital near Toronto has been isolated as a precautionary measure after showing flu-like symptoms similar to those characteristic of the Ebola virus, a public health official said Friday.

Dr. Eileen de Villa with Peel Public Health said the steps were taken because the patient at Brampton Civic Hospital recently travelled to Nigeria, which has been hit with an outbreak of the disease.

http://www.theglobeandmail.com/news/national/patient-with-ebola-like-symptoms-in-isolation-at-brampton-ont-hospital/article19980263/

#77 gladiator on 08.08.14 at 11:11 pm

Just watched “Contagion”.
Not trying to be an alarmist, but this new strain seems to be airborne. Mix the contagion rate of a common cold with a mortality rate of 50% to 90% of Ebola and you get a neat reduction of world population by 50% at least.
I think we have a very serious turning point in the making and not realizing it at this time. But it’s serious. This Ebola strain appears to be airborne, which it wasn’t before.
I’ll pray now.
Peace.

#78 Shawn on 08.08.14 at 11:12 pm

Labour Participation Rate explained

•So, the labour participation rate has just dropped to 65.9%, which means 34.1% of the people who could work, aren’t.

*****************************************
I believe it has been pointed out before that this is not 65.9% of those who could work.

This is 65.9% of those age 15 or older.

So your 34.1% who are not working include students, retirees, the sick, the mentally handicapped, the filthy rich, kept men and women and those who make a living outside the formal economy (black market).

Just saying, because many doomers love to jump on this labor participation rate and pretend it has something to do with the unemployment rate.

#79 OlderbutWiser on 08.08.14 at 11:16 pm

Outsourcing of minimal skill jobs to places like India is just the tip of the iceberg. Next up with be the offloading of the “expensive” skilled jobs….i.e. those in the 45 – 55 age range so that they can be replaced with younger less expensive help. And those are your peak earning and saving years.

I wouldn’t have believed it until I saw it myself. The multinational that I work for plans to “move” an entire specialized department from a high cost major city to the boondocks across the country. The “hope” is that most of this high priced help will not want to move so that they can be replaced with younger and cheaper locals. They expect salary savings in the range of 25% – 30%.

I pray for anyone who is in that age group that is tied down with debt (or a home that they can’t sell). The rug is about to be pulled out from under you and you have no idea…..

#80 Tiger on 08.08.14 at 11:25 pm

On the coast of British Columbia there are thousand places for sale, coming soon to Vancouver !
Maybe you should shave so you don’t look like an idiot , oh yeah your tattoos will be all you have in the end a tattoo you can’t eat it but you are a man ,and a looser and younger than 40 yeah

#81 Jerry Jeff on 08.08.14 at 11:36 pm

The entitlement culture has come to roost..in a condo tower near you. Wait for it…condo ownership will soon be advertised as a ‘right’. You heard it here first. I’m not kidding….we will hear from Millenials who will be screeching about having their student loans rolled into a condo mortgage..”because they deserve it”.

#82 Tiger on 08.08.14 at 11:37 pm

72 led
Who are you led by
Get out there and work you goof!!!!

#83 JimH on 08.08.14 at 11:38 pm

#45 Mister Obvious replying to #35 nonplused
…”The Americans will make it a very inhospitable environment for broke Canadians who try to park their butts longer than the maximum 180 days per year. Just as we might reasonably do to them.”
====================================
Exactly.
Canadians should also be aware that there is considerable confusion and ambiguity concerning the “180 days”, “6 months” or 183 day and whether any are determined by a calendar year, or begins on last entry, or is driven by last exit or whatever. The US Customs and Border Protection Inspector’s Field Manual runs to 354 pages, and I can’t find a clear definition of length of stay for Canadians. I did hear of a case where a Canadian woman went well over the limit, pulled a “Madonna”, and has been denied entry to the US for 5 years, despite repeated appeals. The Canadian folks I know who winter in AZ are fanatical about limiting their stay to 180 days, and have had no issues, just a warm welcome at the border.

The US border protection officer has been given a great deal of leeway and therefore a great deal of power in making crucial decisions; he or she is basically the boss. Like all of us, they have their good and bad days. Don’t go out of your way to piss them off.

There are 2 bills being considered in Congress to lengthen the 180 day rule to 8 months, but there are other statutes that might cause problems, such as whether or not a Canadian who spends more time in the US than in Canada might find the IRS knocking on the door wanting a cut of income earned while in the US. That could ruin your stay. There may be Revenue Canada repercussions also.

#84 Basil Fawlty on 08.08.14 at 11:41 pm

The current US labour participation rate is 62.9%, which is the lowest in 36 years. The US rate has been falling since the year 2000, which should make one wonder about their job creation figures. The thing is that people who are considered no longer looking for work ie. no longer collecting unemployment benefits, are not considered unemployed. Consequently, the unemployment stats look better, while the labour participation rate gets worse.

#85 JimH on 08.08.14 at 11:52 pm

Sorry; I know this is off topic, but might save someone some grief.
from http://www.aboveborder.com/blog

Snowbirds, 2014 the year of enforcement for travel to the USA

Enforcement of days spent in the USA and Canada is about to get tougher much tougher. Both the USA and Canada will light up the technology that keeps track of individuals entering and leaving each respective country in 2014 giving border security personnel real time access to this information…
… this is the year they will really start to enforce the regulations.

#86 Tiger on 08.08.14 at 11:53 pm

In the real world
Nobody sleeps un less you live in Toronto that’s different there

#87 dienekes on 08.08.14 at 11:56 pm

As far as debt goes
I watched an interveiw with Brent Wilson (is that his name?) the prairie merchant guy.
Hes a billionaire
He stated that he felt uncomfortable that as a result of 2008 his debt level approached 1/3 of his net worth.
Meanwhile people with no money leverage up 20 to 1 and take any potential gains and go buy a $90000 mastercraft boat, on credit.

#88 Smoking Man on 08.09.14 at 12:03 am

We are on a journey, birth to death..

You all want to go there following rules pleasing the fantasy of your program..

I say blow a curcit. Loose it somewhere, flip a bird.. Oh no..

Guilt… All of you are lesser…
.
SMOKING MAN CODE..

Only thing that matters..

#89 *NAKED APE* on 08.09.14 at 12:16 am

Sorry Garth!

Didn’t even finish reading your blog, (and the blog dog comments), after reading today in the news to see that only 200 jobs had been created this month in Canada, I thought it was a typo. To see that it took away full time jobs and replace them with part time jobs? Made me see red!

We need a little less chest pounding against the BEAR, much less religion mixed into governing our country and a WEE bit more transparency and accountability in a government that promised us exactly that in their last election platform.

I have “faith” that Canadians are finally waking up to what is going on, both on the national front and internationally, and HOPE that we will be rid of this HARPER cancer/blight that was imposed upon us come 2015…..

#90 dogman01 on 08.09.14 at 12:21 am

Your are correct:

Calgary 1998, bought house $175K, late 20’s with future wife.
Had Job for 2 years, looked steady, rented together prior to that.
After 2 years it looked like steady work and we had the 20% DOWNPAYMENT!

I had $150K in debt, OMFG! $150K in debt to the faceless nameless bank. (TD and they seemed pretty nice about the whole thing…really actually pretty nice)
Paid it off with accelerated bi-weekly payments. Got a raise and that acceleration went full throttle.

The job(s) was the key. It allowed a very conservative yet starting from 0 couple to leverage. ( if you ever realize 0 you are conservative) .

Calgary 1997 = $175K house
Calgary 2014 = $ 475K house

IF there are no job prospect$ for middle class there is no real estate market.

PT employment with no benefits = no prospects.
No prospects = no Real Estate
Fundamentals

Middle Class = Healthy Economy

#91 stop lying on 08.09.14 at 12:25 am

She’s wrong, and famously so. — Garth

yup… there’s no chance the flow of HAM will be stopped any time soon

#92 45north on 08.09.14 at 12:26 am

Curious : What is the Bank of Canada going to do if job creation is stalled and the Americans start raising rates?

Bank of Canada will raise rates to match the Americans. The dog wags his tail. Not the other way around.

Boomin Doomer : The depth of risk denial across Canadian society is alarming.

it sure is. So you waited five years to sell your house in Ohio. Pretty funny. I mean five years is a long time but you had the resources to wait. Lots didn’t.

High Plains Drifter : Standard and Poor dropped a dime on the banks

like when a call from a pay phone cost 10 ¢ like when there were pay phones

JO : In the last 12 months we have essentially no job growth outside of Alberta and Sask. I see it on the front lines: the illusion of our debt based economy. The majority of these first time buyers are effectively broke and most cannot survive more than a month without a paycheque.

hmm, this confirms what Garth is saying. not good news

renting & loving it : 17% of condo owners in Toronto, Vancouver bought for investment
– More than half of condo investors rent out their secondary unit

what! this is bad news! you know if I worked for a bank, I could run an SQL query, pull up the mortgages where the address of the property is not the address of the mortgagor (technical term). Don’t buy there.

Mark : In other words, the sales mix has changed to higher-end properties, which explains a significant amount of the change in the mean in and of itself.

This is intuitively obvious when you look at the real-world impact of the Budget 2013 changes to CMHC subprime mortgage insurance.

rich people are rich. If they want to buy they buy. If they want to sell they sell. Middle class people are held up by the market.

Ed : A few weeks ago the grocery clerk telling me that he was happy to get his first house, to get in the market now as housing in Nanaimo is set to take off. Kind of think it might take off, but in the other direction

pretty funny

#93 Waterloo Resident on 08.09.14 at 12:31 am

Garth’s QUOTE: “having babies and buying Audis’

Yup, pretty much sums up 50% of the population here in Waterloo. Look at any driveway and a full 40 to 50% have either a BMW, AUDI, or MERCEDES in the driveway. none over 3 years old.

