What to do when the housing boom turns to bust
Financial Post
Housing market hints at changes with declines in key cities
The Globe and Mail
There ya go. Headlines earlier today in a couple of the mainstream national papers. Finally.
As this consistent but obsessively repetitive and oft-terrifying (but manly) blog has been yammering about for a few months, the housing market is sick. Sales are stagnant or declining in 80% of regional markets. Personal finances are in worse shape than Smoking Man’s teeth. Debt is off the chart, wages are stagnant and the savings rate has tanked. I hear RRSP contributions were a shock this year. And with the oil peril spreading, we have a two-market housing bubble that looks increasingly delusional.
TD now says the economy will soften more in 2015. A realtor dude in Calgary credibly suggests prices there could fall 40% and not recover for eight years. Some analysts look at US oil stockpiles increasing by 1-2 million barrels a day and are forecasting $20 crude within a few months. We have a federal government too chicken to bring in a budget. And people in YVR and the GTA are still snorfling houses? What are they high on?
Crack cocaine mortgages, of course.
This week one of the country’s major mortgage insurers, Genworth, came out and stated the obvious. Alberta is a time bomb:
“What we’re doing is we’re looking at the stacked risk factors a lot closer — so people that have higher debt service ratios, that are employed in the oil and gas sector, that may be dependent on one income versus two, that are buying a home with five per cent down — we’re going to take a lot closer look at that deal.”
What comes next: Panicked feds will lean on the Bank of Canada to drop its key rate another quarter point at 10 am on Wednesday April 15th. (What a sad thing that we have come to this.) The dollar will dive more, immediately. And a five-year, fixed-rate mortgage could be on its way to 2.5% at the major banks – at least for a while. The stock market should jolt mildly higher.
It’s a gamble. Will Canadians keep on toking, or start choking? With mortgages already totaling $1.2 trillion – double in the past few years, despite swampy incomes and higher unemployment – how much more cheap debt can people absorb? Now that most housing markets are flatlining, even with the lowest mortgage costs ever, will buyers stay home – the way they are in Calgary? Will these mainstream news headlines help turn the tide so moist millennials, even in Van and Hogtown, see the towering risk real estate now poses?
Beats me. I just ask the questions here. But we’re certainly closer to a turning point, it would seem.
When we do turn, prepare to see a lot of tears shed over false equity. This is a good term for absolute illusory wealth – the kind that turns nice, good friends into insufferable dorks when they talk about how much money their houses are making.
In reality, there is no money until it’s realized in a house sale and put into your bank account on closing day by the lawyer. Then it’s real. But until that point it’s a fiction, based on market value which can quickly change (remember Calgary?). False equity also refers to the unsustainable gap between what people pay for houses these days, and what they cost to (a) replace or (b) rent.
A US firm studying real estate values nationwide found something interesting. Prices have rebounded from the GFC lows by an average of 13.2%, but rent and reconstruction costs have increased by only 1.9% and 3.3%. So what? So, the market value of properties is exceeding the utility value of them – which is a good gauge of speculation. People are willing to overpay because they expect prices to keep rising, plus interest rates are thin and they can carry the additional debt.
In a correction, this ends quickly. House prices tumble back to their utility value, or below, especially when the number of buyers is seriously reduced. As you know, inflated real estate appraisals were at the very heart of the US bubble that produced excessive prices and epic debt. (Sound familiar?)
So, when was the last time you heard of a bank appraiser here factoring in how much it would cost to rebuild a house, or what it might rent for? ‘Never’ is the correct response. Residential real estate only costs what it does for one reason. Cheap money.
Now it’s about to get cheaper. God help us on the trip down.
247 comments ↓
I’ve said it before and I’ll say it again: Canadians are stupid when it comes to money. It isn’t any more obvious than it is currently. If you’re a Canadian that owns real estate, you are a boner, in my humble, but generally accurate opinion.
U.S.A.!! U.S.A.!!! ….AMERICUH!!!!!
…good god smoking man …get your teeth fixed!
You’ve made it smoking man. Accept your new place in the blogosphere with grace.
Smoking man made his fortunes on his invention, The Toothbrush.
If somebody else had invented it, the name would have been Teethbrush.
Is there a particular era in Canada’s history when the real estate and economic markets would be considered similar to now?
its spring in the queen city
we have a foot of fresh snow on the ground
we have houses that have not sold in over a year
we are very deep in debt as a province
but the robins r back …happy spring
Of course it’s the low rates, but also the incredibly irresponsible way they shifted the risk from the lenders to the taxpayers via CMHC.
If the banks had skin in the game, they wouldn’t be lending to people with only 5% down payments at this point
Fiiiiiirrrrrrrsssssstttt!
So, who really wants to buy a house at this precarious junction?
Boomers who have not saved a big wad to earn interest off of (think 500-750K) with no other income stream besides CPP probably should consider selling in Van and TO to cash in, while the ‘getting’ can still be got.
Otherwise that Alpo & cat food plan will be yours, when you burn through those lesser savings. Yes, replace a car, a few appliances, help out a kid or two, and you are burning through tomorrow’s net income.
Shazaam “we’re broke honey, our house will fetch 2/3 of what it was worth in 2015. Ww have no choice except the “reverse mortgage.”
Ugly option. The world does keep turning, whether you wish to claim your piece of it, or get your wrinkly ass slapped by the reality of tomorrow. Your Choice.
I just met up with my friend from YVR recently and doing a rough estimate of his highly leveraged real estate holdings, he has upwards of $6 mil in a condo, a townhouse, a house and some warehouses. He isnt worried, everything is peachy. I told him that if the Fed raises rates in the US, Canada will be compelled to follow suit or the Loonie will tank even more. His only response was, “Oh really, why?” He said he doesnt like reading the newspaper including financial news as it is too depressing.
Poor Stevo and the boys, they are trying to keep this whole thing together long enough to be returned to power.
It is a real mess, houses going up, inflation going up, the dollar going down, and what does the BOC do, lower the rate.
When it does not make sense – blame the politics of power…
Forces driving Canadian RE are so diverse and our mentality is so screwed up that it is impossible to time this market. We tried to time it unsuccessfully for so many years, that I just lay back now and observe. We know that the fundamentals suck and that the status quo is unsustainable. Crash predictions just keep coming, and at some point, somebody’s 120-th try will be a charm
Come to Australia! It’s still all system go here
Crack cocaine mortgages on BoC for everybody!
Don’t think, just get in.
” false equity”? I like to think of this as psychological income, until realized, of course.
FIRST!!!!
You’re right Garth, it is going to get really ugly out there. I was speaking to a banker the other day here in Victoria about a mortgage renewal for a rec condo I have. He said business was slow and many appraisals were coming in significantly less than the asking prices. He said many of the sellers were going to have to adjust their expectations and sadly some would have to sell for less than they paid. No, real estate doesn’t always just go up.
#243 Mark on 03.24.15 at 3:36 pm
Buy high, sell low? If a person is saving for retirement and most of their expenses ultimately will be denominated in CAD$, why overweight the US?
The argument that’s been made definitely has been for diversification, but overweighting the US is a trade whose time is long past.
Interesting point. Do you believe the US is due for a crash? Why would it happen?
I have 20% of each of my TFSAs and RRSPs in CAD ETFs. Not saying stay away from CAD, just to diversify as much as possible – by geography, by sector, etc.
“As this consistent but obsessively repetitive and oft-terrifying (but manly) blog has been yammering about for a few months”
Really Garth?? It’s only been months? Feels like years. Self fulfilling prophecy at it’s finest. You are a soothsayer indeed sir.
Quoting headlines from FP as sign that media is gloomy on housing only to have a new headline from the same paper insinuate that it’s not so bad:
http://business.financialpost.com/2015/03/24/now-and-then-do-canadian-homes-really-cost-that-much-more-than-30-years-ago/
Give it a read. I’ll let people draw their own conclusions suffice to say it has some glaring errors.
Point is that I wouldn’t trust news articles to guide you as to whether there is a bubble and how large it may be.
[…] Source: http://www.greaterfool.ca/2015/03/24/the-illusion-3/ […]
I can’t help but wonder how many people are going to be in for a very rude awakening when they discover that you can no longer walk away from negative home equity.
Thanks for sharing your views on the RE and invaluable advise on Investing. In some of your previous blogs you have mentioned about balanced portfolio with mix of Equity, Fixed Income, Preferred ETFs without home country bias – I have been following performance of some ETFs like XUS, XIU, VBU, VAB and noticed that their price went up and down together the past few days when the markets were wobbly. Also some of the Fin. Analysts have mentioned that the Bond market is also high due to low interest rates. For a newbee investor would you mind helping understand why the fixed income ETFs will be useful to balance in case there is a correction in the Equity market. Thanks Again !!
Report Says “False Equity is on the Rise” in Housing Market : http://blogs.wsj.com/developments/2015/03/20/report-says-false-equity-is-on-the-rise-in-housing-market/
cheers!
Yeah I don’t think crude is going to $20. Noticed last week that both ND and Texas had falling production for January. It all seems a bit confusing considering the EIA had them both increasing in January. Until you find out that the EIA’s production numbers are based on an algorithm.
Whoopsie.
Are storage numbers done by an algo based on EIA’s production numbers? I guess we’ll find out in about June.
I’ve heard anecdotal evidence of tear-down homes being bought by groups of spec-u-vestors, friends and relatives who pool leveraged funds to flip real estate in YVR.
The intent is to sell once the spec. House is built, and split the profits. Except that the houses aren’t selling – they’re over-priced, and the amateur investors can’t agree on lowering the price to make a sale.
Of course, these investments are made privately, usually without formal contracts, and of course there’s no regulation, and everyone’s too greedy to lose.
This is going to vapourize the wealth of a lot of families.
What precisely was accomplished with the first rate cut? It will take a long time to build up a diversified, innovative manufacturing sector; a quick fix like a lower dollar won’t help. No, these rate cuts will only help Canadian companies paid in US dollars like those involved in the tar sands. Our prime minister for oil is playing to his base. The rest of us will just have to accept higher prices for American imports.
Great post today Garth.
