Could be worse

WORSE modified

It’s not over yet.

Oil fell to forty-eight bucks on world markets Tuesday (another 4% gone), stocks wobbled more, the loonie dropped to 84 cents and Calgary real estate sales so far this month are 23.76% behind last year’s, with prices off 6.5%. This continues a trend that emerged in December, with the number of listings now inflated by 42%. Demand down, supply up. Oops.

Well, oil may find its bottom somewhere in the forty-dollar range and bounce. That would be reasonable. But the ricochet will have to be a huge one to undo the damage now taking place to consumer confidence. Events now unfolding – the apparent end of a long up-market for commodities, suddenly weaker global growth, oil patch layoffs and idle rigs and wall-to-wall negative headlines as the MSM wakes up – are apparently affecting all those sad bovines who don’t read this blog.

One of the big banks surveyed people a few days ago and found confidence is slipping. Last January 76% of people were pumped about their finances, and this year the number reduced to 65%. Strip out the kids and only 58% of those 45 to 54 said they still believe they can reach their financial goals. A year ago the number here was 77%. That’s a dramatic dump.

“The decline in confidence among boomers is the most significant we’ve seen in five years,” said the bank, noting that the number one preoccupation for these people is figuring out how the hell to relieve debt.

Nick Nanos is a pollster I have time for, and have worked with. Nick does a regular sampling for Bloomberg on consumer confidence, and it seems to be fading along with oil. These days the number of people who expect house prices to keep going up has dropped to 31% from 47% just last summer. That obviously means about 70% of Canadians now expect real estate values to fall or to flatline – despite the incessant pumping from marketing charlatans like Re/Max (they just told Van residents to expect a jump in 2015).

“Perceptions on both the future strength of the Canadian economy and the value of real estate are five points below the six year average,” says Nanos. Adds Bloomberg economist Robert Lawrie: “Households in the Prairies, whose expectations earlier in the year were the most optimistic, have plummeted and are now lower than in the Atlantic provinces.” The collapse in oil has caused the way people look at housing and the economy, “to be turned on its head.”

“Consumer attitudes toward job security and personal finances are drifting lower as well, adding to the likely negative impact on household consumption.”

Hmmm.

This may be getting serious. Holy crap. Now the CBC is giving people advice – to maybe sell their houses.

A column posted this week on the corp’s site speculates that even a small rise in interest rates coming out of the Fed (there’s definitely no deflation in the US) could precipitate much moaning and slobbering among vastly indebted homeowners. The advice is simple – pay down debt (good luck with that), lock in the rate on mortgages or lines of credit (except virtually all LOCs are demand loans), delay any new home purchase, or (gasp) sell.

The point is this: only months ago the real-estate-is-good meme in the mainstream media was strong and intact. Even when logic told us that prices and debt levels cannot inflate when incomes are limp, it continued. Meanwhile US and international experts, plus the Bank of Canada, warned that all it would take for this residential house of cards to tumble, was some kind of economic shock. Folks, they said, should use cheap interest rates not to take on more debt, but to accelerate paying off the debt you have.

Of course, few heeded. And now we have the shock. In Canada, oil means jobs, exports and essential government revenues. If the black stuff stays remotely near these levels for the rest of 2015, expect damage.

Financial markets will recover and investors there will be fine. Don’t sweat that. But for those holding epic house debt and little equity, or with the bulk of their net worth in one asset which sheds value and liquidity at the same time, it could get worse.

And surely will.

197 comments ↓

#1 Mic on 01.06.15 at 7:45 pm

“Now the CBC is giving people advice – to maybe sell their houses.”

What? You mean they didn’t just ask those people: ‘How does it feel’ …’that house prices are being slammed’?

So much ‘feeling’ and ‘slamming’ in reporting these days. Even the CBC is now irritating.

Sorry (sort of) about the rant.

#2 None on 01.06.15 at 7:47 pm

Out of date and off topic but this is the most classic media article I have ever read of self serving con artist that are some real estate agents.

It’s hilarious (and very contradictory).
http://thechronicleherald.ca/opinion/1228173-false-assumptions-zap-hrm-real-estate-market

#3 Leaving Cowtown on 01.06.15 at 7:48 pm

We got a shock over the holidays from the buyer of our house in Calgary. They were getting cold feet after signing, and were unable to sell their own house at a fair price “due to seasonal factors” they told us. They threatened to cancel the deal and walk away from their deposit if we would not renegotiate the price or at least delay closing until spring.

Luckily, we called their bluff. Our realtor and lawyer were smart to urge us to require a large deposit when we got multiple offers in November, nearly $200K. Tougher to walk away from.

We held our ground.

The paperwork is now complete. The full balance is now in trust and we depart January 15, a bit earlier than we originally thought, but great timing for a Maui getaway.

We feel grateful we were reasonable and did not get greedy in setting our price.

We also do feel sorry for the buyers who still have not sold their own place and will come into ours at a loss, it now appears.

We’re seeing the start of a train wreck up close and personal. Just glad we’re not in it.

#4 Chris on 01.06.15 at 7:50 pm

Great post Garth, but I hope this time you are right as I have been holding out from buying a house since 2008 and cannot keep battling the family chorus every Christmas.

#5 dangeresque2 on 01.06.15 at 7:50 pm

I’m remembering a quote from a book – that wealth is neither created nor destroyed, merely transferred.

Oil is down in value. What are some investing ideas/strategies for “buying” oil at this time, when it is undervalued?

#6 Kim on 01.06.15 at 7:50 pm

If I have a mortgage, would you suggest ‘blend and extend’ as you have in the past?

#7 Optmistic Grump on 01.06.15 at 7:53 pm

Not first.

#8 Wet in Vancouver on 01.06.15 at 7:54 pm

News is out and the median price in Vancouver is just slightly over 1 million bucks. What gives? Keeps going up in wet Vancouver.

#9 not 1st on 01.06.15 at 7:56 pm

Returns on the DJA and S&P will be negative one year hence.

Book it

#10 Smoking Man on 01.06.15 at 8:00 pm

Ha, not Toronto dude, lower oil, and rising exports will be an afterburner on the spring market here in leaf nation.

And with the Five Year Bond selling at near historic highs with Lowest yields.

The Herd will compare record low mortgages prices to rent.

Spring will be hot LaughingCons, very Hot.

#11 Macrath on 01.06.15 at 8:05 pm

The price of black gold, that all the wars are fought over , at $40 and interest rates not seen since the Black Death. This is more than a shock, more like tectonic plates shifting.

#12 DM in C on 01.06.15 at 8:05 pm

And to add insult to injury, Calgary sent out assessment notices this week. +10.5% on our place. Crooks. In two years, according to the city we’ve gained $100k in value. We’ll see what this year brings. Might cash out and move back to NS.

#13 KAC on 01.06.15 at 8:06 pm

Meanwhile, here in La La land the MSM has been trumpeting average Vancouver house prices topping a million bucks for the first time ever.

The only problem is that they announced that in 2010 and then again in 2012 (using their Frankenumber). Now it’s happening again! How can you argue against a market that keeps breaking thought the same high water mark?

#14 The_plan on 01.06.15 at 8:08 pm

What Canada should do is to buy bunch of Oil futures.

Each contract requires lets say 10k margin (slightly less, but lets make 10k for simple math). There are 130k contracts currently opened, plus minus.

Say Canada wants oil to go up, so they need to buy 100k contracts over some period of time and that should push oil up significantly.

Where to get the money for margins? Well, somebody in your community will have to sell their beloved house, and community will provide for renting for that hero while oil is being fixed.

100k contacts x 10k margin = $1 bln

We need just 1 bln! Its pocket change really for the whole country.
Just 2000 houses with average price 500k, and CMHC can jump in and provide some support too.

FAQ:
1. Will I get my house back? – of course, in few month when we fix oil prices, we sell all futures at a profit and be able to buy back it for you or provide cash equivalent to buy a better house.

2. What if oil keeps falling? – that’s totally possible. In that case we’ll work closely with government agencies, CMHC and Canadian banks to help us with oil fixing (they’re very proficient with things like that anyway)

3. What if US organize similar plan but SELL oil futures, to have cheaper gas you know? Well folks, then we’ll need to reassess our strategy at that point.

4. I’m interested, hate this 40$ oil. Where can I sign up? – Please send your application in free format to Garth and copy CMHC.

#15 KAC on 01.06.15 at 8:08 pm

“thought” was supposed to be “through” but my auto-spell check disagreed.

#16 Optimistic Oilbertan on 01.06.15 at 8:08 pm

Please send back all those transfer payments.
Thanks

#17 back to the future on 01.06.15 at 8:09 pm

I think the vast majority of people out there are too easily manipulated into doing things that are against their best interests. Let’s be real: the government and the banks want everyone to pile on the debt, despite assertions to the contrary. Bank of Canada warnings about excessive debt are the equivalent of gambling addiction posters in casinos. Banks will make money no matter what. We the ‘consumers’ have been lead down the road of low interest rates and people have been hoodwinked into thinking this is normal. It’s not. We’re in for some interesting times ahead

#18 Bob on 01.06.15 at 8:10 pm

This week at work (in Alberta) the conversation has being more about what we are not buying until oil rebounds. Vehicles and houses top the list of postponed items. Last year it was the opposite. Im used to Happy New Year what are your (spending) plans this year?

Look out below :(

#19 Sebee on 01.06.15 at 8:13 pm

Who could have seen this coming? Now…remind me again if we’re still 2nd biggest country on the planet or if we’re out of room.

#20 Rajeev on 01.06.15 at 8:16 pm

Thanks for the valuable information and guidance. Do you think its the right time to buy oil stocks or wait for few more weeks..

#21 Habbit on 01.06.15 at 8:17 pm

Hi Garth and dogs. Here in the frozen wasteland that is Regina I am told by local realtors prices have come down about 15% since the summer months. We sold in August and now rent. We watch the market closely and can say that prices have come down and that is before the oil price drop. Should be an interesting spring. I do feel for the virgins that are going to be hurt. It sucks.

#22 Alberta faces a world of financial pain on 01.06.15 at 8:20 pm

The pain of a housing crash is coming. Big Bets by Big US hedge funds on short Canada (Canadian housing crash) are ready to send the Canadian housing bubble back down to reality. Alberta faces 50% losses while GTA could hit 30% or more. No oil money = economic pain for all those in debt.

#23 Hank Hertigan on 01.06.15 at 8:21 pm

I simply don’t understand why some people think oil is going to rebound, simply because it has come down a lot recently.

Even at the $48 level at which WTI currently finds itself, the price of oil is still up 5.1% annualized over the past 20 years. In other words, one could argue, based on the concept of mean-reversion, that oil should slide another 50% from here.

#24 mr.pleasant on 01.06.15 at 8:23 pm

Economics 101
You can’t pull 50-100 billion directly out of an economy like Canada without serious repercussions. That’s easily enough to start the dominoes falling, and it will.
I don’t care what industry you’re in or what province you live in, you’re going to have this come to your door, just a matter of when.

#25 DV01 on 01.06.15 at 8:23 pm

“suddenly weaker global growth”

#suddenly …ummmmm

Is this a finger pointing segway for soon-to-follow posts blaming the ROW on what was actually a non-existent US “decoupling” growth meme? Honestly, Garth, if you had the time to parce data across the globe (esp the US), it would be very obvious, as obvious as the sun rising, that the US growth storey has been a series of clever shenanigans meant to back up the FED decision to end QE & signal rate hikes mid-15. Reminder: Rates can, and will, rise…but Not by choice. Of course this speaks to confidence, or the lack therof. No, nothing was fixed after 08. It will be “fixed” soon enough.