#94 notagreaterfool on 08.09.14 at 12:34 am

But…..Mr. Harper said “best country in the world & remains an island of stability”

http://news.nationalpost.com/2012/12/25/stephen-harpers-christmas-message-2012/

#95 Willy H on 08.09.14 at 12:40 am

How can our economy be in such a sorry state when the Reformicons have lowered corporate taxes by billions, cut the GST, not once, but twice, created the hallowed TSFA* and entered into numerous free trade agreements**? Apparently they are about to balance the federal budget as well. Yet all of this and we are stagnating.

*A gift to Canadians that will ultimately drive a bigger wedge between the haves and have-nots and result in lower Federal government revenues over the long haul!
** Free Trade agreements negotiated with minimal public consultation and yet to debated in openly in public and the House of Commons!

#96 BG on 08.09.14 at 12:46 am

When the bubble bursts and takes the economy with it, how will portfolio with only Canadian dollars (Canadian couch potato) be impacted?

Wondering if I’m not putting all my eggs in the same Canadian basket.

#97 Mark on 08.09.14 at 12:48 am

“I am very confused, why would then gold go down if everyone is depreciating their currencies?”

Not everything, including gold, moves in a straight line. But there is a trend that, despite the recent setback, is still intact. And that is, for currency depreciation to continue for quite a while to come.

In the short term, returns on long-term debt have been fairly attractive. Gold, typically inversely correlated with such, not quite so. As long-term rates start to tick up, asset classes that require the expenditure of enormous amounts of capital (borrowed at interest) in their production should rise as scarcity of new production increases.

#98 Setting the Record Straight on 08.09.14 at 2:16 am

@58
“Centrally planned economies (and Canada is one of them) have made it possible for capital to move freely around the globe, while workers are being left behind. Finally, the revenge of the 1% against the peoples for having the gall to enact the welfare state!”

Pulease! Stop with the One Percenters. The bottom fifty percent of the One Percent are just middle class. You need to think about the 0.1 percent or the 0.01 percent.

Those are the one Percenters who count.

#99 Peter on 08.09.14 at 2:35 am

The parents are helping the kids to buy house. Can’t be stopped.

#100 JG on 08.09.14 at 3:02 am

sooo…the Harper economic action plan isn’t working? I wonder how much tax dollars was wasted on this scheme?

#101 nonplused on 08.09.14 at 4:22 am

I actually have a real dilemma that I can’t quite figure out.

My understanding is that the real economy, that being the exchange of goods and services, actually works in real time. That means you know one guy drills some oil, another guy makes it into gasoline, and then a third guy puts it in his taxi. Someone builds a road, someone drives on it.

I understand paper money or any money even gold is just an accounting system. You know, I worked so many hours, you owe me something back.

What I don’t understand how we’ve gotten to the point where people can work but the pay they earn don’t equal the same purchasing power. Ya sure I understand outsourcing, but why don’t those people buy our oil and produce? How did it come to be that you can work a job but not afford a house built by other people that are working a job? Where are all our efforts going that we can’t all exchange our labour with each other anymore? Why are we working, but we can’t afford what other people worked to produce?

#102 Mithan on 08.09.14 at 4:25 am

I still think your probably wrong on the 10-15% correction Garth! but we will see.

#103 Italians love real estate on 08.09.14 at 6:59 am

#3 crowdedelevatorfartz

You know it !

#64 Spaccone – you should listen to your mama. Mama knows best !

Garth- al Sinclair pointed directly at you yesterday evening when he said yesterday night on hot property that quote” we were right predicting higher prices last year and the experts predicting a crash were wrong ”

Incidentally at the end of the show, he mentioned presenting an offer to an Italian family , whom , prior to seeing the offer, the patriarch offered him a drink. Well, after the family sees the offer, the Italian father takes the drink away from him because it was such a lowball offer.. LOL

Yes , Italians love their real estate !!

#104 Nobleton Bill on 08.09.14 at 7:23 am

I see the natural evolution for this blog becoming a ‘Fight Club’ with secret locations set inside unsold condo’s.
It’s a way for differing opinions to set the record straight!

Great posts:
a) #6 Boomin Doomer on 08.08.14 at 6:21 pm
b)#7 Drill Baby Drill on 08.08.14 at 6:21 pm
c) #66 ED on 08.08.14 at 10:20 pm
d) #29 MissisaugatoVancouver on 08.08.14 at 7:21 pm

#29 MissisaugatoVancouver on 08.08.14 at 7:21 pm
This is an important comment because we will be forced
raise interest rates…That’s how you stay competitive in attracting foreign bonds…If America raises rates to 4%, Canada can’t attract investment at 2%. Central banks compete against each other. It’s false for Canadians to think ‘they can’t raise rates because they know everyone is going to be in trouble’.

Canada has to compete against global markets for Foreign Bond Investors.

#105 Steve French on 08.09.14 at 8:05 am

I’m following Smoking Man code by having a read of the GF comments section on my ipad, and pouring myself a very nice Glengoyne single malt. Air dried, never with peat. Highly recommended.

Feel free to drop by Australia if you are in the neighbourhood !

#106 Herb on 08.09.14 at 8:07 am

#95 Willy H,

as Brewster Kneen put it in an article, “Who pays the Harper, calls the tune.”

Paying does not involve anything as crass as cash under the table. It’s helping to put or keep him (or any politician) in power. Which, of course, is backing him with the power and influence that only money can exert in elections – or threatening not to.

#107 Bob Rice on 08.09.14 at 8:10 am

“The Myth of Harper’s Economic Competence”

http://www.huffingtonpost.ca/sean-casey/harper-debt-economy_b_3976972.html
_____________________________________________

in fairness, the Liberals governed under better economic conditions… 2007-2009 was a very precarious period. Among the G7 Canada faire best. That is a fact.

Mr. Harper inherited a budgetary surplus in 2006. By 2010 our additional annual debt was at an all-time high. Not too impressive. Or Conservative. — Garth

#108 Bob Rice on 08.09.14 at 8:14 am

@ Italians love real estate , please go away… I’m Italian and you’re embarrassing … your stereotypes are nauseating…

#109 Steve French on 08.09.14 at 8:18 am

hmmm shall i pour another Glengoyne?

WWGBSMD?

….what would garth’s buddy smoking man do….

#110 economy stalls on 08.09.14 at 8:21 am

Playing for fun #57 the housing bubble is killing the economy as maxed out people cannot afford to go out. Talk to any restaurant or retailer and they will tell you sales are down 20-30 % this year. Uneducated high school drop out realtors. Mortgage brokers cheer the fake economy (CHMC) back by the taxpayer . I know one guy who can’t get an internship and it’s been over one year. Canada is a house of cards

#111 Ferdinand (@StFerdinandIII) on 08.09.14 at 8:29 am

You should also mention Inflation. Since 1971 with the destruction of the Gold Standard, yearly real-world inflation has annualized 5%. Today it takes $6 to buy a 1971 $. Currency values have gone down in real terms by 80%. This is one reason why that little bung from 1970 which you could buy for $50 K then, is now min. anywhere in Canada, $350 K. Inflation. Gov’ts are wiping out your currency value.

The destruction of money value is a main reason for bubbles and bursts. Today’s housing and stock bubbles are no different. They WILL burst.

There is no stock bubble, as equity markets broadly pace economic growth. The US grew at an annualized rate of 4% last quarter, and has seriously rebounded since 2009, even as stimulus spending is turned off. Markets are likely overvalued by 10-20%, and will correct before recovering. Housing is more emotional, with a broader participation of less sophisticated, more highly-leveraged investors. Far more risk lies there. — Garth

#112 Ontario Ebola Patient on 08.09.14 at 8:33 am

DELETED

#113 OMG on 08.09.14 at 8:41 am

Does Smoking Man ever post when sober? As far as his dog comments go he sounds like a poodle, me I would not be a dog but rather an Alpha Wolf.

#114 Bottoms_Up on 08.09.14 at 9:09 am

#19 Slim on 08.08.14 at 7:04 pm
—————————————-
The problem with target is that Canadians don’t like being lied to (and don’t like paying higher prices). They told us lowest prices, but they can’t compete with Walmart. Canadians are not stupid and will comparison shop. If Target’s prices aren’t competitive, Canadians won’t shop there.

#115 Bottoms_Up on 08.09.14 at 9:10 am

ps. Black swan event could be Ebola in Ontario (Brampton)…talk about devastating to the economy!

One guy probably has the flu, and you’re writing off the economy? Drama queen, much? — Garth

#116 young & foolish on 08.09.14 at 9:18 am

Every policy is subject to the laws of unintended consequences … and cheap money is no exception, neither are free trade agreements, nor do-gooder regulations. Every “do something” decision results is somebody’s toes getting stepped on. Has it ever been different?

#117 Cha Ching on 08.09.14 at 9:32 am

Don’t pay too much attention to Mark’s baseless claims of real estate prices declining based on ‘sales mix’. These made up claim is what got him banned on RFD.

As real estate prices continue to increase across the country, bears like him simply get more desperate and angry.

I also find it amusing that self-professed renters create post titles to reflect that they’re renting. It’s like a deep seated insecurity to show that they don’t feel that they’re not homeowners. Too bad that it’s only showing the opposite.