The comment on there being no money in a house until it is sold and the money gets put in your bank on closing day is right on. I have always found it interesting how people talk about what there house is worth based upon what the guy (or gal) down the street just sold his (or her) for. They think they are rich (because some bank has a good tag line) and borrow against the so called equity in the house. What I have never understood is what to they plan to do when the sell and buy a replacement one. There is no equity because they already spent it.
My view has always been that a house is a place to live. Nothing more. I have never worried about what the market is doing because if I sell, I will need to replace it and the cost of the replacement one will rise and fall with the markets like the one I already own.
If banks had some skin in the mortgage game, what would bank stocks really be “worth?”
False equity in equities?
Its a sad reality we are facing.
I can picture the rates continuing to drop until the election is over. This will lower our dollar and allow people to feel safe while parroting the “a low dollar means more jobs since its good for manufacturing” meme. Its just more debt to pacify the greaterfools and give them a false sense of security. To me it seems the intention is to delay the tough times so no one is blaming Harper when the election comes in 6months.
Meanwhile the price of almost everything goes up punishing all Canadians whether they own a house or not.
Nostradamus is always right. Canada is immune to financial crisis.
“A US firm studying real estate values nationwide..”
Sorry if I’m a bit dense.. but did you mean they studied “values nationwide” in Canada, or the U.S.?
American. — Garth
And people in YVR and the GTA are still snorfling houses? What are they high on?
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Probably HAM, or looming lack thereof.
Garth
I remember reading how one economist in the USA sent a detailed report to the SEC outlining how the steady return of 1.0% per month being claimed by Bernie Madoff could not be achieved under any combination of purchases or sales. Year after year this concerned citizen provided the SEC with clear evidence that Bernie was running a gigantic Ponzi scheme. Several of the brightest minds in the country refused to consider this possibility because the consequences of the truth were very very scary.
Well Garth many of our brightest minds are refusing to consider the possibility that financial institutions in Canada are so focussed on the price of their share and bonuses that they may have lost touch with reality. Canadians, with the full co-operation of our government and financial institutions have participated in a Ponzi scheme based on the purchase of real estate. No matter how often your blog warms Canadian citizens that the value of housing cannot continue to increase forever they cannot, and will not, accept this truth. This is how, and why, a confidence game works!
At some point in the future our media will be full of stories asking how we missed the warning signs. We missed the signs because the 70% of Canadian families that own their own homes and our elected governments refuse to consider the obvious truth! Just like the high rate of return offered by Bernie Madoff our access to cheap credit has conned Canadians into beliving that the purchase of an overvalued house remains a good investment. When the music stops the last players in get burned and finally look behind the curtain.
No pleasure in saying I told you so after billions of hard earned dollars disappear down the drain.
Let’s see. In January the Poloz poodles lowered the rates; in April they make fold and lower them again…. then later they’ll raise ’em and then raise ’em again….. back to where they were before January’s epiphany. Hamster poodles spinning in a wheel. Meanwhile, just out in Calgary: “Overnight, Nexen Energy the Calgary-based company, which was acquired by (China)state-controlled CNOOC in 2013 for $15.1 billion, cut 400 jobs last week in North America… and shutters oil trading desk…” Oopsy. Norway invested its oil kazillions; Alberta played footsy with the largess meme… We’re pretty, pathetic panty-waists. Meaning: stupid. Ditto for housing debt.
Garth,
Do you think that the current government, or the new one come October, will introduce mortgage interest deduction similar to the US? Kind of the perfect “middle class” tax thing that will appeal to a whole lot of voters.
Never. — Garth
Hmm maybe this is a tooth blog.
Harper is trying his best to follow George W Bush’s playbook:
– drill baby drill, to hell with pesky enviros? check
– real estate market bubble and sub-prime lending? check
– spy on your own citizens under the guise of “security”? check
– send troops/planes to Iraq? check
– lower corporate taxes? check
In Vancouver, its the taxpayer that seem to be funding the never-ending condo-building boom.
Sooo canadian….may God help us indeed,especially with the con-government of ours.
Rest in peace canada!!!!
Its not about transit, it’s all about the condos. Dangle a few B-Line busses in front of the unwashed masses like the proverbial carrot on a string while denying to reveal who’s on their donor list? Look who stands up and calls all the no voters losers and practically equates a no vote with the end of the world. Pump and dump baby! It all comes off a little too desperate really.
http://www.vancourier.com/opinion/columnists/hold-your-nose-and-vote-no-on-plebiscite-1.1791689
“There is plenty of proof over the last two decades that hub to hub transport by TransLink is merely a ploy for businesses to make money from building the concrete intensive SkyTrain lines and concrete intensive condos along the SkyTrain lines,” insists Eric Chris.
This argument is echoed by Charles Menzies, a UBC professor of anthropology. A passage from his blog deserves to be quoted at length:
“Fundamentally the transit referendum is about subsidizing the real estate development industry of the Lower Mainland. It is a wealth transfer from the majority to the elite minority who are raking in big dollars by revalorizing land through the development of public transit. This is not a new plan, it’s one used by developers historically and the world over: use the mechanisms of the state to take money from the majority to fund the profit making ventures of the minority.”
#28 Some guy
It blows my mind.
Doesn’t a “trade deficit” mean that we import more than we export?
Given that our major exports include “oil”, doesn’t that mean that our trade deficit is going to increase?
Doesn’t that mean that a falling dollar is bad, bad, bad?
Pretty soon the banks will be forced to tighten up their credit policies – as the market changes & prices fall it may no longer be possible for home buyers to be able to roll credit card debts into their mortgage payments. KABOOM!
OK Garth. I am partially listening.
Not ready to sell my house, cash out and rent. I am not there.
But, I am taking advantage of the extremely low interest rate on my mortgage by reducing the accelerated payment pace and instead transferring funds to purchase some ETFs (within my TFSA firstly).
Hesitating between a few – I have quite a few ETF’s in my RRSP and RESP – but they all seem quite high right now. Need to study a bit more.
Garth, fantastic blog Squire.
I read with particular interest to see the, Great Race of Monumental Absurdity, between Australia and Canada on who can blow-up the biggest.
In one corner we have Australia, the Land of Oz, with a significantly smaller population, smaller economy, but able to punch way above its weight in debt consumption.
Though Canada is showing a very impressive appetite for all round, skillful debt consuption, there are no prizes for second worst… I’ll stop there, I tip Oz as the winners.
Hopefully these debt munchers don’t take the debt-free, savers with them.
#1 Leroy Washington on 03.24.15 at 6:09 pm
I’ve said it before and I’ll say it again: Canadians are stupid when it comes to money. It isn’t any more obvious than it is currently. If you’re a Canadian that owns real estate, you are a boner, in my humble, but generally accurate opinion.
U.S.A.!! U.S.A.!!! ….AMERICUH!!!!!
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I guess you wish you’d bought some huh, mister pathetic canadian bitter cockroach that you truly are.
Instead of spewing venom, take a good look in the mirror to find the answers you’re looking for.
#6 wishful_thinker on 03.24.15 at 6:21 pm
Of course it’s the low rates, but also the incredibly irresponsible way they shifted the risk from the lenders to the taxpayers via CMHC.
If the banks had skin in the game, they wouldn’t be lending to people with only 5% down payments at this point
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Or any other point in recent decades long history.
Poloz will drop on the 15th – as sure as stock in Media Companies (The CRTC just killed the golden goose, but I digress) will be a great short for a while.
That means I best buy my EUROS now, for the upcoming Europe excursion.
I was absolutely HORRIFIED at the job losses and impact of the recession was having on Paris, last time I was there. A LOT of excess retail, broke students with useless BA’s – and huge debt.
We have added Rome to the trip, and I have a feeling that the Eurozone and Canada seem to be on the same trajectory.
Fascinating, if scary, times.
10 8102 on 03.24.15 at 6:30 pm
Poor Stevo and the boys, they are trying to keep this whole thing together long enough to be returned to power.
Oh well, if the Liberals get in and it all falls apart by Christmas the Cons will be blaming Trudeau..
Wouldn’t a prudent leader book off about 30 minutes of prime time tv space and address the country directly in real speak, not BoC platitudes, about the state of affairs in the economy and tell people not to choke themselves on debt and start de-leveraging a bit while rates remain low?
I mean why be the person that leads the country into an economic meltdown?
Alberta is FINISHED
http://www.cbc.ca/news/business/genworth-braces-for-downturn-in-alberta-real-estate-1.3007917
Wow
Smoking man gets a straight up mention in the blog. He’s becoming an official celebrity.
I’ll pay $10 for the deleted posts. Winning bid gets donated to charity..
Mr.Turner write smth about traffic, it’s getting crazy, I was bitting my nails with gloves today in 401. Doctor said you are ok and gave me Prozac but I don’t believe him, now in worried about my teeth.
#48 not 1st
“Wouldn’t a prudent leader book off about 30 minutes of prime time tv space and address the country directly in real speak, not BoC platitudes, about the state of affairs in the economy and tell people not to choke themselves on debt and start de-leveraging a bit while rates remain low?
I mean why be the person that leads the country into an economic meltdown?”
I don’t think our leaders are the most credible in terms of demonstrating fiscal responsibility.
Garth,
I know you don’t follow this site but add this to todays headlines…
http://www.zerohedge.com/news/2015-03-24/canadian-housing-bubble-has-begun-burst
#1 Leroy Washington
You have a lot to learn in the art of trolling Leroy – less is more.
#48 not 1st on 03.24.15 at 7:44 pm
Wouldn’t a prudent leader book off about 30 minutes of prime time tv space and address the country directly in real speak, not BoC platitudes, about the state of affairs in the economy and tell people not to choke themselves on debt and start de-leveraging a bit while rates remain low?
I mean why be the person that leads the country into an economic meltdown?
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Harpo would have to be human first to do so.
Fat chance !!!
“Will these mainstream news headlines help turn the tide so moist millennials, even in Van and Hogtown, see the towering risk real estate now poses?”
