The shock

WASHROOMS1 modified

(Shot by blog dog Winston, of Edinburgh UK, on a recent trip to India)
Bank of Canada cuts its rate 0.25%

Well, the inevitable consequence took just a few minutes today. The Canadian dollar lost almost 1.5 cents US within moments of the central bank’s dramatic and unexpected decision. At 10 am EST the loonie had plunged to 81.43 pennies. (It fell below 81 during Stephen Poloz’s disappointing media scrum.)

Almost no credible Canadian economists saw this coming. Nor did I. The cut not only wounds the currency and risks further inflating our credit and housing bubbles, but it sends a strong message that our economy’s faltering. Clearly the Bank of Canada is privy to information we are not. “The oil price shock increases both downside risks to the inflation profile and financial stability risks. The Bank’s policy action is intended to provide insurance against these risks.”

We’re also being told growth in Canada will now be 1.5%, compared to 5% in the States. I hope you followed my long-standing advice to be heavier in US growth assets, and reduce your exposure to Canada. Now you know why.

*   *   *

Hong Kong’s 7.2 million people are crammed into 1,000 square kilometers of space. It has the most expensive real estate on earth. No wonder. Metro Vancouver has just 2.3 million, living in 2,800 square kilometers. Houses there are the second most expensive on the planet. No kidding.

In the eleven years the outfit called Demographia has been documenting this stuff, it’s the worst showing ever for a Canadian city. When a beater detached property that would make a barely adequate biker club house goes for $1 million (on average) people who analyze this stuff in a global context just shake their heads. We’re certifiable. Especially those in YVR who like to come here and tell us they’re special.

Got that right.

Now, let’s add some further context. The International Monetary Fund downgraded prospects for global growth this week. Canada’s economy, they said, will crawl along at maybe 2% (the US is growing at a 5% clip). As a result, the Canadian dollar plunged a full cent on Tuesday, down to less than 83 American pennies. Oil fell back into the $46 range (off 5% in one day). The latest stats on factory orders sucked, lower for the third time in four months. As you know, there were 20,000 layoff notices issued nation-wide last week.

Did I mention the daily Cowtown Death Watch? Sales so far in January are lagging last year by 33%. The big story, however, is listings. New ones are running 38% ahead of January, 2013, while total actives keep piling up – now ahead 66.4%. Imagine a swelling herd of uncontrollable wild mustangs, running panicked through the sagebrush. Those are the Calgary sellers. This is what happens when an external factor – in this case a 40% drop in oil since November – meets the kind of it’s-different-here delusion that typifies Canada. Yep. Stampede.

Is Vancouver, or Toronto or Mississauga, immune from this kind of catharsis? Unlikely. As I told you, a detached house in 416 today ($859,672) is worth less than it was a year ago ($894,654). To buy this house would cost $27,000 in tax and to sell it would peel off another $43,000. So, as a one-year-investment, this property would yield a loss of $105,000, or -12%.

And 2014 was a good year for real estate. In fact, this was the realtors’ summary in the GTA: “The strong price growth we experienced in 2014 can be explained with two words: listings shortage. The constrained supply of listings was especially evident for low-rise home types like singles, semis and town houses. The number of households looking to purchase these home types increased, while the number of homes from which they could choose decreased. This situation resulted in more competition between buyers and more aggressive offers.”

Strong price growth? Continually we’re told values rise monthly, but here’s tangible proof that real estate in the bustling centre of the biggest city costs less now than it did a year ago. Or nine months ago. Add in transaction costs and taxes, and homeowners who think they’re sitting on a growing asset are actually traveling in the opposite direction. Now the same is happening in Montreal, Winnipeg, Halifax – in fact in almost 70% of Canadian cities, real estate is already in decline. And we haven’t had a single rate hike. In fact, mortgages are cheaper than a year ago.

In contrast, last year a balanced and diversified portfolio (60% growth, 40% boring) grew by more than 8%. There was no property tax on it. No insurance required. If you needed some money, you could just sell some stuff (try marketing a bedroom when you’re tight for cash). It didn’t need mowing or watering. You didn’t have to shovel it. To sell it took a few clicks and ten seconds. No lawyer. No fluffer. No title insurance. No stress. No debt.

Anyway, you get my point. People in Toronto, Calgary, Vancouver and other places where houses cost too much have sacrificed a giant amount to acquire and finance them. As demonstrated yesterday, this has often kept them from saving or investing anything for the future. So when real estate turns from just shelter into a non-performing financial asset, as is happening now most places and will inevitably repeat in 604, it’ll be a shock.

The past three weeks in Calgary should give you a taste of what that means, on the ground, in real terms.

Remember: the goal of life is the freedom and means to relish the one thing that truly matters. Incredibly, it does not involve granite.

BUY ME

Ask Kelly what it takes to sell a $1.1 million house in Calgary these days: www.calgary1425.com.

413 comments ↓

#1 Dunbar Dale on 01.20.15 at 5:56 pm

Anybody who buys a house in Vancouver right now is a freaking moron. You can quote me on that. Yeah baby! Moron.

#2 Cassie McPhee on 01.20.15 at 5:59 pm

http://www.realtor.com/realestateandhomes-detail/276-Montana_Detroit_MI_48203_M38991-40528?row=1931

This house can be yours for under 70K. People in Vancouver should sell their homes and move to Detroit.

Better hockey team. — Garth

#3 Harbour on 01.20.15 at 6:09 pm

Oil falls again as IMF cuts forecast; Iran hints at $25 oil

http://finance.yahoo.com/news/oil-markets-open-cautiously-ahead-020946589.html

#4 Terrier on 01.20.15 at 6:10 pm

Judging by the pictures on the website, this puppy has been on sale since summer.
This is just a beginning of a slow and painful slide … wait until spring, it will be ugly. Toronto and Vancity are the next in line …

#5 Euro pean on 01.20.15 at 6:13 pm

http://globalnews.ca/news/1781133/home-prices-fall-in-calgary-as-correction-begins/

The first four comments are priceless on this link.

A breath of fresh air by the author. Feels great to hear real news for once, not directly from the real estate boards or RE-MAx.

#6 Blobby on 01.20.15 at 6:23 pm

Just got back from my investor guy

My 60/40 (growth/boring) split, with the growth stuff split 60/40 American/Canadian.. With a good mix of preferred shares/reits/etc thrown in.

Basically taking Garths advice and reapplying it to what worked for me..

Netted me 14% last year. The year before i netted 9%.

Very happy.

I just wish i had more to put in :D

#7 S. Bby on 01.20.15 at 6:24 pm

In my ‘hood South Burnaby (Metrotown area) property is crazy hot. Any original ’50s bung that comes on the market is bought by developers/speculators with the intent to build a McMansion which will then be marketed to the Asian demographic (wok kitchens etc.) . Property speculation is rampant here. Ironically the new builds seem slow to sell while the old dumps sell right away to the builders. But my elderly neighbours continue to hold out and not sell their ever deteriorating houses.

#8 Euro pean on 01.20.15 at 6:26 pm

http://youtu.be/50Z4xpKJX7E

Feel asleep halfway through this one, posted as damage control by the real estate cartel.

Its a real math wizard, as in real estate math wizard, trying to bs correlate the Calgary population to inventory. Basically damage control, I say let the dice roll with the oil price.

#9 Grantmi on 01.20.15 at 6:27 pm

http://goo.gl/stIYEb

Looks like Canadian rate cut coming.

#10 45north on 01.20.15 at 6:30 pm

Sunday’s post got my attention:

Jeff:

“I am an executive in the energy sector. I see a lot of information before it becomes public. Project cancellations, budget curtailments, and layoffs are currently significantly under-reported in the media.

http://www.greaterfool.ca/2015/01/18/the-awakening/

over the kitchen table, I hear the needle trade in Montreal is near collapse

Cassie McPhee: 276 Montana, Detroit just two miles south of the Michigan State Fair – I was there 10 years ago just as they were closing up for the winter

#11 Blobby on 01.20.15 at 6:40 pm

The comments thread on this article depresses me.

“I bought at these massively inflated prices, but it’s those damn foreigners buying that is pushing up the prices”

http://www.cbc.ca/news/canada/british-columbia/vancouver-has-2nd-most-unaffordable-housing-market-in-the-world-after-hong-kong-1.2919593#vf-4625700000853

#12 Pierr Fortin on 01.20.15 at 6:57 pm

#10, can you clarify what you mean about Montreal? As far as I can tell, Montreal housing prices are much lower than in Toronto and Vancouver, so we should be fine here in Montreal no?

Regards,
– Pierre “le poutin” Fortin

#13 Vanecdotal on 01.20.15 at 7:11 pm

#7 S. Bby

Identical phenomena happening last few years in White Rock and spendy parts of S. Surrey as well. Old homes still sell quite quickly to builders, (for close to lot value or essentially lot value), the new Luxury Mc MegaHome that rises quickly from the demo dust languishes on the market, unloved and without a buyer. 2 years+ this is observable in WR & surrounding areas. HAM influence is cooling/has already cooled substantially here.

There are hundreds of SFH listings over $1.5 million that never left the market last year and persisted through winter as well, with more new builds coming to market shortly. Seems an awful lot of luxury supply is piling up now, and Spring market only just beginning.

Same as your ‘hood though, most of the boomer downsizers are blissfully unaware of this new reality… so far.

Interesting to hear you’re noticing the same thing.

#14 Jimmy on 01.20.15 at 7:15 pm

Lucky 13th?

#15 Ben Bergstrom on 01.20.15 at 7:16 pm

The price of housing is like a big ship and moves a lot slower than the price of oil. Saying that, if oil suddenly recovers V shape style, will housing shoot up quickly as well? I see housing values melting slowly with low oil but shooting up again if there is any indication of a reasonable oil recovery.

#16 Keith on 01.20.15 at 7:21 pm

Vancouver – for SFH, it’s different here.

Home ownership is about 50%, there is much more untapped demand than other Canadian markets. The supply of SFH’s shrinks daily, a trend that will continue. Thousand of houses are zoned duplex or multifamily, and houses are continually being razed to build higher density. SFH is always the most desired option for families and supply continues to shrink.

Vancouver doesn’t have a single specific industry employing a vast majority of its citizens. An economic downturn doesn’t help matters, but how much does it hurt a city built on ???? a diversified lifestyle/service economy with a median family income of 70k. If the Canadian economy goes down, so will the Canadian dollar. When the Canadian dollar was 62 cents, the real estate for sale in the Gulf Islands was priced in U.S. dollars.

Vancouver is a globally attractive place to live. Not because “it’s the best place on earth,” and not because it is a global centre for finance, culture or antiquities. People make huge sacrifices to leave their homeland and move not just to Canada, but to Vancouver. The clean air, freedom of speech, spectacular beauty and democracy that we take for granted are in short supply in this world.

I don’t blame people for their critique of Vancouver, the price of real estate, lack of career opportunity, and the culture of a city still very much growing up. At the end of the day, I work with people from every major western and eastern nation who are very grateful to live not just in Canada, but in Vancouver. You may not agree with them, they are willing to pay a huge financial and career price to raise their families in this city. That desire will not end overnight.

#17 For those about to flop ... on 01.20.15 at 7:30 pm

Ben at 15
Ask all the American middle class that got wiped out in 09 how “slow” the ship was moving.
By the time most people realize they are in trouble the
SHIP has already sailed.

#18 not 1st on 01.20.15 at 7:33 pm

Guess Regina isn’t going to be the next Silicon Valley after all;

http://www.leaderpost.com/news/regina/laying+employees+company+makes+transformation/10745628/story.html

#19 4 AM Sunrise on 01.20.15 at 7:41 pm

#13 Vanecdotal on 01.20.15 at 7:11 pm

My Boomer parents plan to stay in their house until both of them pass away. The elderly dogs (canines!) who live them concur – heaven forbid the trauma of any kind of move give them a heart attack. The house was paid off eons ago and they live well below their means. Meanwhile, the SFH stock in the neighbourhood, most of it built in the 60’s, is being bought up and razed. Can’t wait to see the ugly McMansions that will take their place. It’s sadder in West Vancouver where gorgeous houses with beautiful landscaping and reasonable yard-to-building ratios are being demolished as we speak.

#20 Observer on 01.20.15 at 7:45 pm

#16

So many people are of the opinion that Vancouver somehow is the best city in the world. There are many other beautiful cities on the planet, Europe contains cities that make Vancouver look like an industrial park. The desire to live here may not end over night and hopefully that desire can be met at a more reasonable price going forward.
No amount of desire can armor an epic bubble such as the phonemnal Vancouver delusion.

#21 Smoking Man on 01.20.15 at 7:45 pm

We can debate real estate till the cows come home.

Is anyone not worried about ww3, guess it depends where you get your news.

Clearly ISIS is there to remove Assad. A strategic alley of Russia. At same time, Ukrainians talking peace but firing artillery.

Russia as I speek are preparing for thermo nuke war. They clearly know who their enemy is. It’s tactics, it’s plays, it’s moves.

Our leaders, or the ones controlling them seriously underestimate The Russians.

I was contemplating quiting drinking and Smoking, hell, no spring chicken here.

But realizing the grave danger we are all in. I’ll wait a bit longer and let this play out. Why suffer for nothing.

If CNN goes

Breaking News, take cover the Russians have launched nukes.

I’ll take a bottle of JD, my shades and a Nice Cuban on my roof and enjoy the show..

#22 Mark on 01.20.15 at 7:46 pm

“The price of housing is like a big ship and moves a lot slower than the price of oil. Saying that, if oil suddenly recovers V shape style, will housing shoot up quickly as well? I see housing values melting slowly with low oil but shooting up again if there is any indication of a reasonable oil recovery.”

Housing was already, albeit slowly, melting away with oil prices at $100. So a return to ‘high’ oil prices probably won’t save it. If anything, the oil industry into the next upturn will probably hoard capital and not deploy it, out of fear of another downturn.

Every time we have one of these wash-out events, the equilibrium price of oil likely climbs as institutional memory increasingly remembers the pain of over-investment and becomes more conservative.

#23 robert james on 01.20.15 at 7:47 pm

A shady realtor to stay away from in Vancouver… http://www.theglobeandmail.com/life/home-and-garden/real-estate/regulator-slams-agent-who-hid-high-commission/article22488195/ http://www.pixilink.com/clients/3189/

#24 Vanecdotal on 01.20.15 at 7:52 pm

#16 Keith

You raise some valid points, and having been born and raised in YVR I hear what you are saying. I too believe this may create some form of “floor” for SFH’s (condos/townhomes – doubtful), but only in SPECIFIC areas of Van that are truly high-demand for foreign buyers.

Even in this scenario, all it takes to rock the supply/demand boat is one single future government policy change re: immigration or foreign ownership rules, a massive economic (black swan) event directly affecting the country where the income is actually earned, or additional CRA / regulatory rule changes. None of which we can predict, but any of which are possible, perhaps even likely in the not-too-distant future imho.

Problem is though, even if this proves to be true, the rest of YVR housing that IS directly tied to local incomes runs the risk of getting absolutely hammered in the event of even a modest price correction, due to the general over-reaching required to afford even a modest SFH just about anywhere in greater Van. This highly-leveraged segment (average working family), generally would not be able to weather additional economic instability much longer. Especially when you consider the negative household savings rate, stagnant / deflating incomes, and high debt loads often typical in Van.

#25 valleyrenter on 01.20.15 at 7:53 pm

#13-Vanecdotal

I get a chuckle out of the spec houses on 160th, down the hill from Southridge. Been for sale for years by different R/E outfits. The current one keeps putting up sold stickers, then takes the stickers off a month later, puts them back on a month later, takes them off a month later, wash, rinse, repeat, lol.

#26 4 AM Sunrise on 01.20.15 at 7:53 pm

So this guy from an old-world culture was chatting me up and he said something about buying me lots of gold. And do you know what this (admittedly drunk) blog bish said, people?! “I don’t want a hunk of metal that doesn’t pay interest.” Luckily, I think he was too drunk himself to fully understand it. And he still bought me flowers the following week, so I guess he wasn’t insulted. Whew. Have to be careful about not quoting this blog when I have my guard down.

(For anybody who cares: this is not the guy who bought the sailboat. This one IS an ex-Realtard(tm), but I think it was just a hobby for him. Seems like everybody in my town has or claims to have sold real estate on the side.)

#27 screwed on 01.20.15 at 7:57 pm

Not concerned about Canadian real estate

Canadians need to live somewhere. As long as they have a job, they continue to make mortgage payments. Even if they lose the job, they don’t lose the house straight away. They may in the long run not be able to hold the house but that’s another story and common across the globe regardless of valuations.

Mortgage rates are cheap. Owning and paying a mortgage builds equity whether in Vancouver, Calgary, Toronto Ste Saint Marie or Princeton.

Rates are not going up which ensures that home owners will continue to make their payments.

Obviously there are sellers in the market now who are trying to “cash in” as they say. Bank their equity before prices MAY correct and go rent. Whatever they would do with their equity is a mystery as our cash is getting worth less and less every day.

By the way… that 1 million building lot in Vancouver is only 800,000 US. Not a bad price for a city lot. Cheaper than L.A., San Fran or Seattle.

Too much hype when prices went up and now too much hype when Canadian economy has hiccups.

I predict that many sellers will probably not get their price and then either take the listing off the market or relist and relist and relist but within the same price range.

There doesn’t seem to be an urgency to sell and when that day comes where half the country is out of work, well we have more to worry about than selling houses.

My property has depreciated 20% in US$ terms over 2 years roughly. Why would I sell it now even lower just because the market may not be so hot? Makes no sense especially knowing that the Canadian Dollar is sinking even further. Mind you, if I was a speculator and sitting on several properties I might sing a different tune.

#28 not 1st on 01.20.15 at 7:58 pm

umm, Garth, that house has no garage.

For a million, can a person living in the great white tundra not get a garage to park their kia and F350 with banger balls?

#29 palebird on 01.20.15 at 7:58 pm

#16 Keith if you are really that happy living in Van that is great. I am happy for you. I have lived there and I can’t think of one or two or three special, one of a kind features that would ever draw me back. Mind you I do get out and about a lot.

#30 Westcdn on 01.20.15 at 7:59 pm

Oh, Garth knock off the Calgary Death Watch. It is the speculators and new builds that are going to take most of the pain of a RE price decline in Alberta. The majority of job losses due to oil prices in this province will be exported. Yes, small businesses and homeowners will fail due to economic conditions but Alberta is far from finished. The main thing is confidence in the future. I believe in the young, not the old who fight like hell to keep what they have got.

#31 joe schmoe on 01.20.15 at 8:00 pm

Hey my kid goes to school across the street from that house!

A RE Agent I met is listing a house for 2.8M in cowtown…just broke ground last week…normally speculators here carry the risk to make a better margin (move in tomorrow!) He is definitely smelling the downturn.

lot 900k, house costs 1.2M = 2.1M…looking to profit 700k.

BEFORE correction. If he was smart he would sell the lot and run. I mentioned he is a Re agent right?

#32 Edward on 01.20.15 at 8:03 pm

#16 Keith

“Vancouver – for SFH, it’s different here.”
——————————————-

I agree. But not all SFH’s in the Lower Mainland will escape a downturn. Houses further out in the Valley or ones that are a long commute from Downtown might be more vulnerable.

But SFH’s on the Westside of Vancouver proper, parts of the Eastside, West Vancouver and North Vancouver are in constant demand from developers seeking higher density like you say. A drive through West Vancouver is a real eye opener. There are dozens upon dozens of new huge houses being built where older homes once stood. Few are being built on spec – they are being built for the owner. I know there are doubters, but many are being built by foreigners. A falling Loonie is just making that much less costly to offshore money.

Owning a Single Family house in these neighborhoods is no longer an option for most. And their values will continue to rise as their supply dimishes. The problem is that their sale stats are included in today’s study by Demographia and others like it. If you strip these SFH’s out of the mix, the picture of Vancouver housing is much different. Still expensive but not nearly as much.

#33 Mister Obvious on 01.20.15 at 8:04 pm

Born and raised in Vancouver I’ve been hanging around this fine town well in excess of sixty years. Few people here can say that.

Although I love Vancouver I don’t mind saying there’s no reason on earth an east side pressed cornflake split level should cost in excess of $1M. Half of that maybe. And I won’t even get into the stupidity of the west side.

I used to own a seriously overvalued bungalow until I came out of hypnosis and liquidated in 2010.

The reason prices are where they are is childishly simple: It’s because, collectively, we agree that they are. It will remain that way until we collectively agree they are not. (Refer to Dutch tulip bulb mania).

#34 jess on 01.20.15 at 8:04 pm

contrasts

One57
It rises 1,004 feet and 90 stories above 57th Street.
Read more: http://www.businessinsider.com/inside-one57s-100-million-penthouse-2015-1?op=1#ixzz3PP60NWrs
====
tax abatements…How many printed houses would one get for that?

…”Extell would only be required to kick in $5 million for affordable housing elsewhere in exchange for more than $40 million in breaks for its Billionaire Tower in the heart of midtown.
http://www.thedailybeast.com/articles/2015/01/20/want-to-see-the-state-of-the-union-gaze-up-at-the-abhorrent-billionaire-s-tower.html
==================

China just 3D-printed an entire mansion. Here’s what it looks like
Steven Millward
Each approximately 2,100 square-foot building costs less than $5,000 to construct. The houses’ components are checked for quality as they are being erected because there are no building codes yet for 3D-printing construction in China.
it took one day to build ten 2100 sq ft 1 story homes at a cost of $5000 each. Plus they claim that this prevents health risks to construction workers and is eco-friendly.

Researchers at the University of Southern California developed a 3D printer capable of building a 2,500 square-foot house within 24 hours, using a process called contour crafting. DUS Architects designed a 3D-printed canal house, which is currently under construction in Amsterdam.

#35 Watchdog on 01.20.15 at 8:04 pm

Garth,

Where do you get the Calgary sales stats from? Are these published daily? Just wondering as this month you’ve been publishing the stats daily and I see it changes from post to post.

Yesterday’s article: “So far this month overall sales are down a rattling 37%, while listings have now swollen 64% from the same month last year.”

Today’s article: “Sales so far in January are lagging last year by 33%. The big story, however, is listings. New ones are running 38% ahead of January, 2013, while total actives keep piling up – now ahead 66.4%.”

#36 Patient in Richmond on 01.20.15 at 8:10 pm

“That desire will not end overnight.”

that is true but 1 million dollar houses that are snapped up over night are a thing of the past …just wait until next spring , it will bottom out , people are spending money that they dont have ……

Target leaving ,Sony leaving , lots of restaurants are closing ……… just wait and see …..