Disagree? Of course you do! …and right there we have ourselves a “market” – I look forward to risk-adjusted price-discovery.

#26 Yuus bin Haad on 01.06.15 at 8:26 pm

I’m still trying to figure out just what Ontario will be manufacturing and exporting more of.

#27 For those about to flop... on 01.06.15 at 8:27 pm

A few weeks ago I said I was off to California on vacation and would give an honest post about what I saw in the day to day lives of Californians.
Here’s what I saw……went to 5 different malls they were all packed ,no where to park.
Line ups daily out the front of restaurants….overheard one guy say”no omelette is worth a 90 minute wait!”
People were out and about splashing cash post Xmas
Despite the cold temperatures….they had snow in the hills around SanDiego!
Middle class America is alive and kicking although still slightly bruised from the GFC .
The recovery continues….

#28 Johnson on 01.06.15 at 8:28 pm

I’ll believe it when I see it. I’m sticking with increased demand vs restricts supply. After all , Canada grows by 500,000 people a year. The highest in the developed world.

#29 Alberta faces a world of financial pain on 01.06.15 at 8:29 pm

Look at the fear and denial postings from worried oil patch workers and indebted home owners who are one pay check away from financial pain. A layoff would mean financial ruin as these people would be bankrupt in weeks. Oil isn’t going up and Canada is the most expensive. To talk about Russia hurting or others like Saudi Arabia taking a hit is just laughable when you compare Canada who is on deaths door when you compare them to Canada. Canadian oil sand at $60 oil is a major problem. Financial pain is coming

#30 Oilbertan Saver on 01.06.15 at 8:31 pm

Still not first. Here’s a quick way to get ride of the housing glut….

http://news.nationalpost.com/2015/01/06/martial-artist-wants-to-demolish-a-house-with-just-fists-in-under-an-hour-anyone-want-to-donate-one/

#31 Gary on 01.06.15 at 8:32 pm

Suddenly Harphole’s strategy of subsidizing big oil doesn’t look so good now. The Conservatives have sure messed up the economy.

#32 Oilbertan Saver on 01.06.15 at 8:35 pm

Every January Nenshi sends out his annual 5% tax increase… Happy F’ing New Year I tell ya. A goofy grin can sell anything.

#33 Dave on 01.06.15 at 8:35 pm

Help!! I put all my cash in jars on Jan 1st, and now can’t get the darn lids off!!

#34 Oilbertan Saver on 01.06.15 at 8:36 pm

The transfer payments were just a loan.. seriously, send them back.

#35 Alberta faces a world of financial pain on 01.06.15 at 8:36 pm

Smoking man #10

Another delusional realtor. Toronto will be ok because of exports? Lmfao! The GTA is losing manufacturing jobs that will NEVER come back. What increase in exports? Do you know how many factories have closed? You know big US hedge funds that run the WORLD have place monsters bets on the Canadian housing crash. They will lead the herd into a monster crash JUST like the USA.

#36 A Yank in BC on 01.06.15 at 8:37 pm

#9 not 1st on 01.06.15 at 7:56 pm

“Returns on the DJA and S&P will be negative one year hence. Book it”

Possible.. but not probable.

I’ll play the odds, thank you very much.

#37 North Burnaby on 01.06.15 at 8:38 pm

Garth, I suggest you to visit Richmond, British Columbia sometimes. Maybe it will be an eye opener for you about the existence of HAM in BC!

HAM = Hot Asian Money. It only means non-white people to dinglenuts like you. — Garth

#38 screwed on 01.06.15 at 8:41 pm

Maybe I’m missing something but I don’t understand this blog. Hindsight is always 20/20. Getting too deep into debt is never a good idea. Emotions when buying a new house or car will always be blamed later when the allure has faded.

As people we’re more or less always emotional. Trying to live in an unemotional state is near impossible.

Nobody saw the huge drop in oil coming. Oil prices in US$ are below the point where it makes sense to bring the resource to market. Either price goes up or the buyers will have to find somewhere else to get the resource. Saudi production is not big enough to support all of the world.

Better start discussing when and how the world can trade oil in other currencies and sell at a price the market is willing to pay. The paper casino a.k.a. CME is about to blow up over this.

#39 TurnerNation on 01.06.15 at 8:44 pm

Lol: Horizons BetaPro NYMEX Crude Oil Bull to roll back 1:4

Fresh water filters on the way for my system. Expect less-flouridated and better posts in coming weeks.
I’m feeling passivity. It’s in mouthwash, even.

#40 Okotokian on 01.06.15 at 8:45 pm

There’s always this scenario: albertans will take out more credit to pay for the lean times. Another HELOC. Apply for 5 credit cards… You know 2 or 3 of the applications will be accepted. Like those circus acts where someone from the side keeps throwing the juggling clown new pins. There’s a few things I know about most albertans
– they intuitively think the next boom is around the corner
– they’re not averse to taking on debt
-any idea or thought from a liberal or Liberal automatically makes that thought stupid thus null and void.

#41 ANON on 01.06.15 at 8:45 pm

I honestly doubt something could be worse than the Big Hyper-D. Maybe an asteroid impact could be worse? On second thought, that one is fast and less painful.

#42 TurnerNation on 01.06.15 at 8:48 pm

They’ll stone you when you’re young and able.
Not Rainy Day Woman but also VanM’s lyric.
Fitting boomer song:

https://www.youtube.com/watch?v=hX8nAZftZL4

#43 Mark on 01.06.15 at 8:49 pm

“After all , Canada grows by 500,000 people a year. The highest in the developed world.”

But if there’s capacity to build housing for 500,000 + 1 people a year, then prices go down. And clearly there is capacity to expand Canada’s housing stock at a rate faster than immigration growth. After all, there is no epidemic of homelessness, and rentals remain quite affordable.

As for those 500k immigrants, as I’ve pointed out on numerous occasions, most arrive with little more than a damage deposit for an apartment and enough to buy a used Honda. Many arrive with even less, as refugees. Meaning that nearly all immigrants have to go out and work, often in the construction industry and various industries of supply to the domestic RE sector.

#44 Setting the Record Straight on 01.06.15 at 8:50 pm

From yesterday

We are on the road to servitude and debt slavery. Prepare accordingly, and to ease yourself of future heart break I would start expecting less. The truth is no one really knows how to navigate the road ahead, but the brave ones who have been able to take an honest look at the situation will have a good head start.

If humanity and the 99% could come together and not be servants to the 1% we might have a chance to turn this ship around… But honestly… I don’t see it. Too many people are either in denial or oblivious to what is really happening. The writing has been on the wall for years…

It won’t be much longer now before there is another engineered catastrophe to shock the masses into giving up more liberties and freedoms all while their governments beat the war drum. I hate to be the bearer of bad news but the probability of war and financial collapse is much greater right now ……
*************+

Debt servitude started when government and central banks became responsible for the economy.

Neither Humanity nor the 99 percent need to come together. That is Judy a recipe for Global fascism.

#45 Freedom First on 01.06.15 at 8:51 pm

Yes, the Boomers in my life who are 58 and up, have been talking to me about their finances lately. Keep in mind they know zero about my financial situation and only see what I allow them to see. However, they do know I am an easy going guy and enjoy my life, and that nothing about me has changed. I can’t hide that, but one of them told me it is easy to see that I am “flush”, to which I did not reply. Anyways, they are worried, as they don’t know if they will be able to retire, and though their stories may be different, the reason is the same, they are worried because of the amount of debt they have. This is in Alberta, and since oil tanked, the many worried Boomers are now voicing their worries, whereas before, they wore nothing but confident smiles. I just listen. I never gave advice before and will continue to focus only on what I am doing. How can I possibly talk finances with people when I only believe in: diversification, liquidity, balance, income streams, cash, cash flow, and always being debt free. Only been doing this for decades but so far I am really enjoying life.

Thank you for your Blog of sane financial advice/principles Garth. It is the only place in the world I feel safe in talking about my financial life and how when it comes to my finances, as well as my health and everything else in my life, I always put my Freedom First. I have said before, #2 in my life after me, is helping others, and I feel like I am sure Garth feels, how can I possibly be of help to anyone else, if I am not looking after myself at all times?

Oh, about the voting on comments. I vote no voting on comments. There is already enough insanity to go around. Look at the crazy $$$$$hit Garth has to deal with already.

#46 Mark on 01.06.15 at 8:51 pm

“There’s always this scenario: albertans will take out more credit to pay for the lean times. Another HELOC. Apply for 5 credit cards… “

Debt is already off the charts for Albertans (and Canadians more broadly). Incremental credit will likely come at much higher interest rates reflecting the risk.

Heck, the way things are falling apart at this point, it wouldn’t surprise me to see the lenders re-price a lot of existing credit in situations where they have the ability to do so.

#47 Setting the Record Straight on 01.06.15 at 8:51 pm

“#88 Mukadi on 01.05.15 at 11:09 pm
Wait! Is that price chart correct?
If yes, doesn’t it mean that Canada and the US should stop destroying the environment by extracting oil for a loss?”

The Green Taliban lives!

#48 no keystone XL = RE trobles on 01.06.15 at 8:52 pm

It does not look good for high cost and expensive Canadian oil. RE is going to have major head winds.

#49 stop lying on 01.06.15 at 8:56 pm

SM is right, I think this will be a decent spring market in the GTA. I expect prices to be higher in spring/summer 2015 before the prices start to drop yoy. How far and fast they go down is up to the interest rates. It may not be that bad.

#50 stop lying on 01.06.15 at 8:58 pm

btw from what I understand the o&g companies who hedged their oil at $90 are making a killing right now. it may keep them solvent for quite a while until the price comes back up.

#51 Smoking Man on 01.06.15 at 9:08 pm

#35 Alberta faces a world of financial pain on 01.06.15 at 8:36 pm
Smoking man #10

Another delusional realtor. Toronto will be ok because of exports? Lmfao! The GTA is losing manufacturing jobs that will NEVER come back. What increase in exports? Do you know how many factories have closed? You know big US hedge funds that run the WORLD have place monsters bets on the Canadian housing crash. They will lead the herd into a monster crash JUST like the USA.
……

Just Grasshopper…. just watch… Supply and Demand.

The Herd has been told for the last 5 years rates are going up.. Yet lowest ever
Until it actually happens, then what. Where do go.. An apartment with low life’s,

As demonstrated for the Harpo years anyway.. Market goes soft, MSM blows sunshine. Markets hot like now, they blow cold air.

Single Family, no maintance fees in 416 are on a the launch pad, you ain’t seen nothing yet..

TREB stats come out tomorrow…

#52 Could be worse | Realties.ca on 01.06.15 at 9:11 pm

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#53 Oilbertan Saver - the only one on 01.06.15 at 9:11 pm

And here we go……. red seas to infinity….

Dear Ontario and Quebec – send back the transfer payments, immediately.

http://www.calgarysun.com/2015/01/06/alberta-premier-projects-500m-deficit-this-year-considering-three-year-plan-to-balance-budget

#54 Trader Joe on 01.06.15 at 9:14 pm

Time to buy levered bull oil ETFs up the yin yang. If the GFC didn’t take out Canadian RE, a temporary oil glut sure the heck isn’t. I’ll make a killing off all you doomers!