There will definitely be some psychological contagion. Will that be enough to turn the tide? In Toronto anyway, I doubt it. You need economic contagion – which will come, I believe, but later in the year after all the ripple effects of the oil slump have materialized. Right now the psychology of getting in while rates are low and before you get priced out seems to be the dominant one.
Relax everyone… it’s just money… paper money… printed out of nothing…
OMG, every time I read this blog my anxiety grows.
Hate that.
And, worse, I keep coming back for more — six freakin’ days a week.
Called the realtor a few weeks back after two key events: reading GT’s daily warning, er, post and seeing 2 SFH’s one block over selling, IMHO, for ridiculous over list prices in only a few days (1.1m+). Both smaller sq ft and lot size than what I am sitting on (nervously) here in the wilds of North Vancouver. I at least have a legal 1-brdm suite making $1k/mth to go along with the SST, quartz and hardwood.
Realtor answered my call from a beach in Hawaii. Nice work when you can get it. Anyways, I booked him then and there for a meeting that is finally only 48hrs away (Thurs night @ 5PM). Can’t wait. Been sprucing up the place while Realtor got tanned to ensure it “shows well”. Praying the Vancouver market holds on another week or three as plan is to sign the listing papers by 6pm Thursday and invite the masses in.
Fingers & toes crossed the house sells and quick and we get out with our cash.
Not even looking forward to the anxiety I will likely experience between signing an offer, closing date and seeing “the” check deposited/invested safe and sound (or is that the real illusion?).
Wish me luck, dogs.
RE:26 Freddie on 03.24.15 at 7:08 pm
My view has always been that a house is a place to live. Nothing more. I have never worried about what the market is doing because if I sell, I will need to replace it and the cost of the replacement one will rise and fall with the markets like the one I already own.
Yup. Much better to sell/buy in a down or falling market. Less taxes, less Realturd commission, less pressure, etc.
run away from the Cad dollar as fast as you can, still reducing rates to inflate a bubble, not to deflate it.
loonie to 30 cents, gold help us
god help us
Where is my 10G TFSA contribution limit, Mr Harper?
You’d better come up with it backfill the quickly eroding tar sand votes.
Surprised Bill C-51 hasn’t become an issue on your blog considering how often our government is criticized. Are you aware that criticizing Canadian housing policy could be viewed as a threat to national security in Harperland?
http://www.zerohedge.com/news/2015-03-24/canadian-housing-bubble-has-begun-burst
From our friends zerohedge.
Does anyone else find it obscene that Our Canadian bankers are trying their damedest to rope in just as many unschooled home buyers that they can at this critical time just before the realestate collapse with interest rate deductions?
Talk about shooting yourself in the foot,After this epic housing bust is complete trust in the banking/financial system will be damaged for years to come.
“Cheap money. Now it’s about to get cheaper.” – Garth
——————————————————
Exactly! Rates are NOT going higher for the foreseeable future.
#49 Alberta is FINISHED on 03.24.15 at 7:46 pm
================================
I’m actually starting to feel sorry for you.
Should I buy euro before the CAD dives again?
#26 Smartalox: tear-down homes being bought by groups of spec-u-vestors, friends and relatives who pool leveraged funds to flip real estate in YVR. … This is going to vapourize the wealth of a lot of families.
—
If this is true, it’s going to vapourize the love as well!
Hey! Take it easy on smoking man…
I told SM to floss his teeth. But I suspect he thinks floss is those stringy things the girls in the massage parlours wear.
Going to Europe in a month… do I buy Euros with my USD now, or wait unt I get there? Discuss.
#13…
Australia? Whatever for? I was there last year for the first (and last) time. For the life of me, I don’t know what would ever attract people to that place.
Rude, arrogant people, dull scenery and a cultural wasteland…Hell, you don’t even have a national anthem let alone any national “symbols”.
#41 DreamingInTechnicolour:
…as the market changes & prices fall it may no longer be possible for home buyers to be able to roll credit card debts into their mortgage payments.
This sort of thing should never have been permitted in the first place; mortgage is mortgage, consumption debt is what it is and never the twains should have met. I sure hope the gov’t will enact a law forbidding lenders from continuing this sort of thing. Maybe it would knock some sense into people and force them to be more responsible.
http://pentodpost.com/Business/Home/Filter?ProfileId=5&Category=0&Date=2&Objective=0&SortBy=2&QueryString=canada%20housing
On the subject of cdn beaver-loonie.
Has anyone been grocery shopping lately…..
MY GAWD………………….
Once I read the second paragraph of tonight’s blog and the specific mention of our pal, I got too hammerd to post. On bozze.
The conclusion drawn based on the stats quoted near the end of the article from the US firm are based on flawed logic.
Prices of homes in the US fell hard during the GFC, however rents and reconstruction costs did not budge…and rents actually increased slightly in 08 and 09. So home values had to actually outperform rents in the years post GFC just to make up for the value they lost relative to renting during the downturn.
I hope the point I made is clear and understood…because it’s correct.
#38 Mountain Man on 03.24.15 at 7:31 pm
Harper is trying his best to follow George W Bush’s playbook:
—
You got it. Add:
— Disavow scientific findings and stifle scientists – check
— Use “dog whistle” phrases and causes to attract far-right, white Christian fundamentalists – check
— Loosen gun regulation – check
— Ignore population-health needs and need to innovate in health-insurance and care systems – check
— Disrespect the rights of women – check
— Disrespect and attempt to dismantle organized labour – check
— Disrespect and underserve veterans while promoting militarism – check
What else?
Love the wondering what the gubermint will do when the feces hits the air oscillator questions.
No-thing. Zilch. Dumb asses will be on their own. Dumbness will fester in its steaming piles of duh.
Lest we forget, CMHC protects the banks. Banks will have no losses. The gubermint will be sure to remind seriously delinquent and indebted home owners to not neglect their obligations as they enact emergency legislation to extract funds from responsible savers to compensate lenders.
This can’t end well.
I am now left with one property. The last property to be sold was the mouldy, rat-infested, 50 year old bung. A 4 day multi-offer bidding war that resulted in over a half million in my pocket.
Also sold were 2 condos that are over 15 years old as well as a 10 year old townhouse. Finally. I’ve divested myself of 4/5 Toronto properties.
Overall this put a cool million in my pocket. Half of which I dumped into U.S. Real estate when Garth was talking about it 5 years ago. A nice retirement home and 2 small multi units.
Garth, give the word, and I’ll be going to Calgary baby!
Congrats on being recongized in the blog post, Smoking Man. If you liked the Carlin bit, you need to check out the show Silicon Valley if you haven’t yet already. If you don’t have the time for the full series, at least check out the following clip which is the funniest thing I’ve seen on TV, probably ever.
https://www.youtube.com/watch?v=Tx3wDTzqDTs
Time to start watching CMHC’s numbers…………..
I have never been solicited by phone, mail and email by my RBC bank so much before.
Increasing my Visa limit… I never asked for that.
Trying to get me to open a TFSA
Trying get me to have another Visa card with all the bonus point quirks, etc
Aren’t we supposed to be watching our spending?
My Boomer friend lost his job recently, downsized and replaced by two university kids for half his pay. He just listed his house in Whitby, sold in three days, $12,000 over asking.
He’s headed to Peterborough, buying a smaller place with cash, putting 100k in the bank and returning to his roots, working the tools of the trade. He’s in electrical work. He says it’s like a huge weight off his shoulders.
Rates will drop 50 basis points before the federal election. Get ready for even more.
The need to have the illusion of wealth through home ownership far surpasses the affiliated debt burden.
As many have experienced or seen;that illusion and debt burden catches up to people compromising their future, their kids’ future, their time, their relationships, their quality of life, their stress level, their health etc….
“Personal finances are in worse shape than Smoking Man’s teeth.”
BWAHAHAHAHA ! Now that’s funny. I thought he wore teeth carved out of wood with a good dose of Ploygrip ?
Just imagine what will happen with all those house equity loans and line of credits when property value goes down the drain? Banks will require the whole ammount to be paid back immediately…
#38 Mountain Man on 03.24.15 at 7:31 pm
Harper is trying his best to follow George W Bush’s playbook:
—
You got it. Add:
theft in the form of utilization of tax dollars to send out those PARTY adds purporting to be “government” accomplishments.
This form of add makes me place signs on my car to let people know how the taxes are being “stolen”.
Actually, even Bush was not that brazen.
# 58 Julie K.
You are going to do fine. At least you are not feeling the pressure that I have felt a couple of times between 1990 and 2001 having, more than once, bought another house unconditionally before selling the existing one, in Calgary. Those were sleepless nights but with blind luck we pulled it off.
Best of luck. Good move.
I love cheap money, tax credits subsidizing my companies, free interns, big houses, big cottage, geographically diversified collection of beach front vacation properties, big portfolio, fast cars and boats, off-shore taxes, sexy blonds bundled in two as my jet takes off.
Anything less is not taking life seriously.
#1- Leroy Washington
For a die hard American you sure are obsessed with Canada eh?
I’m a blog dog, so no way in hell would I overpay for a house, but is it really healthy to look a ‘utility value’ when buying a home for shelter and not as an investment?
When house prices do correct, I hope folks won’t suffer from ‘analysis paralysis’ when deciding to buy a home to live in
As most blog dogs will know, China pegs the value of the yuan to the US dollar. The export-driven Chinese economy is slowing down. Many countries have devalued their currencies against the rocketing USD to help their exporters. It seems strange then that China hasn’t . A yuan devaluation would also potentially help Canadian suppliers to China.
The most likely explanation is that China wants to keep its currency stable to help its efforts to have the yuan accepted as a reserve currency.
“At a forum on Sunday, central bank Governor Zhou Xiaochuan swapped the topic of a panel discussion so he could pitch the renminbi’s readiness for reserve status to his co-speaker, IMF Managing Director Christine Lagarde. Premier Li Keqiang told Lagarde in a meeting Monday that China hopes to get the IMF’s seal of approval, according to the government. It may have worked.”
Our resident apocalypse fans may be disappointed to know that the USD will not be demoted from its dominant position as soon as this happens.