#37 CalgaryBoy on 01.20.15 at 8:10 pm

I found some info on the internet about the last housing correction in Calgary.

“During the early 1980’s boom/bust, Calgary average house prices peaked at $110,184 (Total MLS) in January 1982. Prices bottomed out in November 1984 at $68,322 – a 37.99% drop.”

from http://calgaryrealestatereview.com/2010/07/29/calgary-historical-average-house-prices-sales-timeline

Back then, oil took almost 7 years from peak to bottoming.

Then this article states that Saudi Arabia can cope with oil this low for at least 8 years. http://www.bbc.com/news/business-30876920

I think Garth is right, it’s not going to end well.

#38 souvereigninternational on 01.20.15 at 8:13 pm

“As I told you, a detached house in 416 today ($859,672) is worth less than it was a year ago ($894,654). To buy this house would cost $27,000 in tax and to sell it would peel off another $43,000. So, as a one-year-investment, this property would yield a loss of $105,000, or -12%.”

now add to that 18% loss in C$ and you have 30% decline. Who says that in global terms when compared to currency basket/US$/ Gold & PM we will not see a much deeper correction than recently predicted 63%. After all we are half way there. Methinks that a measly 50 oz. of platinum/100 oz. of gold and 1000 oz. of silver will buy that average TO house in about 5-10 years.

By the way Garth, I really enjoyed your best post of the year:

http://www.greaterfool.ca/2015/01/11/extremes-2/

#39 CalgaryBoy on 01.20.15 at 8:14 pm

#21 Watchdog

Stats from here:
http://www.creb.com/

#40 ANON on 01.20.15 at 8:15 pm

I was still on the fence about moving West to score some dirt cheap stuff that used to be expensive (in a different way), some time after the fan becomes immersed in poo.
However, I have a strange feeling that tonight’s supercilious comments will convince me it is really different. There. This time. Only.
Possibly different DNA, also, quite a new breed, yet unheard of. I’m glued to the screen in awe.

#41 DOMAIN AGE TOOL on 01.20.15 at 8:18 pm

Domain Age Checker
Results for: http://www.calgary1425.com/

Domain was first registered on: 2013-06-07

**Home has been on the market for at least 7 months. Maybe more…

#42 james on 01.20.15 at 8:20 pm

#26

“Rates are not going up which ensures that home owners will continue to make their payments.”

I don’t think you know what the term ‘ensures’ means.

Low rates do not ‘ensure’ that owners can make payments. What do you think a rate is, an insurance company?

Owners can fail to make payments for a number of reasons, one of which is that they don’t have the money for them. This can occur if they lose their job.

What makes you think that homeowners are somehow magically divorced from labour market conditions?

This is a form of magic, apparently.

#43 Calgary Retiree on 01.20.15 at 8:23 pm

An international survey shows the Vancouver’s housing market among the least affordable in the world:

https://ca.finance.yahoo.com/news/vancouvers-housing-market-second-most-unaffordable-world-study-154803216.html

In fact, it is second only to – you guessed it – Hong Kong!

Vancouver’s dubious second place honour is, of course, no coincidence. The two cities are connected by more than just accidental housing cost. My Vancouver friend calls his birth place Hongcouver. In other words, Vancouver is a kind of a suburb of Hong Kong. Maybe a bit of a commute, but the real estate price structures of the twin cities are attached by the hip.

That also means that Vancouver prices, outrageous as they are by Canadian standards, are not necessary depended on the ROC’s economic events. A great deal of it links to another economy entirely.

Meanwhile here in Calgary, house sales are down by 33% and new listings are up by 38%. The Days On Market (DOM) numbers are stable, but this will increase as time goes on. Initially many listings will be allowed to expire as owners will try to, “wait it out”. Tough to do if your job no longer exists.

Potentially a big future improvement in Calgary’s rental availability.

#44 DOMAIN AGE TOOL on 01.20.15 at 8:23 pm

Correction 1 year and 7 months

#45 james on 01.20.15 at 8:26 pm

#16

Keith, all those crappy arguments could have been made for San Diego, Miami and like cities in the USA. They still crashed.

You had better hope that Vancouver prices go down. Why? Because high housing prices are bad from a macro-economic standpoint. They increase transaction costs, reduce labour mobility, and are correlated with decreased employment opportunities. They siphon money away from R+D, business formation, and other productive purposes.

There’s a reason that Vancouver has middling job opportunities at best. There’s a reason why the savings rate is negative, and people are putting almost nothing into retirement savings.

You can keep pumping RE and hoping it stays up, but the idea that there are no consequences is a little silly.

#46 Smoking Man on 01.20.15 at 8:26 pm

DAYTONA BEACH — A North Carolina developer is planning to build an outlet mall in Daytona Beach that would be the first in Volusia and Flagler counties.

Yup that’s crap hole Daytona Beach. For all you USA bashers, bet you wish you listened to Gartho a few years ago. And bought some USA real estate.

Not only has it appreciated, but a currency bounce too.

#47 Mark on 01.20.15 at 8:26 pm

“Mortgage rates are cheap. Owning and paying a mortgage builds equity whether in Vancouver, Calgary, Toronto Ste Saint Marie or Princeton.”

Not with prices going down. If the 1990s are any indication, the next decade will be that of increasing mortgage payments, while building only minimal to no equity a decade later. Meanwhile, those who invested more wisely, perhaps in the sort of “balanced portfolio” that Garth espouses here on a regular basis, will be far, far ahead.

Canadian residential housing has a P/E (on a basis equivalent to that of the stock market’s GAAP-compliant earnings) of roughly 35, and an “earnings” growth rate roughly that of inflation. If RE were a stock, I think we would all be aghast at how many were investing in such a bubble. Or alternatively, how cheap the alternatives to the bubble are.

#48 deaner on 01.20.15 at 8:28 pm

Van real estate is stupid. We should have progressive property taxes on SFHs.

However, I think the New Zealand Demographia report is misreported as the countries are mostly Anglo. The study reads as a domestic New Zealand political document. The study doesn’t include much of Europe, or poor countries in Africa, South America, or Asia.

That said, it’s not exactly a point of pride to be not as bad as Africa in affordability.

#49 souvereigninternational on 01.20.15 at 8:31 pm

Now on a recent trip to Buffallo went to Target. Still a great store to shop, just not the ones in Canada. Hope that Nordstrom will not do the same mistakes i.e. lower service standards to Ontario quality, while offer poor selection at prices that do not compete with existing competition and are not comparable with US stores. We don’t need another Holt Renfrew or Harry Rosen. We need sales discounted and in line with the booming economy across the border.

City of Buffalo should build a superfast train connection with GTA and experience an economic boom. Affordable middle class houses for Canadians:

http://www.zillow.com/homedetails/367-Washington-Hwy-Amherst-NY-14226/30265591_zpid/

this one will probably sell for 140K tops. Or this historic renovation special:

http://www.realtyusa.com/property/18-Chapel-Cuba-NY-14727/BuffaloNY/B466268/

#50 lou on 01.20.15 at 8:36 pm

any thoughts as to the upcoming EuroZone Bazooka coming up shortly (up to 1 Trillion Euro QE)? US 10yr poised to hit 1.5% in 2015? market meltup?

#51 TnT on 01.20.15 at 8:40 pm

Hong Kong’s 7.2 million people are crammed into 1,000 square kilometers of space. It has the most expensive real estate on earth. No wonder. Metro Vancouver has just 2.3 million, living in 2,800 square kilometers. Houses there are the second most expensive on the planet. No kidding.

Looks to me that Hong Kong is literally spilling over into Vancouver which begets its unofficial name “Hongcouver”

#52 The shock | Realties.ca on 01.20.15 at 8:43 pm

[…] Source: http://www.greaterfool.ca/2015/01/20/the-shock-3/ […]

#53 Ronaldo on 01.20.15 at 8:47 pm

Amazing what 1.1 million will get you in Calgary compared to Vancouver. I can’t imagine anyone wanting to leave Calgary to situate in Vancouver when all you could get for the same money is a 1920’s teardown. Another example of unrealistic housing prices in the best place on earth. Going to be a slammer when it happens.

#54 Okotokian on 01.20.15 at 8:48 pm

stop. NO BODY PANIC!

#55 GarthGroupie on 01.20.15 at 8:51 pm

Took a look at that house for sale in Calgary – right in my neighbourhood, a stone’s throw from downtown. Great location but there’s still a lot of beaten-up properties here. They’re slowly tearing them down and putting up these overpriced cardboard “mansions” and semis (those are listed for $750 – 800k).
So these people own a $1.1 million dollar house but won’t pay for an agent – FSBO. I thought only mobile homes got sold that way but obviously not.

#56 Kenchie on 01.20.15 at 8:59 pm

#5 Euro pean on 01.20.15 at 6:13 pm
“http://globalnews.ca/news/1781133/home-prices-fall-in-calgary-as-correction-begins/

The first four comments are priceless on this link.

A breath of fresh air by the author. Feels great to hear real news for once, not directly from the real estate boards or RE-MAx.”

I watched the video that is posted in the comments section. The guy has Calgary’s population at just below 1.5 million people in 2014 (and mentions that it was 1.0 million in 2000). Last time I checked, the latest estimate if just over 1.2 million. After that gaff, I turned it off. Until that part, he was making some sense. But that overestimation of population growth shows his bias.

#57 Mike L on 01.20.15 at 9:13 pm

Keep up the “Calgary Death Watch”, it gives yet another reason (not that we need another!) to read your blog daily!

Calgary is a good barometer for sure. Glad I don’t own there or looking to buy there. I worry for those who are.

Keep on the good work!

#58 Jimmy on 01.20.15 at 9:15 pm

#55 garthgroupie

Westbrook mall blows chunks big time.

#59 Washed Up Lawyer on 01.20.15 at 9:17 pm

#28 Not 1st

“umm, Garth, that house has no garage.”
***********************************

Double detached behind the house. You can see the wall of the garage in the photo of the patio ensemble. And street parking. In that hood, street parking would be available in the evening when you return from scratching in the dirt to earn your living downtown.

Shaganappi is a nice, safe, older centrally located neighbourhood. My personal best ever was at the Shag golf course.

The 5.5 minute commute to downtown is a bit overstated. Yes, it can be done in off peak hours but should probably expect 10 – 15 in rush hour down Bow Trail to 9th Avenue. The house can be had in 12 to 15 months for $800K. No rush. Lots like them.

The rout in oil prices will be felt beyond Ab., Sask, Nfld & Labradoodle (Garth loves dogs). Yes the effect will be muted but the personal financial hit in Calgary, Edmonton, Wabasca etc. will show up in real estate in the Okanagan, the Shuswap, Predator Ridge, Crown Royal (Comox), Fernie, Van Isle etc. as Albertans unload their BC properties.

#60 Dale From Calgary on 01.20.15 at 9:26 pm

Further on that link you give for the Calgary house in Shaganappi. It says minutes from LRT station but doesn’t mention that the station is in the median of Bow Trail freeway. Trains are fully packed during rush hour when they get to Shaganappi station, so you will stand all the way to downtown like sardines.

It also claims it is only a five-minute drive to downtown during rush hour. Not believable. If you are lucky, you might make it to the edge of downtown in five minutes, but you will sit and wait on 9 Avenue SW or the 5 Avenue/Pumphouse bypass.

Saw this before in my neighbourhood in Marda Loop. Infill across street completed just in time for Panic of 2008 finally sold in 2011 at $400,000 below initial listing of $1.2 million. Similar houses down the block finally sold as repossessions between 2011 and 2013. I’m now watching an infill on 50 Avenue SW (very noisy high-traffic collector road) which has been sitting for eight months and now on second real estate agent

#61 Washed Up Lawyer on 01.20.15 at 9:28 pm

It is not Crown Royal at Comox. It is Crown Isle. Confused the name of the golf resort with what we were drinking. That golf junket is just a haze in my mind.

#62 Setting the Record Straight on 01.20.15 at 9:28 pm

@#123 Ray Skunk on 01.20.15 at 12:04 am
Re: Toronto growth demographics:
Realtors always bang on about the amount of immigrants arriving in the city, but people leaving or expiring is never taken into account. The narrative the RE industry likes to portray is that people keep pouring in through a one-way valve.

As for $60k a year in private school tuition… balls to that, you can make damn sure my kids are going to the public system I’m paying in to. If there was a refund if you went private, sure, but I’m not paying twice.

I may, however, pay for some top-up tuition on the side, from a nice right-wing, non-unionized tutor to balance out the Liberal indoctrination from the public system.

********+

It’s not about the quality of the education. It’s about who the children meet, become friends with and marry.
Private school needs to be followed by Ivy League type universities in the states.

This is how the rich create rich families over time.

If you do not want to provide proper support for your children don’t have them.

#63 Leo Tolstoy on 01.20.15 at 9:39 pm

#19 4 AM Sunrise on 01.20.15 at 7:41 pm

My Boomer parents plan to stay in their house until both of them pass away.

That’s a quaint idea until one spouse passes. Unless the surviving spouse loves mowing the lawn, raking leaves, removing weeds, shovelling snow and handling all the bills/finances and investments, the house will be sold.

Been there, done that. Heard the same assumptions.

Actually it’s sad. Your life as Ground Hog Day. — Garth

#64 Western Observer on 01.20.15 at 9:40 pm

RE: #16 Keith

Eloquently put.

As a fellow Vancouverite , I couldn’t agree more.

#65 screwed on 01.20.15 at 9:41 pm

@ #42 – Barring a job loss, the home owner will continue to make mortgage payments as long as rates stay where they’re at. Rates won’t move. There are always unforeseen events and the market conditions for real estate valuations are not exclusive to Canada

@ #47 – There is no such thing as a balanced portfolio. Insurance companies which invest very conservatively with a low appetite for risk, something you would call a “balanced portfolio” are unable to meet their targets and guaranteeing the payouts. Same will be true for pension funds.

Our cash is getting worth less and less in US Dollar terms. Canada’s 10 yr is below 2%.

Where would I put the cash equity from a property in order to preserve some form of wealth? Could buy gold, I guess. Stocks may do ok but they did ok in Zimbabwe as well.

S&P will not make big moves this year. USD getting too strong.

So much for the balanced portfolio.

If you don’t hold it you don’t own it.

Of course one can have a successful balanced portfolio, delivering an average of 7% over the last decade – which contained far more trying times than these. Don’t be a drama queen. — Garth

#66 Andrew Woburn on 01.20.15 at 9:42 pm

I know Zero-Hedge keeps saying stuff like this but unfortunately, this ain’t ZH. He also warned us about the GFC.

“We are in a world that is dangerously unanchored,” said William White, the Swiss-based chairman of the OECD’s Review Committee. “We’re seeing true currency wars and everybody is doing it, and I have no idea where this is going to end.”

Mr White is a former chief economist to the Bank for International Settlements – the bank of central banks – and currently an advisor to German Chancellor Angela Merkel.

He said the global elastic has been stretched even further than it was in 2008 on the eve of the Great Recession. The excesses have reached almost every corner of the globe, and combined public/private debt is 20pc of GDP higher today. “We are holding a tiger by the tail,” he said.

http://www.telegraph.co.uk/finance/economics/11358316/Central-bank-prophet-fears-QE-warfare-pushing-world-financial-system-out-of-control.html

#67 Andrew Woburn on 01.20.15 at 9:48 pm

I have figured out that we can really reduce global warming if nobody has to drive to work. This could help.

“Drones’ Next Job: Construction Work”

Komatsu to Use Unmanned Aircraft, Bulldozers to Automate Early Foundation Work

http://www.wsj.com/articles/drones-next-job-construction-work-1421769564

#68 Mike on 01.20.15 at 9:53 pm

Hey people Canadian RE prices are already down almost 20% across the board…for the foreign investors holding USDs that is. I see each post starts with a nonsensical photo – so how about a suitcase bursting with USD – like we see in the movies (and brokers, lawyers and agents see on a daily basis when dealing with foreign investors)

Impossible for most to even phantom – because *gasp*, it’s not reported in any way shape or form and there are no selfies to prove it, but how does one explain all those shiny new towers in the 416, with 3 out of 4 units with the lights off ?

Could it be that there are actually a mere 2-3 thousand individuals descend on our beloved city with a mill or two in cash, buying half-dozen condos at a time, not caring about leaving it empty while paying maintenance fees or even property taxes?

Could it be that they are looking to safeguard their future in the 416?

Just one fact for you tonight: China had 2,378,000 “official” millionaire households in 2013, a rise of 82% from the previous year – that’s millionaire household as in those with $1 million in total liquid wealth
http://blogs.wsj.com/chinarealtime/2014/06/10/china-now-has-more-millionaires-than-any-country-but-the-u-s/

Is it so farfetched that just a couple of thousand come to the 416 and spend a bit of money here? I don’t even want to guess the unofficial number above…

Hey, but who can blame them – this is the 10% of the Canadian RE market that isn’t in decline (and won’t be for some time to come) because people actually want to live here. One can almost argue that the greater the decreases elsewhere in Canada, the more likely that the prices will just keep on going up in the 416. Rents too..just sayin’.

Hong Kong RE was mentioned above…that makes the new 350 sq Toronto micro units a mansion with a swimming pool in comparison to the square footage of what’s considered reasonable on that island.

Put things in perspective, asses the global trends, make your move.

So, it’s different in Toronto, because the world wants its ancient culture, globally recognized art, moderate climate. and je-ne-sais-quoi? — Garth

#69 Darryl on 01.20.15 at 9:56 pm

47 SM said
DAYTONA BEACH — A North Carolina developer is planning to build an outlet mall in Daytona Beach that would be the first in Volusia and Flagler counties.

Yup that’s crap hole Daytona Beach. For all you USA bashers, bet you wish you listened to Gartho a few years ago. And bought some USA real estate.

Not only has it appreciated, but a currency bounce too.
———————————————————
If you have expenses on the property they are in US dollars and most here earn CAD.
This currency loss should make up for the recent property appreciation. And then some.
And then the IRS wants some. And then you die.
Then the IRS wants more.
Buy US RE was only good when dollars were the same.
Even then I don’t think it was worth it.

#70 BlackDog on 01.20.15 at 10:04 pm

@SettingTheRecordStraight, re: ” It’s not about the quality of the education. It’s about who the children meet, become friends with and marry.
Private school needs to be followed by Ivy League type universities in the states. This is how the rich create rich families over time. If you do not want to provide proper support for your children don’t have them.”

So basically are you saying that only the 1%ers should have kids? Maybe there should be government mandated sterilization for the vast majority who cannot afford private education for their poor waifs.

Give your head a shake you elitist snob! If you are a representative example of the mindset of people whose kids go to private school, I’m glad my three ‘underprivileged’ children are in the public system.

#71 Joe2.0 on 01.20.15 at 10:05 pm

New immigrants aka new Canadians will continue to flock to Vancouver to pay those increasing house taxes.
The leaping loonie is also a great incentive to certain foreign investors.
Come on over to Vancouver we’ll take your money.

#72 Washed Up Lawyer on 01.20.15 at 10:06 pm

#67 Andrew Woburn

re automation:

Driverless haul trucks in the oil sands mines. Coming soon. $60.00 per hour jobs gone.

#73 Cici on 01.20.15 at 10:06 pm

Rate cut or rate hike…guess we’ll find out tomorrow!

No change tomorrow. — Garth

#74 Ralph Cramdown on 01.20.15 at 10:08 pm

#27 screwed

“By the way… that 1 million building lot in Vancouver is only 800,000 US. Not a bad price for a city lot. Cheaper than L.A., San Fran or Seattle.”

Here’s an 8,000 s.f. lot suitable for a 3,500 s.f. house+pool, private, views of the valley, ocean and Hollywood sign, just above Mulholland in the Hollywood hills. US$795k. There may be better available, this was simply the newest listing at the top of the list for my search criteria.

http://www.realtor.com/realestateandhomes-detail/3075-Beckman-Rd_Los-Angeles_CA_90068_M22171-53316

#75 Nobody on 01.20.15 at 10:10 pm

I believe your source for world wide realestate prices has it wrong. Without doubt, Monaco tops both HK as well as Van.

#76 Freedom First on 01.20.15 at 10:10 pm

I enjoy the Cowtown Death Watch. Interesting seeing the REaltarded comments today denying the truth of what is happening in the crumbling Canadian $$$$$$ and the Canadian economy right now. Everything is falling into place, and the title of today’s Post, “the shock”, will inevitably be followed by a future Post titled “The surrender”.

To the people who snipe at my comments, which are only always telling the truth, of course, and the truth being what you are unable to handle, well, all I can say, is: “Suck it up Buttercup”.

I am here to learn, and to help, and as always, always, always, put my Freedom First.

#77 Mike on 01.20.15 at 10:12 pm

So, it’s different in Toronto, because the world wants its ancient culture, globally recognized art, moderate climate. and je-ne-sais-qua? — Garth

For the mere few thousand investors per year driving up the prices – no deadly smog, drinkable tap water and Canadian citizenship would suffice – something so many of us take for granted

They can also scoop up a nice one or two bedroom off the coast of Spain for next to nothing for all the culture, art, wine and sunshine they can handle

As for the Canadians from Cost-to coast that are flocking to TO, you gotta ask what drives them..

They must hate losing money in the past year. Shoulda picked NY. — Garth

#78 Mark on 01.20.15 at 10:16 pm

“Yup that’s crap hole Daytona Beach. For all you USA bashers, bet you wish you listened to Gartho a few years ago. And bought some USA real estate. ”

Why? The fundamentals are even worse today than they were in 2008 US-RE-wise. Overcapacity is even worse. Okay, you’ve gotten a bit of a bounce in the USD$, which is only, at best temporary. Good luck keeping that high valuation, as the US will be forced to flush their currency down the toilet to revive growth.

This is shaping up to be a 1930s-style US dollar bubble. I think historians know how exactly that was resolved in 1933-1934 — with a 41% US dollar devaluation. And even then, the economy still didn’t do well until WW2-related demand reinvigorated things.

#79 Mike on 01.20.15 at 10:23 pm

They must hate losing money in the past year. Shoulda picked NY. — Garth

Or how about Detroit freeholds, for a price of a fake Gucci wallet?

http://www.theguardian.com/cities/2014/jul/22/does-multimillion-dollar-chinese-investment-signal-detroits-rebirth

#80 Kenchie on 01.20.15 at 10:23 pm

#16 Keith on 01.20.15 at 7:21 pm
“Vancouver – for SFH, it’s different here.

Home ownership is about 50%, there is much more untapped demand than other Canadian markets.”