#55 Dr. Nonplused, Phd., Economics on 01.06.15 at 9:14 pm

As I have tried to explain in these responses before, falling energy prices only indicate good times ahead if it is due to a structural change that actually reduced the cost (labor, capital) of that energy. We get more for less.

This is not what’s happening in oil now, sure we are getting more but we are getting more for more.

Therefore the huge drop in oil prices means there is something desperately wrong with the world economy.

I am not sure I fully understand it but over-indebtedness certainly is one factor.

But in the end of the day it means that at least at this point the world wide economy does not have much of an appetite for oil over $100 a barrel.

The supply glut will continue for a while, but marginal projects are going to be left to decline. At some point, probably at least 2 years off, oil will rise in price until some of these projects make sense, but the enthusiasm to invest will be much less.

From here on in I think the economy moves towards efficiency. We have to rework the economy such that oil is worth $80-100 a barrel. For example smaller cars or motorcycles. I have a motorcycle here that can go 75 miles on a gallon of gas. I can afford to ride it at $80 a barrel. I have another motorcycle that gets around 40 but that’s still affordable. And I also have a truck that just pours the diesel on the ground. A bit less affordable I might say.

#56 Roy on 01.06.15 at 9:15 pm

Alberta oil firms keep pumping as prices collapse
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/alberta-companies-vow-to-increase-pumping-despite-collapse-in-prices/article22323031/

“No one wants to disappoint their shareholders and say we’re cutting production. That’s death,” said Judith Dwarkin, director of research at ITG Investment Research in Calgary.

FP reported a few weeks ago the tar sands would be ramping up production by 85% to 2020. One would wonder if a 1 to 2-year period of unprofitable oil would eventually crater those plans… but as always no contingency plan for economic condition changes whatsoever

#57 Happy Renting on 01.06.15 at 9:19 pm

For that bank survey, I think the responses from the 45-54 age group are the most realistic. They’re at the age where they’re getting a view of the possible length and cost of retirement, and have an idea of how many years they must (if able) work to pay for it. Perhaps they see the precarious state of their job (maybe know others in their 50s who got laid off and never worked again) or have regret that they didn’t put away more in their younger years. They should certainly have some recollection of what damage a bust can do if you’re at the end of growing your retirement nest egg or at the beginning of drawing it down.

I can’t tell if it’s a candy jar or fish bowl in the picture, but if a dog is going to be in an uncomfortable, embarrassing, and potentially harmful position such as that, I hope it was a candy jar and he at least got to eat all the candy!

#58 Chaddywack on 01.06.15 at 9:22 pm

What I’m trying to figure out is what move the central bank will make if Canada enters deflation, but the US keeps trucking along and raising interest rates in the process. Does Canada follow the US or its own numbers in this hypothetical situation? Or are our economies so entangled that we’ll ride on their coattails!

#59 pravchaw on 01.06.15 at 9:23 pm

Even the pro’s are running scared. http://www.cnbc.com/id/102314374

#60 Happy Renting on 01.06.15 at 9:38 pm

#45 Freedom First on 01.06.15 at 8:51 pm

What do you think gives you away? We have a lot of deceptively frugal habits to suggest modest means but do enough fun stuff (travel, eating out, etc.) to mostly blend in with the indebted. The only things we can’t hide are our professions (if using a broad brush, some industries pay better than others) and being on the ball when financial matters come up.

Over dinner tonight I remarked that we are lucky. We have no family likely to come begging for a loan (they are all good savers.) Hope there aren’t too many hands held out in your direction when things really head south.

#61 Sheik Yerbouti on 01.06.15 at 9:41 pm

Garth,

I smell a possible niche media opportunity for you here.

I recently struggled to make it through several episodes of Love it or list it Vancouver, and actually found it to be quite humerous if not a bit sad…..

I suggest you start a “Hate it and list it anyway” style counterfoil show to track the downward plunge….get a bunch of depressive schlep-rock type wannabe sellers on there, complaining about the end being nigh etcetcetc…..and of course, I see you as being the ultimate counterfoil host, counseling on how you warned them, but they just wouldn’t listen…..after all the media needs to be balanced both in bull and bear markets….go fer it!

#62 Sponge Rob on 01.06.15 at 9:42 pm

Everyone thinks low prices lead to production cuts. It doesn’t work that way. What makes sense at the industry level (cutbacks) does not at an individual company level. Companies have expenses that are fixed and must be paid. Interest being a huge one. Because the price per barrel is down there is a big incentive to increase production to full capacity to keep the lights on.
The often quoted $80 bbl breakeven number is pretty misleading too. That’s breakeven for establishing a new oil sands project. Existing sites where the infrastructure is already in place and running have a much lower cost. I’m afraid it’s a bit early in the game for non Albertans to do touchdown dances, high 5’s and butt slaps.

#63 DM in C on 01.06.15 at 9:48 pm

The ‘natural governing party’ of AB should take this opportunity to slide in the forbidden sales tax.

I would give odds that this time next year, if oil remains ~$50.00, we will be very far down that path. There goes the Alberta Advantage.

Last one out, turn off the lights.

#64 Linda on 01.06.15 at 9:51 pm

Idea #1: sell the house. Except – if everyone picks idea #1, guess what prices will do as the desperate continue to drop prices in order to sell while they can.

Oil prices – I’m a traditionalist. The usual recovery is 2 plus years. So once oil bottoms (soon?) then expect prices to recover no earlier than 2017. Some call for prices to bounce back in 2015 & that may occur, but I’d not be betting that they will. I think they will climb back up, maybe end up in the $70 range by the end of 2015 if all goes well. Well would not be well for other places – lots of oil disruption would have to occur to let the prices bounce back that fast. Fortunately for the West, the mid-East usually has at least one outbreak of hostilities & usually more. If Russia remains embargoed then maybe supply won’t exceed demand for too long…..

#65 Sponge Rob on 01.06.15 at 9:53 pm

#58
That’s the question isn’t it? I’m thinking no interest rate hikes for years. Here or down south. The bond market certainly backs me up.
The only chance I can see rates going up in Canada is if traders smell weakness and toss the Loony into a wood chipper. Even then it may not happen. Japan has been in the same debt filled sludge for 20 years. The very instant Japan raises rates we will be next…in more 20 years.

#66 Tony on 01.06.15 at 9:56 pm

DELETED

#67 I love real estate on 01.06.15 at 9:59 pm

Garth I have no connection with Re/Max and do not consider myself one of those marketing charlatans you reference.

I agree however with some here about the 416 being very resilient to a price drop.

2015 should see 12% gains in Toronto, averaging 8% annually for the next five years.

People SHOULD pay down debt, I agree, but use that to build savings for your down payment while you can.

House prices in prime areas of Toronto for SFD will double again within a decade I believe, and likely triple by 2030.

This is now the ONE place in all Canada that everyone feels they could run to in times of trouble. Its a new era.

I hope the blog dawgs who are basement dwellers understand that what you say about Calgary and other parts does not really apply to Toronto.

Jump in or be left behind. The only greater fools in 416 will be scared sellers who fear a drop that won’t come.

You are delusional. — Garth

#68 And BNN says: on 01.06.15 at 10:05 pm

Ontario does not enjoy the “torque” it used to vis a vis the US upswing. ON manufacturers a fraction of what it did before so the US upswing means a lot less.

#69 Smoking Man on 01.06.15 at 10:07 pm

#54 Trader Joe on 01.06.15 at 9:14 pm
Time to buy levered bull oil ETFs up the yin yang. If the GFC didn’t take out Canadian RE, a temporary oil glut sure the heck isn’t. I’ll make a killing off all you doomers!
…….

Love it, you all check out Batman on the S&P it’s a beauty…

#70 Terry on 01.06.15 at 10:10 pm

Yup……….my wife and I can see what’s coming for Canada. We are cancelling trips, vacations and major purchases. No new car or furniture purchases everything else is on the cutting board.

Buckle-up!

#71 james on 01.06.15 at 10:21 pm

#67 I love real estate

“2015 should see 12% gains in Toronto, averaging 8% annually for the next five years.”

And your basis for this claim is what? That the future will be like the past?

“I hope the blog dawgs who are basement dwellers understand that what you say about Calgary and other parts does not really apply to Toronto.”

I’ll run my income against yours any day. My house too.

I guess Toronto is so special that reversion to the mean will never happen. Riiight.

#72 james on 01.06.15 at 10:22 pm

The thing that I love about recent developments is that naysayers were saying for years that asset bubbles only collapse because of ‘external events’, and that there was no such event in Canada.

Bam. Oil prices collapse.

Not only were they wrong about the first claim, they were wrong about the second. Now we get to see what happens.

#73 Industrial Guy on 01.06.15 at 10:26 pm

Well, one thing is for sure. Any plans the Bank of Canada had in raising interest rates in Canada will be shelved. All this economic soufflé needs is another good poke and all bets are off.
Last year, it looked like housing was in for a soft landing. By the end of the year it looked a bit more like a hard landing. Are we heading for an “aluminum shower” … sudden and massive unemployment in Western Canada, Federal tax revenues falling off a cliff?
The good news is …… with a cheaper dollar it’s time to start cutting down those trees that have been growing in the parking lots of closed auto parts plants across S.W. Ontario. OK, the jobs that will be coming back will not be unionized, $24.00 per hour jobs. Workers will be lucky to see $18.00 per hour ……. and that’s after five years. Benefits? Yeah, I read about those in a book about the 1970’s. I guess it’s a lot better than working for a temp service as Liquidation Universe & Pottery Galaxy staff.

#74 hohoho on 01.06.15 at 10:27 pm

> … Japan has been in the same debt filled sludge for 20 years …

Comparing the Loonie/TSX against the Yen/Nikkei is like comparing Canadian RE to Tokyo, Hongkong, Paris and London RE …

#75 Cici on 01.06.15 at 10:27 pm

Poor doggy!

#76 Eastern Creep and Bum on 01.06.15 at 10:33 pm

Got my layoff notice too, so guess I’ll be like the people in this story heading back east.

http://www.ctvnews.ca/canada/as-crude-prices-plummet-oilsands-workers-find-themselves-jobless-1.2176208

Albertans: Please don’t follow us home, there’s no room for you and your trucks. Another boom will come along for you, just give it a decade or two.

Fort Mac hookers: What happens in Fort Mac stays in Fort Mac, got it?

In the spirit of good ol’ Ralph, Cape Breton here I come!!

#77 Washed Up Lawyer on 01.06.15 at 10:36 pm

Just got off the phone with Mrs. in Calgary. I am in Ft. McM. She was elated with our assessment from the Cowtown tax folks. I had to bring her down from the stippled ceiling. She thinks I am such a Debbie Downer. I am not a pessimist. I read Garth’s blog. The assessment was too high. 20% too high.

Cowville has a population of 1.2 million and not a single newspaper worth reading. The Calgary Herald is an unabashed cheerleader for all things CREB and CAPP.

Earlier today the Herald ran a story about an intermediate producer (whatever that means), Crew Energy, cutting its production by slightly less than 5%. Its stock dropped 10%. Five minutes later the article was gone. No news is good news. The Herald will assiduously avoid any news of layoffs.

Thank goodness I have found the Lame Stream Media here.