Experience on this blog shows the housing bulls are far more prolific when it comes to trying to create multiple identities and inflate their influence. Trust me, I am in a position to verify this. — Garth

#118 crowdedelevatorfartz on 08.09.14 at 10:21 am

@#103 Italians Love Real estate

I have a very good friend who’s Italian-canadian.
He’s been building anf flipping houses for 20+ years here in Vancouver. He’s made a lot of money.
He’s stopped buying, building and flipping.
‘Too expensive” was his reply when I asked.
This was after it took almost a year to sell the last one and he broke even on it………

#119 May on 08.09.14 at 10:22 am

I found this article from huffpost on lack of data (or access to anyway) on housing situation in Canada. At least I now feel informed on just how uninformed I am.

Sorry if this is a duplicate – I didn’t see it in any of the comments.

http://www.huffingtonpost.ca/2014/08/07/real-estate-canada-missing-data_n_5658382.html

#120 M on 08.09.14 at 10:26 am

@Gladiator:

You are being an alarmist. Ebola (and its viral relatives) is an RNA virus. RNA is pretty fragile compared to DNA so it biodegrades relatively quickly. That means it needs a live host or recent body fluids for transmission. Airborne? Probably not.
I’m not sure you got the point of the movie Contagion, either. That viral strain wasn’t airborne, it was transmitted mostly by “fomites” or surfaces. That’s why the epidemiologists kept saying. “Don’t touch that!”
Now influenza.. Airborne? Yes! And more scary for the developing world.
Can we get back to finance now?

#121 Daisy Mae on 08.09.14 at 10:40 am

PROPERTY BROTHERS: “And since money is cheap, thanks to record-low interest rates, it has never been easier for Canadians to borrow to get that new breakfast-nook addition or backyard patio. But mostly, it’s driven by the premise that thousands spent on new floors and fixtures is an “investment,” as opposed to mere conspicuous consumption.”

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

True! We’re kidding ourselves if we think otherwise.

#122 Big Ed on 08.09.14 at 11:42 am

#43 Lawboy on 08.08.14 at 8:28 pm
Perhaps Mark, Devil’s Advocate, Ralph Cramdown and Smoking Man could all just leave the building?

Smoking Man-narcissist, yes but can be entertaining
Ralph-knowledgeable, doesn’t overdo it with the posts
Devils Advocate-goes on too long, too many posts that trend along the same theme
Mark-one word, freaking annoying

#123 stop lying on 08.09.14 at 11:55 am

Mr. Harper inherited a budgetary surplus in 2006. By 2010 our additional annual debt was at an all-time high. Not too impressive. Or Conservative. — Garth

Compared with Dalton and Wynne he’s a mf genius. And if not him, then who, Leyton? Ignatieff? Surely you jest.

As for rates, some ppl here aren’t paying attention. There is 0 chance BoC rates are going up, in fact with more jobs numbers like they they may be going down.

Rate decrease? 0%. Rate increase? 100%. But not yet. — Garth

#124 AfterTheHouseSold on 08.09.14 at 11:57 am

#117 Cha Ching
Busted by Garth!

Your posts are just a tad too rabid in your bid to discredit Mark. These tactics may have worked for you on RDF but you, or is that cj, da, zee and ilk are wasting your time here.

Now where have I heard that cha ching name…oh yah:
Cha ching (Till we grow older) Lyrics
“I don’t sleep so well at night
Waiting up and shivering
Hate is gone and money’s tight
This little home that I’m living in”

#125 Renter's Revenge! on 08.09.14 at 11:59 am

@101 nonplused:

“I actually have a real dilemma that I can’t quite figure out.”

I don’t mean to sound condescending when I say this, but the actual economy doesn’t have this problem, just you. Paradoxes don’t exist in the real world, either, like “what came first, the chicken or the egg?” It all depends on how you frame the question. The problem lies in the way you’re thinking about the economy.

Once you take into account the following, you should be able to sort it out in your head:
-profit
-income inequality
-capital investment
-savings (consumption delayed)
-debt (consumption brought forward)
-taxes (production without consumption)
-useless government paper-pushers (consumption without production)

Also, how many person-years does it take to build a modern house? Like 10 maybe? So expect to be paying that mortgage for 20-25 years on an average income.

Hope that helps.

#126 Renter's Revenge! on 08.09.14 at 12:06 pm

@117 Cha Ching:

“I also find it amusing that self-professed renters create post titles to reflect that they’re renting. It’s like a deep seated insecurity to show that they don’t feel that they’re not homeowners. Too bad that it’s only showing the opposite.”

I know, riiiight?

#127 Renter's Revenge! on 08.09.14 at 12:17 pm

@60 Macrath:

According to Diane Francis in her article, Russia is in a close second for illicit capital flows, so maybe it should be called HARM instead of HAM (Hot Asian/Russian money). Or maybe HARIM if we include Iranians. Think of it this way, the more letters we add, the less racist it becomes, right?

#128 MikeS on 08.09.14 at 12:23 pm

Hi Dogs,

Is there any chance that the BoC will drop the rate say .25% just to goose the market and ‘induce’ a
further mortgage rate cut?

Crush the dollar.
Crush savers.
Crush bonds for lower rates as they roll over.

Got to keep the game rolling until election time…..

Cheers.
MikeS

None. — Garth

#129 james on 08.09.14 at 12:48 pm

http://www.cbc.ca/m/news/#!/content/1.2731289

Garth said most people put 5% down. Yeah right….

No, I said the average down payment is 7%. — Garth

#130 Shawn on 08.09.14 at 1:06 pm

Economics 101 (or Economics Nonplused 101)

Nonplused at 101 made an excellent post about money and exchange of labour

“Why are we working, but we can’t afford what other people worked to produce?”

*******************************************
Good post on the common sense nature of money and employment. Adam Smith would be proud. I’ve just been re-reading his 1776 classic and the first four chapters explain much including why wages have been stagnant.

Smith explains how the spoils of the economy are divided between labour, capital (the money invested in factories and inventories and more) and rent on land.

Interestingly in Smith’s time the economy was a lot more centrally planned and restrictive than today. Unions were illegal but producer cartels were practically encouraged. All trades had restrictive entry and long unpaid apprenticeships. People were not allowed to move from one “parish” to another without permission – which was hard to obtain.

It is perhaps largely the market value of land (location) that makes houses so expensive. Clearly though the buyers are still somehow affording them although not without insane amounts of debt.

#131 Mark on 08.09.14 at 1:31 pm

“Don’t pay too much attention to Mark’s baseless claims of real estate prices declining based on ‘sales mix’. These made up claim is what got him banned on RFD.”

Nothing made up about such. And a few articles in this very blog have discussed the shift as well. Most evidence is pointing to RE prices in Canada having reached a peak in March-May, 2013, and declining thereafter. The sales mix shift should be obvious to pretty much anyone who actually has been watching the markets.

#132 Mark on 08.09.14 at 1:37 pm

“When the bubble bursts and takes the economy with it, how will portfolio with only Canadian dollars (Canadian couch potato) be impacted?

Wondering if I’m not putting all my eggs in the same Canadian basket.

Assuming that XIU is the portion of your Canadian Couch Potato Portfolio (or XIC, VCE, etc.), very little. In fact, the banks should benefit from a housing decline by being able to extract higher spreads from increasingly less-credit worthy borrowers.

Additionally, if you look at XIU, for example, there are no home builders. There is minimal exposure to discretionary retail. One problem that could be encountered however would be a significantly rising Canadian dollar due to the RE-led deflation. But this would be contrasted with a cyclical rotation towards stocks as a currently out-of-favour asset class.

Best case scenario, however, could be the 1990s as a template, where housing didn’t return to its 1989-1990 peak for over a decade, while the TSX tripled on the strength of enthusiasm for a deeply cyclical sector that was slowly building earnings momentum in the early 1990s. It likely won’t be tech this time around, but certainly could be the currently very-out-of-favour precious metals mining sector.

#133 Mark on 08.09.14 at 1:40 pm

“Is there any chance that the BoC will drop the rate say .25% just to goose the market and ‘induce’ a
further mortgage rate cut?”

Absolutely, and far more than just 0.25%. The BoC, to combat the increasing domestic deflationary quagmire and rising Canadian dollar, eventually will be forced to cut to 0%, and engage in other extreme policy measures.

After all, Canada’s RE bubble is even larger than seen in the US at the peak. And the natural tendency for the CAD$ is to appreciate on the strength of our export sector.\\

That has got to be your dumbest comment. We have no deflation at the moment, and a currency with momentum to the downside. The biggest long-term economic threat is a credit bubble, which will take years to unwind, and making money cheaper is not exactly the way to deal with it. There will be no BoC cut. — Garth

#134 Pooh on 08.09.14 at 1:49 pm

#43

Agreed that Smoking Man is a constant stain on a generally superb commentary section. But those others – especially Mark, offer excellent thought-provoking opinions that help make this blog hum.

#135 2or3orsometimes7 on 08.09.14 at 2:12 pm

Brampton person with fever = most likely malaria. There will not be an ‘Outbreak’ type scenerio with Ebola.

#136 Mark on 08.09.14 at 2:21 pm

“Also, how many person-years does it take to build a modern house? Like 10 maybe? So expect to be paying that mortgage for 20-25 years on an average income.”

Closer to 3-4 years actually. So a person dedicating 1/3rd of their labour output to building a modern house should be able to, in the absence of interest, pay it off in 10.

Taking 25 years, 30 years, whatever to pay back a mortgage loan, means that the banks and the tax collectors have found a magic way of extracting many years worth of a borrower’s labour. Simply to gratify the borrower with current consumption.

#137 Grantmi on 08.09.14 at 2:27 pm

#3 crowdedelevatorfartz on 08.08.14 at 6:18 pm

But Italians Love real estate.

Not enough to save this next collapses!!

#138 Snowboid on 08.09.14 at 2:34 pm

According to OMREB spokesperson, RE in the Okanagan is hot, hot, hot!

A realtor said it’s so busy she is working 16 hours a day, 7 days a week for two months.