Nope. All of English Canada is essentially above the US (64.4%) or UK average (65.2%). (as per CMHC and the Census in 2011)

Vancouver’s home ownership rate is 65.5%
Victoria: 65.1%
Calgary: 73.9%
Abbotsford-Mission: 75.4%
Edmonton: 70.6%
Saskatoon: 69.1%
Regina: 71.2%
Winnipeg: 68.4%
Barrie: 79.3% (!!!)
Hamilton: 71.4%
Toronto: 68.3%
Oshawa: 79.6% (!!!)
Ottawa: 67.9%
Montreal: 55%
Quebec City: 59.7%
Saint John: 71.0%
Halifax: 62.8% (Lowest in English Canada)
St. John’s: 70.3%

Sorry dude, Vancouver does not have “much more untapped demand than other Canadian markets”.

http://www.cmhc.ca/en/corp/about/cahoob/data/data_003.cfm

Furthermore, read this, “Most Germans don’t buy their homes, they rent. Here’s Why”:

http://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/

#81 Porsche on 01.20.15 at 10:26 pm

#78 Mark

What a nutcase

#82 Keith on 01.20.15 at 10:33 pm

#45

james

What’s different about San Diego? Um, it’s the home base of the Pacific fleet of the U.S. Navy, Mirimar airfield, for starters. When real estate crashed there, Vancouver’s peak to trough price drop was 18 percent. No one on the planet who wants to live in Canada (my seminal point) gave a damn, including the surprising number of Americans who live in Vancouver.

I better hope that Vancouver house prices go down? I’m far more concerned about my retirement investments pricing than I am about the price of my house. The goal of home ownership for me is to eventually live mortgage free, with income from long term retirement savings. The value of a paid for piece of real estate is far less relevant to retired people who have no intention of selling.

I could eat my home equity in retirement, but that is a backup plan. The problem with a real estate crash in Vancouver is that I am concerned that real estate redevelopment is a big industry in Vancouver and if there is no money to be made in that business a significant piece of the local economy will suffer, including a lot of construction workers and tradespeople.

All three levels of government and the developers have a huge vested interest in up zoning Vancouver land and keeping the redevelopment industry going. There’s no civil service here, no industry to speak of, nickel and dime finance industry. What industry would be attracted by a falling market in Vancouver?

#83 West Vanner on 01.20.15 at 10:33 pm

“Especially those in YVR who like to come here and tell us they’re special.”

It’s not “those in YVR” that are special Garth, it’s YVR that’s special. Where else in Canada can you drive around all day today with the top down? :-) Hence it attracts a lot of people who don’t like to be cold or don’t know how to operate a snow blower, or lawn mower, who buy real estate. Not me, but it does attract them. I prefer to rent, invest my money for the future and stay mobile, or liquid as you like to put it. Time will tell if the YVR real estate will ‘correct’, I am not that sure it will since most of it these days is bought with money earned elsewhere, even if it is bought by ‘Canadians’.

#84 Berniebee on 01.20.15 at 10:42 pm

#16 Keith

While Vancouver looked good from afar, I moved there from Montreal, lived in lotus land for five years and was very happy to leave.

What the pretty pictures don’t show is how bad the traffic is. It’s difficult to convey how it feels to cope with constant rain and endless bleary grey skies for weeks, if not months at a stretch. I was shocked at the high prices, not just for real estate, but for everything else as well. In retrospect, high food and dry goods costs should not have been a surprise, considering that every merchant faces the same real estate costs.
The horrid drugged out whore spectacle that is East Hastings street still gives me the chills.

I found that many Vancouver residents thought nothing of spending their prime earning years living in basement apartments or tiny condos. Or living with a 90 minute commute to the Fraser valley.

People pay a huge financial penalty and severely limit their career options to live in Vancouver. But I believe that many people born in Vancouver just don’t realize how great that cost is.

#85 not 1st on 01.20.15 at 10:46 pm

Garth, my friend in cowtown oil patch, (who happens to be sitting on one clenched butt cheek in his office hoping to survive) informs me that there is so much money floating around calgary that nobody cares what the price of oil does or if the housing market falls.

That’s authoritative. We can stop worrying now. — Garth

#86 Frustrated Kiwi on 01.20.15 at 10:48 pm

#16 Keith
“That desire will not end overnight.”
People tell themselves that here in Auckland too (9th on Demographia’s Least Affordable Major Metropolitan).
I desire a Ferarri but at some point it has to be about value for money. Or do you really think that Vancouver is the 2nd most desirable city to live in in the world (behind HK)?

#87 Frustrated Kiwi on 01.20.15 at 10:49 pm

Typed too fast – Ferrari obviously!

#88 Washed Up Lawyer on 01.20.15 at 10:52 pm

Garth, Mark, Andrew Woburn, Smoking Man, Beach Girl:

A question. Did protectionism ever actually disappear under free trade agreements?

The US is insisting that if Keystone XL is built, it will be with US steel.

If Canada imposes some protectionism, we will get our arses sued off?

Thanks.

#89 AfterTheHouseSold on 01.20.15 at 10:53 pm

#74 Ralph Cramdown

Welcome back! Have missed your input.

#90 Leo Tolstoy on 01.20.15 at 10:55 pm

#81 Porsche on 01.20.15 at 10:26 pm
#78 Mark

What a nutcase

This sounds about right.

If I had $1 US dollar for every time he talks about 1930, I would be a Canadian millionaire.

The weird thing is that I think that he actually believes that he’s financially intelligent.

#91 Mr Stats on 01.20.15 at 11:06 pm

Greater Vancouver is priced at future value.

In 20 years, Vancouver will be majority filled with Canadians of recent Chinese descent. The 10 hour direct flight means there will be lots of people dividing their time between Canada and China (just like the snowbirds).

Whether you like it or not, Vancouver will take on a predominantly asian character going forward (just like the University of New Brunswick professor said).

Thus “asian” cities demand asian prices. Its that simple.

People of Chinese and South Asian origin make up 33% of Vancouver, and 26% of Toronto. No, it’s not that simple. — Garth

#92 devore on 01.20.15 at 11:06 pm

#55 GarthGroupie

So these people own a $1.1 million dollar house but won’t pay for an agent – FSBO. I thought only mobile homes got sold that way but obviously not.

It’s been a long time since millionaires lived in million dollar houses in Canada.

#93 jess on 01.20.15 at 11:06 pm

The plot thickens

http://www.thekomisarscoop.com/2015/01/ny-review-of-books-reports-this-comment-but-wont-print-it/

Lucy Komisar, a member of 100 Reporters, is an investigative journalist focusing on corporate corruption. She won a 2010 Gerald Loeb award for exposing how the Florida Banking Dept. allowed Ponzi schemer Allen Stanford to move money offshore with no regulation.

(*A money launderer uses offshore shell companies and bank accounts to launder illicit funds, most likely for drug traffickers and other crime groups. A profit launderer uses offshore shell companies and bank accounts to steal licit money — corporate profits — from legitimate shareholders and tax authorities.)

#94 Kenchie on 01.20.15 at 11:08 pm

#42 james on 01.20.15 at 8:20 pm
“#26

“Rates are not going up which ensures that home owners will continue to make their payments.”

I don’t think you know what the term ‘ensures’ means.

Low rates do not ‘ensure’ that owners can make payments. What do you think a rate is, an insurance company?”

Ensure = make certain that (something) shall occur or be the case.

Insure = arrange for compensation in the event of damage to or loss of (property), or injury to or the death of (someone), in exchange for regular advance payments to a company or government agency.

#95 devore on 01.20.15 at 11:13 pm

#60 Dale From Calgary

It also claims it is only a five-minute drive to downtown during rush hour. Not believable. If you are lucky, you might make it to the edge of downtown in five minutes

Technically correct, the best kind of correct.

#96 Ulsterman on 01.20.15 at 11:17 pm

#7 S. Bby & Vanecdotal

Same here in North Burnaby. On my street along 6 or 7 50’s bung’s have gone and SFU’s are in various stages of contruction – all this within 3 blocks.

One utter monstrosity of an asian monster home has sat unloved for 6 months. Started at 2.4 then after about 4 months, I received a real-estate flier through the door claiming that at 2.2m this “just on the market” home wouldn’t last. I guess lying is OK in the used-house selling game.

It’s still sitting there another 3 months later.

#97 For those about to flop... on 01.20.15 at 11:21 pm

# 76 Freedom First.
People snipe at your comments because your last 40 comments have been like this.
2 paragraphs of horseshit in which the first you kiss Garth’s bum and in the second paragraph you say something sexist then kiss your own bum.
Challenge Garth’s thinking,challenge your own thinking.
If you have it all figured out WHY are you here

#98 OttawaMike on 01.20.15 at 11:26 pm

#21 Smoking Man on 01.20.15 at 7:45 pm
Clearly ISIS is there to remove Assad. A strategic alley of Russia. At same time, Ukrainians talking peace but firing artillery.

Russia as I speek are preparing for thermo nuke war. They clearly know who their enemy is. It’s tactics, it’s plays, it’s moves.
—————————————–
Unfortunately you are again not too far off . A recent conversation with a high ranking Cnd. Air Force officer also described geopolitical tensions are approaching Cold War days conditions.

Funny how a country with fully functioning power, water, sewers and fuel supplies is placed into ruins in the name of freedom. Nobody from the west had a problem with the Assads the previous 40 years.

Now to punish Russia and create a western gas pipeline route we are fully behind toppling the tyrannical Syrian regime and ended up fueling the Islamic state, ISIS monster.

#99 Gweillo on 01.20.15 at 11:33 pm

Vancouver is a nice town. Beautiful views of the mountains, a short hop to Whistler, people are nice a very Canadian trait, the air is clean etc. World city it is not, sorry to say. I doubt it ever will be. Now if you have money which you’ve made elsewhere at lower tax rates a house in West Van and a place in Whistler is hard to beat. Leaving aside those who have stolen the money to live in YVR, people with money tend to have money because they make more than they spend, don’t buy depreciating assets with credit or overpay for stuff.

So hoping that just because the Lonnie is off 20% and all the hot money will come to bail out the market dream again. The Euro and sterling too have depreciated vs the Usd. Out here in HK the talk is USA not Canada . Too expensive, now harder to get into and more paper work to fill in. As to the mainland, have a look what is happening in Macau.
On the housing issue you may be on your own. Houses are like stocks, when they are going up no one sees downside. Once expensive and the momentum is no longer up, people see only downside. What trades multiple standard deviations above the mean usually does not settle at the mean.
Vancouver will still be nice place, the air clean it is just that the price of the above will be lower.

#100 Kenchie on 01.20.15 at 11:38 pm

#77 Mike on 01.20.15 at 10:12 pm

“As for the Canadians from Cost-to coast that are flocking to TO, you gotta ask what drives them..”

Where are you getting your figures from?

In 2012, Ontario lost 17,561 to other provinces (i.e. Alberta). And has averaged a loss of 8,200 between 2010 and 2012. This trend probably continued until Q3/Q4 2014…

http://www.td.com/document/PDF/economics/special/jb0613_interprovincial_migration.pdf

#101 dreamin on 01.20.15 at 11:39 pm

>a diversified lifestyle/service economy with a median family income of 70k.

Well surely if you live here you realize you cannot buy a 800k house with that income. You need 3 incomes to do that, and previous property that you are upgrading from. Rental suite, foreign student, inlaws. This all at the lowest possible interest rates.

Vancouver people are seriously deluded, and its not caused by the foreigners. It is caused by people that look just like you and me. 15 years ago that same house was 250k. I remember often thinking, who would but that damp collapsing 60s run down mould farm for 250k. Time is a river and history repeats.

#102 45north on 01.20.15 at 11:43 pm

Vanecdotal : Problem is though, even if this proves to be true, the rest of YVR housing that IS directly tied to local incomes runs the risk of getting absolutely hammered in the event of even a modest price correction, due to the general over-reaching required to afford even a modest SFH just about anywhere in greater Van.

key word being hammered

deaner : Van real estate is stupid. We should have progressive property taxes on SFHs.

prediction for 2015: no real person will actually say this, I mean no credible person with something to lose will say this

Andrew Woburn: I know Zero-Hedge keeps saying stuff like this but unfortunately, this ain’t ZH. He also warned us about the GFC.

that is not really Tyler Durden

Calgary Retiree : Vancouver is a kind of a suburb of Hong Kong. Maybe a bit of a commute, but the real estate price structures of the twin cities are attached by the hip.

that’s a bit of a stretch

#103 Jimmy P on 01.20.15 at 11:43 pm

Garth: Of course one can have a successful balanced portfolio, delivering an average of 7% over the last decade – which contained far more trying times than these.
—————–
Interest rates have been falling for 10 years, which hardly are “trying times” for a fixed and common equity heavy portfolio Present a track record of how it performed in rising rates and I’ll pay attention . Remember, you’re the one writing articles that are predicting higher rates. Yes housing will get creamed, but historically so will a balanced portfolio.

That made no sense whatsoever. — Garth

#104 bdy sktrn on 01.20.15 at 11:44 pm

Van (city) Density 5,249/km2

HK density 6,544[5]/km2

—————————
maybe we are not that far off after all.

frankly, I’m shocked HK is not much higher as it is not full of SFH lots as is vancouver. maybe it’s mountains?

#105 Keith on 01.20.15 at 11:46 pm

#80

CMHC is one source, Vancouver’s renter’s union (and I appreciate they are biased) claims that 55% of Vancouver’s population rents. I would respectfully point out that CMHC and the census almost certainly underestimate the renting population in Vancouver due to the vastly higher prevalence of unregistered suites than other Canadian cities and homesharing arrangements that would likely escape official government statistics.

#106 Dd on 01.20.15 at 11:47 pm

Use the correct info.

@KeithMcCullough: Every business looks at growth in year-over-year terms – so does the USA, after all 4 quarters are reported http://t.co/VhNYP6QCRu

#107 Larry1 on 01.20.15 at 11:48 pm

So many RE crazy over “denseification” here in the 604. Everyone’s a developer all a sudden with. I can’t see it continuing for much longer but I’ve been wrong since 2000 on van RE

#108 Fed-up on 01.20.15 at 11:51 pm

#83 West Vanner on 01.20.15 at 10:33 pm

It’s not “those in YVR” that are special Garth, it’s YVR that’s special. Where else in Canada can you drive around all day today with the top down? :-)

—————————————————————————-

What kind of a deluded lunatic would drive around with the top down when it’s 6 or 7 degrees above freezing??? It was plus 10 here in Toronto just before the New Year and plus 13 on Christmas Eve. As moronic as Torontonians truly are, I saw no such psychotic behaviour. Almost the same as Calgarians who go jogging in shorts surrounded by 4 feet of snow because a chinook pulled them 4 degrees above zero for an afternoon after suffering a minus 30 deep freeze that went on for weeks.

Typical damp coast dreamer. This is why the rest world laughs at us and has the impression that we all live in igloos. In reality and sadly, million+$ s*^thole igloos.

Get a grip.

#109 Industrial Guy on 01.21.15 at 12:05 am

Bonjour Pierre Fortin
Prices will always be lower in Montreal. The Province of Quebec will always have political uncertainty and entrenched corruption as a constant anchor holding it back. The Cliche commission, the Malouf Inquiry, the Charbonneau Corruption Inquiry. Who would want to do business in such a screwed up place?

You’re one Provincial election from another Sovereignty Referendum. Once the Liberals bury themselves in corruption once again … and you know they will. It’s in their nature. They just can’t help themselves. We’ll all be thrown back into this game of brinksmanship with the Parti Quebecois.

Who wants to invest in a province that has the threat of separation every election? I wouldn’t. Would you?

Cheap electricity will only get you so far. Without a real third choice for voters to choose. You’re doomed to always be dragging behind the rest of Canada.

With its massive losses in oil/gas revenues, Ottawa will simply not be able to continue dumping $8.6 billion, in transfers into Quebec’s provincial coffers.

House prices in Montreal never zoomed to the insane heights of Toronto and Vancouver. They have less to fall ….. Maybe it worked in your favour this time.

#110 Paul on 01.21.15 at 12:09 am

107. Larry1
You have not been wrong on real estate you have been misled by cheap/free money everyone is approved with a heart beat, sometimes I think even without one.

#111 Abby on 01.21.15 at 12:11 am

Demographia ranks cities using a measure called the “median multiple”, which is calculated by dividing the median house price by the gross annual median household income.
————————-
Demographia uses total sales figures. But what is not included is the household incomes of any offshore purchasers. There’s no way to track those figures. In 2014, 842 homes over $3 million were sold in the area. 1/3 increase from a year earlier. Most in West Vancouver and Point Grey. It has been estimated that over 90% of these purchasers were made by non-Canadians or some sort of recent residents. Thousands more homes priced between $1 million – $3 million were also sold. This greatly skews the numbers.

If you need any more convincing as to Demographia’s legitimacy, just visit their website. It’s a cross between the Farmer’s Almanac and a cheap internet porno site.

#112 Fed-up on 01.21.15 at 12:15 am

#71 Joe2.0 on 01.20.15 at 10:05 pm

New immigrants aka new Canadians will continue to flock to Vancouver to pay those increasing house taxes.
The leaping loonie is also a great incentive to certain foreign investors.
Come on over to Vancouver we’ll take your money.
—————————————————————————

There’s some solid and sound long term thinking a la Canadiana.

#113 Dominoes Lining Up on 01.21.15 at 12:18 am

I had an unexpected and revealing conversation with some GTA friends today.

Met up with nine guys at a café, we go back to school days together.

All of them agreed, Toronto real estate is just about to burst, and everyone they know has way too much debt.

They live in Woodbridge, Vaughan, and off College Street and Corso Italia.

They all agreed, 416 real estate is officially toast this year and 905 is worse. They wouldn’t touch any of it.

and….

They are all Italians.

(The Supreme Court of RE has spoken, methinks.)

#114 Abby on 01.21.15 at 12:18 am

Demographia

http://www.demographia.com

#115 waiting on the west coast on 01.21.15 at 12:23 am

#104 bdy sktrn on 01.20.15 at 11:44 pm

“frankly, I’m shocked HK is not much higher as it is not full of SFH lots as is vancouver. maybe it’s mountains?”

It is the mountains and some of the islands that are not as populated that constrain it. If you took the same area (2800 square kms), we would be far less dense – both figuratively and literally! Sorry – had to do it ;-)

Downtown Vancouver has similar densities to Manhattan/Brooklyn. But the suburbs are far less dense especially as you head out to the Valley.

For whatever reasons – you cannot point to us “running out of land” as the reason for high prices… just chasing the dream!

#116 Kenchie on 01.21.15 at 12:25 am

#162 Mark on 01.20.15 at 11:15 am
““why is this even a discussion point, it could take years for rates to rise 2%.”

Or it could happen overnight. Especially as fear sets in, and bankers decide they simply don’t want to invest in mortgages in preference to investing in other things, including, but not limited to, share buybacks, etc.”
————————————-

Anecdotes for the blog dawgs: I had a meeting with a commercial real estate mortgage broker today who said that he’s never seen such different reactions from the banks for the same property (example given was long-leased suburban office building). He was saying some banks are being competitive and others aren’t interested at all, when previously every bank would respond with an offer. He also said lifecos are being more competitive than banks right now because they have more capital to place in CRE. He also said that some banks have floors on rates regardless of what the bond yields are doing, as are some select lifecos. But he expects more lenders to institute floors. In other words, they are likely to be more risk-averse in 2015 than previous years.

And he said CMHC is conservative on multi-family resi product. They use a much higher cap rate for Toronto prime MF resi, and that’s their floor for underwriting (i.e. they are willing to insure 70% of a conventional mortgage on the same property).

#117 Karma on 01.21.15 at 12:35 am

#175 kothar on 01.20.15 at 12:43 pm
“Who is attacking our dollar to make it so low? None of the bank forecasts showed the dollar going this low. They said our value ppp is 83 cents or so. Why are they allowed to attack us in this regard? How are supposed to travel and buy things now being more expensive. The BoC needs to stop this and revalue it higher!”

Nobody is “attacking” us. You are not supposed to live beyond your means, therefore if you can’t afford to “travel and buy things” at 83 cents, don’t do it.

If the BoC raises rates to counteract the falling loonie, then plenty of variable mortgages will have their effective amortization elongated to the detriment of the indebted populace. People with HELOCs and regular LOCs would have to pay more for the same amount of debt. It would suck disposable income out of the economy very quickly. It would likely lead to a (much needed?) recession.

Careful what you wish for…

#118 Keith on 01.21.15 at 12:38 am

#84

Your post points out that we are truly people of our background. Compared to Montreal, Vancouver traffic is awful and Vancouver drivers are absolute idiots. Fair comment. I take public transit as often as is practical, so the traffic is of little concern.

The grey rainy weather is characteristic of a coastal temperate rain forest climate, something I find beautiful since I grew up with it. I’m guessing that snow doesn’t bother you, but since I grew up in Victoria I would never live in most major Canadian cities for that reason alone.

I spend my money more on experiences than on stuff, so Vancouver prices don’t bother me. If I was a “stuff” person, I would live and work in the Fraser Valley, own a larger more luxurious house with home theatre etc. It’s the same tradeoff most people make. It’s a great lifestyle out there, just not for me.

I worked for a global company and was fully aware of the career opportunities that would accrue to me if I was willing to move anywhere in the world. Everyone in Vancouver is aware of the money in the oil patch, and some even make the commute. To each his or her own.

#86

I love Canada and the west coast of North America, and I am willing to pay the price necessary to live in Vancouver. Whether it’s the 2nd most desirable city in the world to live in is not something that keeps me up at night. A market theorist would point out that the judgement of the market price is that Vancouver is the second most desirable city in the world to live in. The market may be irrational in this case, but Keynes points out that the market can stay irrational longer than you can stay solvent.

#119 Smoking Man on 01.21.15 at 12:42 am

#98 OttawaMike on 01.20.15 at 11:26 pm

They say the cream rises to top. That’s wrong.

The badest of bad sit in the King’s chair.
It’s been that way since nectonites dropped you pathetic humans on this planet.

I should teach kindergarten…

#120 Republic_of_Western_Canada on 01.21.15 at 12:48 am

#84 Berniebee on 01.20.15 at 10:42 pm

#16 Keith

While Vancouver looked good from afar, I moved there from Montreal, lived in lotus land for five years and was very happy to leave.

What the pretty pictures don’t show is how bad the traffic is. It’s difficult to convey how it feels to cope with constant rain and endless bleary grey skies for weeks, if not months at a stretch. I was shocked at the high prices, not just for real estate, but for everything else as well. In retrospect, high food and dry goods costs should not have been a surprise, considering that every merchant faces the same real estate costs.
The horrid drugged out whore spectacle that is East Hastings street still gives me the chills.