#78 JustMe on 01.06.15 at 10:41 pm

http://oilprice.com/Energy/Oil-Prices/Chart-Of-The-Day-Natural-Gas-Suggests-33-Oil.html

“If you ask virtually any oil and gas professional, that has been around the industry longer than the graduating class of 2000, they will tell you that the historical relationship between oil and gas prices is roughly 8x.”

Natural Gas = $4 x 8 = $32 oil

#79 Toronto house prices 2030 on 01.06.15 at 10:43 pm

#67 I love real estate

“2015 should see 12% gains in Toronto”; “House prices in prime areas of Toronto for SFD will double again within a decade I believe, and likely triple by 2030.”

No-one is doubting the demand for housing here old boy. What is in doubt is people’s ability to pay for it. When looking at supply and demand, implicit in that balance is the ability to actually pay to represent demand.

Did I mention I want a helicopter and a yacht?

#80 RST on 01.06.15 at 10:44 pm

I bought a bunch of Energy ETF and mutual funds about 3 weeks ago when oil was dropping, should I be buying some more now? I have some money that is parked and I expect that energy stocks will go up within the next year or so, am I wrong?

Are you an investor or a gambler? — Garth

#81 Mean Gene on 01.06.15 at 10:44 pm

“May you live in interesting times” is an English expression purporting to be a translation of a traditional Chinese curse. Despite being so common in English as to be known as “the Chinese curse”, the saying is apocryphal and no actual Chinese source has ever been produced.[1] The nearest related Chinese expression is “宁为太平犬,莫做乱世人” (níng wéi tàipíng quǎn, mò zuò luànshì rén) which conveys the sense that it is “better to live as a dog in an era of peace than a man in times of war.”

#82 Sean on 01.06.15 at 10:45 pm

Prediction.. smoking man will disappear from GreaterFool when the msm finally is reporting collapsing prices in the GTA. That will, of course, be well after the party is over.

Your schtick ain’t half bad, SM, but you are obviously all in on T.O. real estate.. and that ain’t gonna work out, my friend.

#83 Sheik Yerbouti on 01.06.15 at 10:46 pm

Ok, this is a bit out there, but these trying times call for creative solutions…….Why not transform the Alberta oilsands into an international penal colony…..at least until oil prices head back up, to keep the cash flow coming….”The Sands” almost has a Hollywoodesque/Alcatraz “The Rock” sexy namebrand style and quality to it, and some of the “guests” may even think they are being shipped to an exotic beach-like location, albeit one with temps near -40! Might help with the plummeting loonie as well…..

#84 Smoking Man on 01.06.15 at 10:50 pm

#70 Terry on 01.06.15 at 10:10 pm
Yup……….my wife and I can see what’s coming for Canada. We are cancelling trips, vacations and major purchases. No new car or furniture purchases everything else is on the cutting board.

Buckle-up!
………..

Dumb, you might get hit by an asteroid, slip on ice and splatter your brains on side walk. Living in fear with such little time on this shit planet is illogical to the enlightened.

Smoke, Drink, Gamble, live on the edge, you can’t take it with you.

#85 oil going to $20 or less? on 01.06.15 at 10:51 pm

Sponge Rob on 01.06.15 at 9:42 pm
Everyone thinks low prices lead to production cuts. It doesn’t work that way. What makes sense at the industry level (cutbacks) does not at an individual company level. Companies have expenses that are fixed and must be paid. Interest being a huge one. Because the price per barrel is down there is a big incentive to increase production to full capacity to keep the lights on.
The often quoted $80 bbl breakeven number is pretty misleading too. That’s breakeven for establishing a new oil sands project. Existing sites where the infrastructure is already in place and running have a much lower cost. I’m afraid it’s a bit early in the game for non Albertans to do touchdown dances, high 5’s and butt slaps.

___________________________________

What you are saying is Alberta is going to run full tilt producing even more oil on the market causing an even great excess of oil which will push the price even lower? Lol you delusional people are going to face a world of financial hurt. It’s coming

#86 hohoho on 01.06.15 at 10:53 pm

> … What I’m trying to figure out is what move the central bank will make if Canada enters deflation, but the US keeps trucking along and raising interest rates in the process …

asset deflation, $ CAD devaluation, CPI inflation, interest rate hike.

#87 Retired Boomer - WI on 01.06.15 at 11:00 pm

Well today was not as bad as expected. Everyone here is celebrating true oil price melt. People are happy with oil prices, naturally bitching about the stock market. No impacts to local business steady as it goes.

Decided to see what the numbers look like on my stuff down 12-13 grand, not a big deal. Reminds me of January last year.

No, nobody too worried here, but we are not in the oil patch. We be the milk patch, and tonight the freezer. Brrr!!! Fun day with the wife, life is still good.

#88 Karma on 01.06.15 at 11:02 pm

#34 Oilbertan Saver on 01.06.15 at 8:36 pm
“The transfer payments were just a loan.. seriously, send them back.”

Those oil resources in the ground are just a loan.. seriously, send them back

#89 Hot Albertan Money on 01.06.15 at 11:07 pm

Garth, saw this story on Bloomber…is this good news (improving economy) or bad news (deja vu all over again)

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

http://www.bloomberg.com/news/2015-01-05/young-home-buyers-return-to-u-s-as-economy-accelerates.html

““Credit tightness has been an issue for the housing market but demand weakness has been a bigger one,” said Douglas Duncan, chief economist at mortgage giant Fannie Mae in Washington. “The improving economy is going to put renters in a better place to buy.”

***********

Oh, and by the way, thanks for using my handle in your post a couple days ago!

#90 Washed Up Lawyer on 01.06.15 at 11:08 pm

My math is off. The tax assessment is 30% too high. If someone offered me assessed value, I would give them any closing date they wanted, moving costs and a weekend in the Red Deer Lodge.

It is not listed. I want to burn birch in the fireplace for the next 15 years.

#91 Ronaldo on 01.06.15 at 11:11 pm

#3 Leaving Cowtown on 01.06.15 at 7:48 pm

So a couple more buyers who will become reluctant landlords and subsidizing renters while their equity melts away. Lots more buyer remorse to come. Sad but true.

#92 Karma on 01.06.15 at 11:14 pm

“We are on the road to servitude and debt slavery.”

————————————————————–

It’s all about personal choices. People choose to be in debt when they buy things they can’t afford with savings, and thus that leads them to debt slavery. (although some unfortunate circumstances can force people into debt)

More frugality is needed. Less conspicuous spending never hurt any individual… Maybe it hurts the consumption portion of the GDP figure in the short-term, but not in the long-term.

#93 Shalecountry on 01.06.15 at 11:16 pm

Wonder how many cowboys that gambled and used the smith manoeuvre are sweating at the moment?

Nobody should attempt that. — Garth

#94 fade-to-black on 01.06.15 at 11:16 pm

Thank you global central banks. What stalwart visionaries you lot are.

BOC makes sure that Boomer’s & older seniors get zero interest on their rapidly depleting life-savings in the last few years, while making sure they have higher costs for everything else, and are heavy weighted on mortgage-to-the-eyballs ‘particle board castles.’

Their own kids and grandkids can’t make a decent living and … can’t support the looming ponzi retirement commitments when Canadian seniors will make up 1/4 of the entire population in less than a decade.

Canada pension plan averages about $650. per month in payments.

Life is good.

How is any of that the fault of central banks? — Garth

#95 Steve on 01.06.15 at 11:19 pm

I went to a anniversary party of a couple we’re friends with. It was at another couples house. The hostess has always been somewhat jealous of my wife and I and some other friends because we “bought a house”

The topic came up with her. We sold in March and never looked back and we were happy to be renting again. I tried to explain to her that we used to come over for dinner and kind of feel jealous that they were renting!

I tried to explain why buying is a trap. Emotionally, financially, getting stuck with bastard neighbours, constant mega bills, stress on top of stress. I think I was able to make my point. If you have never owned a house it’s a humiliating experience to socialize with people who do. You feel so poor and irrelevant. They talk about bamboo flooring and walk in closets. They ram it in your face all evening.

I said to the poor mother of two “our entire lives are a battle of perspective. We wanted what you have, you wanted what we had. Look around your home, it’s cozy and welcoming. You have great landlords. You’re minutes from everything. You have very little exposure to any risk. Be grateful and promise me not to push for a dream that’s past it’s due date.”

Because that’s exactly what this lifestyle is. A dream.
Like rocket camels or bendy elves or anything normal people dream about. Unattainable unless you’re asleep…

#96 ALBERTASTROPHE on 01.06.15 at 11:20 pm

I take back anything negative I might have said about Alberta’s one dimensional economy and utterly incompetent neandercon governments who have squandered all its wealth over decades.

I just learned, none of it matters. We won’t be here come February.

http://www.zerohedge.com/news/2015-01-05/potential-dangerous-asteroid-hit-earth-january-26-three-weeks

https://www.youtube.com/watch?v=k3zLtY4e5LA

Where should this baby hit first, blog dogs?

#97 Leo Tolstoy on 01.06.15 at 11:22 pm

Low oil is going to juice Toronto real estate higher.

A condo and Hummer for all! ;)

#98 OMG the original, MA Economics, 20 years in resource industries, McDonald's Customer of the month Nov 2010 on 01.06.15 at 11:25 pm

#55 Dr. Nonplused, Phd., Economics
Therefore the huge drop in oil prices means there is something desperately wrong with the world economy.
—————————————

Which would result if demand was dropping.

But could also occur if supply was increasing.

Prices changes due to technical innovation in high capital industries takes place over years not 2 months.

Ceteris parbis of course.

#99 OMG the original, MA Economics AND McDonald's Customer of the month Nov 2010 on 01.06.15 at 11:27 pm

#55 Dr. Nonplused, Phd., Economics
Therefore the huge drop in oil prices means there is something desperately wrong with the world economy.
—————————————

Which would result if demand was dropping………..

…………but could also occur if supply was increasing.

Prices changes due to technical innovation in high capital industries takes place over years not 2 months.

Ceteris parbis of course.

#100 Inquiry for lending rates on 01.06.15 at 11:29 pm

#46 Mark on 01.06.15 at 8:51 pm
[“There’s always this scenario: albertans will take out more credit to pay for the lean times. Another HELOC. Apply for 5 credit cards… “

Debt is already off the charts for Albertans (and Canadians more broadly). Incremental credit will likely come at much higher interest rates reflecting the risk.

Heck, the way things are falling apart at this point, it wouldn’t surprise me to see the lenders re-price a lot of existing credit in situations where they have the ability to do so.]

Totally agree with you, Mark. Although my anecdotes are on a slightly different scale…

On Dec 12th, I called an institutional lender about renewing a $10m mortgage on a high rise multi-family apartment building in Toronto. Here are the GoC and spreads for Conventional mortgages:

5-year = 1.40% + 155 bps = 2.95%
7-year = 1.55% + 165 bps = 3.20%
10-year = 1.85% + 180 bps – 3.65%

Yesterday morning (Jan 5) at 9:15am (i.e. before they repriced yields), I called a different institutional lender for the same quotes:

5-year = 1.31% + 174 bps = 3.05%
7-year = 1.48% + 183 bps = 3.31%
10-year = 1.79% + 186 bps = 3.65%

Obviously, not all lenders offer the same rates and regular residential mortgages are on a much smaller scale (e.g. they said they hold the rates only for 30 minutes because the treasury department gives the approval), so it’s not directly apples-to-apples. But close enough!