“Why China Wants Yuan to Be the World’s 5th Reserve Currency”
http://www.bloomberg.com/news/articles/2015-03-23/why-china-wants-its-yuan-to-be-the-world-s-5th-reserve-currency
True that appraisers don’t look at replacement costs, only similar sales, much like the tax man. And it’s true for residential and commercial real estate alike. I think it’s because first off it’s easier and secondly it’s hard to value the land itself. What is a ’49 era 900 sqft bungalow in Winston Heights worth? The structure itself can’t be worth much at all, so the value must be in the land. What’s that worth? Well here is one that just sold just one block over. And that is how the feedback loop works.
Feh. Just let the little rats go broke with their excessive mortgages. Might finally turn society around and off of excessive domestic squalor.
does Smokey even smoke? I thought he just drank JD. Now there’s a liver
Alberta is FINISHED
Your constant repetitive rants about Alberta indicate to me that you are a one trick blogger with zero depth of knowledge.
Housing won’t start to tank for another 4-6 months. I know, the wife just came from a bidding war of 19 people for a McMansion in Toronto. It went $250k over asking price, $4.5 Million.
I’ll share some golden advice on how to gauge the financial health of the sheeple. Keep an eye on Kijiji.
When you start seeing boats, RVs, sports cars, expensive toys flooding the Kijiji pages, you know people are starting to hurt for money. I am not seeing that in Ontario yet. Alberta, yes, Ontario, no.
Ontario is full steam ahead via government funding. Without government money Ontario, especially Toronto would look like Detroit, already kind of does.
Thanks Garth.
http://business.financialpost.com/2015/03/24/if-you-thought-your-housing-market-was-bad-check-out-fort-mcmurray-the-heart-of-canadas-struggling-oilsands/
Average house price over 750,000 grand in Fort Mac. Yikes.
Interestingly enough if someone searches MLS for Calgary inputting the keyword REDUCED will find 100 listings for which 25 have been reduced within the last week. This should give a good indication of the market going forward on a weekly basis.
Garth said:
‘Panicked feds will lean on the Bank of Canada to drop its key rate another quarter point at 10 am on Wednesday April 15th. (What a sad thing that we have come to this.)’
If this happens I think it will be a disaster for most of canadians and the general economy in moose land. It will make the housing situation worse everywhere and will provide slack to cowboys (the real ones in calgary, not the one in the montreal’s ‘village’ ).
This would really tank the dollar. But I don’t think Poloz has the guts, nor the brains, to not agree with Steve Boy.
Maybe I will vote for PKP in the next Québec election?
Listings in Ft Mac have finally leveled off…. Sales are still majorly lacking and prices continue to drop, but it looks like listings may have finally nearly reached a peak.
Can’t say the same for Edmonton or Calgary. They are both still climbing, yet, prices have yet to noticeably drop.
The long awaited rebuttal. A bit soft I know. In to good mood watching hands free porno.
So I get this little goof who emails me, calls me an Anti Semite, threatening to kill me.
My crime. Posting a link about that 911 shit. My entire point at the time was to demonstrate who Bill C 51 was going on after. Dissenters to the official school sanctioned narratives as they economy goes to shit.
You can not be king, have any kind of power with out being a the dirtiest rotten bastard in the tribe.
Just look at , Idi Amin, Karl Row, Don Corleone, NutandYahoo. The kings of Kings.
The power behind the curtains in any society are killers, they can murder baby’s with impunity, and they do it mostly to frighten the challengers to the throne. It’s nothing personal.
They say the cream rises to the top, that’s a lie. Only the one everyone is afraid of gets to be king. It’s been that way since the beginning of time.
The link I supplied features this dude who says Israel did 911. Some of his observations were bang on, others out to lunch, but that’s free speech. And that the way I see it. And that’s way I report it.
In my 56 years on this pathetic planet, I’ve never met a Jew I didn’t like a lot. And I’ve met a lot. I avoid people who sport religious gear , no matter its symbol so that’s probably why. I judge the person not the tribe.
So to be called an Anti-Semite really pisses me off. How dare you, you stupid pathetic simpleton. Your going to blow my head off are you.
Now religious freaks, those loons at the wailing wall, the ones in Mecca, at the Vatican are all raving psychopaths in my eyes. So if I’m accused of hating them your god damn right I do.
I despise with every fiber of my being stupidity. Its pure hate..I’ll admit it. Shoot me for that.
The clincher in regards to 911 was when the BBC had a live broadcast. Said the Solomon building or building had fallen, when clearly in the background it stood for 20 minutes before it fell.
It takes weeks if not months to rig a demolition to have building to fall at free fall speed into its oun foot print.
Someone knew, and someone screwed up by reporting it too early.
https://youtu.be/V8iohvk7LmQ
That’s for knowllage, this was definitely an inside job…
I can’t no matter what be stupid, I never went to school. This one fell through the cracks.
That’s the day I bought a tin foil fedora and I’ve been proudly wearing it ever since.
So when you come too shoot me, place the revolver right on my for head, give me a three second count down, so at second one , I spit in your face, and at second two is where you pull the trigger.
Know this, I have always wanted to King. So be careful. Asshole..
This week one of the country’s major mortgage insurers, Genworth, came out and stated the obvious. Alberta is a time bomb
The only other thing bombing is their share price.
https://ca.finance.yahoo.com/q/bc?s=MIC.TO&t=6m&l=on&z=l&q=l&c=
GT: ” – how much more cheap debt can people absorb?”
Maybe retail sales stats, and jobs stats can help answer that question.
Retail sales are down near 2% two months in a row. I expect every jobs report to come to be horrible.
GT: “Will these mainstream news headlines turn the tide . . . ?”
Rule of thumb: MSM only catches on AFTER trend has turned. (Is it different here?)
GT: “The dollar will dive more, immediately.”
Yes, definitely.
California doesn’t have its own currency, e.g. a Califranc. Texas doesn’t have its own currency, e.g. a Texeso. I think of the Loonie as a tariff instrument and historical national vanity.
GT: “Panicked feds will lean on the Bank of Canada to drop . . . ”
Too kind.
Rabid political swine swarm Poloz. And primary dealers stand by.
SMOKING MAN MADE IT TO THE BIG TIME!
He actually got a mention in a primary post from Godth.
Now be careful and play nice Smokey, don’t let the all the celebrity and fame go to your head.
You might get some book sales out of the deal if Godth mentions your name again.
Nice use of the word “Dork” I once called a school teacher that, she sent me to the principal office where he and the teacher made me look up the meaning, turns out it meant “whales penis”. Dork, what a word.
See what you can learn on this blog? — Garth
I hadn’t monitored the RE prices for a long time, and while doing so recently I stumbled upon a cute little century house in an up and coming area, priced like a brand new 3 1/2 downtown.
It’s not far so I went to give it a look.
I turns out the lot is adjacent to road tracks used by regional passenger trains.
During the 10 minutes I was in that street, two trains passed by.
Too bad. could have lived there.
things in #98 Fuzzy Camel, have you been to detroit lately? The -new- Detroit, that is the mike duggan, post bankruptcy detroit is moving forward with strong momentum. New projects line the M1 rail line and the new red wings arena are being mainly funded by private money. Things are definitely moving up.
“…..As this consistent but obsessively repetitive and oft-terrifying (but manly) blog has been yammering about for a few months, the housing market is sick……”
_________________________
Au contraire….depends upon your point of view.
If you’ve managed your finances correctly over the last decade or so, your housing market will be soon be feeling just fine.
Then again, if you’ve failed to listen to your (grand?)father here, and have been gorging on nothing but Halloween candy instead of eating your daily veggies, yeah, you’re probably going to puke very soon.
#98 Fuzzy Camel
“I’ll share some golden advice on how to gauge the financial health of the sheeple. Keep an eye on Kijiji.”
Funny you should mention that. My son has noticed an increase in ads from people looking for someone to take over their high end car leases. (In central Ontario)
#2 Dead Cat Bounce on 03.24.15 at 6:14 pm
…good god smoking man …get your teeth fixed!
…..
Seriously, the only thing fusing my teeth to my skull are the 10 years of accumulated plack and tartar.
I go for a cleaning, they all fall out. The guck stays…
#105, Nagra.
You (and the CIA’s top bureau chief in Ottawa), Harper, should be a “team”. After all, he’s trying to destroy our country, too.
If you’re so enamoured with the USA…emigrate!
Buh-bye!
From last night
#237 Former Fool
Thank you for the recommendations. Taking the plunge very soon and looking forward to investing, freedom and liquidity.
I’ll keep everyone posted.
#203 Mark
Thanks!!
MF
“run away from the Cad dollar as fast as you can, still reducing rates to inflate a bubble, not to deflate it.
loonie to 30 cents, gold help us
“
Are you kidding? Have you any clue what happens in a debt and asset deflation?
I guess Harper the economist and amateur dictator is harvesting what he reaps – a Canadan peso, civil strife, money for the rich , debt and no pensions for the middle class. Gotta love the sheeple followng the neo con herd off the cliff – true freedom and liberty is truth and a willingness to accept fear uncertainty and doubt.
The reform a con are a disaster – the 32% percenters have had their chance
#106 Steve French on 03.24.15 at 9:34 pm
SMOKING MAN MADE IT TO THE BIG TIME!
He actually got a mention in a primary post from Godth.
Now be careful and play nice Smokey, don’t let the all the celebrity and fame go to your head.
You might get some book sales out of the deal if Godth mentions your name again.
…….
I don’t need godth, develth has my back…
I got get back to my book, finish it before I’m finished, the ever increasing drinking smoking, and pissing off phycopaths will catch up to me soon..
Not afraid, but Ive been promising the book for years.
I guess I should focus , finish it and move on..
#81 besmirched on 03.24.15 at 8:40 pm
[…] check out the show Silicon Valley if you haven’t yet already. If you don’t have the time for the full series, at least check out the following clip which is the funniest thing I’ve seen on TV, probably ever.
No it’s not, it’s crap. Unless of course SV has decomposed even further past the dot-com meltdown.
The real deal was an intense focus on certain kinds and applications of technology by particularly intense people. That led to a disregard of most other parts of a balanced, or at least massively consumerist, life as being not immediately relevant. Read ‘Soul of a New Machine’ by Tracy Kidder; then ‘Microserfs’ by Douglas Coupland for a slightly more realistic take.