I found that many Vancouver residents thought nothing of spending their prime earning years living in basement apartments or tiny condos. Or living with a 90 minute commute to the Fraser valley.

People pay a huge financial penalty and severely limit their career options to live in Vancouver. But I believe that many people born in Vancouver just don’t realize how great that cost is.

Yup.

There was a time once, in the 1960’s, when Vancouver was truly a magical place. But then, so was California. Not so much anymore.

Although the Sat night cat-fights outside North Van bars are somewhat entertaining, the downsides of living in the Lower Mainland are significant. Mostly caused by too many people living in one hemmed-in place, with too much pressure and expectation to ‘enjoy the good life’, and little remaining cultural support for a stable and progressive white society.

It’s a life masquerading as normal which is unaffordable for most. Hence, massive debt financing or Money From Elsewhere.

Thing is, for the kind of money (locally made or imported) that it takes to insulate yourself from the problems and negatives now a’la NYC, you can live in far nicer places. Such as having a small chateau in France, a house in Laguna Niguel, and a handful of favorite hotels from Berlin or Stockholm to Singapore to Buenos Aires to Capetown Seth Efrica in which to chill and plan your investments.

For the medium-rich, during the cold-war years, Vancouver was still loosely populated and unknown enough that you could build a very nice house up in the Properties overlooking the sunsets beyond Spanish Banks. Live there for a spell during the summer and lounge with your tennis buddies down in Dundarave restaurants after a day in Hollyburn. You’d always be doing the brakes of the ‘vette, but never have riff-raff coming across the bridge to hike all the way up just to cause problems.

Too troublesome and expensive to set up roots there now. Besides the mudslides into the Cleveland reservoir dumping mud into everyone’s water supply, whatever is in there covers everything with some blue gunk. The raw human congestion from overpopulation is staggering, antisocial aggression is commonplace, and social venues resemble a cross between Blade Runner and a chinese factory at shift-change.

#121 Tony on 01.21.15 at 12:50 am

Re: #15 Ben Bergstrom on 01.20.15 at 7:16 pm

Oil won’t recover at all until after the U.S. election.

#122 Andrew Woburn on 01.21.15 at 12:51 am

#88 Washed Up Lawyer on 01.20.15 at 10:52 pm
Garth, Mark, Andrew Woburn, Smoking Man, Beach Girl:

A question. Did protectionism ever actually disappear under free trade agreements?
==============================

No. The protectionists just switch to other issues such as health and safety. I have seen safety specs written in such a narrow way by domestic industry associations that foreign suppliers cannot meet them. If you don’t want immigrant doctors to compete with you, you tut-tut about medical risk and make them retake the education they already have.

I am convinced that if the US government suddenly wanted to curb Chinese imports, they would discover a “carbon footprint” safety measure that would disqualify them.

#123 José on 01.21.15 at 12:55 am

#7 S. Bby

“In my ‘hood South Burnaby (Metrotown area) property is crazy hot. Any original ’50s bung that comes on the market is bought by developers/speculators with the intent to build a McMansion which will then be marketed to the Asian demographic (wok kitchens etc.) . Property speculatiSon is rampant here. Ironically the new builds seem slow to sell while the old dumps sell right away to the builders. But my elderly neighbours continue to hold out and not sell their ever deteriorating houses.”

——————————————–

How much are these older bung/dumps selling for? How big are the lots?

#124 Republic_of_Western_Canada on 01.21.15 at 1:00 am

#85 not 1st on 01.20.15 at 10:46 pm

Garth, my friend in cowtown oil patch, (who happens to be sitting on one clenched butt cheek in his office hoping to survive) informs me that there is so much money floating around calgary that nobody cares what the price of oil does or if the housing market falls.

That’s authoritative. We can stop worrying now. — Garth

He’s not far off the mark. A swath of the working population has accumulated a significant amount of coin there over the last half-dozen years.

I doubt most have been smart enough to properly invest it though. Or have seen previous booms and learnt that a good run always screeches to a halt for a couple of years.

#125 NotAGreaterFool on 01.21.15 at 1:09 am

I am only interested in fortress Toronto.

Any realtors here who can share anecdotal evidence of sales for SFH in the 416? What will month end TREB report?

#126 Ex-Cowtown on 01.21.15 at 1:10 am

#85 not 1st on 01.20.15 at 10:46 pm

Garth, my friend in cowtown oil patch, (who happens to be sitting on one clenched butt cheek in his office hoping to survive) informs me that there is so much money floating around calgary that nobody cares what the price of oil does or if the housing market falls.
++++++++++++++++++++++++++++++++++++

Hilarious comment. Obviously made by someone who is totally disconnected from reality and who has never even worked at a Dairy Queen. Barack is that you out there???? Or is it Justin (Trudeau, not Bieber)????

#127 Mr Stats on 01.21.15 at 1:16 am

People of Chinese and South Asian origin make up 33% of Vancouver, and 26% of Toronto. No, it’s not that simple. — Garth

2011 Census

Vancouver Pop 590,000 (46% Asian, S Asian, and SE Asian)
Richmond 65%
Burnaby 58%
Coquitlam 33%
Surrey 48%

That was 4 years ago. I’m sorry but all these numbers will be above 66% in 20 years. I’m one of the 66%.

Place of origin and ethic heritage are not the same. This is like calling a black guy in Toronto whose grandfather was born in Detroit an ‘African.’ He is no more than than a woman whose father was raised in Burnaby is an ‘Asian.’ What a silly, divisive discussion. — Garth

#128 Republic_of_Western_Canada on 01.21.15 at 1:16 am

#108 Fed-up on 01.20.15 at 11:51 pm
[…]Calgarians who go jogging in shorts surrounded by 4 feet of snow because a chinook pulled them 4 degrees above zero for an afternoon after suffering a minus 30 deep freeze that went on for weeks.

You say that like it’s a bad thing.

Haven’t you been to basement beach parties c/w pith helmets, bikinis, and hawaiian shirts during a month of ongoing -40 weather? A few yards of sand trucked in to cover the garage floor just adds to the atmosphere. And some of the best weekend club/bar parties, full to bursting, used to happen in the coldest weather in February. Hotter than August inside – the a/c couldn’t keep up.

Time was, some of the best rock bands came from Winnipeg of all places. Of course – what else are you going to do there indoors after work, no internet, snowed in for weeks at a stretch?

#129 Happy Renting on 01.21.15 at 1:19 am

#74 Ralph Cramdown on 01.20.15 at 10:08 pm

Glad to see you back in the comments section, RC. Have missed your contributions.

Now we just need to get Cat Food Lady back!

#130 cowtown cowboy on 01.21.15 at 1:22 am

#59 Washed Up Lawyer on 01.20.15 at 9:17 pm

#28 Not 1st

“umm, Garth, that house has no garage.”
***********************************

Double detached behind the house. You can see the wall of the garage in the photo of the patio ensemble. And street parking. In that hood, street parking would be available in the evening when you return from scratching in the dirt to earn your living downtown.

Shaganappi is a nice, safe, older centrally located neighbourhood. My personal best ever was at the Shag golf course.

The 5.5 minute commute to downtown is a bit overstated. Yes, it can be done in off peak hours but should probably expect 10 – 15 in rush hour down Bow Trail to 9th Avenue. The house can be had in 12 to 15 months for $800K. No rush. Lots like them.

The rout in oil prices will be felt beyond Ab., Sask, Nfld & Labradoodle (Garth loves dogs). Yes the effect will be muted but the personal financial hit in Calgary, Edmonton, Wabasca etc. will show up in real estate in the Okanagan, the Shuswap, Predator Ridge, Crown Royal (Comox), Fernie, Van Isle etc. as Albertans unload their BC properties.
+++++++++++++++++++++++++++++++++++++

Want to bet that place never sees $800k? It is at most 5min from downtown, you could probably walk there in 10. A little under 4000 sf within shouting distance of the core, yeah it’ll be 250k in 6 months…jezus there are a retards on this site

#131 cowtown cowboy on 01.21.15 at 1:23 am

‘lot of retards…’

#132 rentin on 01.21.15 at 1:32 am

I was born and raised in Vancouver. HAM has definitely driven up the price, but didn’t do it alone. If Garth’s stats are right and Asians make up 33% of Vancouver’s population, that wouldn’t be enough HAM.

What it takes is another 40-50% of lemmings to follow these HAM leaders to substantiate the rising prices and continue the cycle.

To say HAM hasn’t played a role is not correct. To blame it all on HAM is also incorrect.

Personal example:

HAM moved in next door. Bought the 1 acre place for 1.4M cash and is looking to sell to a developer for 2M. Says he was offered 1.8M already by way of scribbling and gesturing. Drives a range rover, doesn’t speak a stitch of english and flies back and forth to China every week. HAM or DAM? Only time will tell.

#133 Vanecdotal on 01.21.15 at 1:50 am

#25 valleyrenter

That is interesting. I see some of those have finally slipped under $700k, yet are still unloved. That probably took at least 2 years of no action to reduce even this far? Good grief. Corroborates what I have been observing for several years now in the (still waaaay overpriced but steadily drifting down) new-build OSBeautiful SFH’s as well as “entry-level” starter home type condos / townhomes in the Cloverdale, S. Surrey near White Rock, and Langley City /nearby township areas also.

I wonder if that is direct Realtroll™ obfuscation? Or is the financing repeatedly falling through? Either way, very interesting. If it’s the former, where is the regulatory oversight? If these were financial vehicles that would likely constitute fraud, but It’s Just Housing People, nothing to see here…

Incidentally in the immediate ‘hood, a house SOLD last spring, only to be listed again a just a few months later. Never lived in, no activity since original occupiers left. No work done for a flip, so rather weird. I am thinking may be a failed flip, but in this case wondering if maybe the financing got yanked before work even started. It took @ 2 years to sell the first time, back on market slightly higher than last ask price… and there it sits months later, all fall and winter.

The amount of (flipper/spec) overbuilding across all housing categories out here is absolutely unprecedented and utterly staggering. It is pretty apparent supply has been out stripping demand for more than a few years now at every price point. Yet assessments (and property taxes) are “up” again… *mmmm Kool-aid gooood*… what a ponzi scheme this is, with local govn’t passed out in the punch bowl.

1000’s more condo / townhomes are already in the pipe due to complete by, I believe @ 2017 – 2018…. and thanks to the Surrey City Development Corp. local taxpayers are actually bankrolling a large percentage of this runaway spec development (both commercial and residential), the very same that can no longer find many greater fools even today.

It’s great to hear other YVR’rs corroborating personal observations to get a more accurate sense of what is really happening in different local markets. Sort of a jury-rigged, rag-tag underground Zillow-esque network of observations, but better than the MSM any day.

#134 Mark on 01.21.15 at 2:03 am

“Well surely if you live here you realize you cannot buy a 800k house with that income.”

Of course, but a $70k income easily supports a family “moving up” from an existing home with a large amount of equity, to something newer/bigger. Which is what has been happening in Vancouver. Subprime credit, with the CMHC guarantee, supports the low end — this is where you find most of the new immigrant activity.

I know big headlines are made when the occasional person brings money to Vancouver, but for the most part, housing prices in Vancouver are levitated with large amounts of credit and people foolishly burning their equity and leveraging into even deeper debt just to secure a higher place on the proverbial “housing ladder”. Of course, it won’t end well.

#135 Vanecdotal on 01.21.15 at 2:16 am

#19 4 AM Sunrise

True, even Boomers who hold on to their (paid off long ago) family homes for a while longer will have experienced substantial price appreciation, even if selling into a downturn, a profit is still likely, as even “lot value” would likely be $100’s of thousands over what they paid for it way back when. I empathize with the heartbreaking razing of perfectly kept old homes and landscaping, happening out here as well, as well as 100’s (1000’s?) of acres of 2nd growth forest and beautiful acreages being razed in the name of (non-existent presently) “demand”. It really is sad. The next generation growing up here is in for a tough ride.

#45 james

Bang on. Well put.

#84 Berniebee

Excellent points. So true.

#96 Ulsterman

Also very interesting. Anecdotally, so far we have dawgs from 3 different, and previously HAM Hot Pockets noticing that flippers are still tripping over themselves buying up the older homes, but those shiny new multi-$million dollar monstrosities that take their place aren’t moving very fast, or recently, at all. Coincidence?

#97 For those about to flop…

:))

This is great info for any potential buyers out there. Thanks all for sharing observations.

(FALLING KNIVES abound). Buyer beware.

#136 Mark on 01.21.15 at 2:19 am

“Remember, you’re the one writing articles that are predicting higher rates. Yes housing will get creamed, but historically so will a balanced portfolio.”

Are you kidding? The TSX tripled in the 1990s when housing remained, decade over decade, at best, flat. There is a long and rich history of Canadian RE being inversely correlated to Canadian equities.

#137 NEVER GIVE UP on 01.21.15 at 2:38 am

#16 Keith on 01.20.15 at 7:21 pm

I decided in 1984 to settle in Vancouver. It was time to raise a family. I had one specific criteria. I wanted to raise them in a city that they would not leave. What does it profit you if you raise kids @ $250k each to age 18 and then they leave you to Toronto or Calgary so they can cash in an extra 30 or 40k a year for themselves?

What happens after 5 or 10 years and they are settled in the new city? They never come back to visit. Not even Christmas.

It fractures the family during intangible unforeseen circumstances like funerals, sickness and car accidents. They just are not there for the family. They likely will not even be there for your passing.

So far none of my 7 kids are leaving Lotusland. They have been around traveling and always come back with a new found love of this place.

They are all waiting for the crash to happen before buying. There will be one and it will be severe. There have been many before here and even the Chinese are getting cold feet as of late.

Meanwhile one of my sons wisely refused a job in Cowtown for 150k. He knew he would hate it there. He will stay here renting and saving diligently for his place in Lotusland.

My plan may be actually working to my pleasant surprise!

#138 screwed on 01.21.15 at 2:55 am

@ #103 – I got what you were trying to say.

Maintaining a “balanced portfolio” with an average return of 7% is not easy. Since QE started, the wisdom of the past is out the window. Everyone made good returns in the markets as long as the Fed was intervening and giving nearly free loans to the banks which either bought stocks or gave corporations cheap loans which in turn also bought stocks. That’s what drove equities for the most part since 2009.

QE ended and equities are out there fending for themselves. Have been for a while already. Good luck trying to maintain that 7% average “balanced portfolio”.

The daily gyrations of the markets are not for the faint of heart. HFT has distorted the opportunities to make money on a daily basis.

If ECB starts QE this week, the DAX will outperform the DJI and other markets but measured in USD, the advance of EUR denominated equities will be meaningless.

#139 Mark on 01.21.15 at 3:19 am

, but how does one explain all those shiny new towers in the 416, with 3 out of 4 units with the lights off

A drive around my block, in semi-rural western Canada, has roughly the same ratio of lights to no lights. And I know for a fact that nearly all the houses, save for a couple that have been up for sale, are occupied.

Condos, same deal. Lots of people watch TV in the dark or in bedrooms that aren’t directly exposed to the outside. Or just don’t keep the lights on bright (ie: just keep the kitchen minimally/dimly lit). I believe BC Hydro stats could only justify, amongst the Vancouver glass condos, far less than 10% having electricity consumption that was beneath the threshold of being ‘occupied’.

Trust me, modern hipsters do not like to have the sort of full-blown lighting enjoyed by “grandpa”.

#140 Irish Stew on 01.21.15 at 4:44 am

Any thoughts on real estate in SW Ontario? (Between London & Windsor)?

The housing pricing is already low and in some cases, rentals can equal all an owners operating costs.

#141 Hicksville Alberta on 01.21.15 at 4:57 am

#91 Mr Stats

Totally agree. A reasonable gauge of change in Vancouver demographics can be seen just by looking back on the past twenty years changes.
I see nothing wrong with that if it happens. It’s all part of devolution and natural Just think if B.C. hadn’t had the kind of quality immigration it has so far received, it probably would still be a much simpler place with the traditional shallow culture that it previously had.
From what i read “They” are projecting something like 10 billion people on this planet by 2040 or so and if that is the case your view has to be more or less correct, perhaps even quite understated.
I would also expect the population to materially expand beyond the lower mainland to places like Nanaimo and areas around there.
Good post.

#142 Shane on 01.21.15 at 5:44 am

Looks like we were wrong. BMO says expect 80 cent dollar. People here are saying immigration will go up.

I don’t think there will be a correction anymore.

Shane.

Immigration will remain at .8% of the population. — Garth

#143 maxx on 01.21.15 at 7:16 am

Good grief, have Canadians ever been taken for a ride…..

#144 ole Doberman on 01.21.15 at 7:54 am

Gartho what are your thoughts on this, legendary business man and Shark Tank extrodanaire feels that Calgary RE will grow, but modestly over next few years, here have a read:

http://www.jimsparrow.com/blog/kevin-oleary-on-calgary-real-estate.html

Mr O’leary is a very respected man.

By whom? — Garth

#145 ANON on 01.21.15 at 8:11 am

@ #66 Andrew Woburn on 01.20.15 at 9:42 pm

He probably has a fair idea where this is going to end, however he cannot publicly voice that idea.
Not sure if he can still climb down the stairs of his ivory tower to look at what is exactly wrong with the foundations. Admitting that you cannot get paid back more than you emit is not exactly easy when it comes to money. Sure, as an abstract on paper anyone will admit it is an impossibility. In the real world, however, when it comes to money, it is very … let’s say…emotional.

#146 JWD on 01.21.15 at 8:26 am

Born and raised in Van and last lived there in 2003 as the explosion in RE prices was just getting started. So why this continuous increase in RE prices for more than the last decade? In 2003 friends were buying older bungs on the west side for about 500-600k. We bought a nice new condo for about 220k. Do people make 4 times as much as they did in 2003? I don’t think so….

Is this somehow a completely different city than 2003? Looks about the same to me. Is this somehow a new found world playground? Busy tourism sector in the summer and some nice new waterfront developments but PLEASE. High paying jobs? Ah no. Dreary rain and constant traffic? Yes. Hey, I still love my home city, but lets me serious here. The numbers are so crazy now it’s completely gone mad. HAM without any shadow of a doubt is a major factor. Those that live there see it first hand. Especially prevalent in certain neighborhoods -all of the Westside, Richmond and the North shore. So a standard house in the middle of crappy Richmond is worth 1.2M? Ya right. Who knows what’s going to happen, but when it starts to fall – look out below. I still see a 600k fixer upper on the west side.

#147 duncan on 01.21.15 at 8:30 am

alberta was dumb to remove their Medicare premiums years ago. They should have brought in a pst back then around 2000. Missed opportunity.

#148 4 AM Sunrise on 01.21.15 at 9:37 am

For the first time ever, one of the grand prizes in the BC Chidlren’s Hospital Home Lottery is not one, not two, but THREE condos. Developers desperate to give away stock that might not sell?

http://bcchildren.com/wealth-for-life/

#149 fancy_pants on 01.21.15 at 9:47 am

pic should read savers to the left b/c the debtors (including gov’t) are always right.

http://business.financialpost.com/2015/01/21/bank-of-canada-expected-to-slash-outlook-most-since-2008-as-oil-rout-plunges-economy-into-another-era/

so a potential interest rate decrease? seriously? drop rates and they lose my vote.

I’m done with this. House shopping for an upgrade has moved back to #1 priority on our list. I’m not in one of the delusional RE locations and we can afford even a 5% rate increase if it comes to that. If I had upgraded back in ’09 I would be worth another $200k now. Too bad I forgot that the govt acts back asswards.

So with a rate decrease expect further tanking of the $ and expect more QE coming down the pipes. Savers are tossed to the dogs. Perhaps excluding Hongcouver, Cowtown/Alberta, godless Toronto and perhaps a few other markets, for everyone else, pour another round if they drop rates. The party rages on.

#150 BlackDog on 01.21.15 at 9:54 am

I’m curious what others think about this article written by Mark Nestmann who says:

“In case you missed the announcement, Cyprus-style bail-ins are coming to a bank near you. On November 16, leaders of the G20 Group of Nations – the 20 largest economies – made an important decision. The world’s megabanks now have official permission to pledge depositor accounts as collateral to make leveraged derivative bets. And if they lose a bet, the counterparty to the contract has first dibs on your money.”

The entire article can be read here: http://www.nestmann.com/its-official-the-worldwide-bail-ins-are-coming#.VL-t5UfF964

Stop with the conspiracy junk. There is no legislated bail-in provision in Canada or the US designating retail deposits as bank collateral, nor putting them at counterparty risk. This is false. Mark Nestmann is now, and always has been, a dingaling. — Garth

#151 TurnerNation on 01.21.15 at 9:56 am

# of comments spiking around market inflection points as always.

In these lean times a home’s proximity to Dollarama should rank in its official assesment valuation.

#152 BlackDog on 01.21.15 at 9:58 am

@ForThoseAboutToFlop, re: #97

Exactly!

#153 Hoser on 01.21.15 at 10:13 am

>>This house can be yours for under 70K. People in Vancouver should sell their homes and move to Detroit.
—————————————————————

“This listing is not shown on the map at the data provider’s request.”

Why would the listing not want you to see it on a map? Google Streetview will tell you why.
It’s surrounded by abandoned and burned out properties.

#154 Toronto_CA on 01.21.15 at 10:31 am

Garth – can we assume there will be no talk of a rate increase in the language today?

There wasn’t last time, either. All will change after the Fed moves, as I have said often. — Garth

#155 RENTER4LIFE on 01.21.15 at 10:33 am

Rent vs Buy? The Truth!

1. It costs less. It costs as much as 50% less than owning. Everything is altogether, no separate bills for utilities, taxes, etc.
2. The landlord will need to fix anything that breaks down.
3. Clean or do yard work if you feel like it.
4. No need to renovate. Don’t like the style of where you live, move somewhere else.
5. Commute. Move close to your work. Changing homes is as easy as 30 days notice and finding a different property. Always have a 10 minute commute.
6. Need to change cities for work? No problem. You can be out in as little as 30 days, and be somewhere completely new.
7. Want to spend a year travelling? If you own a house, you still have to pay. If you rent? no problem. cancel your lease and find something else when you get back.
8. Missed a payment? The landlord isn’t going to throw you out overnight. You have time to make it up or move somewhere else.
9. Having a baby? Need some place for parents? No problem. You can move to a bigger house within a few days. Avoid the Land transfer tax, realtor fees, lawyer, etc. save thousands!
10. Want to quit your job? No problem. Don’t need to worry about foreclosure.
11. What do I do with all this extra money that I have when I rent? No problem. Learn how to invest PROPERLY.
12. Hate your neighbors? No problem. Move in as little as 30 days.
13. Bank won’t approve your mortgage? No problem. renters have no problem getting the house compared to getting approved for a mortgage.
14. Once a house is paid off, no more payments. BS! You still have property tax, utilities, condo fees, maintenance, etc.
15. My house is paid off. I don’t have any more mortgage payments. WRONG. 500K invested in Bank stock pays 5% divided. that is 25K/year or 2100/month. You can rent a much nicer place for that amount than what you own where ever you want.
16. Landlords are annoying. WRONG. Landlords are much better than bankers if you miss a payment. At least landlords are people too.