OMREB says it’s the best sales figures since 1980.

Okay, so they sold more properties in July, but let’s look at the OMREB stats – pricing is a totally different matter.

Residential SFH:

July 2008 Av – $512,811 Med – $470,000
June 2013 Av – $478,433 Med – $438,000
July 2014 Av – $495,500 Med – $450,000

Condo:

July 2008 Av – $315,707 Med – $247,500
June 2013 Av – $265,151 Med – $219,500
July 2014 Av – $247,355 Med – $225,000

Residential Waterfront:

June 2008 Av – $2,445,000 Med – $2,925,000
June 2013 Av – $1,848,113 Med – $1,711,250
July 2014 Av – $1,812,700 Med – $1,500,000

This doesn’t even take inflation into account! Prices for SFH and Condos are up a bit from last year, but are still below July 2008.

Residential waterfront took a bit hit over the years.

It appears to me the MSM is helping the RE industry in the Okanagan grasp at straws.

The news story…

http://globalnews.ca/news/1500582/watch-okanagan-real-estate-market-heats-up/

#139 };-) aka Devil's Advocate on 08.09.14 at 2:36 pm

“Well, come to your own conclusions. I have. This won’t end well.” – Garth

You’ve been saying that for years.

Of course it won’t end well. This economic model is unsustainable. But it won’t end in your or my lifetimes, not in our children’s and not in their children’s lifetimes and not likely even in the lifetime of the generation after that.

In the meantime SHIFT will continue to happen. Get over it

#140 Grantmi on 08.09.14 at 2:47 pm

#123 stop lying on 08.09.14 at 11:55 am

Mr. Harper inherited a budgetary surplus in 2006. By 2010 our additional annual debt was at an all-time high. Not too impressive. Or Conservative. — Garth

I just love all you Harper haters… squeaking about these stats.. when he’s the ONLY PM in HISTORY to go through a financial tsunami like we did in 2007 – 2009.

I don’t agree with some things he does. (like the open door immigration scheme he just slammed the door on!) But overall, he’s done pretty well.

You’re probably one of these guys, that didn’t even vote in the last election anyway!!

I was in his caucus. Certain measures such as reducing the GST by 2% and bringing in 0/40 mortgages – both moves immediately prior to the 2008 mess (which was clearly coming) – were in error. I am sure my knowledge of the government’s actions is deeper than yours. But don’t let that stop you from embarrassing yourself. — Garth

#141 espressobob on 08.09.14 at 3:00 pm

#96 BG

You can own ETFs in USD. Below is an example. I like this one!

http://www.etfs.bmo.com/bmo-etfs/glance?fundId=92495

#142 devore on 08.09.14 at 3:05 pm

#72 Led

By the way, you portray the gen x crowd in a bad light – our parents paid off their houses in a few years due to inflation

Along with 15% mortgage rates. No one got a free lunch, and no one inflated their way out of debt. Not even governments. This is a complete myth.

#143 devore on 08.09.14 at 3:15 pm

#96 BG

When the bubble bursts and takes the economy with it, how will portfolio with only Canadian dollars (Canadian couch potato) be impacted?

Depending on what you own. If you own USD denominated assets, it matters not what happens to CDN, even if you buy/sell the asset in CDN. They key is the exposure of the underlying asset to CDN movement.

To use an example of gold, whether you buy GLD or IGT, doesn’t matter. Should CDN drop 50%, IGT will simply double in price.

In reality, even Canadian companies have wide exposure to other currencies, and/or use hedging to mitigate movements in exchange rates. Since Canada’s companies are less driven by Canadian consumer spending (more resource and energy), they will also be less negatively impacted by worse local economy or lower CDN.

#144 johnny d on 08.09.14 at 3:27 pm

@#140 Grantmi

Typical Harper fanboy. Embarrasses himself with stupidity before even trying to make a point.

Example: “…he’s the ONLY PM in HISTORY to go through a financial tsunami like we did in 2007 – 2009”

See how he made some of those words bold? In his simple mind that makes that statement valid somehow. Just sad.

And I guess Canada didn’t have a PM in the 30’s during the great depression. Oh but that wasn’t a ‘financial tsunami’. Save the over hyped dramatic figures of speech for Fox news.

And accusing someone like Garth, who served in Harper’s caucus, of not being involved enough in politics to have an opinion is just classic. The sheer stupidity and ignorance of that line of thinking is why an IQ test should be administered to anyone who does vote… If you ever have even voted.

#145 Debtfree on 08.09.14 at 3:32 pm

I just love all you Harper haters… squeaking about these stats.. when he’s the ONLY PM in HISTORY to go through a financial tsunami like we did in 2007 – 2009.
Huh?
Have you ever heard of PMs King and Bennett . Abit tougher times for them but even tougher times for Canadians . I can still hear voices of some that survived The Great Depression saying Tory times are hungry times . Steve and his Conservative , Reform , Alliance party (crap ) have been a disaster for Canada . The chickens just haven’t come home to roost yet . I guess you didn’t read the huff post article . Take the wool off your eyes , you’ve been had .

#146 };-) aka Devil's Advocate on 08.09.14 at 3:43 pm

#138 Snowboid on 08.09.14 at 2:34 pm

Yes Snowboid, real estate sales in the Central Okanagan ARE ON FIRE!!! Almost made me give up my summer vacation. You know what they say about “making hay while the sun’s shining”. But these are the months we live here in the Okanagan for… right? Lifestyle.

That said, I do sense something approaching over the near horizon. Probably nothing more than a, needed, moderating of the pace as this is crazy too much like 2004/05/06/07. Hmmm 7 to 10 years ago… interesting.

SHIFT happens.

};-)

#147 mike on 08.09.14 at 3:46 pm

Each new single family home built in Canada is believed to create 2 to 2.5 “person years” of employment

#148 dosouth on 08.09.14 at 3:46 pm

#139 };-) aka Devil’s Advocate on 08.09.14 at 2:36 pm

“……In the meantime SHIFT will continue to happen. Get over it.”

————————————

Time for someone to get out of the sun in Okanagan I’d say….

#149 devore on 08.09.14 at 3:51 pm

#98 Setting the Record Straight

Pulease! Stop with the One Percenters. The bottom fifty percent of the One Percent are just middle class. You need to think about the 0.1 percent or the 0.01 percent.

I don’t think people realize this. Making it into the 1% is not that difficult, you just have to make a moderately higher number of good decisions over the average person, particularly in your younger years, such as not buying a condo with 5% down you can barely afford the monthly costs on, or sinking your formative, high energy, risk-taking years on earning an arts degree.

It is the top 0.01% or even the 0.001% that are the subject of this “1%” mania. The people whose names you don’t know, whose estates/mansions/compounds you don’t even know exist. The invisible people. If you’re counting the likes of Brad Lamb or Bob Rennie in the “1%”, you’re missing the boat by a long shot, and you’re probably playing the part of a useful idiot to perfection.

#150 dosouth on 08.09.14 at 3:55 pm

So been renting for just over two years and the place I am in has re-assessed (BC Assess) downward for the past two years a total of 9%. Taxes have increased 5% and we’re getting a shiny new gas range as the old one (8 years old) just kicked it.

Supporting wall between our place and next driveway which is elevated has now collapsed onto our side. Estimates to follow….

Being treated very well by the landlord as more places here to rent than available renters in our price range. Renting is doing us well.

#151 Victor V on 08.09.14 at 4:08 pm

http://themashcanada.blogspot.ca/2014/08/price-drop-2-10-baytree-crescent-saint.html

In April of this year, I posted this 3+2 bedroom, 6 bathroom house on a 162.7 x 300 foot lot at 10 Baytree Crescent in the Saint Andrew’s neighbourhood on a dead end street off of Bayview.

According to a commentor, and this article in the Ottawa Citizen, it was designed by Karen Kayne of Cityline fame…

And may even be her house.

So…it was done by a designer, who presumably bought it in 2007 for $2,425,000 and put a ton of work into it…

But $5,279,000!?!

That was a little high.

Three weeks after I posted it, the price was dropped to $4,688,000.

It never sold and at the end of June, the price was dropped again to $4,250,000.

I’m sensing another drop.

#152 rainclouds on 08.09.14 at 4:10 pm

#146

Credible data please

#153 Victor V on 08.09.14 at 4:14 pm

RELIST – 140 Park Lane Circle – BRIDLE PATH

http://themashcanada.blogspot.ca/2014/08/relist-140-park-lane-circle-bridle-path.html

In December, I posted this 6+2 bedroom, 14 bathroom, 21,000 square foot on a 227.69 x 469.91 foot lot at 140 Park Lane Circle in the Bridle Path.

It was a house that had been listed since 2010 with an asking price of $23,800,000. The listing sayed it was ‘fashioned after the Palace of Versailles’, just like the monstrosity at 90 Rocmary Place in Vaughn.

Like that house, this house sat on the market for a LOOOOOONG time. It was finally put up for auction this past winter.

It FINALLY sold conditionally for $13,980,000, but was officially sold a few days later.

Guess something happened though because this monstrosity is back on the market…for $13,980,000.

#154 rainclouds on 08.09.14 at 4:18 pm

Grantmi

As with his brethern in the US his economic policies will result in record debt . Why is it the right over the past several mandates consistently touts their fiscal acumen yet leave steaming financial turds for the next guy……

They couldn’t run a lemonade stand

#155 nancy on 08.09.14 at 4:34 pm

“This will not end well” – is a quote you have been using for many years. Have you set a date to when “the end” will be? The end of time? The end of the year? The end of 5 years? Eventually that quote will be true, one day. If “the end” is defined as your retirement age and you sell your property right now in Vancouver West side, it most definitely has ended well for you. That prediction is so general that you are absolutely correct Garth.