#101 Washed Up Lawyer on 01.06.15 at 11:31 pm

#76 Eastern Creep and Bum

Your sense of humour in a dark time is what makes the wonderful, hard working people from the East Coast so special to this Albertan. Please never let the comments of that drunken, ignorant, chain smoking bully Ralph Klein reflect on what you think of all Albertans. I have cheered and hoped for you for as long as I remember.

Please let me know if a proper thinking Albertan(Canadian) would be welcome to sit at your table and have a pint with you in Cape Breton should I ever be so fortunate to visit.

I wish you the best.

#102 Brian Ripley on 01.06.15 at 11:31 pm

I have my Calgary Housing chart up with the Dec data now (Vancouver and hopefully Toronto tomorrow):

http://www.chpc.biz/calgary-housing.html

Total residential sales in Calgary plunged and are now 64% below the May 2014 seasonal sales high

Average #Calgary SF Detached Prices Down 3.1% from SEP 2014 peak

Average #Calgary Town-House Prices Down 6.4% from AUG 2014 peak

Average Calgary Condo Prices Down 9.2% from JUN 2014 peak

#103 VICTORIA TEA PARTY on 01.06.15 at 11:32 pm

HISTORY IN THE MAKING HERE…

St. Garth of More To Come has been daily and properly documenting the beginnings of the largest credit bubble unwind in history.

Problem is, it’ll take a lot of time and hurt a lot of people. In fact it already is as this world-wide phemonenon builds.

From oil prices cascading, to the US dollar climbing heights soon to be unknown (only to eventually crash with likely unknown impacts), to deflation in Canada’s other big trading partner, the Eurozone, makes for mighty fine copy indeed.

But it does no good for the rest of us who know what’s coming and are filling up our sandbags and doing this’n’that before something “more bad” starts rolling into Dodge.

SO, WHAT TO DO?

Getting rid of debt is good.

BUT cutting expenses is better. However that will also demolish lots of small businesses everywhere. Like I said there is no escaping the effects of a credit bubble explosion.

Also, what about those folks who invested in the stock markets by taking out low interest “secured” lines of credit (debt)?

And say they were, until very recently, making say a 7 per cent return and are now making less than nothing because the markets and their securities are melting.

What do they do? Hang on because markets
“eventually always go back up?”

OK, but just when will that happen? And what if the nervous banks call in those loans?

Then what?

Something like this happened in 2008 to investors when brokers were forced to implement margin calls on cash brokerage accounts and all hell broke loose even more.

This then brings to Main Street the full implications of what a bursting credit bubble does to regular folks, never mind governments and large companies.

Everyone gets smoked. Big Time. This will be happening shortly if what’s been happening in recent days keeps on happening.

MEANWHILE, check out the following from “bond king” Bill Gross. He is Mr. Cloudy about our economic way of life these days as he looks forward.

http://marketsanity.com/bill-gross-good-times-beware-2015/

#104 Steve on 01.06.15 at 11:36 pm

Yikes!

http://m.huffpost.com/ca/entry/6421634

#105 Jake556 on 01.06.15 at 11:38 pm

Garth – these are all valid points in terms of future real estate demand and pricing. However, any prudent homeowner will have some cash allocated in their TFSA, RRSP (as an emergency cash reserve which is taxable) and Savings accounts to cover any foreseeable unemployment gaps due to the low commodity prices we are seeing now. My point is as follows; regardless of the pricing shocks in real estate the general public will find a way not to default on their mortgages, especially when you have young children and your elders riding on your shoulder.

Where did I mention defaults? They are not necessary for an equity melt. — Garth

#106 Smoking Man on 01.06.15 at 11:40 pm

#82 Sean on 01.06.15 at 10:45 pm
Prediction.. smoking man will disappear from GreaterFool when the msm finally is reporting collapsing prices in the GTA. That will, of course, be well after the party is over.

Your schtick ain’t half bad, SM, but you are obviously all in on T.O. real estate.. and that ain’t gonna work out, my friend.
……..

Dude I used logic five years ago, I unload four properties cause I aggreed with Garth, I’ve since learn when it comes to Toronto real estate, it’s all emotional.

The hit I took on selling to early was made up 4 fold by listening to Garth and my UCC.

I have 32 fans on here, I don’t give a flying, F what happens to real eastate, it’s a tini tiny portion of my net.

But I will get 32 purchasers of my book here, 10 thousand on Twitter. An other 30 thousand on Facebook.. But remeber, I bend over for pennies I see on the street. 32 is worth it… Plus, I have addiction issues, this blog is one of a long list.

I’m not going anywhere..

#107 Gregor Samsa on 01.06.15 at 11:45 pm

Very interesting article about oil at FP that includes a telling inflation adjusted graph of oil prices. Premise is that low oil prices are normal and that what we just experienced was a bubble.

http://business.financialpost.com/2015/01/06/jack-m-mintz-welcome-to-the-return-of-normal-oil-prices/

#108 drydock on 01.06.15 at 11:49 pm

#10 Smoking Man on 01.06.15 at 8:00 pm

“Leaf Nation” , never heard that before,it’s got a nice ring to it.
Having said that.
Go Sens Go.

#109 Smoking Man on 01.06.15 at 11:56 pm

#107 drydock on 01.06.15 at 11:49 pm
#10 Smoking Man on 01.06.15 at 8:00 pm

“Leaf Nation” , never heard that before,it’s got a nice ring to it.
Having said that.
Go Sens Go.
….
Ha, if you think the Femanazis are bad here, just try and post a habs logo on Facebook, my family, they were getting the noose ready, I backed of real quick.
I’m not an idiot.

#110 Sponge Rob on 01.06.15 at 11:58 pm

#85
That’s exactly what I’m saying. Not just Alberta. US shale, Russia, Iran Saudis, Venezuela …everyone. The price will have to stay down at least a year to make a dent. That’s not even counting how much oil is forward sold at $90. The producers all know that the cure to low prices is reduced production. The problem is they are all looking around the table, shrugging their shoulders and muttering “you first”. Eventually the producers who are swimming naked will go bankrupt and that will slow down production. Laid off workers will get EI for a year too. Disaster could happen here but it will take a lot longer than everyone thinks. By then oil could be back up to $100.

#111 Andrew Woburn on 01.06.15 at 11:59 pm

I keep hearing that a lot of oil producers around the world including the Middle East have hedged their prices out as far as 18 months. They are not hurting yet.

If that is true, some folks, as Obama likes to say, must be getting royally gored on the losing side of the trade. Who are they and when do we see the fallout? Are the big banks having to bite on this one? Hedge funds? Does anyone here have any ideas?

#112 drydock on 01.07.15 at 12:01 am

#33 Dave on 01.06.15 at 8:35 pm

Go outside and get a rock.

#113 Predictions2015! on 01.07.15 at 12:02 am

RE: post #96 by Steve

Thank you for sharing your story. Very true and appreciated.
—————————————-

So far in 2015, only January 6th:

– Oil prices keep dropping, no bottom yet. A reversal may happen but do you have a crystal ball that can tell us when?

– CAD drops with oil, not as much as oil, thankfully.

– Gold prices are rising, broke USD $1200/oz. Gold prices have risen in other currencies. We’ll see if this is the beginning of a rally/bull trend for gold.

– US debt over $18 trillion and counting. Fed eyes interest rate hike in 2015 after 3 to 4 rounds of QE (incl. Operation Twist) that have inflated the stock market and real estate bubble. Raise interest rates? Maybe at best.

– The Fed’s willingness to raise interest rates will be tied to the much anticipated US economic recovery. Will the US economy materialize and meet expectations? Keep your eyes peeled to the official and unofficial stats. I guarantee 2015 will be one hell of a ride.

Stay tuned.

#114 Flamen Lupanares on 01.07.15 at 12:07 am

#53 Oilbertan Saver – the only one
Dear Ontario and Quebec – send back the transfer payments, immediately.

—–

Only if you take back the pseudo-cowboy telenovelas that the CBC keeps producing and showing up the non-Alberta asses for years now, so that we all know who is paying the Harpo piper. Deal?

#115 Washed Up Lawyer on 01.07.15 at 12:08 am

Retired Boomer:

In my ramblings on the http://www.web I saw that Wisconsin is one of the biggest producers of frac sand (it props open the cracks in the rock). Not that it is a big deal as it is just about the most common commodity in the world. Nonetheless it is a tie to the oil industry. Harley Davidson, not so much, especially this spring in Ft. McM. Vultch. What is the difference between a hard tail and a soft tail?

#116 gut check on 01.07.15 at 12:09 am

“#60 Happy Renting on 01.06.15 at 9:38 pm

Over dinner tonight I remarked that we are lucky. We have no family likely to come begging for a loan (they are all good savers.)”

I can relate.

As I sat on the expansive deck of my winter home in Malta savoring my last mouthful of foie gras before heading down to my private runway to do a test flight of the new Gulfstream which had been delivered earlier in the afternoon, I thought about how lucky I was. I don’t have any family that like to travel. (motion sickness)

#117 Andrew Woburn on 01.07.15 at 12:10 am

I keep hearing happy talk about how the drop in oil prices will boost the economy by increasing consumer spending power. I can see the logic of this in the US, but my gut tells me that a lot of Canadians are going to see the headlights of reality bearing down on them in the next couple of months. They will probably start to spend their energy savings on desperately paying down their credit cards.

#118 drydock on 01.07.15 at 12:11 am

#55 Dr. Nonplused, Phd., Economics on 01.06.15 at 9:14 pm

Peak oil?

#119 Joe2.0 on 01.07.15 at 12:20 am

The FED moves in 2015 aka QE4.

#120 Vicpaul on 01.07.15 at 12:36 am

#76 Sheik Yerbouti ( w deference to Frank)
I like your creative thinking, but I have questions….
Are they trained to work the sagd operations – for Inmate minimum wage ($5.00/hr). Sheesh, think of the cost savings for the company! Of course, in return for the endless supply of labour, the Trudeau Government (yeah, I know – if I’m wrong I’ll apologize later) will exact a percentage of the bottom line…oh, I don’t know…20%. You may have something here – a little Mad Maxian, but workable.

#121 Vicpaul on 01.07.15 at 12:38 am

# 83.

#122 bcc on 01.07.15 at 12:38 am

oops

http://www.slideshare.net/fullscreen/TBFweb/2014-152ndquarterfiscalupdate/11
(Alberta budget Q2 update on Nov 28 2014)

#123 DreamingInTechnicolour on 01.07.15 at 12:40 am

Toronto. Sort of like Sudbury but without all the exposed rock – pavement and concrete instead.

#124 Ollie on 01.07.15 at 12:42 am

The crash in oil price is in the financial markets. Could be a function of the lurking deflation, hidden credit default… Nothing about demand and supply, as many taut. This did not yet take hold on the physical economy. Rigs are only starting to be closed. There is inertia in this move, both ways, to start, and worse, to stop it. Producer loans will be called in and they will default. They won’t come back easily. Maybe the big ones will swallow the small ones. Maybe this is why the whole game is for. I don’t care much since I cannot do shit.

But… The oil economy is extremely inelastic. This means when you don’t get enough gas to go where you need to go, or to warm yourself up in the winter, the price suddenly shoots up. Hard.
And since the world produces only 2% extra than it uses how long will it take for the scarcity scenario to show up? As long as maybe 10-20% production gets shut off. That takes a while… bankers are slow at pushing papers, as with everything (not the brightest bulbs). But when it shows, nothing to stop it since the wells are shut.