I could go on.

#156 BlackDog on 01.21.15 at 10:42 am

@Garth re:#149,

I never said I bought what Mark Nestman wrote in that article, nor do I know much about the man. I was looking to see what other people thought. Thanks for your opinion.

#157 Kenchie on 01.21.15 at 10:51 am

To all those who think Vancouver’s saving grace is it’s diverse economy, please consider that Hamilton has a more diverse economy then Vancouver (according to the Conference Board of Canada), and that hasn’t helped them much…

Hamilton: 0.94
Vancouver: 0.92
Winnipeg: 0.92
Saskatoon: 0.92
Montreal: 0.91
Edmonton: 0.89
Toronto: 0.89
Halifax: 0.89
Regina: 0.82
Calgary: 0.76
Victoria: 0.72
Quebec City: 0.69
Ottawa: 0.37

Source: Conference Board of Canada – Economic structure (Highest = 1, Lowest = 0)

#158 cramar on 01.21.15 at 11:02 am

2 Cassie McPhee on 01.20.15 at 5:59 pm
http://www.realtor.com/realestateandhomes-detail/276-Montana_Detroit_MI_48203_M38991-40528?row=1931

This house can be yours for under 70K. People in Vancouver should sell their homes and move to Detroit.

——————

Detroit and Van are on different planets. You can buy houses at auction for $1000. But you must bring them up to code within 6 months (not a lot of time). Some of these houses look like ones in Van or TO, except there is more room between the house and neighbours in Detroit than in TO.

http://auctions.buildingdetroit.org/home

I like this one that just sold for $5,400. Pocket change compared to Canada.

http://auctions.buildingdetroit.org/Listing/Details/1107163/16739-Greydale

#159 Smoking Man on 01.21.15 at 11:05 am

NOT ONLY MY CALL OUT OF THE PARK.. OUT OF COUNYRY

YOU DOGS READY.

0. 25 Cut. In over night rate..

Never bet against the Smoking Man

As I wait applause..

#160 TurnerNation on 01.21.15 at 11:05 am

OMG BOC

#161 bdy sktrn on 01.21.15 at 11:06 am

boc lowers!!!!
.25 DOWN

Well, it’s a move I did not expect. Nor did any economist I hang with. Hang on. — Garth

#162 Rate Cut on 01.21.15 at 11:09 am

http://www.cbc.ca/news/business

#163 Daisy Mae on 01.21.15 at 11:09 am

News Alert
Bank of Canada lowers overnight lending rate to 0.75%

This breaking story will appear soon at http://www.cbcnews.ca

#164 not 1st on 01.21.15 at 11:13 am

Garth, your call on everything needs to be adjusted now. Canada lowers by .25 and US raises by probably the same in the summer, every thing stays the same including housing and the bubble continues.

As I have said before, our govt will do WHATEVER it takes to keep the party rolling.

#165 bdy sktrn on 01.21.15 at 11:14 am

the fact that the us 30yr bond has made the lowest rates OF ALL TIME last week may have been a hint

#166 The R on 01.21.15 at 11:18 am

pop the champagne …heee – haa

polok for president !!!!

#167 Mark on 01.21.15 at 11:19 am

“every thing stays the same including housing and the bubble continues.”

Hardly, the rate cut (which I have been predicting for years) is an indication that things are not going well. I agreed with Garth — the BoC needing to cut rates isn’t exactly something we should take as a good thing, even though I argued that the economy was in poor enough shape that it would be necessary.

The BoC’s comments were mostly pertaining to the drop in oil, not even really taking into account the slow-motion melt in the housing market. So very likely a round of future cuts will be needed as the housing market continues to snowball downwards.

#168 bdy sktrn on 01.21.15 at 11:19 am

.813 cdn/usd – dollar goes into freefall in wake of boc cut

#169 Sheane Wallace on 01.21.15 at 11:20 am

Loonie ‘gaining’ today, 2.2 % down agains euro this morning.

Mark, comments?

#170 Sheane Wallace on 01.21.15 at 11:22 am

BOC cuts interest rates, good I moved away from CA dollar on time.

Garth, comments?

#171 Daisy Mae on 01.21.15 at 11:22 am

CBC News Alert

News Alert
Loonie plunges almost a full cent after BoC announces rate cut

#172 SHOCK AND AWE on 01.21.15 at 11:24 am

BOC DROPS RATES. WHAT’S NEXT?
40Y AMORTIZATIONS AND ZERO DOWN PAYMENT?

#173 Nerf Herder on 01.21.15 at 11:25 am

Going against the herd only works if policy is actually on your side.

Policy is not always what’s “right,” but more about ensuring the greater good is looked after – ie. that voters are employed, happy and not bankrupt.

#174 Incubus on 01.21.15 at 11:26 am

“Bank of Canada lowers overnight lending rate to 0.75%”

They should cut more like the Swiss.

The dollar will go down, that will mitigate the oil war done by the Saudis obeying to the american orders.

#175 AisA on 01.21.15 at 11:27 am

Our dollar lost 3 cents of value in 15 minutes. Ouch.

#176 GBayBoater on 01.21.15 at 11:31 am

Cici

Rate cut or rate hike…guess we’ll find out tomorrow!

No change tomorrow. — Garth

Ooops. Down to .75 per cent.

Savers get screwed again. I wonder if this will be taken as a signal to the indebted to double down?

#177 Mark on 01.21.15 at 11:33 am

“Loonie ‘gaining’ today, 2.2 % down agains euro this morning.
Mark, comments?

An over-reaction by the leveraged shorts. At these prices, only dummies would be trying to sell CAD$ and CAD$ assets short.

#178 Harbour on 01.21.15 at 11:35 am

The banks love the rate cut, they’re all green

Lend more money… lol

#179 bdy sktrn on 01.21.15 at 11:38 am

BOC growth forecast slashed ;

“The central bank also reduced its growth forecast for the first half of this year to a 1.5% annualized pace, from an October estimate of 2.4%. Inflation will slow to 0.3% in the second quarter, outside the central bank’s target range of 1% to 3%, the bank projected.

#180 IM in C on 01.21.15 at 11:39 am

Garth.
Like I told you the other day. To allow interest rates to rise will trash the real estate sector. And the government that allows that to happen will be punted in the next election. So ..the other alternative is to keep rates low by letting the dollar slide. Get ready for the 62 cent dollar !!

#181 fancy_pants on 01.21.15 at 11:39 am

yep, back asswards.

Time to pack it up. 5 years and counting… will be another 5, 10, 20? It offers potential to make today’s RE prices appear like bargains.

QE is the new economic norm globally. Devaluation, it’s is a race to the bottom so spend your $ now before the gov’t finds a way to steal it away one way or another. Are you socking $ into an RRSP? Chances are you will lose in the long run with much higher tax rates coming out coupled with longer term insane inflation via QE.

Those on the sidelines the last 5 years, sorry, the Canadian ship named “affordable RE” has long sailed away. One called “bubbly?” is docked. It may or may not offer a good ride as it is heading to uncharted seas.

Everyone grab a lifejacket, doesn’t matter if you’re on the boat. Just ask Noah.

#182 Kenchie on 01.21.15 at 11:40 am

Garth,

Time to admit that you didn’t expect this… Morgan Stanley got it partially right, with their 1/3rd probability of this happening…

Read my post. — Garth

#183 Blacksheep on 01.21.15 at 11:41 am

Not # 163,

“every thing stays the same including housing and the bubble continues.”
———————————————-
That’s the thing we Canadian’s gotta get our heads around.

The bubble is NOT continuing, it is DEFLATING, quickly, as I type. Kitco’s got the CAN $ down 1.5 %.

We ALL just lot 1.5 % of our real world value.

But that’s OK, better a temporary currency adjustment than a housing crash.

#184 Incubus on 01.21.15 at 11:41 am

“Almost no credible Canadian economists saw this coming. Nor did I. The cut not only wounds the currency and risks further inflating our credit and housing bubbles, but it sends a strong message that our economy’s faltering.”

If the canadian dollar drops to 50 USD, then the canadian oil brings in the same money as 100$ USD oil when the canadian dollar is at par.

Our oil industries won’t collapse or be bought cheap by foreigners

#185 HD on 01.21.15 at 11:42 am

@ Mark

Well, I got to give credit when it’s due…

Good call on that one Mark.

Best,

HD

#186 Serene on 01.21.15 at 11:43 am

Stupid question prob. But I’m new at this. Will this rate cut have any bearing on the 5 year fixed rate?
Up for renewal soon and was hoping to lock in at this rate?

Unlikely. VRMs are affected. — Garth

#187 Mark on 01.21.15 at 11:43 am

Any “Prime” adjustments from the chartered banks yet? Anyone?

#188 BlackDog on 01.21.15 at 11:43 am

@Renter4Life #154,
Don’t get me wrong, I rent also, but some of your points are not quite right.

Regarding your points:
#1. Everything is not necessarily “all together”. Most of us still pay our own: water, heating (gas, propane, or whatever), hydro, insurance, etc.
#2. True, but some landlords are not so great when it comes to fixing things. My landlord is totally inept, and we usually end of fixing things ourselves and sending him the bill. At least he pays it – sometimes – another story.
#3. If we don’t cut the grass, the landlord sure won’t.
#5. Changing homes is a pain in the butt, and expensive (have you checked out the price to move the average sized home?).
#6 (and #5). I’m not sure where you think you can be “out in 30 days.” Last I heard it takes 60 days notice to get out of the typical lease.
#7. So, what will you do with all your ‘stuff’? What a hassle and expense to move it out into storage, then move it back into a new place. I guess this would not be so bad if you are single and don’t have a lot to store.
#8. Landlords want their money too. Don’t kid yourself that they won’t do what they have to do to get it as soon as possible. And the bank has to go through proper channels as well; it will take more than one month’s missed mortgage payment for you to find the locks changed on your home.
#9. How do you find a new home for your expanding family in just “a few days”?
#10 So, let’s get this straight. You think it is OK to quit your job if you rent, but not if you own because your landlord will not kick you out, but the bank will. Yeah, right.
#11 One does not necessarily have more money to burn when one rents. It really depends on your particular situation, where you live, etc, as people rent for all sorts of reasons, for example, to be mobile.
#12 There you go with that “move in 30 days” comment again. Good luck with that.
#13 I had to jump through hoops to be “approved” by my landlord. He checked references, required credit reports from myself and my spouse, and ALMOST refused us because we had a dog. In fact, MOST landlords did not even want to speak to us when they found out we had a dog (yeah I know you can sneak one in and they can’t actually DO anything, but that’s not nice).
#14 Most of those payments (minus the property taxes) don’t ever go away when you rent either.
#15. Not necessarily, it depends on the particular housing market.
#16 Like you said more than once, landlords are people. However, some people are honest, and conscientious while others are not. And they all seem nice when showing the rental unit. The truth comes out after the lease has been signed, and you have an issue with the house. The landlord I have now, I do not trust. He insisted that the house had a working smoke detector, but it did not (it was a natural gas detector). It was like pulling teeth to convince him to install one, and he only got moving when I pointed out that it was illegal not to.

#189 aaron on 01.21.15 at 11:45 am

Amazing. My Toronto house just went up 100K just like that.

#190 Grantmi on 01.21.15 at 11:50 am

158 Smoking Man on 01.21.15 at 11:05 am

NOT ONLY MY CALL OUT OF THE PARK.. OUT OF COUNYRY

YOU DOGS READY.

0. 25 Cut. In over night rate..

Never bet against the Smoking Man

As I wait applause..

Ok.. here’s your applause!!

http://bit.ly/1yLiFDM

#191 Smoking Man on 01.21.15 at 11:50 am

From just yesterday….

#155 Smoking Man on 01.20.15 at 9:56 am
CAN Manufacturing Sales down 1.4% survey said – 0.7%

Oh to be a fly on the wall at BOC, wonder what our export centric Governor is thinking, looking at this disappointing number, while reading the IMF wants all countries to be more accommodating and stimulating..

Should be an interesting day at 10am tomorrow.

…………
#152 Nottarealtor on 01.20.15 at 9:27 am

I sympathize with your frustration and hostilities, can’t be easy in that basement.

#192 Gregor Samsa on 01.21.15 at 11:54 am

I hate to say “I told you so,” but I saw this rate cut coming months ago.

I think the level of influence that the Harper government has over its hand picked appointees at the Bank of Canada is more than most people acknowledge. Harper will not allow the housing market to falter during an election year.

Yes, this policy is short sighted, dangerous, and in the end will not work. But it buys Harper a bit of time, and that’s what really matters.

#193 Sheane Wallace on 01.21.15 at 11:54 am

Mark, you are delusional.

BOC expects inflation of 0.3 %, do we live on the same planet?

Dollar just dove 15-20 in few months.
It is currency crash that is coming, I was expecting 60 something handle, now it could be 50 something.

Cheers savers and people on fixed income.

#194 Harbour on 01.21.15 at 11:54 am

My U.S. stock trading account has almost 20% profit if I wanted to cash it in

#195 gut check on 01.21.15 at 11:56 am

“#160 bdy sktrn on 01.21.15 at 11:06 am
boc lowers!!!!
.25 DOWN

Well, it’s a move I did not expect. Nor did any economist I hang with. Hang on. — Garth”

That’s why you ought to stop hanging with economists and hang instead with artist like me, who see the big picture. Plus we’re more fun at parties. :D This was so obviously going to happen. And the Fed will not raise rates. seriously. perhaps more QE, too. it’ll happen.

#196 Harbour on 01.21.15 at 11:56 am

My U.S. stock trading account has almost 20% profit just on the exchange rate if I wanted to cash it in

#197 footydiver on 01.21.15 at 11:57 am

Is this a temporary bailout for the home owners, in exchange of a bigger RE bubble?

#198 Sideshow Rob on 01.21.15 at 11:57 am

Garth your interest rate whisperers are full of something…And it’s not knowledge. I was telling anyone who would listen that rate cuts are far far more likely than increases. You’re welcome.

#199 Toronto_CA on 01.21.15 at 11:59 am

Well, f*ck. The cynic in me wants to think the neutral BoC was influenced by the election/budget but I’m sure that’s not the case. The economy must be on the verge of recession in the near future to induce a rate cut, given the massive warnings we have on house prices and household debt levels. I guess we can hope that people will…pay off debts at the low interest rates rather than borrow even more and that low prices at the pump will spur growth elsewhere enough to offset the oil extraction declines.

Not a great day for Canada, and shit, my US vacation plans just keep getting more expensive. I guess I’ll go to Europe instead.

#200 fancy_pants on 01.21.15 at 11:59 am

#182 Blacksheep on 01.21.15 at 11:41 am

sure, globally our RE bubble deflates but unless you are moving out of country, moot.

however, the HAM will make sure to take advantage of our lower dollar – past 6 months has seen Hongcouver RE drop 25%! party rages on.

#201 Mark on 01.21.15 at 12:01 pm

“Mark, you are delusional.
BOC expects inflation of 0.3 %, do we live on the same planet?

Inflation of 0.3% implies the CAD$ isn’t devaluing. And today’s BoC announcement, which I predicted the inevitably of for pretty much the past year or two, proves I’m far more grounded in reality than most ‘economists’.

#202 Mark on 01.21.15 at 12:03 pm

“Is this a temporary bailout for the home owners, in exchange of a bigger RE bubble?”

Nope, because the cut may not even be passed onto consumers, and the implication is that the economy (ie: incomes) are stagnant to decreasing at best. This is definitely not a house-price-positive move, that’s for sure.

#203 BoC Are IDIoTS on 01.21.15 at 12:04 pm

I feel like I am being financially terrorized by the BOC making me poorer everyday. Canada is a joke and the economy is in worse shape then anyone can imagine.

#204 TurnerNation on 01.21.15 at 12:06 pm

Blog dog Poloz must want Long Branch bungs topping a cool mill.

#205 MarcFromOttawa on 01.21.15 at 12:07 pm

First to say BoC cut INTEREST RATE!

#206 Hicksville Alberta on 01.21.15 at 12:08 pm

My response to these rates cuts is that the savers/ seniors are getting gutted like a fish. At the same time their children and grandchildren are probably getting gutted just as bad or worse as the Canadian Government tries to keep the pump in house prices going.
So as a parent/ grandparent you are getting it twice unless you don’t care about your kids.
For me therefore, just stop spending. Live simple, want less, and love more. And Eff all the politicians and bureaucrats throughout this fine land. Canada is still a great place to live in spite of these arseholes, not because of them.

#207 MarcFromOttawa on 01.21.15 at 12:08 pm

Ok maybe not

#208 BigM on 01.21.15 at 12:09 pm

@198 I guess I’ll go to Europe instead.

The QE program hasn’t started in Europe yet, it will be very expensive, the CDN slide will be much faster now.

What was funny, the CDN was actually getting stronger against the Euro; that will now change.

Take your vacation in Canada.

As a saver, I am crushed.
Everything my parents taught me is going for nothing.

#209 Daisy Mae on 01.21.15 at 12:12 pm

News Alert
Watch CBC coverage of Bank of Canada newser on economic outlook

#210 JSS on 01.21.15 at 12:17 pm

Mark – good call. You the man!

#211 Dominoes Lining Up on 01.21.15 at 12:17 pm

To think this will help the real estate economy is delusional.

At best, expect to see an increase in listings by those who think this will make buying easier. But buying will not increase. The other economic dominoes have already caused too much concern.

This will accelerate the drop in real estate valuations.

We’re in trouble.

It appears the Bank of Canada just turned to this guy for help.

https://www.youtube.com/watch?v=T6XjRdbU9hQ

#212 Adrian on 01.21.15 at 12:19 pm

Je suis japonais

#213 6,000 years and counting... on 01.21.15 at 12:19 pm

6,000 years and counting..

Swiss bond rates negative with all durations up to 15 years:
http://www.investing.com/rates-bonds/switzerland-government-bonds?maturity_from=10&maturity_to=290

Canada 5 years bond rate – 0.8%

#214 not 1st on 01.21.15 at 12:20 pm

Logic and economics and politics parted ways a long time ago.

I predict that Econ 101 will be replaced with plate spinning 101.

#215 Edith on 01.21.15 at 12:20 pm

Well, it’s pretty much assured now that there won’t be a correction in real estate any time soon outside of Alberta or energy producing provinces.

In markets that are influenced by off shore purchases like Vancouver, they’ve just received a 20% discount on the currency exchange and now a cut in financing for at least 2 years.

Growth in SFH sales will be strong for a while yet in Vancouver and Toronto.

#216 Londoner on 01.21.15 at 12:21 pm

“Well, it’s a move I did not expect. Nor did any economist I hang with. Hang on. — Garth”

Except for us “Xbox economists”, right? So the BoC cut rates like a few of us thought they would. Big deal. If anything, this is more justification to move away from hard assets and into financial assets.

#217 gut check on 01.21.15 at 12:22 pm

@#206 BigM on 01.21.15 at 12:09 pm

hear you. on all of it. time to adjust to the new new reality. I believe I’m going to stop holding my breath and start living now. The world is insane and there’s no way for a sane person to fight it.

#218 Mark on 01.21.15 at 12:22 pm

“My response to these rates cuts is that the savers/ seniors are getting gutted like a fish. “

No they aren’t. Low rates/low inflation has been the best thing that ever happened to seniors/savers. Bond portfolios are worth top dollar, and so are their houses. Seniors/savers should fear a return to a high rate environment which will see their savings destroyed through inflation and taxation.

#219 GBayBoater on 01.21.15 at 12:25 pm

“The Shock” aptly titled.

SM, Mark, hate to encourage you… But applause.

#220 Grantmi on 01.21.15 at 12:26 pm

#204 Hicksville Alberta on 01.21.15 at 12:08 pm

My response to these rates cuts is that the savers/ seniors are getting gutted like a fish. At the same time their children and grandchildren are probably getting gutted just as bad or worse as the Canadian Government tries to keep the pump in house prices going.

So as a parent/ grandparent you are getting it twice unless you don’t care about your kids.

For me therefore, just stop spending. Live simple, want less, and love more. And Eff all the politicians and bureaucrats throughout this fine land. Canada is still a great place to live in spite of these arseholes, not because of them.

You’ve got it all wrong Hicky!

All those pre-boomers (75-90) and Boomer (75-55) parents homes will continue to go up up up now… They pass away.. home sells at the highest values ever.. goes to kids. Yhey stand back on the side line waiting for RATES to explode up… and all is well again.

repeat!

#221 Henry Rearden on 01.21.15 at 12:26 pm

Being liquid and free is a beautiful thing. Rates decrease – make money on stocks. However, this all signals the tyranny of governent and central banks. People talk about ‘fairness’ in society and expect government to help. Government is the almighty god of unfairness – tipping the balance in favour of those whom least deserve it. But wise folks understand this and do not expect ‘fairness’. The problem with this decrease of course is that the central bank has less leeway to help the housing market when it does collapse. This means the crash will only be heavier when it comes. Prices here in Nova Scotia still collapsing. Tiimmmmbeeerrrr!

#222 TurnerNation on 01.21.15 at 12:28 pm

F must be turning over in his nave.

The licks index (LIX.TO) is spiking.

#223 NorthOf49 on 01.21.15 at 12:28 pm

“I think I’m turning Japanese, I think I’m turning Japanese, I really think so! ba da da da da da daa.”

#224 Sheane Wallace on 01.21.15 at 12:29 pm

#200Mark

BOC said that they are going to increase interest rates by 0.5 % in 2015, instead they are cutting it.

They are clearly lyiers. Why would one trust their inflation statistics? I do not trust it.

The dollar is diving 15-20 %, all imports (specially food) are going up big time.

#225 JB on 01.21.15 at 12:34 pm

Keep that bubble alive until election time!

#226 rosie "moving forward" in the knowledge that, "this won't end well" on 01.21.15 at 12:35 pm

Even at $750 p/m each, not a bad deal. Some renters are smart, some owners, not so much.

http://thetyee.ca/News/2015/01/19/Low-Rent-Mansion-Living/

#227 eric on 01.21.15 at 12:35 pm

With the rate cut, I wouldn’t mind go for a bidding war in the 416. Purchashing power just went up up up!