You will know. Congrats on the sale. — Garth

#156 Macrath on 08.09.14 at 4:42 pm

#127 Renter’s Revenge!

The Top 10 countries with the highest measured cumulative illicit financial outflows between 2001 and 2010 were:

China: US$2.74 trillion
Mexico: US$476 billion
Malaysia: US$285 billon
Saudi Arabia: US$210 billion
Russia: US$152 billion
Philippines: US$138 billion
Nigeria: US$129 billion
India: US$123 billion
Indonesia: US$109 billion
United Arab Emirates: US$107 billion

Ham wins out by a large margin.

Chinese probe into PetroChina’s Canadian operations deepens as fourth executive under investigation
http://tinyurl.com/mey3de7

Now rank them per capita. — Garth

#157 devore on 08.09.14 at 4:54 pm

Mr. Harper inherited a budgetary surplus in 2006. By 2010 our additional annual debt was at an all-time high. Not too impressive. Or Conservative. — Garth

Certainly not exemplary leadership. But also let us not forget all this, and shenanigans such as 0 down 40 year mortgages, took place while Conservatives held minority government.

Not much of an opposition.

#158 Subprime Obsessed on 08.09.14 at 5:16 pm

I thought it would have been better to have exempted more items, only necesseties, and left the GST rate at 7%. To me that would have achieved some relief for those who most needed it while not forgoing so much revenue.
Do you think that would have been a better option? Obviously even they realized the 40 year and zero down were bad ideas, eventually.

#159 devore on 08.09.14 at 5:19 pm

Now rank them per capita. — Garth

Per capita, UAE leads the way, with China in the middle of the pack at less than 1/5th of the amount.

Just for fun, did the same relative to GDP. Malaysia leads the way by a mile, with about half of its annual GDP fleeing the country in the manner the poster described. UAE again ranks second, with China again pulling in the middle of the pack exporting about 1/3rd as much.

In summary, the impact of China is pretty average for its population. You should be much more worried about Arabs and Malaysians than the Yellow Peril.

#160 young & foolish on 08.09.14 at 5:25 pm

“There is no stock bubble, as equity markets broadly pace economic growth.” – Garth

That’s how is should be, but for many, they can’t shake off the feeling that the markets are manipulated, even rigged, especially against the retail investor (the last guy in).

Then they are ignorant. Financial markets are far too vast and diverse to be manipulated. — Garth

#161 Mark on 08.09.14 at 5:32 pm

“I thought it would have been better to have exempted more items, only necesseties, and left the GST rate at 7%. To me that would have achieved some relief for those who most needed it while not forgoing so much revenue.”

Those “who most needed it” already receive nearly all of their GST outlay rebated through the GST credit. If anything, it is a travesty that the (Mulroney) government exempted so many goods from the GST and imposed such an administrative and technical burden on businesses collecting the GST with a plethora of exemptions. Lots of employment for computer programmers, accountants, and tax litigators, I guess.

Agree with Garth 100% here, lowering the GST was a very bad move. Just like with the expansion of CMHC subprime, a crass populist move, but terrible for the economy over the long term. In hindsight, the GST was one of the best things, tax-policy wise, that ever happened to Canada.

I’m not sure if I even agree with the TFSA, which, as Garth points out, has merely been used to shelter tax on money lent to the banks mostly at negligible interest. If the goal was to stimulate long-term savings, a cumulative lifetime capital gains exemption scheme would have done the same, yet tilted the investment climate towards long-term investments. That actually create jobs, rather than just inflate the debt bubble further.

#162 Shawn on 08.09.14 at 5:37 pm

Mark’s Non-sequitorat 136

Closer to 3-4 years actually. So a person dedicating 1/3rd of their labour output to building a modern house should be able to, in the absence of interest, pay it off in 10.

*******************************************
That would work for the labor portion of the cost of the house. And only if the person has a job that pays as well as skilled house builders.

But there is also the cost of the materials to pay off and the cost of the land. And if money was borrowed to fund the house then there is the cost of interest. (And why should there ever be an absence of interest?)

Houses are say 5 times income. It’s a bit of a marvel that five years at many jobs is worth $500k.

#163 Macrath on 08.09.14 at 5:46 pm

Now rank them per capita. — Garth
————————————-
China per capita annual income in 2010 was $2,425, illicit financial outflows are obviously not from these people nor the Mexican TFWs.

Crooks per capita stats unavailable ?

A guy from away visiting a maritime wharf noticed a pot of lobsters without a lid. He asked the fisherman: ‘Don’t you worry about them crawling out?’. The old man laughed. ‘Nope. They’re Canadian lobsters. Every time one gets near the top the others pull it down.’

You just reminded me of why this is true. — Garth

#164 Shawn on 08.09.14 at 5:59 pm

OK upon reflection, Mark is including the labour in the materials and to prepare the land.

But I don’ think that counts the cost of the capital tied up in the factories that create and deliver the material.

In any case houses are expensive and no amount of calculations like this changes that fact. If you don’t like the price to buy, don’t buy. Or sell and rent if you please.

At the end of the day each of us trades a 2000 hours of work or so for an enormous standard of living in most cases. Fair trade I would say.

#165 Bill Gable on 08.09.14 at 5:59 pm

#140 Grantmi

You win the “Darwin Award” for the rudest and stupidest comment I have read on this blog.

Sit down, you are making a total ass of yourself.

Garth Turner PC….any idea what our host’s CV looks like?

#166 Shawn on 08.09.14 at 6:00 pm

And it does not count the value of the land as raw land and its increased location value.

#167 Italians love real estate on 08.09.14 at 6:03 pm

#107 Bob Rice.

You are nauseated only because you know it to be true.

#118 crowdelevatorfartz

What you say about your one Italian friend may be true over in Hongcouver but it bears no relationship to the sheer number of Italians in the GTA who worship real estate far and beyond the vaticans worship of God himself !

#168 Mark on 08.09.14 at 6:05 pm

“That would work for the labor portion of the cost of the house. And only if the person has a job that pays as well as skilled house builders.”

No, that’s for the whole house. Which is why houses are usually 2-3X yearly income, including the land, any purchased materials involved in making them, etc.

“(And why should there ever be an absence of interest?)”

There isn’t an absence of interest, but I was merely pointing out that interest basically doubles/triples the end-user cost of housing. Which isn’t apparent in our low-rate, borrow-as-much-as-you-can environment, but as we eventually transition to a higher mortgage rate environment, will be painfully apparent.

Houses are say 5 times income. It’s a bit of a marvel that five years at many jobs is worth $500k.

Not really, if you reference such against houses. If the average Canadian house is $400k, and the long-term average is 2-3X income, then people are being seriously underpaid relative to the historic income to house price ratio. As this blog often argues, since wage inflation probably isn’t too much in the cards, house prices are going to have to drop in the process of mean reversion.

#169 JimH on 08.09.14 at 6:20 pm

#140 Grantmi

Wow! Unbelievable! Wonder how long it will take you to get over that one!

God! You’re really talented!

You already had your head up your butt, but still managed to get your foot in your mouth!

Any chance for a selfie?

#170 Chickenlittle on 08.09.14 at 6:36 pm

Hi Garth. Quick question: how many of your fellow PM’s in caucas were actually qualified to do what they were appointed to do? Did they have education behind them, or were they just thrown helter skelter in whatever position they were appointed to?

I know you were qualified for your position, but to me it seems as if most are not able to do their titles justice.

#171 Chickenlittle on 08.09.14 at 6:38 pm

One more: how easy was it to pass bills that were common sense, but not popular? Was it really hard to do what is right in spite of everyone?

#172 Macrath on 08.09.14 at 7:04 pm

Garth, I agree with you that the RE mania was not caused by HAM but rater cheap money, easy credit and all the other reasons you discuss.

I think the illicit money folks have better places to hide the trillions than second rate Canadian condos, BC particle board or crumbling Toronto bricks. Sadly none of the lobsters will ever concur.

#173 eddy on 08.09.14 at 7:20 pm

“So what are the addresses and the prices of the identical houses your are typing about Mark?”

The whole idea of identical properties is rooted in statistics.


I’ll make it easy for you Mark. EVERY bungalow in Leaside is lot value. They cost more today than late last year. Call an agent and ask them to email you a list of sold Leaside bungalows for the last year, (C11) it’s a short list, prove me wrong.

#174 Jacko the Wonder on 08.09.14 at 7:22 pm

Garth…..stop flinging that liberal dung…..

“Mr. Harper inherited a budgetary surplus in 2006. By 2010 our additional annual debt was at an all-time high. Not too impressive. Or Conservative. — Garth”

There was never any budget surplus or balanced budget…that was all just fly by night Crazy Harry accounting.

The libs divested themselves of all financial responsibility by off loading everything onto the provinces….. et voila….debt was gone. But every city, municipality and province had to jack up the rates, fines, fee’s, utilities, school levies etc etc etc ….

For more tricks…call Penn & Teller.

None of that was altered by the Conservatives, who went on to spent the aurplus and add over $100 billion to the debt. As I said, not too conservative. — Garth

#175 Millmech on 08.09.14 at 7:26 pm

AKA Devils Advocate,
Living up your area,seeing lots of sold signs being removed and houses relisted,of the ten houses that I am a bit curious about only one has sold since March,and average price reduction of 15%-20% with still no sales.The realtor at one has an open house almost every weekend seen her sign out again today,with another price reduction of another 15%,total price drop since I started tracking this house is 35%,not really on fire,as your stating,starting to see firesale prices though.’

#176 Macrath on 08.09.14 at 7:44 pm

#159 devore
Thanks, interesting. I`ve been thinking about the upheavals during the cultural revolution and how China can quickly get very volatile. This Communist party purge is unprecedented and captivating.