The TV series fails to even come close to the intensity/brightness and caffeine drive to building something, of the SV crews I’ve worked with. And the common heart of the techies alluded to in Couplands work is totally shattered – destroyed by the [accurate] head-shaking goofiness of Hindu boy. Which has been representative of the whole offshored I.T. mess over the last several years, really.
Tragic and lame, and directed at the Oprah-swilling masses, yes. Funny, no.
Fairy tooth blog
#107 B Riding on 03.24.15 at 9:43 pm
Nice use of the word “Dork” I once called a school teacher that, she sent me to the principal office where he and the teacher made me look up the meaning, turns out it meant “whales penis”. Dork, what a word.
See what you can learn on this blog? — Garth
—————————————————
Damn you’re right!.. this sorta trivia knowledge is far more useful than the endless gloom n doom stuff on here.
http://business.financialpost.com/2015/03/24/alberta-prepares-to-shut-the-taps-in-move-away-from-relying-on/?__lsa=d655-fadd
With oil prices below the economic threshold needed by industry to make money and that the province requires to collect meaningful royalties, Mr. Prentice has the crisis he needs for meaningful change.
In a televised address Tuesday evening, he warned Albertans that spending cuts and health care premiums are coming, as the province struggles with a revenue gap that could exceed $7 billion. Alberta will also reduce the amount of energy revenue that goes into program spending, pay down debt, and boost contributions to the Heritage Fund.
“How on earth did we get here?” Mr. Prentice asks. “There are many factors but if there is one underlying reason, I would say that for too many years, our budgeting has been speculative. And I use the term speculative — because in essence, we have built our budgets around energy revenues and oil prices.”
For #116 Robert Agnew,
I suppose you could choose the flip flopper sitting on both sides of the fence or the angry bearded one who fortunately for us all will never be elected PM. Perhaps you are a greenie, part of the single digit %’s. For me, I will stick with what I know.
@118,
Harper. I can’t think of a politician I have EVER felt this strongly about.
He makes me sick.
http://blogs.vancouversun.com/2013/03/23/vancouver-real-estate-the-fog-of-foreign-ownership/
Did smoking man get banned?
Was he trying to sell some forex strategy? he bragged about making easy money but forex is a loser’s gamble that burns most people. Glad his rubbish is gone. Leave that nonsense to /biz/
Smoking Man is da Man. Kudos!
Canadian dollar going to 30 cents? That would be nice. I’ll take 70 cents for now.
Oil going to $20? Current prices are interesting enough. I’m enjoying the show.
We’ve been driving from Calgary to Kelowna all the time…amazing how many RIG PIG pick up trucks are racing back Mc boats and Mc Quads from the Okanagan and Shuswap in the middle of winter!! We figured then they were trying to sell them to finance their Mc mansions and Mc pick up truck loans! (I’m from Calgary, we call oil riggers rig pigs as an fyi)
#107 B Riding
So my boss is a whales penis ?
The scariest thing will not be increasing interest rates. It would be not being able to renew the 3 or 5 year mortgage most people have. In the U.S. people get 30 year mortgage and never have to renew that thing until it is paid off. Here people need to renew it every 3 to 5 years. What if you happen to lose your job or the banks tighten lending rules. YOu will be forced to hand over the keys.
to 46 and 2 #77 comment yesterday…I actually have never lived in Kelowna. I moved to Calgary from Toronto, where I was making MORE money and owned 2 properties…so no, didn’t move to Calgary to “get ahead”…Is that what you did?? Do you know what ASSUMING does?
#122 Purdy on 03.24.15 at 10:19 pm
Did smoking man get banned?
Was he trying to sell some forex strategy? he bragged about making easy money but forex is a loser’s gamble that burns most people. Glad his rubbish is gone. Leave that nonsense to /biz/
……
Got to be the first to badmit my technical English skills need some work..
But HUH?
Come on Guys, Quit bashing Harper. Yes he may be a little bit politically awkward, but come on! TFSA at $10,000 YES!!
I am picturing Garth sitting under that beautiful glass ceiling.
http://ottawacitizen.com/news/politics/parliaments-3-billion-mother-of-all-renovations-on-time-and-on-budget
#122 Bobby on 03.24.15 at 10:17 pm
For #116 Robert Agnew,
I suppose you could choose the flip flopper sitting on both sides of the fence or the angry bearded one who fortunately for us all will never be elected PM. Perhaps you are a greenie, part of the single digit %’s. For me, I will stick with what I know.
———————————————-
So you are familiar with whale penises?
So, when was the last time you heard of a bank appraiser here factoring in how much it would cost to rebuild a house, or what it might rent for? ‘Never’ is the correct response. Residential real estate only costs what it does for one reason. Cheap money.
The majority of bank appraisals have the cost approach in their report. Cost and market value are not synonymous (you should know that). The older the home is, the less reliable the cost approach becomes, which is a result of depreciation. A 30 year old home with an effective age of 20 years would have 28% depreciation +/-. For your info, the banks want to see the Cost approach in the report. As far as market rents, banks also ask for that but not on a regular base.
Smoking Man that was the comeback? Well it was coherent and spelling on track anyways. I was expecting an ephipany?
#94 nonplused on 03.24.15 at 9:04 pm
True that appraisers don’t look at replacement costs, only similar sales, much like the tax man. And it’s true for residential and commercial real estate alike. I think it’s because first off it’s easier and secondly it’s hard to value the land itself. What is a ’49 era 900 sqft bungalow in Winston Heights worth? The structure itself can’t be worth much at all, so the value must be in the land. What’s that worth? Well here is one that just sold just one block over. And that is how the feedback loop works.
————————————————————-
You sound foolish, what a crock of poo.. you are wrong on all accounts..
#115 Mark
Is the madhouse closed today?
Deflation in Canada? You still shorting US dollar, boy?
People are willing to overpay because they expect prices to keep rising
————————————-
We can hardly blame a 29 year old that has never actually lost money in a bubble market to think anything else.
We all have to learn our lessons on something. Hopefully they can recover from it.
Garth
Speaking of manly and digressing slightly from the theme of the moment, what do you make of the whole man-grooming thing…other than your facial fur, do you engage in this alarming trend of the y generation…after all Beckham does it!
Hi
You say remember Calgary….prices are down 2% over the last few months with sales collapsing, listings rising and jobs loses mounting.
Garth and #94 Nonpulsed
With comment about real estate appraisers like that I begin to wonder how many appraisals you have read.
RCN and land vaue are considerably more important than you opine. Trying to determine the value of a single family residence by a monthly rental factor is well…….
72 Boombust
Australia? Whatever for? I was there last year for the first (and last) time. For the life of me, I don’t know what would ever attract people to that place.
Rude, arrogant people, dull scenery and a cultural wasteland…
————————-
I always find the Australians and Australia very much like Canadians/Canada.
Except its warm most of the time and they have funny BBQs.
And the topless beaches are OK too.
For years I have had a bag of shiny nickels collecting dust, waiting for the day I can hand them out to homeless Vancouver real estate speculators huddled under cardboard in the rain. Looks like that day may finally come. One per homedebtor. Feel the wrath of a full recourse mortgage and enjoy your shiny new nickel.
#124 RC on 03.24.15 at 10:18 pm
http://blogs.vancouversun.com/2013/03/23/vancouver-real-estate-the-fog-of-foreign-ownership/
——
Welcome to HAMcouver. The Most Corrupt Place On Earth
BC and Vancouver seem to be the only place in the G-20 that is actually DE-evolving……and populace does nothing because they are all parasites feeding on one another. Sad really….
I think this is a US story, but may hold true for Canucks in the future
http://www.msn.com/en-us/news/us/more-millennials-turn-to-mom-and-dad-to-help-with-homebuying/ar-AA9XdLv
#116 Robert Agnew on 03.24.15 at 10:00 pm
I guess Harper the economist and amateur dictator is harvesting what he reaps – a Canadan peso, civil strife, money for the rich , debt and no pensions for the middle class. Gotta love the sheeple followng the neo con herd off the cliff – true freedom and liberty is truth and a willingness to accept fear uncertainty and doubt.
The reform a con are a disaster – the 32% percenters have had their chance
——-
the PM gets his orders from bibi……
#26 Smartalox on 03.24.15 at 6:59 pm
“I’ve heard anecdotal evidence of tear-down homes being bought by groups of spec-u-vestors, friends and relatives who pool leveraged funds to flip real estate in YVR.
The intent is to sell once the spec. House is built, and split the profits. Except that the houses aren’t selling – they’re over-priced, and the amateur investors can’t agree on lowering the price to make a sale.
Of course, these investments are made privately, usually without formal contracts, and of course there’s no regulation, and everyone’s too greedy to lose.
This is going to vapourize the wealth of a lot of families.”
Good. In the eternal words of Snoop Dogg, “Buck ’em”
https://www.youtube.com/watch?v=Aj1KBfnOnmU
#58 Julie K. on 03.24.15 at 7:58 pm
“Fingers & toes crossed the house sells and quick and we get out with our cash.
Not even looking forward to the anxiety I will likely experience between signing an offer, closing date and seeing “the” check deposited/invested safe and sound (or is that the real illusion?).
Wish me luck, dogs.”
Good luck. It may take a bit longer than you expect. But don’t be greedy. That will just delay things.
#65 Babblemaster on 03.24.15 at 8:08 pm
“Cheap money. Now it’s about to get cheaper.” – Garth
——————————————————
“Exactly! Rates are NOT going higher for the foreseeable future.”
Maybe unforeseeable to you. I can see it within the next 12 months, which is in my foreseeable future.
Chalk it up to subjective definition of “Foreseeable”…
39 – GGGR – you may find this intersting too
http://www.ffwdweekly.com/news–views/viewpoints/ring-road-re-think/
#94 nonplused on 03.24.15 at 9:04 pm
“True that appraisers don’t look at replacement costs, only similar sales, much like the tax man. And it’s true for residential and commercial real estate alike. I think it’s because first off it’s easier and secondly it’s hard to value the land itself. What is a ’49 era 900 sqft bungalow in Winston Heights worth? The structure itself can’t be worth much at all, so the value must be in the land. What’s that worth? Well here is one that just sold just one block over. And that is how the feedback loop works.”