#228 debtified on 01.21.15 at 12:37 pm

Poloz is not calling the shots. This rate cut is obviously a political move from the powers that be. That’s why Garth didn’t see this coming. He’s a good man with a good conscience that is why he sucks in politics.

Smoking Man, on the other hand, is well….

#229 4 AM Sunrise on 01.21.15 at 12:43 pm

#63 Leo Tolstoy on 01.20.15 at 9:39 pm

Actually my dad loves doing all of those things (except for the bills/finances part – I’ve been doing most of it for years). Garth, are you saying my dad’s life is sad? His goal is to maintain the same low-key schedule day in, day out. He loves the feeling of security that comes with routine, and he’s convinced it’s the key to longevity. Not all retirees want “fun” like a Freedom 55 commercial. Outliers like my dad crave “boring”.

Now if my dad were to go first…I’m probably playing the Good Asian Daughter and moving back in with my mom. We’ll see. Aging parents – all part of life’s journey, right?

#230 rosie "moving forward" in the knowledge that, "this won't end well" on 01.21.15 at 12:43 pm

When there’s a will, there’s a way.

http://www.bloomberg.com/news/2015-01-21/shadow-lenders-fuel-risk-as-canadian-home-prices-soar-mortgages.html

#231 Mike S on 01.21.15 at 12:45 pm

“Well, I got to give credit when it’s due…

Good call on that one Mark.”

Good call on the rates. They are down. But so is the CAD (relative to USD at least)

Still don’t get the CAD appreciation according to Mark theory …

Also while at that. Why would anybody want to do QE if the long term rates are already down? For instance why would it be beneficial for Europe or even Canada/US to do QE at these rates?

#232 Leo Tolstoy on 01.21.15 at 12:45 pm

Mark is funny. He allegedly ‘predicts’ everything, yet loses money on everything.

I’m not sure it’s supposed to work like that Marky. Haha

#233 rosie "moving forward" in the knowledge that, "this won't end well" on 01.21.15 at 12:46 pm

This should help compound the misery.

http://www.660news.com/2015/01/20/falling-oil-prices-can-make-high-divorce-month-of-january-even-tougher/

#234 Mike L on 01.21.15 at 12:47 pm

The Shocker: Bank of Canada cuts its rate 0.25%

Wow, that is indeed a shocker! It is a sad day for Canada. Smoking Man and Gregor Samsa called it right.

But take Garth’s advice: Get into the market on a Balanced Fund (like MUTF_CA:ATB103) as there won’t be return in Bank Accounts or GICs now for savers. :(

There goes support for the Loonie I guess as well…

#235 Sheane Wallace on 01.21.15 at 12:48 pm

Excellent note Garth,

Proves the point that both Joe and Poloz are not credible

#236 Leo Tolstoy on 01.21.15 at 12:48 pm

Garth is the King of this blog and Mark is the jester. I love the juxtaposition of sound financial advice with the investing buffoonery. Haha

#237 TRT The Real Truth on 01.21.15 at 12:51 pm

Told you guys. The BoC and the Gov are in bed together and will sacrifice our currency. All the while saying inflation is low.

And also while keeping the immigration floodgates open. And don’t tell me the numbers have always been the same. Add in temps and it is almost double.

5 year 1.88% coming. Believe it.

With foreign demand and limited supply, RE will be on fire this spring. Everyone will refinance, so no correction.

Game over

#238 kothar on 01.21.15 at 12:54 pm

Do not believe any economist that lives. Not one single one called for BoC to do what it did today. Not one called the CHF to unwind its peg last week. They all tell us their forecasts based on what they see, but they all really can’t see what is going on. The true power is to ignore them all and focus on what Garth says, balance and diversify, don’t follow prongostications of these over paid amateurs. The ilk of Camilla Sutton at BNS or Jeff Rubin CIBC alumni (his book) all calls were wrong!

#239 Smoking Man on 01.21.15 at 12:54 pm

Damn Russians are going to out us.

http://speisa.com/modules/articles/index.php/item.223/russia-orders-obama-tell-world-about-aliens-or-we-will.html

#240 TRT The Real Truth on 01.21.15 at 12:54 pm

Mark, for the love of God, stop posting.

Dollar approaching 79 cents. Of course it will go up one day. Stick to English. Leave Economics alone.

#241 Mike S on 01.21.15 at 12:59 pm

“I think the level of influence that the Harper government has over its hand picked appointees at the Bank of Canada is more than most people acknowledge. Harper will not allow the housing market to falter during an election year.

Yes, this policy is short sighted, dangerous, and in the end will not work. But it buys Harper a bit of time, and that’s what really matters.”

I think there is no saving RE in Alberta right now (unless oil goes significantly up very soon)

Toronto/Vancouver have an appearance of good market so far, not sure the appearance would have changed this year anyhow …

#242 Eder on 01.21.15 at 1:00 pm

I’m confused…wasn’t it rate increases to be our doom last week? At any rate I like our dollar at 80 cents, here in Mexico the price of fish tacos has remained the same in CAN $.

#243 Harbour on 01.21.15 at 1:00 pm

The Fed will do whatever it takes to avoid a housing meltdown. They know it’s extremely over valued and teetering, but they can’t afford to let it happen or the Canadian economy will crash.

#244 Jeff in Moose Jaw on 01.21.15 at 1:00 pm

The central planners of this nation have acted.

The cost of money is going down, emergency interest rates since 2008.

My advice: save (HAHA I know)/ invest, sit back and enjoy the show. We still have control of our health (that’s important).

#245 rosie "moving forward" in the knowledge that, "this won't end well" on 01.21.15 at 1:03 pm

#237 SM

What a great read you put us onto. Articulate, clever insight and topical. I thought, at first, that they even carried recipes.

http://speisa.com/modules/articles/index.php/item.612/a-vicar-was-hospitalised-with-potato-up-his-bottom.html

#246 Mike S on 01.21.15 at 1:03 pm

“Nope, because the cut may not even be passed onto consumers, and the implication is that the economy (ie: incomes) are stagnant to decreasing at best. This is definitely not a house-price-positive move, that’s for sure.”

Won’t it automatically bring down the variable mortgages? at least the existing ones?

#247 Capt. Obvious on 01.21.15 at 1:07 pm

Well, that rate drop is troubling. More gorging on debt, even though the economy is clearly on the rocks. Clearly the central bank is seeing incoming data which implies the risk of slipping into recession.

The other theory that this cut was orchestrated by the government better not be true. Our central bank would lose all credibility with other central banks.

On another note: Harper is going to get side swiped in the coming election by the economy. Nothing he can do about it. Voters will pin it on the government in power, always.

#248 Grantmi on 01.21.15 at 1:07 pm

Well there goes the Bellingham and Blaine, in Washington State economy overnight!!

Went across LAST Saturday at Peace Arch border… and the REGULAR border crossing was only a 10 minute wait. 80 cent CN to USA.. good-bye!

#249 ShawnG in TO on 01.21.15 at 1:08 pm

bad decision that will hunt them in 6 months time.
maybe fed election to be called soon?

#250 bdy sktrn on 01.21.15 at 1:12 pm

By whom? — Garth
————————–
Amanda?

Ah, the Don Sherry of finance. He is a smoking man. Got very lucky once.
I met him on in the Den long ago, he was the only useful dragon, could quickly understand what i had, and at least had something to say about it. The others were mostly useless.

#251 Edward on 01.21.15 at 1:12 pm

Well I guess Royal LePage made the right call after all.

Mortgage rates going lower just in time for spring.

Listings down in most cities outside Calgary and Ft Mac. Even that may be a temporary blip since everybody knows that oil will come back one day probably soon and Alberta will be back. Why not buy now when prices are on sale and mortgage rates will be at all time lows.

As for Toronto and Van – up, up, up.

#252 bdy sktrn on 01.21.15 at 1:13 pm

who was saying buy the TSX recently?
nice call.

#253 Mark on 01.21.15 at 1:14 pm

No moves from the chartered banks on “Prime” yet.

This could get interesting if they don’t act…

#254 AB Boxster on 01.21.15 at 1:14 pm

So if the Canadian economy is slowing down…
And price of oil is still falling…
And unemployment looms for many..
And the rate cut surely signals problems for Canada…

Why on the news of the rate cut is the TSX up 2%?

Anyone?

#255 Mississauga Renter on 01.21.15 at 1:16 pm

“In contrast, last year a balanced and diversified portfolio (60% growth, 40% boring) grew by more than 8%.”

Actually Garth, in 2014, a balanced and diversified portfolio of low-cost index funds (60% growth, 40% bonds) grew 10.5% (and that’s net of MER’s):

http://canadiancouchpotato.com/2015/01/09/couch-potato-portfolio-returns-for-2014/

That obviously depends on the asset mix and attendant risk. — Garth

#256 Peter on 01.21.15 at 1:16 pm

That’s it people.

With limited supply an CAD on sale 20%, an these rates, expect Toronto prices gain 20% this year.

Done deal. Game over.

People here just keep getting weirder. — Garth

#257 Bookie on 01.21.15 at 1:16 pm

What’s going to happen to 416 detached prices?

The wealth divide in Canada will get much wider. There will be homeowners who will have lower monthly payments due to lower rates. Renters, on the other hand, will face higher rent costs due to inflation, especially in the 416.

#258 @AB Boxster on 01.21.15 at 1:19 pm

Because TSX is stable in USD. This announcement only hurts Canadians who are savers and/or renters. It’s not about us anymore. Keep splitting the Liberal/NDP vote and you’ll be out on the street one day.

#259 Bongo on 01.21.15 at 1:20 pm

Time to stop guaranteeing rates will increase “soon”. It’s been years now – let’s all admit that nobody has a clue, and economists know no more about the real market than the rest of us. Full of theory and hindsight but poor real time analysis.

Time to pick up more REITs for a nice steady income. Fortunately over 80% of my money is in US stocks, so timing couldn’t be better. Unfortuantely I still don’t own real estate, and now probably won’t for several more years.

#260 JSS on 01.21.15 at 1:21 pm

A good day for those who have variable rate mortgages.

Mark, good call.

#261 Butch on 01.21.15 at 1:23 pm

So Garth? What’s the next move? Housing up up up?

#262 screwed on 01.21.15 at 1:24 pm

#250
Why on the news of the rate cut is the TSX up 2%?
***********
Where else do you put your money now? Let the chips fall where they may.

#263 Justin Time on 01.21.15 at 1:24 pm

Kind of reminds of the past – Prime Minister Trudeau, a broken Alberta and a low Loonie.

http://www.bnn.ca/News/2015/1/21/Harper-and-Trudeau-tightly-locked-in-latest-Nanos-polling.aspx

#264 Catalyst on 01.21.15 at 1:26 pm

As I have said many times, what is unacknowled by Garth, incomprehensibly since it was the reason for his ousting; is that Steve will do ANYTHING to keep this party going. He has too much control over his appointees that must do his binding rather than what’s right for Canada long term.

#265 Poloz on 01.21.15 at 1:26 pm

If you read Poloz’s statement, he says the next move can be a further rate cut. People that bought pre-2009 just hit the jackpot.

#266 Mark on 01.21.15 at 1:26 pm

http://www.huffingtonpost.ca/2015/01/20/vancouver-housing-renting_n_6509694.html?utm_hp_ref=canada-british-columbia

“The local filmmaker’s statement is at once sincere and ironic: He and his roommates pay an average of just $750 a month, substantially below the average $1,000-plus one-bedroom rent in the city. But they’ve managed to drive costs down by moving into an abode that is anything but “humble.””

“Their 7,500-square-foot, six-bedroom Spanish-style mansion, built in 1931 and nestled on nearly an acre of land overlooking the Fraser River, is valued at $5,063,000, according to municipal records.”

“”There’s lots of big houses, including mansions, for rent,”

#267 Victor V on 01.21.15 at 1:32 pm

Loonie falls off a cliff.

https://ca.finance.yahoo.com/q/bc?s=CADUSD%3DX&t=1d

#268 Ontario's Left Coast on 01.21.15 at 1:40 pm

Wow, surprise rate cut, who knew? Looks as though (yet again ) “This won’t end well” will have to wait.

#269 Harbour on 01.21.15 at 1:40 pm

Here comes the housing pump on BNN

Calgary, Canada’s hottest housing market

blah blah blah… lol

#270 Pre-Retiree on 01.21.15 at 1:49 pm

Garth: “I hope you followed my long-standing advice to be heavier in US growth assets, and reduce your exposure to Canada. Now you know why.”

How does that fit into a rebalanced portfolio. In 6 months, when US stocks have been doing well compared to Canadian ones, wouldn’t your advice be to sell high (US) and buy low (Canadian)?

#271 Gigi on 01.21.15 at 1:49 pm

Yahoooo let’s go people! time to go out and buy the biggest house in T.O Our economy is great, let’s spend spend spend spend KABOOM!!!!!!!

#272 Adrian on 01.21.15 at 1:49 pm

Wow, they’ve killed our dollar. . . .I guess that’s now “economic development”

#273 bdy sktrn on 01.21.15 at 1:53 pm

Well there goes the Bellingham and Blaine, in Washington State economy overnight!!
——————————-
damn, we just got our nexus , but yes, just as well to stay home now –
A big boost to retail in border areas.

go Canada!?!?

all out currency war, someone said.
we got ahead of the american ‘fail to launch’ coming soon

#274 Kenchie on 01.21.15 at 1:55 pm

Rob Carrick is being responsible…

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/resist-the-urge-to-borrow-more/article22549247/

#275 Bobby on 01.21.15 at 1:55 pm

The naivety and lack of financial literacy of many on this blog is astounding. Unfortunately, the rate cut is a clear signal that Canada’s economy is in the toilet. Canadians are living their life on debt.
It doesn’t matter what rates are if you have no job and a large mortgage. Imagine you just bought last year in Calgary based on the money you were supposed to make this year. But, you’ve just got your layoff notice. Who are you going to sell too, the next guy wondering if he is going to have a job.
Sure, those with variable rate mortgages and lines of credit, like me, have struck a win. But how about someone locked in on a five year who has to sell. Imagine the penalty to get out, just as you’ve lost your job.
No wonder many realtors and financial advisers have such bad reputations, if the comments on this blog are any indication.

#276 Rapier Wit on 01.21.15 at 1:55 pm

WTF?
http://business.financialpost.com/2015/01/21/bank-of-canada-cuts-interest-rate-as-oil-plunge-takes-toll-on-economy/

#277 Sheane Wallace on 01.21.15 at 1:56 pm

exchange rates at major canadian bank:
buy 1.179, sell: 1.25..

Over 7 cents spread.

You are poorer than you think.

Cheers,

#278 Pre-Retiree on 01.21.15 at 1:59 pm

#210 Adrian: “Je suis japonais”.

Hilarious.

#279 Babblemaster on 01.21.15 at 1:59 pm

Higher interest rates will NEVER happen. This is Japan repeated. Time to stop predicting higher rates.

#280 Devore on 01.21.15 at 2:02 pm

People should resist the urge to borrow. They could be in trouble when rates rise by a astounding 33% (from 0.75% to 1.0%). It is coming so prepare.

#281 Joseph R. on 01.21.15 at 2:06 pm

I doubt this rate cut has anything to do with housing. The BoC isn’t obsessed with Real Estate the way we are; it bases it decisions on the overall economy of the country.

That said, I believe the BoC is looking toward exports and a lower loonies to help us get through this “oil price crisis” (The BoC and governments are allergic to the “R” word). It wants exporting businesses to take on debt in order to hire and expand.

However, with this move, the BoC also said that Canada is forecasting a recession.

#282 Mark on 01.21.15 at 2:11 pm

“How does that fit into a rebalanced portfolio. In 6 months, when US stocks have been doing well compared to Canadian ones, wouldn’t your advice be to sell high (US) and buy low (Canadian)?”

Rebalancing of a balanced portfolio implies that you sell over-performing assets and buy under-performing, so as to balance the portfolio back to target weights. So anyone who advises buying a balanced portfolio and rebalancing, probably would render the ‘advice’ that you are suggesting.

#283 aaron on 01.21.15 at 2:12 pm

#270 Kenchie on 01.21.15 at 1:55 pm

I see what he did there. Reverse psychology.

Why wouldn’t you borrow when there is free money? That’s how Toronto rolls.

Btw, the Fed won’t raise rates. That is my call.

#284 Shawn Allen on 01.21.15 at 2:12 pm

Bank of Canada does not target the dollar level

The Bank of Canada has long said it has one job, to manage inflation. Period. I personally heard a deputy governor explain this. They cannot and do not serve two masters.

The rate cut was necessary to increase inflation save off deflation.

The lower dollar is simply collateral damage (or an unintended benefit, depending on your view).

They are not managing house price or consumer borrowing. Again, they have ONE job, to manage inflation. Get over it.

#285 Shawn Allen on 01.21.15 at 2:12 pm

stave off deflation, not save off

#286 Ollie on 01.21.15 at 2:19 pm

So, the Gov makes a tremendously hostile move against the voters’ savings… “From the people, for the people”. And that just right before/for the elections. Betting on stupidity? Or actually realizing savers are a tiny voter pool?

#287 Renter's Revenge! on 01.21.15 at 2:25 pm

“Imagine you just bought last year in Calgary based on the money you were supposed to make this year. But, you’ve just got your layoff notice. Who are you going to sell too, the next guy wondering if he is going to have a job.” – Bobby

Maybe a divorce or bankruptcy lawyer… or a psychiatrist…

#288 Sideshow Rob on 01.21.15 at 2:33 pm

# 250
Canadian stocks are up 2% because the dollar is down the same. If your portfolio didn’t go up 2% today you lost no matter what the index says. Every Canadian bank stock is down on the US exchanges but up here. Purely a currency adjustment. The US price is the real price.

#289 gut check on 01.21.15 at 2:40 pm

“#241 Jeff in Moose Jaw on 01.21.15 at 1:00 pm
My advice: save (HAHA I know)/ invest, sit back and enjoy the show. We still have control of our health (that’s important)”

I wish I could agree with your last point, but that’s not my experience.

If we had control of our health I’d be able to request the blood tests I want. But I can’t, and when I’ve tried in the past to insist I’ve ended up on the wrong side of the GP who I have to rely on for access to all my healthcare needs. I even requested a second opinion and got told ‘NO.’

that doesn’t feel like being in control of one’s health probably feels.

#290 AB Boxster on 01.21.15 at 2:40 pm

#273 Sheane Wallace
————————————–

7 point spread.
Wow that’s unbelievable!

I think thats #3 of the Seven Signs of the Apocalypse

#291 AB Boxster on 01.21.15 at 2:45 pm

#254
“Because TSX is stable in USD. This announcement only hurts Canadians who are savers and/or renters. It’s not about us anymore. Keep splitting the Liberal/NDP vote and you’ll be out on the street one day.”

————————————————————
Not me. (Fiscal conservative, social progressive)

I just spoil my ballet now.
What with the sad state of Alberta politics and the policies and stupidity at the fed level, its a wonder I even make that effort.

#292 pwn3d on 01.21.15 at 2:48 pm

LOL, you basement dwellers who hate 70% of Canadians with a home just got lit up… again…

Better luck next year. At least you have $1.50 CAD to look forward to, right Mark? lolol

The sentiment that a quarter-point drop will boost real estate is without basis. Over 70% of borrowers go fixed, and this will not alter those rates. — Garth

#293 Pre-Retiree on 01.21.15 at 2:53 pm

To #271 Bobby:

The financially illeterates, like me, (and other types) on this blog are trying to learn. Give them (us) a break. If they knew everything, they would not be here. Isn’t that the point of the blog?

#294 Capt. Obvious on 01.21.15 at 2:59 pm

Interesting conclusion in the BoC statement:
The oil price shock increases both downside risks to the inflation profile and financial stability risks. The Bank’s policy action is intended to provide insurance against these risks, support the sectoral adjustment needed to strengthen investment and growth, and bring the Canadian economy back to full capacity and inflation to target within the projection horizon.

Appears a primary BoC concern is the impact of the oil price collapse on the banking sector. I assume they have data that leads them to believe they need to do something to try to offset losses the financial industry faces due to the reduction in spending in the oil patch and possibly investment losses.
Note their ‘projection horizon’ extends out to end of 2016, so we’re in for some tough months ahead.

#295 pwn3d on 01.21.15 at 3:05 pm

The sentiment that a quarter-point drop will boost real estate is without basis. Over 70% of borrowers go fixed, and this will not alter those rates. — Garth

True, in the big picture, .25 is nothing, however it doesn’t hurt, especially when many were calling for a move in the other direction which would have hurt. Also it maybe a coincidence but my ETF portfolio is up 1% today. If today is bad news, all I can say is keep it coming.

#296 Harbour on 01.21.15 at 3:05 pm

The .25% cut in rates did more to crash the Loonie than anything… not that it has already crashed

More snowbirds will be going for the powder than the sand

#297 Edward on 01.21.15 at 3:07 pm

#259 Justin Time

You think that this BOC move wasn’t poitical think again!

Harper read the headlines about being tied with Justin. Oil is done for a while, at least until after the Canadian election. If housing takes a downturn also, Harper’s toast and he knows it.

Lowering mortgage rates will pump up housing even more and will save the industry for a couple more years.

#298 LuckyRenter on 01.21.15 at 3:07 pm

Surprise Canadian interest rate cut renews real estate bubble fears!!

The unexpected cut of 0.25% in the key Canadian benchmark interest rate has renewed market bubble fears in a market where values are already thought to be overvalued by up to 30%

Today’s surprise cut in interest rates by the Bank of Canada has renewed fears of a bubble in the housing sector, which is already said to be overvalued by up to 30%.

http://www.opp-connect.com/21/01/2015/surprise-canadian-interest-rate-cut-renews-real-estate-bubble-fears/

#299 Rational Optimist on 01.21.15 at 3:10 pm

The dollar is below seventy euro cents. God damn it all. When’s QE European Edition?

We better hope that this rate cut was a mistake. If it’s based in sound reasoning, we must be hooped for the next while.

#300 Blacksheep on 01.21.15 at 3:11 pm

Fancy # 199,

“#182 Blacksheep on 01.21.15 at 11:41 am
sure, globally our RE bubble deflates but unless you are moving out of country, moot.”
————————————————
Your response is exactly what the system expected and wants to hear.

CAN $ is down 2%, Gold is up 2% and the TSX up 2%.

These are real world valuation adjustments that prove Canada is not economically isolated. This adjustment (loss?) to our net worth is quite real, as in ‘your RE is worth 2 % less than it was 4 hours ago’.