#177 TurnerNation on 08.09.14 at 7:58 pm

Bigarider, 20% correction in equities coming? Who cares. REITs are nice this year, and the US Bond ETF is up 16% YTD.

No correction here, for Chancellor Rebalancer.

#178 james on 08.09.14 at 8:05 pm

#155 nancy on 08.09.14 at 4:34 pm

You can wait a life time and still won’t know. I will save you the suspense. It won’t happen.

#179 TO Renter on 08.09.14 at 8:31 pm

@ #117 Cha Ching on 08.09.14 at 9:32 am

I also find it amusing that self-professed renters create post titles to reflect that they’re renting. It’s like a deep seated insecurity to show that they don’t feel that they’re not homeowners. Too bad that it’s only showing the opposite.

—————

Oh dear, I take sincere pride in my handle. Recenty sold in a big Cdn city bubble at 2x the MPAC assessment to hot slavic money. Feeling quite secure, thank you for the concern and caring though. Cha Ching indeed!

Sensing (or knowing) when to get in, and get out, and take profits requires some guts (and smarts) I think. Otherwise, as in gambling, the house always wins.

#180 Kits388 on 08.09.14 at 8:40 pm

Garth, educate yourself …

http://business.financialpost.com/2014/08/08/chinas-anti-corruption-crackdown-threatens-to-spill-over-into-canada/?__federated=1

Australia got smart years ago, and requires foreign buyers of real estate or companies to fully disclose their identities and obtain permission from the federal government. In Canada, there are no restrictions or disclosure requirements with the result that Toronto and Vancouver housing costs have been driven up artificially due to frenzied buying by anonymous foreigners. This is why Toronto has 130 high-rise residential projects or as many as New York City with dramatically more people and immigrant arrivals.

The China crackdown has just started and will reach into Canada and other “host” countries.

Xenophobic policies in Australia have apparently had zero impact on the property bubble there. But they made the bigots happy. How’s the new house? — Garth

#181 Son of Ponzi on 08.09.14 at 8:40 pm

#159
In summary, the impact of China is pretty average for its population. You should be much more worried about Arabs and Malaysians than the Yellow Peril.
——————–
Not if you live in Vancouver.

If you live in Van, worry about the locals. — Garth

#182 TO Renter on 08.09.14 at 8:42 pm

Postscript:

From the psychology of gambling (Journal of Gambling Studies):
– gamblers misjudge the variance and uncertainty of the payoffs derived from taking risks, mainly because multiple small wins inflate the players’ sense of success
– it’s the emotional jolt that compels the gambler, and no statistical argument can compare to that

#183 T.O. Bubble Boy on 08.09.14 at 9:01 pm

@ #140 Grantmi on 08.09.14 at 2:47 pm
#123 stop lying on 08.09.14 at 11:55 am

Mr. Harper inherited a budgetary surplus in 2006. By 2010 our additional annual debt was at an all-time high. Not too impressive. Or Conservative. — Garth

I just love all you Harper haters… squeaking about these stats.. when he’s the ONLY PM in HISTORY to go through a financial tsunami like we did in 2007 – 2009.

I don’t agree with some things he does. (like the open door immigration scheme he just slammed the door on!) But overall, he’s done pretty well.

You’re probably one of these guys, that didn’t even vote in the last election anyway!!
—————————————-

We went through that “financial tsunami” by doubling-down on a housing bubble (loose mortgage standards, “economic action plan” promoting home reno economy, etc.). Now we’re 6 years past 2008, and the bubble is bigger than ever. Everyone in this country thinks that their wannabe Property Brothers / Love It Or List It reno is making them rich, and the jobs where we actually make things or provide value-added services are dissapearing.

#184 AfterTheHouseSold on 08.09.14 at 10:16 pm

#167 Italians love real estate
“the sheer number of Italians in the GTA who love real estate far and beyond the vaticans worship of God himself!”

The five stages of grief: denial, anger, bargaining, depression and acceptance.
So good. Italian has now moved on to anger, invoking God into his post. Or maybe just the full moon. Or maybe needs to be put on Garths ” cuckoo for cocoa puffs” list.

#185 Steve French on 08.09.14 at 11:13 pm

So i checked out Smoking Man’s “blog”…

I couldn’t make head nor tail out of it.

Your revolution is over, Mr. Smoking Man. Condolences. The bums lost. My advice is to do what your parents did; get a job, sir. The bums will always lose.

Do you hear me, Smoking Man?

#186 Mark on 08.09.14 at 11:33 pm

“I’ll make it easy for you Mark. EVERY bungalow in Leaside is lot value. They cost more today than late last year. Call an agent and ask them to email you a list of sold Leaside bungalows for the last year, (C11) it’s a short list, prove me wrong.”

Leaside = higher end area of Toronto. The change in the sales mix implies that places like Leaside are comprising more of the sales mix than they did previously.

So not really a good example at all. And besides, evidence isn’t very strong that there’s price growth there either.

#187 Snowboid on 08.09.14 at 11:42 pm

#175 Millmech on 08.09.14 at 7:26 pm…

Things must be on fire, the golden god of RE sold his one lonesome listing!

Of course, he may be busy filling out those BRAs as a buyers’ agent, likely up to his waist in SHIFT®.

#188 Andrew Woburn on 08.09.14 at 11:43 pm

Why Bubble-Era Jumbo Mortgages Are Doomed

In the US “jumbo mortgages” are those which exceed the limits permitted by government backed insurance agencies. These mortgages are therefore usually retained as assets by the originating bank. Many were issued as interest-only for ten years.

The author states that many of these jumbo loans issued at the peak of the US market, together with HELOC’s from the same period, are still under water but their interest-only terms are about to “reset” to principal and interest payments. While there is no direct parallel in Canada, the potential impact on US bank financials is of concern to Canadian investors.

QUOTE

In October 2011, Moody’s warned that homeowners with jumbo mortgages constituted a “greater strategic default risk” than any other type of borrower. You must keep in mind that most of the 1-4 family mortgages held on the balance sheet of the large “too big to fail” banks are whole jumbo loans. The vast majority of loans originated by them which conformed to Fannie Mae and Freddie Mac limits have been securitized and sold off.

The largest banks have embraced the idea that the housing recovery is solid and have gotten very comfortable with holding new jumbo loans on their books. In March of this year, Inside Mortgage Finance reported that roughly $270 billion in jumbo whole loans had been originated in 2013. That was up from just $118 billion only two years earlier. Very little were packaged into non-guaranteed RMBS. Most went onto the balance sheet of the too-big-to-fail banks.

Several major originators in the jumbo market are now accepting down payments of only 15% from borrowers with the highest credit. After the housing collapse began, they had required a minimum of 25-30% and sometimes more. Several of the largest banks are offering interest-only terms on jumbo mortgages to their wealthier clients. How quickly they seem to have forgotten the disaster of the post-bubble crash.

One of the “too big to fail” banks showed $230 billion in 1-4 family first liens on its balance sheet in its FDIC call report for the first quarter of 2014. The overwhelming majority of these were whole jumbo mortgages.

Of the jumbos in its portfolio, nearly $24 billion were considered “Past due 90 days or more and still accruing.” Really? Keep in mind what I said in my previous article about mortgage-backed securities. Standard and Poor’s now assumes that 100% of all mortgages which are 90+ days delinquent will end up defaulting. Yet the regulators allow this bank (and the others) to continue accruing interest on these delinquent loans. What a joke! It is not so funny for investors.

http://econintersect.com/a/blogs/blog1.php/why-bubble-era-jumbo-mortgages

#189 ChinaOne on 08.10.14 at 12:13 am

Enough of accusations of xenophobia and racism!

Vancouver is different. I have 3 relative families who have immigrated to the Vancouver area this year alone and all have already bought a detached home. They had no credit and had a 6 month window to buy.

Anybody denying HAM’s impact in Vancouver has to give their head a shake or have an ulterior motive.

Is HAM real? Uh!…I’ll ask my relatives.

An interesting comment, as you have posted in the past under a different name, complaining about the habits of non-Canadians. So, were you deceiving us then, or now? — Garth

#190 ChinaOne on 08.10.14 at 12:19 am

And that earlier talk about per capita…

What does that have to do with anything?? Its the absolute value that matters. Wow. Severely lacking numeracy skills on this blog.

#191 Andrew Woburn on 08.10.14 at 12:37 am

Risk and reward in running the delta’s factories with robots

Cheap Chinese labour? Look again.

QUOTE
As many as 32 per cent of Hong Kong manufacturers are planning to move their factories from the Pearl River Delta in three years, due to rising labour costs and labour shortages, a survey by the Chinese Manufacturers’ Association of Hong Kong found.

Robot usage in the delta region is increasing 30 per cent every year, the Shenzhen Robotics Association’s statistics show.

http://www.scmp.com/news/china/article/1569539/risk-and-reward-running-deltas-factories-robots

#192 Entrepreneur on 08.10.14 at 12:46 am

#161 Mark said “In hindsight the GST was one of the best things, tax-policy wise, that ever happened to Canada.

I guess the GST (Goods and Service Tax) would be good if your on the end receiving it. It is a headache if running a small business…a lot of paperwork, time, and sometimes a lot of money. And the government wants it now. Some small business (honest, hard-working people) had to close their doors because of the GST.

I agree with Harper on the 5% instead of the 7% as it helps the small business. I would like it taken away period. Was the GST only to be in place for a short while? Apparently, it is nice to receive then to give.

#193 Flawed on 08.10.14 at 1:38 am

The China crackdown has just started and will reach into Canada and other “host” countries.