—————————————————————
Commercial properties (Retail, Industrial and Office) are valued on DCF models with “support” from Direct Capitalization Approach (NOI/cap rate) and Direct Comparison Approach based on $psf after adjusting for quality, size, location, etc.
Depending on the appraiser, usually the most weight is given to DCF-derived value. Quite often the other two are ignored. Sometimes though, it’s a combination of the DCF and Direct Cap Approach. But this is discretionary to the appraiser.
For Multi-Family, it’s valued by the Direct Cap Approach with “Support” from Effective Gross Income Multiplier and Direct Comparison Approach. The appraiser has the discretion to do a combination of the three (or two), but usually most weight is given to the Direct Cap Approach.
However, regular residential is rarely ever valued via DCF or Direct Cap. And therein lies the the problem, as you suggest. And when people realize that buying houses at $1M or more in Van or GTA is getting them a negative IRR, they will feel awfully stupid… And most people don’t realize land’s value is negatively correlated with interest rates…
#83 Harbour on 03.24.15 at 8:42 pm
I have never been solicited by phone, mail and email by my RBC bank so much before.
Increasing my Visa limit… I never asked for that.
Trying to get me to open a TFSA
Trying get me to have another Visa card with all the bonus point quirks, etc
Aren’t we supposed to be watching our spending?
*********************************
Same thing happening to me. I suspect this will be counted as Revenue for the bank. Banks will also continue to look good for the next little while. hmmm
Monkey see monkey do. I’m pissed with the clown in charge. They bomb so we should!!?? LETS GIVE TERRORIST REASONS TO HATE CANADA TOO….IDIOT We need to bomb you know who’s house..
Anywho….Housing bubble!?? For how long now!? When a bubble pops no one is looking or asking the question…
#129 Chris
Wrong.
I can’t wait for Smokey’s book as this librarian will definitely be adding it to the college’s collection.
The big question is, how do I classify it for shelving? Should it be filed under finance for the business students, or does it belong in fiction, humour, or religion? I guess if all else fails I can add it to supplemental reading for our students in the Dental Hygiene program.
Just whatever you do, DON’T get an editor to fix the spelling, that’s the charm of the read. If these posts are any indication, I am expecting to see a wonderful balance of rudimentary spelling offset with unique insights and complex observations of herdonomics.
Regardless, I will be purchasing a first edition for myself. Those priceless books at antiquities stores are always firsts.
124 RC on 03.24.15 at 10:18 pm
http://blogs.vancouversun.com/2013/03/23/vancouver-real-estate-the-fog-of-foreign-ownership/
The speakers did what they could to respond to heated discussion of the growing housing dilemma in Vancouver, which Demographia has ranked the second most unaffordable city of 325 around the world.
…
“Housing affordability in B.C. remains poor and worsening,” says RBC senior economist Robert Hogue. Vancouver’s unaffordable housing prices, he said, “depend on a constant flow of imported money.”
…
Unlike most countries, cities and jurisdictions around the world, neither Metro Vancouver, British Columbia nor Canadian government agencies keep public records on foreign ownership of real estate.
For some unstated reason, B.C. public officials are unwilling to learn from what has been done for decades in diverse political places – such as Florida, Switzerland, Austria, Prince Edward Island, Manitoba, Alberta, Denmark, Japan, Indonesia, Bali, Thailand, Australia, Turkey, Singapore and Beijing.
Indeed, these jurisdictions do not only collect data on foreign ownership, they have brought in various taxation methods to restrict property speculation and foreign ownership, to reduce investor demand. That’s what specialists say drives up prices and squeezes out locals.
….
This is an issue that needs to be addressed. So it can be put to rest one way or another.
PEI and Manitoba collect data? So clearly, it CAN be done.
Amazing blog post today! I just wanted to say thank you for everything you do. Very well written.
I venture that our own Smoking Man might be the only one of us blog dawgs ever to make the big leagues– with a mention from Godth himself.
Sheesh.
That Smokey must be doing something right.
Garto baby… my Finlandia bottle can not be ignored :)
..just as I said a little while ago, you say now.. :)
http://www.cbc.ca/news/business/bank-of-canada-will-cut-interest-rate-again-td-bank-predicts-1.2931859
do you still believe that our banks are safe ? :)
The coming “pop” will be more like a “boooom”
..and this my friend is exactly when biggest money are made.
Garth I love you but you can’t credibly quote a “realtor dude in Calgary”. Prices are going to fall and all of industry leaders agree, let’s stick with their opinion
“In reality, there is no money until it’s realized in a house sale and put into your bank account on closing day by the lawyer.”
—
Garth’s quote from this post should be etched in stone and placed strategically around everyone’s new home/condo.
I love this blog and am completely hooked on the posts and comments. Thanks for posting so often GT!
#136 Holy Crap Wheres The Tylenol on 03.24.15 at 11:13 pm
Smoking Man that was the comeback? Well it was coherent and spelling on track anyways. I was expecting an ephipany?
…….
You always through in these words, I’m forced to Google them. Ephipany.
Hemmingway would be rolling in his grave.
There is now a booming private mortgage market in which ordinary citizens are borrowing from their home equity lines to lend money to desperate borrowers.
Specifically, “a homeowner acts as a subprime lender by drawing a HELOC at 3 per cent interest-only, and lends it to a subprime borrower at 8-12 per cent for one year (interest only).”
http://www.canadalend.com/blog/is-a-private-mortgage-right-for-you/
Has anyone noticed that Canada is at war??? How did this happen? I thought Canadians do not believe in going to war? I can’t wait until the biggest Canadian moron Steven, increase our taxes more to finance this war? Why doesn’t someone just poison their food? No bombs, no planes, no guns, just some yummy humous.
Yes let’s finance the war and neglect our seniors, our homeless, our infrastructure and our education system.
Oh boy Garth, … the government of the day doesn’t have any influence of the BOC … sheesh!
So many people come here and add comments of doom and gloom as if that’s all there is. I think I come here to learn something, am I special?
Nobody spends their whole life scheming to become head of the central bank so that they can go down in history as the government of the day’s errand boy.
In circles where people talk about such things, people still talk about Arthur Burns, as Fed Chairman, succumbing to pressure from President Nixon. Anybody think Poloz wants to go down in history like that?
The barn door seems to be closing, nah, it’s still open a crack.
http://www.bnn.ca/News/2015/3/25/Real-estate-regulator-aims-to-crack-down-on-dubious-practices.aspx
#166
I come here to learn too. The best takeaway for me, so far, is that I need to sell my house in Calgary (because Alberta is FINISHED tells me so) and move to Lilloet, BC. Also, Leroy Washington keeps informing me that I’m a stupid Canadian.
It’s a wonder I can even leave the house and face the big, bad world each day.
#139 omg the original
“We can hardly blame a 29 year old that has never actually lost money in a bubble market to think anything else.”
—————————–
Nor can we expect that same 29 year old to crack open a history book or possess any basic math skills.
Garth,
This is from yesterday on CBC on rage of housing questions.
I hope you have a look…
http://www.cbc.ca/player/News/ID/2660545139/
A sixty cent dollar is going to screw buyers invested in the cdn dollar and benifit more foriegn money buying into the market.
A million dollar shack will only cost 600k.
We have been screwed by our great leaders who will continue to sell off our country to foriegn investors.
#164 CHERRY BLOSSOM on 03.25.15 at 8:50 am
Has anyone noticed that Canada is at war??? How did this happen? I thought Canadians do not believe in going to war? I can’t wait until the biggest Canadian moron Steven, increase our taxes more to finance this war? Why doesn’t someone just poison their food? No bombs, no planes, no guns, just some yummy humous.
—–
It’s because we have an elected dictatorship run by public servants who only care about their salaries and pensions. Until that type of tyrannical govt in Canada changes – nothing changes.
What is guaranteed is the feds and central bank will continue to fumble the controls. They created a monster and now want brownies points for the illusion of taming it?
keep waving the finger and quacking, as the sheeple continue to gorge on debt. Suggestions don’t generate change. grab a set and some steel balls. raise the damn rates. It will hurt but gain will come through pain.
see the real problem is the gov’ts are just as godless and head deep in debt as the rest. Greed rules in that arena too. And they cant handle the medicine any more than the sheeple that so needs to be administered to society. This circle of debt has to stop! Time to reward savers again. No $ going into RRSP? no kidding. let’s all pretend to be shocked.
to hell in a handbasket we go
Vancity scare paper – no escape from condo life…
http://www.vancouversun.com/touch/business/affordability/Average+Vancouver+house+prices+million+foreseen/10917802/story.html?rel=813152
Dollarama stock up almost 5% on blowout earnings. This is our future. Dollar stores and 5 and Dimes. Ok that was before my time. .where is old man?
I have heard several oil forecasters predict obscenely low oil prices but where were they when oil was $80. Does anyone recall when oil was $150 and these same people predicating $200 oil. It crashed, and what we have here is similar situation, Alberta will not be removed from the earth, it will adjust to the new market conditions and oil will find a more stable footing. I think it is good time to add to an Cdn Resource ETF but not a good time to find a job in Calgary.
What’s the point of earning CDN$ in either RE or the stock market when the next rate decrease will screw you another 10% or more? Open up a US$ account, buy US$ now or before April 15th. Am I considered a foreign investor as a Dual Citizen? I don’t think so.
#167 Ralph Cramdown on 03.25.15 at 9:31 am
Nobody spends their whole life scheming to become head of the central bank so that they can go down in history as the government of the day’s errand boy.
———————
Never under estimate the gravity field of Power.
#178
Am I considered a foreign investor as a Dual Citizen? I don’t think so.
—————-
Good question, my friend.
You’ll never know until it happens.