#125 drydock on 01.07.15 at 12:43 am

#73 Industrial Guy on 01.06.15 at 10:26 pm

“economic soufflé”
Love it.

#126 Snowboid on 01.07.15 at 12:47 am

#27 For those about to flop… on 01.06.15 at 8:27 pm…

Here in Phoenix it’s the same, the busiest we have seen it since 2010.

It was also cold here just after Christmas, snow on the surrounding mountain tops, but today was 25C – can’t complain.

#127 Industrial Guy on 01.07.15 at 12:53 am

“LEAF Nation” ….
In California that’s the hordes of Nissan owners buzzing around L.A. and the Bay area in their very quiet electric cars. I rented one at L.A. airport. The kid at the rental counter says … 75 miles on a full charge at today’s temperature (10 degrees C).

In California, there are fast charge stations everywhere. I must be an electricity hog. I used $6.50 of electricity over the two days I was there.

80% recharge takes less than 30 minutes (lunch). Operators manual says. No oil changes. No radiator flushes. No spark plug changes. Re-gen brakes that charge the battery mean brake pads last a long long time. LED lights everywhere. You change wipers, and tires. With Government rebates, you can buy one (in the USA) for $20,000 (US). No wonder over 50,000 have been sold so far.

Once they get the battery technology to 250 Kms a charge, I’m buying one. Tesla’s technology, which was released to the public in June 2014, gives they’re vehicle a 430 Kms range on a charge. Once Elon Musk gets his “Gigafactory” up and running in Las Vegas, expect battery prices to drop and vehicle ranges to grow.

That’s one less person filling up at Petro-Can and lining up at Mr. Lube on Saturday morning. Sorry Alberta.

#128 Ronaldo on 01.07.15 at 12:59 am

#96 Steve on 01.06.15 at 11:19 pm

Good post Steve.

#129 Ronaldo on 01.07.15 at 1:03 am

#106 Gregor Samsa on 01.06.15 at 11:45 pm

”Premise is that low oil prices are normal and that what we just experienced was a bubble”

Housing prices will follow oil prices downward for the same reason. A bubble.

#130 NotAGreaterFool on 01.07.15 at 1:07 am

Garth – Please advise.

You have previously stated a slow thaw in Canadian housing averaging 10% to 15% in terms of price reductions. I don’t recall it contingent upon an economic shock such as oil price tanking. If the trigger event has arrived now, what do you now foresee in the Canadian housing market and fortress Toronto?

Keep up the good stuff!

#131 Carousel on 01.07.15 at 1:10 am

When prices of homes reach close to their assessment value then we will buy. The way RE is heading, with supply up and demand down will actually create lower offers, no bidding wars ‘cos there is no more money. Cash will be King!! Those sellers that are left are anxious to sell versus the ones fishing on MLS, will drop off from the list. Should be an interesting year. If you buy a home, do it right and be debt free first.

Cheers …..

#132 "I bend over for pennies" on 01.07.15 at 1:29 am

One of Smoking Man’s better lines.

#133 eric on 01.07.15 at 1:38 am

#10 Smoking Man

I will have to agree. Toronto is in a long term bull maket. There is not enough SFH to satisfy demands.

#134 Karma on 01.07.15 at 1:42 am

#153 Meanwhile in the GTA on 01.06.15 at 10:42 am
“Garth says-Smart folks delay buying decisions, waiting for better deals.

I think there was a time not that long ago when this statement was 100% true. Before credit was so widely available people would have to save to make a purchase and hence they had time to rethink their decision of “do I really need it?”.
But in today’s world where those under 40 never knew anything but credit I don’t think that argument “Smart folks delay buying decisions, waiting for better deals” holds water.
Today’s generation wants it because others have it and they don’t care if the price drops tomorrow, because tomorrow it may not be the IN thing anymore.”
——————————————————

In any given population, only a relatively small portion of that population can be considered “smart”. The majority who are not “smart” will not “delay buying decisions, waiting for a better deal”.

You are correct regarding the under 40 year-olds who have grown up with credit cards and easy access to credit and having a FOMO attitude. And since the majority of those under 40 year-olds aren’t “smart”, they will be paying for the dividends of the big 5 banks for many years to come.

#135 Irish Stew on 01.07.15 at 1:44 am

Sometimes you gotta stop worrying and just live your life as best as you can……Live, laugh and love.

#136 squidly77 on 01.07.15 at 1:50 am

Oil will likely be between $40 and $42 by Friday, it will likely hit $34 by March, Nat Gas will also be around $2 GGJ by then.

Oh yeah, CREB stats will soon disappear from their home page. Chicken littles always run away.

What’s that they say about napalm?
http://www.boysonthebus.com/wp-content/uploads/2013/04/Napalm.jpg

#137 Shalecountry on 01.07.15 at 1:59 am

#94 @Garth
Re: Smith Manoeuvre

Someone should tell these guys.

http://forums.redflagdeals.com/smith-manoeuvre-150279/120/

#138 32 Fans on 01.07.15 at 2:28 am

Oh, sorry to disappointed you SM, we actually meant to say we are fans of Smoked Meat. Feel free to leave now…

#139 jane24 on 01.07.15 at 3:15 am

To those concerned about non-resident RE sales pushing up demand and prices to the point that local residents are shut out – the falling value of a Cdn $ will hugely impact on this investment strategy. So you could end up with a win.

The world runs in US $ so international buyers think in US $. So according to them they are looking at investment losses with their Cdn RE investments with far more losses likely to come. The result will be such folk deciding that buying a house in Canada is not smart right now and selling one is even smarter. Such people did not get rich in the first place by being behind the ball. They control the ball.

I went out into my South of England garden yesterday and figure that my daffodils will be in bloom within two weeks. Spring!!!! I don’t care what the calendar says.

Cheers

#140 Fortune500 on 01.07.15 at 3:57 am

A good article in the Huffingtonpost about full recourse mortgages in Canada and what they mean for borrowers:

http://www.huffingtonpost.ca/vanessa-routley/the-canadian-housing-bubble_b_6423826.html?utm_hp_ref=canada-business

Perhaps you could do a post on this Garth. So many seem to be misinformed about what could happen in a default situation in Canada. A lot of the commentators seem to refer to the US when talking about this issue. Care to comment?

#141 bdy sktrn on 01.07.15 at 4:26 am

#80 RST on 01.06.15 at 10:44 pm
I bought a bunch of Energy ETF and mutual funds about 3 weeks ago when oil was dropping, should I be buying some more now? I have some money that is parked and I expect that energy stocks will go up within the next year or so, am I wrong?

Are you an investor or a gambler? — Garth
——————————-
i try so hard to be the former , not the latter, but i just couldn’t resist and did the opposite, as in sold, all energy funds. (the rest of the portfolio is Bal,Div and Liq)

what i sold for 60k is now worth 45k(the cash is holding value ok!).
I plan to get back in when it drops another 15%. (once oil loses ten-twelve more bucks.)
i will jump back in

#142 devore on 01.07.15 at 4:59 am

#28 Johnson

I’ll believe it when I see it. I’m sticking with increased demand vs restricts supply. After all , Canada grows by 500,000 people a year. The highest in the developed world.

Oh look, another person math and fact challenged.

Canada’s population growth is 1.2%, with fertility rate well below replacement, like nearly all developed countries. Fewer than 300,000 immigrants have entered Canada annually for over a decade, so I ask you how is our population growing by 500,000?

I only need to take 5 seconds to see on Stats Canada you’re off by at least 20%. 1.2% is pretty good, but still lower than a fair number of developed countries.

#143 maxx on 01.07.15 at 8:55 am

#3 Leaving Cowtown on 01.06.15 at 7:48 pm

“We got a shock over the holidays from the buyer……They threatened to cancel the deal…”

“We’re seeing the start of a train wreck up close and personal. Just glad we’re not in it.”

Congratulations, Maui is one heavenly place to be in January. You are free as a bird and the buyers now have one mother of a debt burden, on a rapidly declining asset.

You are so very, very lucky. Wow.

#144 SWL1976 on 01.07.15 at 9:12 am

#93 Karma on 01.06.15 at 11:14 pm “We are on the road to servitude and debt slavery.”

————————————————————–

It’s all about personal choices. People choose to be in debt when they buy things they can’t afford with savings, and thus that leads them to debt slavery. (although some unfortunate circumstances can force people into debt)

—————————————

I don’t recall having a choice as to the governments of our provinces and our country continuously borrowing money from our future???

Pesonally I will be fine even after paying 50% of what I earn to support a bloated government that is in cahoots with big business

#145 Luc on 01.07.15 at 9:15 am

Sales of million dollar homes up… http://www.ctvnews.ca/business/sales-of-million-dollar-homes-up-in-2014-report-1.2176519
What will happen to these investors?…

#146 SWL1976 on 01.07.15 at 9:22 am

#100 Washed Up Lawyer – Spot on!

#147 maxx on 01.07.15 at 9:28 am

#17 back to the future on 01.06.15 at 8:09 pm

“I think the vast majority of people out there are too easily manipulated into doing things that are against their best interests. Let’s be real: the government and the banks want everyone to pile on the debt, despite assertions to the contrary. Bank of Canada warnings about excessive debt are the equivalent of gambling addiction posters in casinos. Banks will make money no matter what. We the ‘consumers’ have been lead down the road of low interest rates and people have been hoodwinked into thinking this is normal. It’s not. We’re in for some interesting times ahead”

Excellent post- I cannot believe the level of dumb money in this country.

#148 Matt on 01.07.15 at 9:45 am

Thanks for the information useful. Happy New Year!

#149 Leo Tolstoy on 01.07.15 at 10:12 am

Wonder how many cowboys that gambled and used the smith manoeuvre are sweating at the moment?

Nobody should attempt that. — Garth

Completely agree. It’s a dumb technique that exposes the individual to big risk for a small gain.

#150 Nuke on 01.07.15 at 10:21 am

Cape Bretoners returning home from the the Oil Patch. Don’t forget you can buy a house in Glace Bay for $15,000-$20,000. The properties I know of were good enough for my raising my family’s 14 siblings.

#151 Mark on 01.07.15 at 10:33 am

“Perhaps you could do a post on this Garth. So many seem to be misinformed about what could happen in a default situation in Canada. A lot of the commentators seem to refer to the US when talking about this issue. Care to comment?”

Nearly all mortgage loans, in practice, on either side of the border, are full recourse and are unconditionally guaranteed by not only the collateral, but also by the borrower by way of a promissory note.

Non-Recourse loans in Canada are limited to purchase money first mortgage loans granted by certain provincially-regulated institutions which have not been CMHC-insured.

Similar rules in the US apply, particularly concerning the requirement that non-recourse only apply to ‘purchase money’ first mortgages (not refinanced mortgages, not second mortgages).

Exceedingly few loans in the US actually qualified, during the collapse of their housing bubble, as “non-recourse”. As nearly all of the defaulters either re-financed during the price bubble. Or they purchased with a so-called “80/20” subprime mortgage “package” (basically a 80% LTV Fannie/Freddie “conforming” first mortgage, and a 2nd mortgage representing the balance). Meaning that the only way that those individuals extricated themselves from negative equity was to file for bankruptcy.