Xenophobic policies in Australia have apparently had zero impact on the property bubble there. But they made the bigots happy. How’s the new house? — Garth

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

Garth’s Dictionary:

Bigotry – Countries and the citizens in those countries who demand new comers tell the truth about their income.

Truth – 1. Whatever BS newcomers decide to tell the Cdn govt then ten minutes later they dump their wives and kids off and then go back to asia to make tax free money. 2. Whatever the Cdn govt decides to BS it’s citizens about when it comes to ownership of property.

You are a bitter person, which must be a drag. Maybe that comes from buying at peak-house levels. — Garth

#194 Spiltbongwater on 08.10.14 at 1:43 am

“Certain measures such as reducing the GST by 2% and bringing in 0/40 mortgages – both moves immediately prior to the 2008 mess (which was clearly coming) – were in error.”- Garth

But you campaigned on lowering the GST from 7% to 5% in 2006? Wasn’t all in error, probably won you the seat?

The 2005 Conservative campaign promised to reduce the GST by 1%, with another 1% by 2011. Instead Mr. Harper accelerated the tax reduction even as the economy was crumbling. I voted against it. Additionally the GST reduction was to come with the elimination of capital gains tax upon reinvestment of taxable proceeds within six months, as a stimulative measure. Mr. Harper killed that immediately after the election. He also promised during the campaign that income trusts would not be taxed, since so many senior investors relied upon that investment income. After election, he announced full trust taxation. — Garth

#195 Flawed on 08.10.14 at 1:49 am

That has got to be your dumbest comment. We have no deflation at the moment, and a currency with momentum to the downside. The biggest long-term economic threat is a credit bubble, which will take years to unwind, and making money cheaper is not exactly the way to deal with it. There will be no BoC cut. — Garth

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

And there will be no bail in either…….whoops.

Correct on both counts. — Garth

#196 nonplused on 08.10.14 at 2:05 am

On the other hand, who cares? Fukashima has set the chain reaction in motion. It’s already killing all the animals in the Pacific, soon people won’t work in the nearby plants and they will fail, Japan needs to be evacuated now but if you do that who looks after the plants and anyway where would they go, and then the radiation is eventually every where.

They say smoking causes cancer, and it may. But what about all the nuclear tests??

And the nuclear release that’s coming as all these old plants fail??

Have a cigar or smoke a pipe if that’s your thing. None of us will live long enough to worry about it.

They talk in science circles “well, is there a filter event in evolution that might explain why we are the only ones here”? Yes there is. Uranium. It appears once you discover that, a planet that spent 4 billion years developing life suddenly goes extinct. We can’t undo the Plutonium the earth spent a billion years getting rid of, that we decided we needed to make. Well, we made it, it’s all coming out of the bottles soon, and well, then we are fu$ked. Fukashimaded.

Ya you can get cancer from smoking. But nobody got cancer before the nuclear tests. And now we are screwed. All of the nuclear plants will fail within the next 100 years, and no life can exist on the planet after that.

#197 Randol on 08.10.14 at 3:00 am

This argument is long surpassed – Do I buy, do I sell? Canadians complain about ‘globalisation’ yet are the least willing to pick up and move provinces, let alone country, for opportunity and experience. Is that because they are tied down by mortgage debt or their own insecurities?

#198 cynically on 08.10.14 at 4:02 am

#156 Macrath & #159 devore ——— Ranking them per capita as Garth noted would be meaningless when you have a country with the huge population living in poverty that China has. In fact it makes the HAM point even more valid as there are so few rich relative to the total population, transferring assets abroad.

#199 BigM14 on 08.10.14 at 6:27 am

http://www.businessinsider.com/panic-selling-in-london-and-uk-housing-bubble-2014-8

I wonder if we will see a headline like this in Toronto or Vancouver anytime soon.

#200 the jaguar on 08.10.14 at 9:31 am

#194 Randol

Neither. It’s because people who live in those provinces have a culture of using employment insurance to supplement their income, a practice which would be considered abhorrent in other areas of the country. We are one big country, but we are not the same people. And I say that leaving Quebec and new immigrants to Canada outside the equation. That’s why the Feds are cracking down in come parts of the country.

#201 Macrath on 08.10.14 at 9:33 am

#189 ChinaOne
#195 cynically

I couldn`t figure why per capita would be relevant either,
but the lobster story was accurate.

#202 omi on 08.10.14 at 9:44 am

IIRC, CDS on toxic mortgage pools started to creep up in 06, while US unemployment headline number was still heading down. So I would say it was more of a matter of lenders perceiving higher risk by not being able to create a “riskless” book of mortgage loans by buying CDS cheaply.

USA’s higher-end jobs are being replaced with minimum-wage jobs, while at the same the total hours worked is not doing too hot either.

Last month we lost 60,000 full-time jobs, all replaced with part-time positions. You should worry about Canada, not the US. — Garth

#203 JimH on 08.10.14 at 9:52 am

Re: major Canadian metro housing prices

Brian Ripley’s blog has some interesting quantitative stats here:
http://www.chpc.biz/plunge-o-meter.html

anecdotally, my 2 siblings and I sold a home in Vancouver in late 2011. I see that asking prices on comparable properties are within a gnat’s eyelash of where we were 3 years ago:
http://www.realestatesrichmond.com/mls_vancouver-west-houses-for-sale_dunbar.html?from_price=0&to_price=4000000&beds=1&baths=1&from_area=1000&to_area=10000&sort=listprice_2%20asc

#204 Smoking Man on 08.10.14 at 9:53 am

#196 BigM14 on 08.10.14 at 6:27 amI wonder if we will see a headline like this in Toronto or Vancouver anytime soon
………..

I’m still waiting for the black box info on MH17, get the back of the line….

#205 Kits388 on 08.10.14 at 10:32 am

Thx Garth,

We get possession this week. Looking forward to it.

PS the article was about corruption in China and not about Australian policies. The crack down in corrupt Chinese officials may lead to less demand for foreign real estate.

Cheers

How many corrupt Chinese officials live on your street? — Garth

#206 WallOfWorry on 08.10.14 at 10:35 am

Garth….I enjoy your analysis but do find that your view of US and Canada is somewhat myopic. If the US is flourishing then Canada typically follows due to our resource base. I know that you will say that the US has energy independence and therefore this time is different. However, you take that position at the expense of ignoring some fundamental economic facts.

I would urge you to read (even skim) the attached link and tell me why you feel that the US isn’t monetizing their debt and the current model is sustainable?

http://fofoa.blogspot.ca/2012/04/peak-exorbitant-privilege.html

I did not say the US is flourishing but rather is in a slow but relentless recovery, with a federal deficit and borrowing requirements at the lowest point in seven years, robust GDP growth in the second quarter and persistent job creation. In contrast, we are stalled, with a sliding currency and virtually no employment growth. I don’t need to read a blog that begs for money to survive to understand this. — Garth

#207 What is up with that on 08.10.14 at 11:50 am

The following has nothing to do with real estate…
Well it seems that there is definitely something going on with a reporter at the Globe and Mail saying that a tumblr group called womenagainstfeminism is essentially right…The Globe and Mail article is here…
http://goo.gl/sl7Dn8
The women’s group is here…
http://goo.gl/px4frS
(they have a facebook page too)
http://goo.gl/ZdMZLz
This is quite surprising. I wonder if these women will start writing to editors, advertisers, television networks, movie studios, bureaucrats, legislators, boards of education, principals, teachers, police agencies and politicians to advance their cause because that’s what those they criticize do in a coordinated manner and continually.

#208 eddy on 08.10.14 at 12:23 pm

@Mark

ok, here’s the most recent Leaside bungalow to sell.
again, lot value

136 Sutherland Dr:Toronto :Ontario:M4G 1H9 Sold:$1,140,000 List:$999,000

@Hanna

34×130 lot

Sold Date:7/29/2014

no one has paid this much for a comparable in Leaside.

#209 james on 08.10.14 at 12:42 pm

Here is another evidence, albeit anecdotal, pre builds around McCowan/16th were selling for 600k last year. Now it is going for 700k. Nobody will get priced out.

Greater Fools. Like you. — Garth

#210 liquidincalgary on 08.10.14 at 12:49 pm

“I am very confused, why would then gold go down if everyone is depreciating their currencies?”

+++++++++++++++++++++++++++++++++++++++++++++

gold DOES NOT trade relative to currencies.

currencies trade relative to EACH OTHER

#211 devore on 08.10.14 at 12:55 pm

#198 cynically

as there are so few rich relative to the total population, transferring assets abroad.

But that’s the case for every one of the countries on that list; a few wealthy people, poverty everywhere else. The impact of China money is larger than other countries’ due to population, this is indisputable, why are you even talking about it. Ok, sky is blue, next point.

Wealthy Chinese are far less likely to sneak money out of the country than others. That’s because there is more demand for money and more opportunities to invest at home.

#212 Daisy Mae on 08.10.14 at 1:12 pm

#196 Nonplussed: “But nobody got cancer before the nuclear tests.”

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

Scientific evidence confirms cancers have been found in dinosaur fossils.

#213 JimH on 08.10.14 at 1:36 pm

#206 WallOfWorry
“… tell me why you feel that the US isn’t monetizing their debt and the current model is sustainable?”
==================================
You’ve heard from the gold pimps, so maybe some alternative views might help you. There is no doubt that someone has been “ignoring some fundamental economic facts” as you correctly state.
You just falsely assume that it’s not you, of course.

http://research.stlouisfed.org/publications/es/13/ES_5_2013-02-01.pdf
http://realmoney.thestreet.com/articles/11/14/2013/fed-not-monetizing-debt
http://pragcap.com/pomo-flip-matter
http://pragcap.com/understanding-quantitative-easing
http://pragcap.com/the-fed-still-not-monetizing-the-debt
http://www.aei-ideas.org/2013/02/why-the-fed-isnt-yet-monetizing-us-debt/
http://www.aei-ideas.org/2012/11/2-charts-that-show-the-fed-is-not-monetizing-the-debt/
http://www.businessinsider.com/the-fed-is-not-monetizing-the-debt-2011-2

These articles, like the topic itself resist “skimming”.