Glengarry Glenn Ross: There is plenty of proof over the last two decades that hub to hub transport by TransLink is merely a ploy for businesses to make money from building the concrete intensive SkyTrain lines and concrete intensive condos along the SkyTrain lines,” insists Eric Chris.
also from your link: Fundamentally the transit referendum is about subsidizing the real estate development industry of the Lower Mainland. It is a wealth transfer from the majority to the elite minority who are raking in big dollars by revalorizing land through the development of public transit. This is not a new plan, it’s one used by developers historically and the world over: use the mechanisms of the state to take money from the majority to fund the profit making ventures of the minority.”
and here’s a relevant quote that I will recast: Certainly, the gripe from referendum opponents that urban planning ought to be somehow non-political—performed by angels with spreadsheets who are without human interests and prejudices—seems incredibly naive.
http://www.macleans.ca/news/canada/british-columbias-transit-referendum-is-a-wacky-west-coast-attempt-at-regional-planning-and-it-just-might-work/
the gripe from development opponents that urban development ought to be performed by angels with spreadsheets seems incredibly naive.
It does seem incredibly naive. It’s like you can turn back time and be the Haida 300 years ago. You cannot. And also what’s wrong with concrete-intensive? It’s how cities are made.
I fully support the half-point increase on the provincial sales tax to fund TransLink.
Personal finances are in worse shape than Smoking Man’s teeth. LAUGH OUT LOUD. Classic, Garth
I think many people still fail to understand who our governments actually serve… They are no longer by the people, for the people. Now that the simple minions are saddled with debt time to pull the carpet out from under them, put some fear into them and further tighten the vise.
If you think that just because you are not in a financial pickle right now that this is not your problem? Think again. The psychotic elite want it all, and step by step they are getting there way. Sovereign nations will be dissolved to make way way for a world government and the easiest way to dissolve a sovereign nation is to destroy it from within. I think most can see where this is going in Canada. Now for south of the border… Can’t have any super powers in a world government now can we.
Leroy Washington,
You never did answer the question as to what list you are on? Yellow, Blue, or Red?
I would guess yellow.
When Harper jams C-51 through I will have to tone it down cause I know what list I will be on, or am on
#163 Smoking Man on 03.25.15 at 8:36 am
#136 Holy Crap Wheres The Tylenol on 03.24.15 at 11:13 pm
Smoking Man that was the comeback? Well it was coherent and spelling on track anyways. I was expecting an epiphany?
…….
You always through in these words, I’m forced to Google them. Epiphany.
Hemingway would be rolling in his grave
_____________________________________________
I greatly Hemingway’s his writing and adventures as well I’m 99% sure it was I that turned you on to Hunter S Thompson. Perhaps you should try Carlos Castaneda?
Be a Warrior Smoking Man!
“A warrior is a hunter. He calculates everything. That’s control. Once his calculations are over, he acts. He lets go. That’s abandon. A warrior is not a leaf at the mercy of the wind. No one can push him; no one can make him do things against himself or against his better judgment. A warrior is tuned to survive, and he survives in the best of all possible fashions.”
Carlos Castaneda Quotes from Journey to Ixtlan
So this: “A realtor dude in Calgary credibly suggests prices there could fall 40% and not recover for eight years.”
So I looked at a few properties in the Brentwood area of YYC, an area I have lived in and like quite a bit. Found this:
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15290605
If you couldn’t get the link it’s a sorta-nice little Brentwood bungaloo the color of a military transport vehicle, with a buttload of plasticky, tear-apart-with-your-bare-hands Ikea upgrades in the kitchen and crapper, and a bonus: a ten year old HVAC update. Someone spent a bit of time at Home Depot selecting dour Martha Stewart paint colors which aren’t awful, but aren’t mine. The current price is $674,900.
After that 40% fall from grace, this sorta-nice little box remains a tick north of $404k.
Newp. 40% ain’t enough for this vultch.
You still shorting US dollar, boy?
What he probably means is that IF he was gainfully employed and IF he had money, he would probably short the USD. ;)
#179 Ponzius Polatus on 03.25.15 at 11:32 am
Best handle yet.
#88 Roial1
all taxation is theft.
#171 Andy
Yep, last night I also watched Peter Mansbridge directing questions from Canadians to CBC’s panel of economic pundits. I think those particular folks are competent and credible.
It seems to me they were essentially parroting what Garth has been on about for years but all were doing their best be ‘nice’ about it.
Not like that mean old Mister Turner who insists on calling a spade a spade and denies fairy dust.
#171 Andy on 03.25.15 at 10:25 am
———————————————–
I watched that. It was pretty good, I mean, they are giving sound advice based on being careful, the need to be diversified and make sound financial decisions, and given the unknowns of the current state of the future of the housing market.
It would be good to have Garth on there as a guest to answer some of those questions.
Support an increase in tax for translink??
Money trashed on purpose
Costs higher just to eat never mind anything else
Property taxes alone must provide massive amounts to local governments.
No wonder no one wants to track where the money comes from…
And now they’re hunting for more money for transit.
Next they’ll be asking for another 0.5 % to find hospitals, schools or some other special purpose.
USE WHAT YOU ALREADY GET! But use it wisely.
The well cannot be bottomless.
“Is the madhouse closed today?
Deflation in Canada? You still shorting US dollar, boy?
“
Yes deflation in Canada. And madhouse? Obviously, as Trollstoy is in desperate need of admission.
What’s the point of earning CDN$ in either RE or the stock market when the next rate decrease will screw you another 10% or more? Open up a US$ account, buy US$ now or before April 15th. Am I considered a foreign investor as a Dual Citizen? I don’t think so.
You seem so convinced that lower rates will cause the currency to fall, but there is significant evidence from around the world that this is not historically the case over the long term. Currencies tend to appreciate in asset inflation, because of demand for currency to repay debt. I know this tends to be lost on the random trolls who have little else to do than blatantly make stuff up, but higher rates are not good for currencies.
“Currencies tend to appreciate in asset inflation”
Oops, I meant asset deflation. Sorry. Please fix the previous post of mine. Deflation implies that money is getting more valuable relative to “stuff”.
#164 CHERRY BLOSSOM on 03.25.15 at 8:50 am
———————————————————-
They’re about 5 years too late going into Syria, and over 200,000 people have died.
I hope this is not a move ‘for politics’, and if so, Canadians should send a message over this in the next election.
#160 M on 03.25.15 at 6:01 am
——————————————
Given your TD article is from January, and they predicted another rate cut in March, looks like they were wrong.
#157 DisgustMadeMePost on 03.25.15 at 1:37 am
———————————————————–
But you would really need to follow the money trail to figure out if it was foreign investment or not.
Last house I sold, almost had a deal with a Chinese university student who was waiting on a wire transfer from her granddad in China. Depending on her status, if she was a Canadian citizen, the house would have been in her name and recorded as a regular domestic transaction, but the money would have been from China.
Why not ask the developers to cough up bigger to be able to put up those concrete cities around these stations.
Why does the public have to be responsible ? Because they’re the end user?
Think of the money the developers stand to make.
http://www.cbc.ca/news/canada/saskatoon/case-new-holland-lays-off-more-than-400-workers-at-saskatoon-plant-1.3008883
“Bad news has arrived for more than 400 workers at Saskatoon’s Case New Holland Industrial manufacturing plant.
The company says “poor market conditions” have led to 413 layoffs.
”
Ouch! That’s gonna add to the carnage in Saskatoon! Between the completion of the major potash/uranium projects, and the winding down of construction there.
So much for the lower dollar helping Canada’s manufacturers!
Seven mistakes Millennials make when buying real estate
http://business.financialpost.com/2015/03/25/seven-mistakes-millennials-make-when-buying-real-estate/
All I know is housing is hugely leveraged right now, you can leverage 95% of it’s value up to a mil. Also, people are in a frenzy to buy, and everyone is in the game. Also, people are confident it never will go down. This has all the symptoms of a bubble.
Aside from the Chinese oligarchs buying up Toronto, everyone else is poor. Having a BMW doesn’t mean you are rich. It might fool yuppy women, but I know rich people, and they don’t drive themselves, they have ‘people’ to do that.
So everyones feeling rich, I see lots of European luxury cars. Nice. Good use of capital.
Real estate is good until it isn’t good. And it is mostly mental.
Garth talked about the ‘utility’ price of housing. So what is the equation for that? Is it 20 years market rent?
If the market value for my place is $400,000, with yearly property tax of $4000, and market rent is $24,000/yr ($20,000 net of property tax), is that bang on ‘utility value’?
Garth re: my instructions yesterday to buy Kraft.
You can now sell them all.
Thanks
#ProgressIsIllusory,Or… #DoucheBaggery… #MadCows… #TheWildWildWest,&… #CresseyGetsXuZhangZuZu’dToCorralTheArbutus… #Thar’sGoldInThemTharCorridors!…
[TimesColonist] – Funding cuts are devastating B.C. schools, trustees warn premier
http://www.timescolonist.com/news/local/funding-cuts-are-devastating-b-c-schools-trustees-warn-premier-1.1803319
[CBC] – ‘Angry’ cows escaping trip to the Slaughterhouse close Trans-Canada Highway
http://www.cbc.ca/news/canada/british-columbia/angry-cows-escaping-trip-to-the-slaughterhouse-close-trans-canada-highway-1.3007698
[CBC] – Oliver, B.C., calls for more [any] police resources following crime spike
http://www.cbc.ca/news/canada/british-columbia/oliver-b-c-calls-for-more-police-resources-following-crime-spike-1.3007997
[G&M] – Developer pays 32 per cent premium in hunt for Vancouver land
“Cressey’s deal to buy the multifamily complex will close on April 7. Tax records show that the sellers, Alex Zhang and Lucy Xu, assembled three commercially zoned lots between January and May of 2014 for a total of $19.95-million to clear the way for a single listing. The three land parcels combined had assessed values that totalled $15.87-million in July, 2013.”
http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/developer-pays-big-premium-in-hunt-for-vancouver-land/article23604767/
[NoteToGT: You’ve really got to applaud those cattle… at least they tried. Kerrisdale… Not so much. BonusZen, Or WhySettleForZuZhang when you can HiDeHiDeHo?… Cue HD on the Mighty ArbutusExpress!: https://youtu.be/y-kJqM7he9o . HomefireRadio at its finest, Doggiez…]
I have to say, without this stuning and cunning blogger, I would be horny as hell over a house. No. Condo.