The good news is, currencies move relatively easily and once we hitch our little red Canadian wagon to the US growth machine, we’ll be off to the races.

So holidays cost a bit more for little while, better that than a housing crash.

“The lower dollar is simply collateral damage”

#301 Marco on 01.21.15 at 3:13 pm

Garth, looking forward to tonight’s blog post. Need some answers on how this rate cut reflects and effects the overall state of the economy. Are we creeping toward Deflation?
Cheers

#302 Oil Is Sticky on 01.21.15 at 3:16 pm

I wonder how far into 2015 we go before we find out the FED does not raise rates?

And I think RBC has a 9 point rip off spread with usd/cdn. We left and went to CIBC over a year ago because RBC was falling so far behind the rest of the world for service, cards and rates…..

#303 Edith on 01.21.15 at 3:16 pm

Don Pittis from the CBC made these comments today about the rate cuts.

“The stimulative effects of a rate cut and the oil price decline could well hit at the same time, sending the economy into overdrive in B.C. and the industrial East.”

“Low rates also drive up asset prices, including the price of houses and stocks, disproportionately benefiting the owners of capital and increasing the rich-poor divide.”

It will be another good year for real estate in Toronto and Vancouver particularily in SFH’s.

#304 Rational Optimist on 01.21.15 at 3:19 pm

276 Joseph R. on 01.21.15 at 2:06 pm

“I doubt this rate cut has anything to do with housing. The BoC isn’t obsessed with Real Estate the way we are; it bases it decisions on the overall economy of the country.”

If anything, the BoC is more obsessed with real estate than folks around here are. It’s now a pretty significant part of the overall economy.

Now that resource prices are what they are, what else are we going to do for a living besides building and selling each other ever-more expensive real estate? Pulling stuff out of the ground, and real estate, are two of the biggest things we’ve been doing lately.

#305 Grantmi on 01.21.15 at 3:21 pm

Well! At least the Snow Birds will be heading home early from the US now that they’re yearly funds just got kicked in the nads by Poloz.

spend it here………..

#306 Van Isle Renter on 01.21.15 at 3:22 pm

I think the take away from all of this is how massively oil underpinned the “recovery” that Canada enjoyed while the US went into the dumper after 2008.

The illusion of building and selling condos is about to be laid bare, much as it was in the US RE debacle.

When you export a product abroad, all Canadians benefit as the pie gets bigger. When you sell a condo to your neighbor, you get the cash, they get the debt and it’s a zero sum game.

“You can export oil, but you can’t export a condo.” – VIR

#307 Romeo on 01.21.15 at 3:23 pm

Folks, here is what happened.

First Harper imposes the “Alberta model” of economics (you know – boom / bust, reliant on oil and housing) on Canada. That backfires in oil, starting to backfire in housing.

Oil mow cut in half.
Harper sees housing starting to roll over (most markedly in Alberta, his power base).
Calls Poloz the putz, says do something.
Poloz the prick cuts rates and ensures;

1) deficit drops by $1.5 Billion in Joe Owe’s delayed budget – better optics for election
2) housing bubble burst gets delayed and does not crash on his watch – happy voters
3) inflation in needs (food, etc.) doesn’t respond too much for the next 3 to 4 months – people stay calm and look at their house appreciation
4) exchange rate helps exporters and oil production costs – theoretically
5) calls early election (April to June 2015) before the ill effects kick in
6) Harper gets re-elected.
7) housing – who cares? – he’s back in power

Anybody, and I mean anybody, that sees the BOC as independant of political direction is an idiot. It’s and CMHC’s policies have been formulated to keep Harper in power.

#308 Musty Basement Dweller on 01.21.15 at 3:23 pm

As lame and unimportant as the bank of Canada interest rate setting seems, at least Mr poloz did something today. Whoopdeedoo half a point change.

#309 aaron on 01.21.15 at 3:24 pm

The more I think about, the logical next step is another rate cut to .50% by end year. Mainly due to more down side to oil price.

This is going to be amazing.

#310 DON on 01.21.15 at 3:35 pm

2nd post – needed to be slightly more readable

#209 Dominoes Lining Up on 01.21.15 at 12:17 pm
To think this will help the real estate economy is delusional.
At best, expect to see an increase in listings by those who think this will make buying easier. But buying will not increase. The other economic dominoes have already caused too much concern.
*********************
This will accelerate the drop in real estate valuations
Exactly…thank you. The other economic factors have done much in correcting consumer confidence. Especially in the oil patch and those fly in and out workers from BC. Of course they live beyond their means…making big dollars and no savings. How exactly will they keep their overextended houses when spring break up comes around. As the dominoes fall. Garth has said many times that it only takes on incident/item/issue to start the ball rolling. The fact that the economy is doing so poorly and a rate cut was needed will put a scare in a segment of the population and this will act as a catalyst to bring housing to its knees.

#271 Bobby on 01.21.15 at 1:55 pm
The naivety and lack of financial literacy of many on this blog is astounding. Unfortunately, the rate cut is a clear signal that Canada’s economy is in the toilet. Canadians are living their life on debt. It doesn’t matter what rates are if you have no job and a large mortgage. Imagine you just bought last year in Calgary based on the money you were supposed to make this year. But, you’ve just got your layoff notice. Who are you going to sell too, the next guy wondering if he is going to have a job.
Sure, those with variable rate mortgages and lines of credit, like me, have struck a win. But how about someone locked in on a five year who has to sell. Imagine the penalty to get out, just as you’ve lost your job.
No wonder many realtors and financial advisers have such bad reputations, if the comments on this blog are any indication.
*********************************
You got it Bobby! Celebrating the rate cut is truly funny. Logic is lost on most cherry picking folks. People are already squeezed and forced to live on HELOCs. But you wouldn’t know as everyone plays the part of being or at least thinking they are richer and hence more brilliant than others. Pressure has been building and folks are already overextended; now the cost of imports will go up (food). How did the US and other housing crashes occur, didn’t they make rate cuts also? Did that save the housing market in those countries? It is hard to stop forward momentum when it is already at the tipping point. Let us all remember that it only takes one neighbor (home leaser) who is either over leveraged, suffering a nasty illness, divorce, or loss of a job, over indebted and retiring to start the evitable slide on your street. It takes a lot of people to prop up a housing bubble and only a few to bring it crashing down. This was an election ploy, a desperate man who knows his days are numbered and will do anything not to take the blame. I take it our current PM has never had a non-political job. Problem is we are running out of viable buyers. We have to experience the nasty sickness before becoming healthy again. This is akin to the hair of the dog which always gets you in the end.
Oh look a shiny new gadget…as the herd rolls closer to the point of no return.
I am with Garth on this one…why would people take this as an opportunity to pay down debt. Most will not, most don’t research the past, every generation thinks they are uniquely different. Thanks SM – I knew I was from another planet, couldn’t be part of the herd.
All is fine…housing will keep going up until only billionaires can afford to buy…does anyone see something wrong with this. Ah well! Lol to each their own… can’t fix stupid. By the way China is on an anti-corruption wave…even the thought will slow the Vancouver housing march. If you love 6 – 8 months of rain/wind you’ll love Vancouver and traffic jams on all side streets you’ll love Vancouver.

#311 Smoking Man on 01.21.15 at 3:37 pm

The sentiment that a quarter-point drop will boost real estate is without basis. Over 70% of borrowers go fixed, and this will not alter those rates. — Garth

OK yesterday 5Y close, yield =1.0490
Right now as I type,the yield 0.8510, low of the day was 0.793 a shattering record low….

I’m guessing won’t be tic for tic discount.
But 2.3% to 2.5% for a five year fixed, in spring competative mortgage market, very doable…

Look at all the amo realtors just got re stocked with…

It’s going a nasty price increase realtors, a nasty one..

Oh LaughingCon, where art thow.

#312 For those about to flop... on 01.21.15 at 3:38 pm

You win some ,you lose some.
I was hoping what happened today did not happen ,bit in any case I booked a spring break holiday last night just before our dollar fell off the cliff.
The money I saved from doing that will now have to go to the extra expense which will now happen during the holiday ie. meals/ entertainment.
No point worrying about stuff you can’t control,just happy to be able to afford a holiday in the first place .

#313 Leo Tolstoy on 01.21.15 at 3:39 pm

#227 4 AM Sunrise on 01.21.15 at 12:43 pm

#63 Leo Tolstoy on 01.20.15 at 9:39 pm

Actually my dad loves doing all of those things (except for the bills/finances part – I’ve been doing most of it for years). Garth, are you saying my dad’s life is sad?

I can’t speak for Garth but I don’t think he’s saying that your dad’s life is sad.

If you have parents that are close, who do everything together, when one dies, the grief can be unbearable to the surviving spouse. Ground hog day. Where every day just looks the same as the last. The difference between an individual when their spouse is alive compared to afterwards when the spouse passes, is sad.

Most individuals think that they can hold a house until “both pass”. But when one spouse passes first, the void can be huge.

My dad was the same. He did everything except the bills/finances. He ‘loved’ doing all those things. Been there. Done that. Heard all the assumptions.

When one spouse dies, the chance of holding that house is low. Everything in that house will remind the surviving spouse of what has been lost. Everything.

#314 BigM on 01.21.15 at 3:40 pm

@293R.O.The dollar is below seventy euro cents. God damn it all. When’s QE European Edition?

Announcement should be made tomorrow.
But I’m not sure the ECB will do a full QE, the Germans
won’t accept.
So they will do a weak half assed measure.

The only thing that will trash the Euro will be Syriza winning the Greek elections.

We can only hope, and pray.

signed, a right winger.

#315 Mark on 01.21.15 at 3:40 pm

“Why wouldn’t you borrow when there is free money? That’s how Toronto rolls. “

Money is never “free”. If someone lends to you at “0%”, that means they’re expecting the value of the currency itself to appreciate to provide themselves a return.

And its 2:40 right now, surprised no announcements yet from any of the Canadian chartered banks of cutting “Prime”. Cue the conniptions from the Realtors and the in-debt-forever crowd if this doesn’t get changed in the next few hours.

#316 Big 5 Worker on 01.21.15 at 3:41 pm

Just had lunch with colleagues. We talked about today’s events and this is what we think is going to happen. The European Central Bank is about to launch a massive QE program. This will drive the USD index higher. The CDN Dollar will suffer later this week. Our consensus for year end 2016 is a 67 cent dollar.

This will be our QE. Our housing prices by this time should match US house prices in US Dollars like others have mentioned here. Once the oil boost to the economy wears off, the USA will again embark on a QE program not only to boost their economy but to “fix” the Euro and USD rate. This will boost our dollar to the 75 cent range in a 4-6 few years time.

Our consensus view: the world is trying to inflate its way out of consumer debt.

#317 Mark on 01.21.15 at 3:42 pm

“And I think RBC has a 9 point rip off spread with usd/cdn. We left and went to CIBC over a year ago because RBC was falling so far behind the rest of the world for service, cards and rates…..”

In-branch forex has been a ripoff for as long as I’ve been alive. Go find yourself a real broker who specializes in that stuff if your quantities are anything but trivial.

#318 Ollie on 01.21.15 at 3:44 pm

And how is this going to help the oil producers mr Poloz? Allowing them a slightly cheaper credit would make them competitive? Stop them from defaulting or contracting?
That’s a lot of bull spewed our way. You are just a straw contraption for the south neighbor prime lackey.

#319 Jeff in Moose Jaw on 01.21.15 at 3:46 pm

#284 gut check
“I wish I could agree with your last point, but that’s not my experience.”

Sorry to hear that, good point, anyone with healthcare needs has my sympathy.

#320 Marco on 01.21.15 at 3:48 pm

297 Edith,

Imported goods, clothing and groceries are going to cost more for the average debt straddled Canadian, including high mortgage carriers. I see this eroding consumer confidence and putting more pressure on high asset goods, leading toward deflation. We all have to eat and buy clothes. If the monthly budget increases, spending money on big ticket items decreases I would think.
Cheers.

#321 Mark on 01.21.15 at 3:53 pm

“And how is this going to help the oil producers mr Poloz? Allowing them a slightly cheaper credit would make them competitive?”

Central bank policy, by design, isn’t supposed to target a specific industry. So its doubtful that Poloz is actually targeting a specific industry.

By forcing money out of cash savings accounts, and out of the financing of, for example, mortgages — the goal of the BoC is to incentivize investors in industries where undercapacity exists, to invest more.

The only problem is, in the sort of deflation we’re on the precipice of, there are very few good examples of such. Which means that this probably won’t be the first rate cut of the BoC, and eventually some form of Canadian QE will be required.

Right now, the CAD$ is cooperating with the BoC’s attempts to devalue, but for how much longer, who knows? Central bankers rarely have their wishes come true, so we could be in for some surprises. Maybe not quite as severe as Switzerland, but as a chronic net exporter, the Canadian dollar should emerge as one of the strongest in the world.

#322 RealistvsExtremist on 01.21.15 at 3:53 pm

#311 Mark on 01.21.15 at 3:42 pm
“And I think RBC has a 9 point rip off spread with usd/cdn. We left and went to CIBC over a year ago because RBC was falling so far behind the rest of the world for service, cards and rates…..”

In-branch forex has been a ripoff for as long as I’ve been alive. Go find yourself a real broker who specializes in that stuff if your quantities are anything but trivial.
——–

While I agree with what you are saying, this is what is wrong with this country. Every service is a monopoly. Cell service. Banking. Oil. Internet. We are not getting 40% better services than the USA where it’s 40% cheaper.

There is no competition. I should not have to “go find a broker” for trading in a couple hundred bucks. I thought that was why our Govt regulated banks. But obviously that means nothing when its the banks that control Govt.

#323 Mike S on 01.21.15 at 3:54 pm

“And its 2:40 right now, surprised no announcements yet from any of the Canadian chartered banks of cutting “Prime”. Cue the conniptions from the Realtors and the in-debt-forever crowd if this doesn’t get changed in the next few hours.”

Why do you expect it to be cut right away? they don’t need any time to adjust?

#324 Ollie on 01.21.15 at 3:59 pm

Crude more than halved the price from the oil sands break even. Unless the hostile gov targets a loonie at 0.5 us, i don’t see how the oil producers can regain market. Is that what they want? That’s unbelievable…
FX, here i come… need to hedge my savings… of course, dear gov would want its share if i manage to protect myself successfully.

#325 Mark on 01.21.15 at 4:00 pm

“I’m guessing won’t be tic for tic discount.
But 2.3% to 2.5% for a five year fixed, in spring competative mortgage market, very doable… “

Doubt it. Credit-worthiness is now the issue. It wouldn’t surprise me if we wake up tomorrow and the rate cut was basically a non-issue in terms of retail lending rates, because, quite frankly, consumers suck as credit risks. Especially with house prices declining and jobs drying up.

#326 aaron on 01.21.15 at 4:01 pm

#309 Mark on 01.21.15 at 3:40 pm

Give it a day or two and prime rate will be cut.

6 years and counting. No RE price melt. Perhaps the best spring market yet. Salivating!

#327 Bottoms_Up on 01.21.15 at 4:05 pm

Instead of lowering interest rates they should have (significantly) raised wages of low and middle-income Canadians.

#328 Markymark on 01.21.15 at 4:06 pm

So much for rising interest rates. No matter how much someone thinks they know know one knows what the economy is really going to do, nor what policy makers might do!!

#329 CJ on 01.21.15 at 4:07 pm

For those who ever listened to Mark, feel free to take shots. His rhetoric on this site has never been on target.

#330 Getting old on 01.21.15 at 4:08 pm

Bank of Canada cuts key rate to 0.75% as oil plunge takes toll on economy.

http://business.financialpost.com/2015/01/21/bank-of-canada-cuts-interest-rate-as-oil-plunge-takes-toll-on-economy/

Garth, what do you think? did they have a choice?

#331 Bottoms_Up on 01.21.15 at 4:10 pm

#301 Romeo on 01.21.15 at 3:23 pm
—————————————-
In that case it’s surprising they didn’t cut it 0.5%

#332 jess on 01.21.15 at 4:10 pm

retail currency trading acct.

http://www.globalresearch.ca/citigroups-150-million-in-currency-losses-deserve-a-closer-look/5425860

#333 Mark on 01.21.15 at 4:15 pm

“For those who ever listened to Mark, feel free to take shots. His rhetoric on this site has never been on target.”

Really? I’m quite proud of my record. Policy rates are now going down (but not necessarily retail rates, as I’ve been talking about in a few of my posts relating to credit-worthiness). House prices have spent the past year and a half declining, and even changes to the sales mix can’t really cover up the declines anymore. Okay, the CAD$ is down a bit, but that’s probably mostly run its course and is subject to pretty violent upside with so much bearishness.

So don’t you have anything better to do?

#334 Marco on 01.21.15 at 4:15 pm

#319 aaron

Oy ve. This is not going to end well.

#335 Jeff in Moose Jaw on 01.21.15 at 4:19 pm

To fix my last sentence, and guilty conscience from post #241

Most Canadians still have some control of their health for the time being (which is important).

There that feels better, thanks Garth – this blogs is like a morality car wash…

#336 Henry Rearden on 01.21.15 at 4:19 pm

If someone loses their job, do you think they care what the interest rate is? A lot of Canadians are living paycheque to paycheque. No job = house on the market. This rate decrease signals a very bad economic environment.

#337 Ollie on 01.21.15 at 4:21 pm

Ha ha. If the banks don’t move the mtg rates it would be a perfect storm. The housing won’t be helped, instead hurt by the ever increasing personal spending. The disputably small input from HAM would be hurt too since it won’t wanna buy “investments” in a falling denomination. Serves you well Harper. Hope you don’t get to be an MP anymore, let alone PM.

#338 Hot Albertan Money on 01.21.15 at 4:25 pm

So, how does this affect a regular guy like me with a fixed mortgage that doesn’t renew until mid-2016?

Should I do something now or ignore and and all mortgage related news until next year?

#339 Industrial Guy on 01.21.15 at 4:29 pm

Sure sounds like the fire alarm at the BOC just went off.
It’s a clear admission that it’s really bad.

Exports (oil, what else) are dropping ….. they just recorded the biggest decline since February 2011.
This could be the first of a number of rate reductions. Let’s call it for what it is ….. PANIC!

#340 devore on 01.21.15 at 4:31 pm

#104 bdy sktrn

Van (city) Density 5,249/km2

HK density 6,544[5]/km2

frankly, I’m shocked HK is not much higher as it is not full of SFH lots as is vancouver. maybe it’s mountains?

That includes the entire HK territory, compared to Van city limits. Actually populated areas of Hong Kong have upwards of 50,000 people/sq km. Van metro population density is 800 people/sq km, which is a more proper comparison.

#341 William of the North on 01.21.15 at 4:36 pm

Told you that the interest rates would not be raised.

The interest rate is suffering from ‘deflation’

#342 Oceanside on 01.21.15 at 4:38 pm

2 Musty Basement Dweller on 01.21.15 at 3:23 pm
As lame and unimportant as the bank of Canada interest rate setting seems, at least Mr poloz did something today. Whoopdeedoo half a point change.

Seems this was just for Alberta today..quarter point change….Great for us savers and pension funds…..

#343 SWL1976 on 01.21.15 at 4:40 pm

#21 Smoking Man – We’re all in hot soup, but I wouldn’t be listening to CNN for the final word

Holy cow Garth we are going to have to clone you or hire some laid off O&G workers to help moderate this comments section. It’s getting tough to keep up.

Mark – I always found most of your advice to be quite sound. I enjoy your posts and wondered why you seem to rub a few the wrong way. Oh well.

My 2 cents on predicting the economic future… YOU CAN’T, NO ONE can, all we can do is share our thoughts and ideas and go with what feels right for yourself given the information at hand and your current financial status. I suspect, expect the unexpected going forward, forget about traditional market behaviors.

This blog is a fantastic source of information to those who can sift through it and apply most of it at certain times. Like gold and silver holdings a month ago till now. Where’s the top? You decide

I’ve spent the past week in the forest building bike trails and come up with a saying… Every forest should have a trail, and every trail should have a forest

The simple things in life are grand

#344 Mithan on 01.21.15 at 4:42 pm

I predict very little of this will matter and we are just seeing short term BS.

Canada’s housing will stay high for years to come, maybe even go higher and in a year from now, Oil prices will be recovered, jobs will be coming back, the dollar will be 90 cents US again, the Harper Morons will be re-elected, etc, etc and we will look back at all of this as just another blip of bad news we all screamed over and didn’t really matter in the slightest.

Like all the previous “bad news” we have had over the last few years.

In other words, none of this really matters.

Move on.

#345 Mark on 01.21.15 at 4:44 pm

“Should I do something now or ignore and and all mortgage related news until next year?”

Make as many pre-payments as possible and clean up any other remaining consumer debt, as you will be judged, at your renewal, on your overall credit-worthiness.

If you’re creditworthy, and you have good equity, you may very well get a very nice rate on your renewal.

If you’re not, well, the suffer-age will be not so pleasant and you may be stuck with the “posted rate” with little negotiating power.

#346 Mike T. on 01.21.15 at 4:45 pm

in other more fascinating news…betcha the NHL salary cap doesn’t go up

#347 Leo Tolstoy on 01.21.15 at 4:46 pm

#322 CJ on 01.21.15 at 4:07 pm
For those who ever listened to Mark, feel free to take shots. His rhetoric on this site has never been on target.

Correction.

Mark’s rhetoric on ANY site has never been on target.

#348 LaughingCON on 01.21.15 at 4:50 pm

Re #305 Smoking Man
“It’s going a nasty price increase realtors, a nasty one..
Oh LaughingCon, where art thow.”
====================================

A lot of time until the Spring buddy, a lot of time – keep in mind we are entering a period of extreme market events in a very short span of time.

Novadays one does not know when and where the next big hurt will come…

Lets survive tomorrow, the weekend, Feb.23 —the world may not exist in the way we take it for granted.

And something for you to enjoy:
http://goldprice.org/gold-price-canada.html

It will be a nasty crash realtors, a nasty crash!

#349 Mark on 01.21.15 at 4:51 pm

“Mark’s rhetoric on ANY site has never been on target.”

Wow, so not true. I don’t even know where to begin.

What’s the old sayin, “haters gonna hate”?

Perhaps you should revisit your choice of breakfast cereal if you’re going to wake up so crabby and diss people who are clearly your intellectual superiors.