The strange fact of the matter is that under the gold standard, “monetizing debt” was exactly what the government did every time it bought a gold bar from a miner.

#214 james on 08.10.14 at 2:04 pm

#209 james on 08.10.14 at 12:42 pm

You underestimate the heads mentality. Besides this is Toronto. No houses goes below purchase price. I can only point to last 6 years.

The problem is also you failed to realize people have 10+ years of investment time frame.

#215 Financial Freedom at 40 on 08.10.14 at 2:30 pm

@ #196 nonplused
But nobody got cancer before the nuclear tests.
———
Huh? We have unearthed 3,000+ year-old human skeletons with bone cancer.

#216 Debtfree on 08.10.14 at 2:39 pm

You seldom discuss commercial re except in regards to reits . In the obj apparently the vacancy rate for office space is in the double digits in Ottawa . Why ? Lobbiest telecommuting ? Is this part of the melt ? Have you or anyone have an informative book(s) on the subject of commercial real estate to recommend ?

#217 cynically on 08.10.14 at 2:46 pm

To #211 devore – The point was made on Garth’s flippant remark made probably because of his boredom with the entire subject. The per capita incomes of entire countries some of whose citizens have bot properties in Canada is entirely irrelevant other than to show there are some very wealthy people in those same countries and it is these individuals not the country this subject has dwelled on for some time now. Got it?

#218 Mark on 08.10.14 at 3:10 pm

“ok, here’s the most recent Leaside bungalow to sell.
again, lot value”

Doesn’t matter, Leaside is not a representative nor statistically relevant part of the GTA’s RE marketplace, and you’re just talking of one sample in Leaside.

If we look at the USA experience, for instance, there were a few neighbourhoods which didn’t lose anything in the housing crash, and even gained. But that’s no reason to deny the existence of a broad-based housing crash.

#219 Mark on 08.10.14 at 3:12 pm

“No houses goes below purchase price. I can only point to last 6 years.”

People are getting less for their houses today, than they were, on average, able to get a year ago. You are correct in saying that this still means most are sitting on a nice profit. Assuming that they didn’t HELOC to do a bunch of renos or take a vacation.

#220 };-) aka Devil's Advocate on 08.10.14 at 3:28 pm

#175 Millmech on 08.09.14 at 7:26 pm
AKA Devils Advocate,
Living up your area,seeing lots of sold signs being removed and houses relisted,of the ten houses that I am a bit curious about only one has sold since March,and average price reduction of 15%-20% with still no sales.The realtor at one has an open house almost every weekend seen her sign out again today,with another price reduction of another 15%,total price drop since I started tracking this house is 35%,not really on fire,as your stating,starting to see firesale prices though.’

I call Bullshit.

“Sold signs being removed and houses relisted” WTF logic is there in that?!? BS

“Another price reduction of another 15%”… “total price drop 35%” BS. Give us an address.

If you’re going to fabricate falsities to support your contentions at least do so within the realm of plausible.

Believe what you want to believe Millmech. Was a time popular belief was that the world was flat. The consequence of that was no one ventured to close to the supposed edge for fear of falling off. If you think about it that is somewhat analogous to your real estate sense.

};-)

#221 crowdedelevatorfartz on 08.10.14 at 3:45 pm

@#219 Mark

wow ! 15 posts on this page.

A new record :(

#222 triplenet on 08.10.14 at 4:10 pm

#216 Debtfree

books to read:

google – urban land economics
also
[email protected]
also
appraisal institute of canada
also
Guelph University

they all have bookstores.
may I recommend ” six functions of one (dollar)”,
real estate law, highest and best use analysis and commercial property analysis and valuation.
……could take awhile to get up to speed but you’ll be good at in 10 years.

#223 Stumpy on 08.10.14 at 4:31 pm

Isn’t the Harper government (i.e. Jason Kenney) claiming there is a “shortage of labor & skills”as an excuse to import a hoard of foreign workers?

“Temporary Foreign Worker” scheme is merely a racket to destroy the wages & bargaining power of the Canadian working poor.

Meanwhile the upcoming “Federal Skilled Worker” program which will import 25000 foreign workers per year is aimed at destroying the wages & bargaining power of the Canadian middle class.

There is no shortage or skills nor labor. Its simply collusion between corporatocracy and bribed politicians to destroy the Canadian standard of living.

What politician is bribed? By whom? Or did you just make that up? — Garth

#224 SHELTER THE MONEY NOT THE PEOPLE on 08.10.14 at 4:43 pm

#134 Pooh on 08.09.14 at 1:49 pm AND #43
Agreed that Smoking Man is a constant stain on a generally superb commentary section.
————————————————————
POOH POOH ON YOU POOH!
Smoking man is a thinker and he gets others THINKING.
He is half of the reason I read this blog!
Few people on earth have an overclocked brain like his.

#225 TurnerNation on 08.10.14 at 5:22 pm

Today’s pic: Leap and the fret will appear.

#226 Kits388 on 08.10.14 at 5:23 pm

Hi Garth,

How many corrupt Chinese officials live on my street? Very good question and I wish I had an answer. I can tell you that most of the residents on my current street are Asian and there are three empty houses purchased by offshore investors. Your guess would be as good as mine.

Is it possible? Absolutely.

Cheers

Do you mean ‘Asian’ or ‘Chinese’? Asians born here or who became citizens or permanent residents? Families with Vancouver roots going back generations or those who have come recently to make the city their home? Or corrupt officials dumping their spouses? Sure is handy they all look different from you, though. Makes stereotyping so much simpler. — Garth

#227 TurnerNation on 08.10.14 at 5:30 pm

To all the ebola mongers, what happened to your
man-made ‘H1N1’ scare? I thought so.

Look, there’s 7 billion people. If 250,000 die tomorrow that’s but a rounding error. Yes I take the same risk simply by getting up each morning.

I’m more interested in the last 100 years of bio-warfare research. All that stuff, where it is.
Our cities are the battle fields now. Why, the Tee-vee daily shows us shock and awe. Numbed out to it. WMD in crowded areas. A puff of smoke and some darker skinned bodies pile up. “The other” we are told.
Our psycho leaders state they deeply regret their actions but place responsibility with someone else.

But if your kid dares play Cowpersons and Indigenous people he will suspended from school. Zero tolerance, ya know.

Sleep well now.

#228 Italians love real estate on 08.10.14 at 5:34 pm

#209 James

Here is another evidence, albeit anecdotal, pre builds around McCowan/16th were selling for 600k last year. Now it is going for 700k. Nobody will get priced out.

Greater Fools. Like you. — Garth

Next year those same houses will be 800k , 850k if in richmond hill instead of markham, richmond hill being the leaside equivalent for 905.

Anyway, I fully expect the RE bears to throw cold water on this prediction.

#229 rainclouds on 08.10.14 at 5:47 pm

#228

Quantifiable data please
hyperbole doesn’t cut it anymore

#230 saskatoon on 08.10.14 at 6:05 pm

#212 Daisy Mae

dude…this is HIGHLY speculative–and, even then, only one particular sub-species is in question.

DINOSAURS did not get cancer.

geesh.

#231 liquidincalgary on 08.10.14 at 7:32 pm

mark said:

a cumulative lifetime capital gains exemption scheme would have done the same

+++++++++++++++++++++++++++++++++++++++++++++

funny thing that…every canadian, upon birth, had a lifetime capital gains exemption of 100000. this was repealed (mid 90’s) and only the 500000 capital gain exemption, for business, remained

#232 kILlaBoY50 on 08.10.14 at 8:15 pm

Don’t panic. Everything is fine.

#233 CREIT on 08.10.14 at 9:33 pm

#101 nonplused

Great comment!

#234 rosie "moving forward" in the knowledge that, "this won't end well" on 08.11.14 at 10:20 am

Lots of excellent advice regarding house selling in a stalled or declining market. One point missed however. Drop the price.

http://www.washingtonpost.com/realestate/what-to-do-when-your-home-is-languishing-on-the-areas-cooling-real-estate-market/2014/08/07/a72ff04e-1369-11e4-8936-26932bcfd6ed_story.html

#235 Aj on 08.11.14 at 12:57 pm

“In the last decade our manufacturing output shrank 11.5% while Americans pumped out 23% more. ”
I would chalk that up to the disastrous policies of the McGuinty/Wynne governments which chased out manufacturing with high energy costs and raised minimum wages. I mean when Buffalo/State of NY takes out billboard ads in Toronto to advertise “Move your business here and we’ll give you discounts on power”, your in trouble because they’re poor fiscal plans can’t compete.

#236 joe on 08.11.14 at 2:48 pm

From today’s Huffington Post on Chinese Money Launder:

“Canada must stop being naïve and aiding and abetting such crimes.

Australia got smart years ago, and requires foreign buyers of real estate or companies to fully disclose their identities and obtain permission from the federal government. In Canada, there are no restrictions or disclosure requirements with the result that Toronto and Vancouver housing costs have been driven up artificially due to frenzied buying by anonymous foreigners. This is why Toronto has 130 high-rise residential projects or as many as New York City with dramatically more people and immigrant arrivals.

The China crackdown has just started and will reach into Canada and other “host” countries.”

http://www.huffingtonpost.ca/diane-francis/chinese-money-laundering_b_5664319.html?utm_hp_ref=canada-politics