Some borrowers who were underwater did “short sales”, which involved giving the house back to the bank, but not completely fulfilling the obligation to pay the money back. However, typically a ‘short sale’ did not extinguish the debt, and lenders are now chasing many for the debt now that some of those individuals have cleaned up their affairs.

#152 Edward on 01.07.15 at 10:46 am

Garth said: “Financial markets will recover and investors there will be fine. Don’t sweat that.”

—–

So Are you predicting much damage to equity markets? How much and how long?

#153 Kenchie on 01.07.15 at 10:50 am

Interesting read on the disconnected lending programs of various US governmental departments.

“The (Real) Bank of America”

http://www.politico.com/magazine/story/2015/01/federal-loans-bank-of-america-113920.html#.VK1BStLF8xI

#154 fancy_pants on 01.07.15 at 10:55 am

Living below our means for years now. Mortgage free for 5 years, own a modest/average home, happy with it, a few wants missing (a touch more space) but almost got caught up in the house horniness but convinced my wife now is a bad time (been saying that for 5 years but now it really smells like a wolf).
dodged a bullet. plus the HST on new homes and land transfer tax, RE fees selling – everyone wants to bend you over the table. forget it.

#155 saskatoon on 01.07.15 at 10:58 am

what do global warming, pot, and toronto real estate have in common?

i have no idea…but treb wants the answer.

propagandizing through the public school:

http://www.torontorealestateboard.com/market_news/release_market_updates/news2008/nr022808.htm

i know this link is old…but the contest runs every year–though, perhaps, it is now better hidden.

#156 liquidincalgary on 01.07.15 at 11:08 am

I just learned, none of it matters. We won’t be here come February.

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

wasn’t this thing supposed to hit us last year?

#157 Retired Boomer - WI on 01.07.15 at 11:17 am

#114 Washed Up Lawyer

Frac sand has developed into BIG Business here in western WI where I live. Active Frac sand mine less than 3 miles from my place and over 8 within 25 miles. RR access is much more important that anything else. Biggest ops are adjacent to CP mainline, BN, or UP.

Here they simply mine, wash grade and ship the sand. At the other end they add Frac chemicals which apparently are rather toxic, and may be despoiling the deep water underground. Lots of bitching about it, relatively few facts on it that I find I can trust.

As for the difference between a hard tail vs soft tail on HD cycles, I am totally clueless! Not a cycle guy, need 4 wheels and a seat! Sorry, just no interest in them.

Frac sand investments have been huge locally, and do provide good $$ employment, but like everything else in extractive industry, it will end-someday.

I know several who work at the mines, they live and spend well, bet they save no higher a percentage of income than before the sand boom.
Too bad, there has been zero impact on housing, or local costs. An opportunity to back up the investment truck!!
My hope is they do NOT blow this windfall!

#158 Mark on 01.07.15 at 11:21 am

The result will be such folk deciding that buying a house in Canada is not smart right now and selling one is even smarter. Such people did not get rich in the first place by being behind the ball. They control the ball. “

But on the flip-side, as Canadian RE continues its decline, it may actually become attractive to foreign buyers. Actual Chinese and other foreign money may arrive in Canada, to scoop up bargain prices, as the bubble collapses. Much like Canadians went on a shopping spree in Arizona, Florida, etc. over the past number of years scooping up bargains there.

So its a double-edged sword. But what can be concluded from the facts that are before us is that foreign involvement in Canadian RE, even in Vancouver, is quite minimal, and certainly is not setting the prices. The real driving force behind RE is that of Canadians, using large amounts of subprime credit, made available by the CMHC, to drive up prices. Now that the CMHC is standing firm on not expanding their role and the level of subprime guarantees available to the market, the market is effectively rationing credit against a supply of housing still expanding at a fairly rapid rate. Hence, prices are falling, have been falling for the past year and a half, and will continue to fall for many years to come until there is a severe supply-side adjustment and credit-worthiness returns to the sector.

You are correct regarding the under 40 year-olds who have grown up with credit cards and easy access to credit and having a FOMO attitude. And since the majority of those under 40 year-olds aren’t “smart”, they will be paying for the dividends of the big 5 banks for many years to come.

Some of the highest rates of debt growth, on a cohort basis, has been amongst the seniors and the almost-retired crowd. So I would approach labelling individual groups with caution. And if the implication if that todays under-40-year-old crowd is any less intelligent than in the past, I would implore you to cite data for such than merely making a baseless and rather inflammatory claim.

#159 liquidincalgary on 01.07.15 at 11:37 am

“I bend over for pennies” on 01.07.15 at 1:29 am

One of Smoking Man’s better lines

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

he may be cheap, but i don’t think he’s easy!

#160 Mark on 01.07.15 at 11:39 am

My point is as follows; regardless of the pricing shocks in real estate the general public will find a way not to default on their mortgages, especially when you have young children and your elders riding on your shoulder.

Of course, people will try their hardest not to default. That’s a given. However, at the end of the day, there will be winners and losers. Buying an overpriced house and not defaulting, may very well be the difference between a fully funded RESP for the “young children” 10-18 years from now, and still paying off a mortgage and having no money to help out the kids.

Those who avoided the housing bubble and saved/invested their money appropriately are going to have an enormous plethora of consumptive power ahead of them in the future, while the over-leveraged homeowners will probably work the next 2 decades, make their house payments, only to end up with nothing other than a house that still has an outstanding mortgage, and nothing else.

An example I often give is that of the 1990s. Someone who, in 1990, took their 25% down-payment, and, instead of following the herd and buying RE, bought a simple TSE/TSX index fund (ie: the TIPS) — by the end of the decade, they had enough $$ in their account to buy the same house, outright, in cash. Meanwhile, the person who bought in 1990 barely had 1/4th of the mortgage paid off, a decade later.

#161 Iain McLaren on 01.07.15 at 11:57 am

This is a sad thread: http://www.reddit.com/r/Calgary/comments/2rj3k2/so_who_has_lost_their_job/

A sign of things to come?

#162 Renter's Revenge! on 01.07.15 at 11:59 am

“enormous plethora of consumptive power ahead of [me] in the future”

Mark,

If you don’t mind the plagiarism, I’m going to add these words to the “About Me” section of my online dating profile on Match.com.

#163 Sheane Wallace on 01.07.15 at 12:56 pm

Of course it is going to get worse.

It seems Ca dollar would be going further down
https://ca.finance.yahoo.com/news/canada-trade-deficit-bigger-forecast-161826597.html

At least BOC governor’s dream would be fulfilled.

We should probably expect further increases in prices of food and imported goods.
Despite oil price drop gas is at 94+ cents today at the pumps.

But they (H’s government, not the Canada government) will still balance the budget as a promise is a promise.
One just has to belive hard enough.

#164 Sheane Wallace on 01.07.15 at 1:05 pm

As for hanging to the house and paying off that mortgage,

New grads from UFT after 7 years of study, landing jobs at Lablaws and Staples for 14 $ an hour.
Target salary of 35-40 k max in their lifetime, if lucky.
Soon these jobs will require PHD and 10 years of Canadian experience as to allow to better serve the customer.

With houses north of 1 million and small glass wall condos at 500 k (cold, but with big maintenance, repairs, heating, …) they call it affordable housing.

Sure.

#165 Sheane Wallace on 01.07.15 at 1:21 pm

The level of indebtedness might not allow for meaningful interest rate increases, we might have strongly negative real interest rates for while.
I would like to see Poloz’s face when he announces that despite the inflation he can’t increase rates (as all the munitions were spent to further inflate the gigantic bubbles, not to mitigate their deflation.)
When the dust settles (non-housing) prices could have increased 3 fold from here. As for incomes…
The system is gamed to such extend that any future central banks actions are already factored in.
Bureaucrats should never be allowed to take over the markets.
Just take your hands out of manipulating the cost of money, stop stealing from savers and let the markets play their role.

#166 Bottoms_Up on 01.07.15 at 1:25 pm

#155 Retired Boomer – WI on 01.07.15 at 11:17 am
—————————————————–
Here is a reliable source on fracking (experts that looked at all aspects including local and broader environmental effects, and health):

http://www.scienceadvice.ca/en/assessments/completed/shale-gas.aspx

#167 Bill on 01.07.15 at 1:30 pm

Music to my ears.
Thanks Garth…I think cash is King!!?

#168 Mister Obvious on 01.07.15 at 1:30 pm

#96 Steve

“If you have never owned a house it’s a humiliating experience to socialize with people who do. You feel so poor and irrelevant. They talk about bamboo flooring and walk in closets. They ram it in your face all evening.”
—————————-

I live in a higher end rental building very close to downtown Vancouver. Every now and then some of the tenants get together for a small party in someone’s unit.

Much of the discussion centers around how lucky we are to have such a stellar place to live and how happy we are about the reasonable rent for apartments we would be unable or unwilling to pay for if they were on the market.

Some people who attend are friends of friends who are not from this building. They are if fact owners of homes or condos elsewhere in Vancouver. You can tell they get pretty sick of our self-congratulatory musings after a while. It must be humiliating.

#169 Mark on 01.07.15 at 1:31 pm

“If you don’t mind the plagiarism, I’m going to add these words to the “About Me” section of my online dating profile on Match.com.”

Hilarious. But on a more serious note, a lot of 20 and 30-something-year old females under-water on mortgage debt are really going to be on the prowl in the future for more responsible husbands. Be careful is all I gotta say. Ask the questions up-front unless you want to get sucked into the vortex of debt.

“I would like to see Poloz’s face when he announces that despite the inflation he can’t increase rates (as all the munitions were spent to further inflate the gigantic bubbles, not to mitigate their deflation.)”

What inflation? House prices going down, as they are, mean that people won’t be able to borrow money to spend. Hence, deflation all around. Which will probably push the CAD$ up as well, to heights unimaginable.

Poloz’s struggle will be to contain deflation. And I fear the BoC is significantly behind the curve at the moment in lowering rates. European CPI being minorly negative and in deflation is just a preview of what is to be the case in Canada for many years to come. At least the USA has an external demand driver, of trillions worth of foreign debt as calls on its economy, to fulfill domestic demand and drive inflation. Canada, nothing of the sort, which will push the currency up for years to come.

#170 Grantmi on 01.07.15 at 1:36 pm

See.. you state one thought about the asian invasion into the Vancouver market, and you’re labeled a racist.

“The incoming in Vancouver of Asians and Chinese was too fast, too quick. So essentially, we had a situation in which within a matter of a few years a very British city, a beautiful British city, took on a strongly Asian character,” he said.

“You walk to schools, to universities, high schools and in many cases, you will see are almost only Chinese or Asian students.”

http://bit.ly/1w16Kdp

It’s not just the folks on the West Coast that notice this Garth-O! It’s even professors on the East Coast. It is what it is… and it is the elephant in the room?

#171 Tee Dee on 01.07.15 at 1:47 pm

Funny, I had a realtor email me this link shortly before the christmas break telling me that 2015 is going to be a great time to buy a house cause values will continue to go up. Either she is stupid or immoral.

http://www.thestar.com/business/2014/12/10/toronto_house_prices_to_outpace_country_again_in_2015.html

#172 DrinkingRussianDinglenut on 01.07.15 at 1:53 pm

http://i.imgur.com/eMhKQLQ.jpg

Just wonder is there a way to find out what % of these “58% of those 45 to 54 said they still believe they can reach their financial goals” work for:

– the public service (FYI as of Nov2014 there are 3,683,000 people versus the 11,539,800 employed in the private sector and
http://www.macleans.ca/economy/business/the-new-upper-class

– the Finance, insurance, RE and leasing “private” sector (FYI as of Nov.2014 there were 918,100 employed here versus 865,600 in Nov.2013).
And especially the banking sector given that “Bonus pool at Canada’s biggest banks surges 13% to $12.2 billion in 2014” http://goo.gl/ABwczi
and given that according to the CBA (http://www.cba.ca/contents/files/statistics/stat_employ_db375a_en.pdf) as of 2013 there were 388,265 people (279,795 in Canada) employed by these banks.