#350 nej jen on 01.21.15 at 4:53 pm

really trying to get a handle on what this rate cut means, can someone explain in lay terms ( sorry for what seem like simple questions for all you guys..)
1) we rent, have decent incomes and little debt , does this mean buying a house in the future will be more difficult or easier?
2) i can see that it’s tied to loss of oil revenue – they assume a 60 dollar barrel – what if it goes lower as a lot of experts seem to be saying
3) what will be the trickle down effects for families like ours ( living in Ontario, government jobs…)
thanks for your patience!

#351 Pete on 01.21.15 at 4:55 pm

http://www.greaterfool.ca/2015/01/20/the-shock-3/#comment-346601

In fact Mark has been quite correct in predicting a lowering of the BOC rate, in spite of much derision here (including from our host).

Not sure about his prediction about a rapidly rising CDN$ though. We will have to see…

#352 Butch on 01.21.15 at 4:58 pm

The sentiment that a quarter-point drop will boost real estate is without basis. Over 70% of borrowers go fixed, and this will not alter those rates. — Garth

Ya – but it will keep buyers in the market, making prices to up, not down.

Prices will stay high for the next 3-4 years I bet. Maybe longer. Buyers made a damned good bet.

#353 Mike S on 01.21.15 at 4:59 pm

“Exports (oil, what else) are dropping ….. they just recorded the biggest decline since February 2011.
This could be the first of a number of rate reductions. Let’s call it for what it is ….. PANIC!”

What’s unclear is why now? Why not signal the intention to cut, and then maybe cut in the next few meetings?

#354 Pete on 01.21.15 at 5:01 pm

We should not be surprised at Poloz and his interest rate move in retrospect, really. He has signaled from the beginning of his tenure that he believed in the time-honored Canadian tradition of ignoring our real problems such as pathetic productivity and huge misallocations of capital (particularly into this ridiculous hosing bubble), by simply devaluing our dollar, thus making us all poorer and spreading the pain. Weak and pathetic.

#355 Hot Albertan Money on 01.21.15 at 5:03 pm

@ Mark (#338)

Thanks.

#356 Victor on 01.21.15 at 5:04 pm

Imagine a swelling herd of uncontrollable wild mustangs, running panicked through the sagebrush. Those are the Calgary sellers.
Oh man… I imagined. The most wicked laugh I’ve had in months.

Thanks, Garth.

#357 I told u so on 01.21.15 at 5:09 pm

Nice call on interest rates….LOL
Only one way to go right.
Your advice also sucks on RE in this pussy of a country.
RE will double in the next 5 years.
ps – will come back just to remind you… !

#358 screwed on 01.21.15 at 5:12 pm

That Vancouver building lot of $1,000,000 is now only $750,000 USD …

Hollywood North just got an extra discount on its products.

Wouldn’t be surprised to read that FB and GOOG are going to open up offices in the Vancouver area. The pool of qualified labor is good and the cheaper Dollar expenses helps create more profits on USD revenue streams.

Lumber sales should do well also.

Not all bad news.

#359 Ret on 01.21.15 at 5:13 pm

The whole country was going to go to Hell in a hand basket if he didn’t cut rates by .25.

We’re in a speed wobble folks. Hold on and kiss your assets goodbye, we’re about to …

#360 M on 01.21.15 at 5:14 pm

the REAL US RE story:

http://www.theburningplatform.com/2015/01/16/pin-meet-housing-bubble-2-0/

:)

QE4 in March anyone ?

#361 Kris on 01.21.15 at 5:15 pm

Just yesterday or the day before, I posted on this blog, that the govt watches out for the indebted. This 0.25% rate CUT, in the midst of record ballooning debt, basically proves my point.

Forget about this housing market, folks – It’s not slowing down in the near future.

Blogdogs asked, “If the govt can prop up the market, how come the US govt couldn’t protect theirs?”.. Well, now you see our govt DOES have some knobs to control this market, unlike the US govt.

Cdn housing is very much govt-controlled (via CMHC), while US housing (pre-crash) was entirely in the hands of investment banks.

This cut does nothing to help the indebted. — Garth

#362 Sideshow Rob on 01.21.15 at 5:16 pm

#343 Pete
Exactly. The last BOC governor with a pair (Carney) was quickly promoted to the big leagues. Don’t expect this guy to act like he has a set. He will take the easy way out always and forever. The peasants never figure out that they were sold down the river until too late anyways. Ask an Argentinian if currency devaluations matter.

#363 Sheane Wallace on 01.21.15 at 5:19 pm

#336SWL1976

It is actually quite easy to predict what is coming in long term, short term fluctuations are relevant for repositioning, or if you are a trader.
It is not just politically correct to talk about it.

Bottom line, the things will go the way there were going in the last 6-8 years until they can’t.
And when the reality can’t be ignored any more and all the pressure is released and unwinds in relatively short time frame it would be very painful.

As of the price level they would be relatively measured across assets (so stay in assets) and definitely not in nominal currency value, a house might be 2 millions soon but a cup of coffee might be $ 10, despite all deflation talks.
I wrote about it in 2005. Nothing new under the sun.

Garth and mainstream analysts would be slowly moving in the same direction of thoughts but for the general public there is little hope, by the time all the smoke clears it would be too late.

#364 OMG on 01.21.15 at 5:19 pm

Major alert for Smoking Man. Your investing in USD has just lost 22% every time you go to the Casino. Don’t give any BS about never converting your dollars to US. Even if you have a US account, you gotta start in CDN.

#365 Sathington Willoughby on 01.21.15 at 5:19 pm

I work for an oilfield service company in Alberta and there are plenty of companies jumping on the bandwagon with requests for us to drop our pricing. Guess what, we are doing it…if we don’t, someone else will!
Going to be some lean days out there in the horizon!

#366 Holy Crap Wheres The Tylenol on 01.21.15 at 5:22 pm

#337 Mithan on 01.21.15 at 4:42 pm
I predict very little of this will matter and we are just seeing short term BS.
Canada’s housing will stay high for years to come, maybe even go higher and in a year from now, Oil prices will be recovered, jobs will be coming back, the dollar will be 90 cents US again, the Harper Morons will be re-elected, etc, etc and we will look back at all of this as just another blip of bad news we all screamed over and didn’t really matter in the slightest.
Like all the previous “bad news” we have had over the last few years.
In other words, none of this really matters.
Move on.
____________________________________________

Agreed, nothing really matters. Same old same.

#367 fancy_pants on 01.21.15 at 5:24 pm

Over 70% of borrowers go fixed — Garth

makes sense, poor and stupid go hand in hand. history has proven that is the more expensive option 9 times out of 10. years of Mark Carney with all the finger wagging about imminent rate increases led many to the banks troughs. poor sheeple, sheared by an ex bankster.

#368 mark on 01.21.15 at 5:26 pm

Should the BOC sell naming rights?

The Re/Max Bank of Canada.

#369 what bubble? on 01.21.15 at 5:27 pm

#134 It will be a nasty crash realtors, a nasty crash!

But meanwhile realtors are celebrating, drinking Champaign and pronouncing toasts: “It’s different here. Our economic fundamentals are strong! Vivat consumerism and borrowing!”

#370 Horizons on 01.21.15 at 5:30 pm

Similar type of question as comment #343

We are renting, N Van, very decent incomes and no debt. SFH stock is very low, with listings in the $2-3m range growing (no idea who buys these places) and nothing under $1m.

Are we likely to see a 2nd rate cut later this year?

Will banks follow and reduce mortgage rates?

Is it likely to be easier to find a place or will prices continue to sky rocket?

Thanks

#371 pwn3d on 01.21.15 at 5:31 pm

#344 – If someone told you they thought it would rain because the sun is so bright, wouldn’t you think him a moron? If it then rained a few hours later, would you think him still a moron, or is he now a genius?

How you answer that question will define your opinion of Mark.

#372 Smoking Man on 01.21.15 at 5:34 pm

#355 OMG on 01.21.15 at 5:19 pm
Major alert for Smoking Man. Your investing in USD has just lost 22% every time you go to the Casino. Don’t give any BS about never converting your dollars to US. Even if you have a US account, you gotta start in CDN.
……..
Casino gambling is chicken shit..

At 9am, I called my boss in NYC, told him we are getting a rate cut, or a talk of one.
I sold, 10 contracts USACAD. He put on a 25 contract bet.. Crazy bastard.

#373 Mark on 01.21.15 at 5:38 pm

http://globaleconomicanalysis.blogspot.ca/2015/01/currency-wars-pick-up-steam-today-with.html

Mish (Mike Shedlock)’s comments on the BoC and the state of the CAD$ yield curve. Mish is one of the very few who laid out the case for deflation in the wake of the collapse of the US housing bubble, and is usually well worth the read, even if you don’t fully agree.

#374 screwed on 01.21.15 at 5:41 pm

#362
I’m not a mortgage broker but my understanding is that money is like a commodity now. A few percentage points will allow the servicing of greater debt loads at current income levels.

Basically we should all get our heads around this and start acting like the banks have been for years. Take on as much leverage as you can. Maintain a minimum capital reserve and put the loans you’re taking on to work in something that will hopefully generate revenue.

Money is a commodity. It is worth less and less every day unless it’s put to work and generates a return.

Next year’s Dollar will buy less than the Dollar buys today. So why keep hoarding it?

That is essentially the philosophy of central banks and their primary dealer banks. They discourage the hoarding of cash and in the case of the Swiss SNB, they penalize the hoarding with .75% negative interest.

Hard at first when you’re always taught to be a squirrel.

#375 fancy_pants on 01.21.15 at 5:44 pm

just curious Garth, is Crissy still working for you? http://www.greaterfool.ca/2011/02/06/
I’m surprised you haven’t trashed the Hummer yet.

#376 Tony on 01.21.15 at 5:44 pm

Re: #337 Mithan on 01.21.15 at 4:42 pm

Oil won’t recover until the U.S. election is over.

#377 jess on 01.21.15 at 5:53 pm

The foreclosure echo and mortgage insurance

Years later Homeowners billed for houses lost in foreclosure …
https://www.bostonglobe.com/metro/2015/01/17/insult-injury-home-owners-get-big-bills-for-houses-already-taken-foreclosure/wSJHCbr2AQriwk2LRUHmiI/story.html

http://mfi-miami.com/2015/01/now-its-mortgage-insurers-going-after-homeowners/

========

For Immediate Release – January 16, 2015
Four National Banks to Pay $2.7 Million to Massachusetts Over Unlawful Foreclosures
Bank of America, JP Morgan Chase, Citi and Wells Fargo Bank to Assist Consumers in Curing Foreclosure-Related Title Defects

BOSTON – Four national banks agreed to pay a total of $2.7 million and undertake obligations to facilitate the repair of defective property titles, resolving claims that they unlawfully foreclosed on properties in Massachusetts when they did not hold the mortgages, Attorney General Martha Coakley announced today.

http://www.mass.gov/ago/news-and-updates/press-releases/2015/2015-01-16-national-bank-cj.html

#378 aL pacino on 01.21.15 at 5:55 pm

#361 Horizons on 01.21.15 at 5:30 pm
Similar type of question as comment #343

We are renting, N Van, very decent incomes and no debt. SFH stock is very low, with listings in the $2-3m range growing (no idea who buys these places) and nothing under $1m.

Are we likely to see a 2nd rate cut later this year?

Will banks follow and reduce mortgage rates?

Is it likely to be easier to find a place or will prices continue to sky rocket?

Thanks
****************************************

SKYROCKET, BET ON IT !

#379 Skeptic on 01.21.15 at 5:59 pm

Well, well. Our buddy Mark just learned an important lesson on interest rate differentials. The idea that CAD will rise as housing and the economy rebalances has always been laughable. Sorry, bud

#380 Mark on 01.21.15 at 6:03 pm

“Well, well. Our buddy Mark just learned an important lesson on interest rate differentials. The idea that CAD will rise as housing and the economy rebalances has always been laughable. Sorry, bud”

Interest rate differentials favour the low interest rate currencies appreciating, so as to create convergence of returns in a given asset class. In this case, cash.

Its early in the game, and I think Switzerland recently was a great example of how chasing higher interest rates (or alternatively, fleeing the negative rates of the SNB) can lead to ruin.

#381 Kris on 01.21.15 at 6:03 pm

#352. This cut does nothing to help the indebted. — Garth
—————

I’m not an economist, Garth, but this cut means lower variable rates – No?

Figure out what a 0.25% cut means to a $200,000 interest-only floating-rate LOC. — Garth

#382 calgaryPhantom on 01.21.15 at 6:07 pm

WOW, 370 comments and counting. I guess, asset price is not the only thing that goes up with a rate cut.

#383 rosie "moving forward" in the knowledge that, "this won't end well" on 01.21.15 at 6:10 pm

March 2002, seems like yesterday.

http://www.canadianforex.ca/forex-tools/my-fx-dashboard

#384 aL pacino on 01.21.15 at 6:13 pm

Hey garth.
Are you still ripping on Zlotych ?
Zloty beats the shittly loonie any day.

#385 Red Deer Rob on 01.21.15 at 6:14 pm

I have a feeling Garth is going to drop some knowledge bombs tonight. Take cover!

#386 chapter 9 on 01.21.15 at 6:19 pm

#367 Tony

Oil won’t recover until U.S. election is over.

Oil won’t recover until the cash reserves of Iran and Iraq are depleted. Right now those two countries are sitting on about $130 billion, so we have a ways to go yet.

#387 Snowboid on 01.21.15 at 6:19 pm

#69 Darryl on 01.20.15 at 9:56 pm…

In defense of the personality referred to as Smoking Man, it was a great idea to purchase RE in the US a few years ago.

Not sure if he did so, but we did.

Expenses in US and earnings in CAD – you are correct, but here in Arizona one Canadian dollar would have to decline to .70 cents before expenses are the same as Canada.

The home we purchased in 2010 is worth about 46% more today, with the CAD at .80 US add another 20% if we sold today.

The IRS takes capital gains, as one would expect when one isn’t a permanent resident, but with the tax treaty with Canada it’s about the same as having a second property in Canada.

If you die and your worldwide net worth is over $ 5.4 million US – we have a ways to go with only a tad more than 1/5 that.

You don’t think it was worth it? I respectfully disagree.

We paid less for a nice SFH in a beautiful NW Phoenix area than a mobile home on leased land cost in Kelowna at that time.

It’s now worth around 65% more than we paid. A similar home in Kelowna would cost at least $ 500K, but not likely on a 1/4 acre lot.

We have enjoyed five winters down here and don’t miss the snow one bit. We didn’t buy it as an investment, but as an escape from the Canadian winters, but aren’t complaining about it appreciating as it has.

#388 Romeo on 01.21.15 at 6:30 pm

# 324 Bottoms Up

That’s next should the 0.25 % reduction not be enough .

#389 karma on 01.21.15 at 6:33 pm

TD not dropping its prime rate! hahahahaha

#390 T.J.BONES on 01.21.15 at 6:44 pm

Sir Garth: Rereassurance:
If I could be so bold; to ask a question?
Does this all mean that there is too much money in the world? And it has no place to go? Does this mean that is why the money has no value? Money that is not put to work has no value!

#391 Roadrunner12 on 01.21.15 at 6:47 pm

#364

From the Mish article:

“I smell a Canadian recession (and more surprise actions). A bust of the Canadian real estate bubble, one of the biggest in the world, is also on the way.”

Any thoughts on to what the surprise actions are? Also remember an election in near.

Garth any more comments for us foolhardy goldbugs?

#392 Romeo on 01.21.15 at 6:48 pm

What’s up with al the “MARK” bashing on this website from all the lesser IQ’s on this board ?

Far as I can see, the fellow spends a lot of time trying to interpret events and share his insights – as he sees them. Displays a fairly good intellect in doing so as well.

Instead of criticizing, why don’t you Mark bashers put forth your interpretations or ideas in detail as he does?
Then we will take nasty shots at you – see how long you keep airing your views.

I actually laugh at those who follow this wannabe douche bag Smoking Man – don’t you realize that he is another internet fabrication?

Some people will believe anything I guess.

#393 eric on 01.21.15 at 6:51 pm

Indeed.

http://mobile.bloomberg.com/news/2015-01-21/bank-of-canada-cut-shows-housing-another-worry-from-oil.html

#394 Mark on 01.21.15 at 7:00 pm

“TD not dropping its prime rate! hahahahaha”

Should be good for bank earnings. Canadian consumers are trapped in a debt corner, and the banks know it.

#395 shawn Allen on 01.21.15 at 7:02 pm

Why are Interest Rates so low?

T.J. Bones at 380 asks:

Does this all mean that there is too much money in the world? And it has no place to go? Does this mean that is why the money has no value? Money that is not put to work has no value!

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

Essentially yes.

The 1% have SO much money that they can’t find enough people to borrow it. So the price of borrowing has been bid down

It’s simple supply and demand.

The World may seem awash in debt, but in reality the net debt of the world is always zero (Nothing owed to martians). Some people and countries are awash in debt. The lenders are clearly awash in savings and money.

Low interest rates tell you that there is an abnormally high supply of money for lending as compared to demand for borrowing. It’s simple supply and demand.

As Garth says the Fed don’t set longer term rates…

An no one is forced to loan at low rates, they do it because that is all the market will bear.

#396 Slumlord Billionaire on 01.21.15 at 7:06 pm

Privatize CMHC now! Let the 1% take it on.

#397 Mike S on 01.21.15 at 7:15 pm

“Should be good for bank earnings. Canadian consumers are trapped in a debt corner, and the banks know it.”

Is it only the TD bank or other banks as well?

#398 Is this a record? on 01.21.15 at 7:16 pm

Closing in on 400 comments. Is this a record comment count?

It’s astonishing what gets people randy. — Garth

#399 Mike S on 01.21.15 at 7:21 pm

“Far as I can see, the fellow spends a lot of time trying to interpret events and share his insights – as he sees them. Displays a fairly good intellect in doing so as well.

Instead of criticizing, why don’t you Mark bashers put forth your interpretations or ideas in detail as he does?
Then we will take nasty shots at you – see how long you keep airing your views.”

I’m very happy with Mark’s comments, even if I don’t completely agree (or maybe understand) all of it.

But nice to see a different views on some points

#400 Calgarian pumper on 01.21.15 at 7:29 pm

400!!!!!! who luvs ya baby.

#401 Mark on 01.21.15 at 7:30 pm

“Is it only the TD bank or other banks as well?”

I checked CIBC, RY, CM, and BNS. No change with any of them. But I am getting a chuckle out of the CBC commentators/articles which claim that the lower policy rate will be passed onto consumers.

#402 crowdedelevatorfartz on 01.21.15 at 7:33 pm

Wow 400. A new record?

#403 OttawaMike on 01.21.15 at 7:36 pm

400th!!!

#404 T.J.BONES on 01.21.15 at 7:38 pm

To Shawn Allen:

Thank you for your explanation!

#405 Smoking Man on 01.21.15 at 7:42 pm

#388 karma on 01.21.15 at 6:33 pm
TD not dropping its prime rate! hahahahaha

Not suprising, worced Canadian bank.

BMO will and others will fallow.

#406 Calgarian pumper on 01.21.15 at 7:45 pm

The blue-eyed oil pumpers have ticked off too many… going down in flames….

#407 Jetfixer on 01.21.15 at 8:04 pm

To be honest, reading Garth’s posts and Mark’s commentary is a nice 2 for 1 kind of deal. Mark, nice call on the interest rate. I’ve learned alot off this place. But I am worried about our economy now..

Cheers

#408 Vamanos Pest on 01.21.15 at 8:13 pm

THE BOC DROPPED IT RATE 0.25% AND………yawn.

Balanced and diversified folks have no reaction to this. They’ll make a little on the TSX, and the US equities, etc portion of the portfolio (with the weakening of CAD), and lose a little in other areas mostly related to dollar weakening.

Whatever.

I’ve been in the investment game now long enough (not a really long time, but long enough) to know that if a single piece of financial news is either curse, or a godsend, you’re doing it wrong.

As the housing bulls (shall we call them realtors and homeowners) assure themselves that this is a vindication, and that they were right all along, while the housing bears (renters, savers, Garth) say WTF!!!

I, as a content renter, say “whatever”. If housing doesn’t go down, I’ll keep letting my landlord subsidize my lifestyle with the ridiculously low rent I pay compared to the price he paid for the house.

If housing prices do go down, I’ll buy.

The only thing I know for sure is that this stupidly expensive bottle of Chateauneuf-Du-Pape that I just opened (an ’07 Janasse, bought with money I’m not spending on a mortgage) is awesome!

#409 Ollie on 01.21.15 at 8:19 pm

Smoking Man, what’s a “worced”?

Oh, please remember to attach a thesaurus to your book. Write me down for a few copies. Can’t wait…

#410 James on 01.21.15 at 10:46 pm

With in excess of 35 years experience of watching the FX markets and the interplay of monetary policy and the C$, this is the first time I have seen the BoC act irrationally. They are giving the green light to the FX markets to short the dollar. Next major support is around 74 cents, if that breaks it can go much lower & yes, Virginia, that will raise the price level significantly. This was a colossal blunder.

#411 aL pacino on 01.22.15 at 4:23 pm

So much for a correction in housing.
Its pretty obvious the ball-less gov is determined to save the debt pigs at all cost so real estate has wind left under its wings.
With the loonie taking a huge dump our real estate continues to appreciate.
Afterall, why would anyone keep this shitty fiat paper when our gov is shitting on it daily.
Argument over, REAL ESTATE( 25% of the economy ) WINS AGAIN.

#412 LisaR on 01.22.15 at 5:39 pm

I bought a place in the American Southwest two years ago. The dollars were about at par, I think. I just wanted to escape winter, in a place I could afford. It hasn’t gone up much in value…probably worth the same in American dollars. But, in Canada bucks, it’s worth more. I worry about the water situation though and won’t be doing any major high fives until that part of the world starts to rehydrate!

But I am doing hand springs over the bullion I bought between 7 and 12 years ago. That was a reasoned move. When it cratered to around 1350 an oz, in Canadian funds a couple of months ago, I went to Scotia bank to cash some of it in. I missed the window by 5 minutes as am on the West Coast. That was some fortunate timing. Now gold is trading at over 1600. in Canadian funds.

I moved from the U.S. to Canada when the Canadian dollar was worth 65 cents to the American dollar, too. How weird is that? If there is a patron saint of currency hedges, he/she is looking after me.

#413 LisaR on 01.22.15 at 5:48 pm

#395

I think of the current economy as neither deflationary or inflationary, in classical terms. It seems to me to be bi-flationary, particularly with reference to the current American economy, for all of the reasons you mention.

When the banks start to make it easier for the average person to borrow money , the traditional dynamics might return. Otherwise you will have ‘growth’ predicated on asset bubbles and job recovery based on burger flipping, nail painting, part time jobs.