#173 Blacksheep on 01.07.15 at 1:58 pm

Washed # 114, Retired # 155,

“Harley Davidson, not so much, especially this spring in Ft. McM. Vultch.”

“What is the difference between a hard tail and a soft tail?”
——————————————————-
Probably rhetorical, but what the hell.

On a Hardtail, the rear wheel is fixed to the main frame, offer a spine jarring ride.

On a Softail the rear wheel is suspended and moves independently from the main frame offering a smother ride.

A Softail’s suspension is hidden on the under belly of the bike, so that it ‘looks’ like a old school Hardtail, but this look comes at a cost as the ride is quite compromised, when compared to other conventionally suspended Harley’s. (which still aren’t great)

Vulching? Forget a Softail or Hardtail as they are both losing value due to lack of creature comforts required by the ageing boomer. Rule of thumb, buy something with a radio (touring bike) and it will hold it’s value much longer (another 10-15 years till boomer’s can’t ride at all) BMW RT series, horizontal twins are great bikes.

The demographic shift in toys has been happening for years now. What other liability could the boomer divest themselves of, maybe a 6 bedroom house for a condo some where warm?

#174 Pre-Retiree on 01.07.15 at 2:00 pm

Curious to know if Mark still thinks Canadian stock is still undervalued, when based primarily on oil and financial. Is the P/E really low?
Recovery may take a while…
I guess the answer is and always will be: remain diversified because who can really tell the future?

#175 Smoking Man Dental School now accepting applications on 01.07.15 at 2:21 pm

Included in our promo 99.99 tuition rate
1)Text book “Where there’s no dentist”
2) Coupons for name brand japenesse right angle drive power drill, with titanium bits
3) Up to date Google search results for “DIY dentistry”
4) framed graduation certificate fully endorsed by the Nigerian online education acredidation authority
Please apply to http://www.ImFullOfMyself dot com

#176 Smoking Man on 01.07.15 at 2:23 pm

No one going to comment on the TREB numbers out today…

BoomShackallaka Boom!!!!

#177 Diane on 01.07.15 at 2:29 pm

Grantmi: HAM doesn’t refer to house-buying by asians who immigrate to Canada. HAM refers to asians, who live in asia, but buy up Canadian real estate as an investment. If your problem is asians in your neighborhood, then yes you are racist.

#178 Smoking Man on 01.07.15 at 2:52 pm

Every Media Outlet in the civilized world should run those cartoons that got the French cartoonists kill by raving barbarians.

It’s time to end political correctness.

#179 Nemesis on 01.07.15 at 3:00 pm

#WickedWednesdayMischief… #CouldBeWorse… #PresidentialQuotes’OTheDay…

“Art should not be a “slave” to the market and should not bear “the stench of money.” – Chinese President Xi Jinping

[Xinhua] – China to foster “healthy, quality” online literature

…”Issued by the State Administration of Press, Publication, Radio, Film and Television (SAPPRFT), the guideline said online literature has become an important part of the country’s digital publishing industry, gaining wide popularity among literature fans and young people.

However, online literature is filled with derivative, plagiaristic and stereotypical works that seek only economic benefits. The industry also faces incomplete supervision by authorities.”…

http://news.xinhuanet.com/english/china/2015-01/07/c_133903346.htm

[Xinhua] – More than 70,000 officials punished for violating frugality rules in 2014

BEIJING, Jan. 7 (Xinhua) — A total of 71,748 Chinese officials were punished in 2014 for violating the eight point anti-graft rules, the top antigraft body said Wednesday…

…China also brought back from overseas more than 500 fugitive corrupt officials and recovered more than 3 billion yuan (483 million U.S. dollars) in a campaign targeting those that had fled the country, said Huang, adding that China had inked deals with several countries to support global corruption cooperation, including the United States, Canada and Australia.”…

http://news.xinhuanet.com/english/china/2015-01/07/c_133903161.htm

[NoteToGT: Just between the two of us, I am reliably informed by someone close to our bilateral negotiations with China of a secret proviso to the effect of “for every one of theirs they get back, they have to take one of ours”, beginning with a certain electorally problematic Senator… http://www.cbc.ca/news/politics/mike-duffy-senate-expenses-trial-set-for-41-days-starting-in-april-1.2774968 ]

#180 RealistvsExtremist on 01.07.15 at 3:09 pm

“Fed could start hiking rates even at current inflation level: Dec. minutes”

Yeah? Well I will believe it when I see it with deflation rearing its head……not to mention trillions and trillions of debt.

#181 Holy Crap wheres The Tylenol on 01.07.15 at 3:47 pm

#175 Smoking Man on 01.07.15 at 2:52 pm

Every Media Outlet in the civilized world should run those cartoons that got the French cartoonists kill by raving barbarians.

It’s time to end political correctness.
_____________________________________________
Bastards is all I can say. The innocent people killed and that poor French Policeman injured on the ground begging for his life, executed in cold blood. The world had better wake up as there is no place for scum like this that run around claiming Allah Akbar.
Capital punishment should be a slow death for these evil dare I say the word humans. They are not even human! Seek and Destroy I say!
https://www.youtube.com/watch?v=J-tvJcTPxHc

#182 Piccaso on 01.07.15 at 3:48 pm

Suncor’s 5B Fort Hill project needs $95 oil

Hilarious

#183 Victor V on 01.07.15 at 3:49 pm

Good work to all dogs holding REITs. Not a bad way to start the year off.

https://ca.finance.yahoo.com/q/bc?s=XRE.TO&t=5d&l=on&z=l&q=l&c=

#184 Financial Freedom at 40 on 01.07.15 at 4:05 pm

Re #173
Was surprised to see avg price for semis, and semi sales, down in 416 YoY. I thought all the moist virgins were losing their rational minds over slanty semis with micro lawns and no parking in the downtown core, having been priced out of GTA particle board palaces by more restrictive CMHC.

#185 aaron on 01.07.15 at 4:32 pm

Given the drop in oil price, putting a downward pressure on inflation, it is hard to see how BoC would contemplate hiking interest rates. Probably no rate hikes until 2017 if commodities prices are still suppressed. Blame low oil price.

Good news for RE. Million plus homes are the fastest selling segments according to Sotheby.

#186 Financial Freedom at 40 on 01.07.15 at 4:33 pm

P.S. #173
Long Branch did well in 2014, SM knows how to pick appreciating pockets of goodness.
Still feeling good about managing to sell in C12 this past Spring, avg sale price is flat as a pancake – up only 0.12% to 2013. Granted still beats a regular savings account at a big 5, but that’s non too impressive. So RE topped out for me, may have sold at the top…

#187 Rational Optimist on 01.07.15 at 4:48 pm

167 Mark on 01.07.15 at 1:31 pm

“What inflation? House prices going down, as they are, mean that people won’t be able to borrow money to spend. Hence, deflation all around.”

Inflation on everything we import, which happens to be most of what’s important. Deflation on everything else (houses, wages, pedicures).

#188 Rational Optimist on 01.07.15 at 4:50 pm

Businessweek’s headline this afternoon is “Fed Minutes Show Rate Rise Unlikely Before April.”

That to me says that a rate rise is possible even before April.

Repeat after me: the Fed will go in 2015. — Garth

#189 waiting on the westcoast on 01.07.15 at 5:14 pm

I know we are expecting some significant deflation from contacting debt internal to the economy but remember that 30% of our goods are imported (75% of which is from the US) and this will increase inflation as those prices are up significantly due to our lower exchange rate. That coupled with lower demand for Canadian $$$ due to not raising interest rates may push the dollar lower still….

#190 jess on 01.07.15 at 5:42 pm

some folks might get a little ugly with these new changes

http://michael-hudson.com/2015/01/playing-the-pension-funds/
Transcript:

JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network.

MICHAEL HUDSON, PROF. ECONOMICS, UMKC:
They rewrote two laws. One of the laws was about bank derivatives that Elizabeth Warren has spoken about, promising to bail out Citibank and other banks. If they lose on derivatives, they’re going to get bailed out like they did in 2008.

And the other was a decision not to bail out the Pension Benefit Guaranty Corporation, the government’s pension fund insurer. “

#191 Renting in Calgary on 01.07.15 at 5:59 pm

What is going to happen to renters, though, when interest rates rise and landlords have to keep raising rent to cover inflated mortgages? Those of us who haven’t bought because of the unrealistic real estate prices look forward to the prices dropping but at this point, paying 2K a month in rent, it’s hard to imagine the prices dropping enough to slap a good down payment on a house.

#192 -=jwk=- on 01.07.15 at 6:53 pm

@187 nothing much will happen to rental rates. Rental prices are set by a true free market. CMHC is not giving away rental money, so people have to pay out of pocket. This limits the maximum rent landlords can seek to what people can actually pay. If that wasn’t true, they would have doubled your (and mine) rent already. They can’t because we would walk and anyone capable of paying double what we are, would live somewhere twice as nice.

#193 notagreaterfool on 01.07.15 at 7:08 pm

Garth, with conviction the FED will raise rates in 2015 you say. Historically, Canada must follow. Does this mean BOC raises rates too in 2015 or is this a historical change whereby there is some lag between the two rate hikes? Scotia Bank is saying the latter is true.

#194 Derek R on 01.07.15 at 7:17 pm

#187 Renting in Calgary on 01.07.15 at 5:59 pm asked:
What is going to happen to renters, though, when interest rates rise and landlords have to keep raising rent to cover inflated mortgages?

I’m a Calgary renter too but I’m not worried. Your landlord may well try to raise your rent to cover his mortgage costs but you don’t have to accept it. There’s always somewhere else where the landlord doesn’t have a giant mortgage. Or somewhere smaller. Or further out of town. Or, well, you get the picture.

If you’re paying $2,000 per month in Calgary, you have the whip hand. Most renters want to pay $1,500 or less, so your ability to pay above the average gives you more freedom of choice. Use that freedom to scare your landlord. And if he doesn’t budge on the rent rise, use it to move somewhere else.

Tenants like you aren’t easy to find and over the next few months they’re going to become even rarer. Any sensible landlord knows that. And do you really want to rent from any other kind?

#195 EB on 01.07.15 at 7:48 pm

#187 Renting in Calgary – free market. They can ask whatever they want, but it doesn’t mean anyone is going to pay the newbie landlords to defray the costs of their own poor decisions.

#196 Kris on 01.07.15 at 8:04 pm

Garth, you’ve talked about the fundamental economic concept of prices returning to longterm normals. On that note, what’s the normal for oil? Are we in a short-term dip, or is this actually a more sensible price level for crude longterm?

#197 Balmuto on 01.07.15 at 8:54 pm

Repeat after me: the Fed will go in 2015. — Garth

You sure?

http://mobile.bloomberg.com/news/2015-01-05/janus-gross-sees-no-rate-increase-until-late-2015-if-at-all-.html