I’m 26 and I looked into the previous few ruts (80’s, 90’s and 08/9) and saw something similiar. Middle class gets whacked by being over-exposed to one asset.
It’s as Garth has said… the goal in life is to own a house now. My goal is to have a liquid portfolio that pays me cash so I can retire and travel without worry.
Guess this is the 1% mindset without the 1% portfolio hah!
“If the market value for my place is $400,000, with yearly property tax of $4000, and market rent is $24,000/yr ($20,000 net of property tax), is that bang on ‘utility value’?”
Not quite. You need to deduct long-term maintenance (ie: typically 1%/year or more of the property’s value), property management, property fire insurance, and even arguably, an allowance for short-term maintenance from such. To arrive at what is truly an imputed “rent”.
After all, renters don’t have to put aside funds to replace the roofing, siding, sidewalks, windows, the furnace, door hardware, major structural elements, water heaters/plumbing fixtures, interior finishings, etc. — all of which have a non-infinite service life. Amongst other expenses that will be carried by the landlord versus a typical residential renter.
“I’m 26 and I looked into the previous few ruts (80’s, 90’s and 08/9) and saw something similiar. Middle class gets whacked by being over-exposed to one asset.”
Congratulations on being probably 1000X more enlightened than most your age!
And if you continue to do your research, you’ll find that as the “middle class” has its wealth sheared by the bubble du jour, there is almost always an upper class that is created as wealth is reallocated.
In the 1990s, it was the tech sector exploding upwards, with the Canadian stock market tripling in value as housing imploded and spent over a decade with no nominal returns and significantly negative real returns.
What sector it might be this time around? Figure that out, act accordingly, and life could be a lot easier for you over the coming decades!
Why are Vancouver and Toronto Housing still going up while rest of Canada suffers. Is there something different about them?
Shane
It does seem incredibly naive. It’s like you can turn back time and be the Haida 300 years ago. You cannot. And also what’s wrong with concrete-intensive? It’s how cities are made.
I fully support the half-point increase on the provincial sales tax to fund TransLink.
—–
If you support it you are either a very well paid Public Servant or you do not at all understand how we are taxed to death in BC and how it is killing what little remains of the middle class. Take out Govt Workers and the middle class barely exists considering 30% of all BC employees are govt.
‘The Metro’ is Vancouver’s free bus stop RE pumping rag. Yesterday it ran an article to this effect:
The success of the transit plebiscite depends on the willingness of Vancouver’s stingy boomers (who don’t ride public transit) to leave a lasting legacy for future generations.
What a hoot! Who writes this stuff? Not journalists.
The ‘Yes’ side lobby makes no mention of the ongoing abysmal public relations disaster that is the Translink organization. Their corruption and waste are legendary.
We’re still waiting for the much touted electronic fare system to arrive. So far, it’s millions over budget, a year behind schedule with no estimate for completion in sight. If you read the ‘Dilbert’ comic strip you’ll get a clear idea of operations at the head office.
The developers of Vancouver are anxious for another half billion dollar publicly funded transportation corridor along which they can build more concrete honeycombs before the low interest party comes to and end.
City council’s refrain grows tedious: “Another million are due to arrive soon and we must accommodate them”.
Malignant money-grubbing expansion is making this city increasingly unlivable by the week. Meanwhile, we are asked to dig deeper to contribute to a ‘legacy’ as existing funding is squandered by the latest batch of unaccountable bureaucrats.
The discounted cash flow method of valuation is investor specific. The question to be answered is how much can I pay for this investment based on MY criteria and utilizing a DCF model that works for me.
My DCF valuation may very well be different than yours. It probably is. A REIT may very well use DCF valuation model in a billion dollar aquisition. (and they do).
For the most part, smaller commercial properties are valued by direct capitalization. A simple DCF analysis follow up may turn you on – financially…but why?
On a radio station, it claims average house cost in Vancouver by 2030 will be 2 million. This cannot be supported by locals. What is causing this? Mayor Gregor has sold out to developers and has no desire to restrict investors.
http://www.cbc.ca/news/canada/british-columbia/vancouver-mayor-gregor-robertson-wanting-qu-and-wanting-more-1.2894517
@DualCitizenInCanada #178 re: ” Am I considered a foreign investor as a Dual Citizen? I don’t think so.”
It depends what your other citizenship is. If it is US, then yes, you are definitely a ‘foreign investor’, otherwise you are just like every other Canadian – don’t believe me, ask your bank.
“Why are Vancouver and Toronto Housing still going up while rest of Canada suffers. Is there something different about them?”
Vancouver and Toronto prices really aren’t going up and haven’t been for the past 2 years or so (Budget 2013 changes to CMHC subprime mortgage insurance marked the top of the market in Canada). But because there’s actually a significant quantum of rich people in both cities (ie: high wealth stratification), the sales mix has been able to shift in such a way to cover up stagnant if not minorly declining individual identical property sales prices.
Basically put, what the Realtors are actually selling has gone up in price in those cities, but the average property that a real person owns hasn’t. The supply-side onslaught in both cities has also affected the mix by bringing in a lot of new un-depreciated supply which also has an effect on transactional prices, but not prices for already delivered product.
#207 Oil Is Sticky
———————————-
BC Bud is a 6 billion $ industry. Lot’s of well remunerated people in BC. It’s just not official.
#83 Harbour on 03.24.15 at 8:42 pm
Same here. Years of cheerfully offering to increase my credit limit didn’t work, so now they’ve bribed me with points. Yeah, I took the bait. Once I get the points, I can reduce my limit again, easy.
OK this pretty much sums up the GTA real estate market. Some levity!
While looking at a house, my brother asked the
estate agent which direction was north because
he didn’t want the sun waking him up every morning.
She asked, ‘Does the sun rise in the north?’
My brother explained that the sun rises in the east
And has for some time. She shook her head and said,
‘Oh, I don’t keep up with all that stuff……’
They Walk Among Us and reproduce!
Garth, Long time reader, first time commentor.
Did you find it interesting that the “What to do when boom turns to bust” article says that Mr. Griffiths has found his insulation from a booming housing market by investing in rental properties and increasing his home equity??? Seems backwards
Also, I have read recently that if a homeowner defaults, CMHC will cover the bank’s losses (as we all know) but that CMHC can then come after the mortgagee to recoup their losses? And if you declare bankruptcy you may still owe CMHC for the loss? Maybe you could touch on this in a post?
Deflation?
Dollarama struggling to keep low prices in the face of depressed loonie
https://ca.finance.yahoo.com/news/dollarama-raising-dividend-12-5-q4-profit-rises-123115523.html
Holy # 183,
“Be a Warrior Smoking Man!”
————————————————
When I read the word warrior,
I think of Sun Tzu’s, The Art of War.
#191 Mark
“You seem so convinced that lower rates will cause the currency to fall, but there is significant evidence from around the world that this is not historically the case over the long term. ”
Lower rates and much lower inflation over the last 20 years certainly haven’t helped the Yen:
01/31/1995:
JGB 10YR Yield – 4.63%
UST 10YR Yield – 7.58%
Japan CPI Index – 101.3
US CPI Index – 150.5
USDJPY FX rate – 99.55
01/31/2015:
JGB 10YR Yield – 0.28%
UST 10YR Yield – 1.64%
Japan CPI Index – 103.1
US CPI Index – 234.7
USDJPY FX rate – 117.49
#206 Shane on 03.25.15 at 1:35 pm
Why are Vancouver and Toronto Housing still going up while rest of Canada suffers. Is there something different about them?
———————-
Could be something that starts with an H, but who I am to know.
This radio story made me grumpy this morning, for no other reason than it’s just false propaganda – which i consider to be VERY dangerous
http://www.news1130.com/2015/03/25/average-detached-price-in-vancouver-to-eclipse-2-1-million-by-2013-report
#115 Mark
If the rate is lowered in April, it is to stimulate borrowing, not deflate it. When the loonie is trawling mid-to-low 70s in the summer, are you gonna drop your silly “low rates mean strong currency” position?
So now the plummeting loonie is instigating prodigious complications for the Ha, ha, ha crowd?
http://montrealgazette.com/news/local-news/montreals-festivals-struggle-with-slumping-loonie
Single family houses in Vancouver to average $2.1 million by 2030
http://bc.ctvnews.ca/average-detached-home-in-vancouver-to-cost-2-1m-by-2030-report-1.2296918
Vancouver Realtor Deals with First Time Home Buyers:
https://www.youtube.com/watch?feature=youtu.be&v=wcAMtvNfp78&app=desktop
Published on Mar 18, 2015
Turn CC on to see subtitles
Thinking about buying a house in Vancouver? Looking for a mortgage? You should watch this first…
Not all main stream media is ready to throw in the towel on Real Estate yet. Check out this claptrap.
http://bc.ctvnews.ca/average-detached-home-in-vancouver-to-cost-2-1m-by-2030-report-1.2296918
HAM will push house prices to 2 Million within 5 years…so don’t worry….as long as you plan on sleeping in a shelter everythings going to be fine.
We lived in one of the nicest areas in toronto for 5 years, great place, but I have to say I just don’t understand the hype, seems everyone has entered a delusional spiral. Have any of these buyers ever travelled to other cities on the planet?
#227 GAWD i’M WAITING – re HAM and VanCity
I think we need to redefine HAM
HAM = Holistic Affluence Myth (its a Vancouverite YOGA construct)
I guess they hire Economists from Laval at Vancity…
The only way a house will be $2.1M in 2030 is if we have massive inflation and then we will have HH income floating around 3-400k per year to rationalize it.
NOTE: I do not believe that we will be in that boat. Crazy economists…
#206 / Shane
Why are Vancouver and Toronto Housing still going up while rest of Canada suffers. Is there something different about them?
*******
Yes but we’re not supposed to talk about it so please stop asking. Come to the luxury and exotic car show in Vancouver this weekend and find out why.
#212 Mark on 03.25.15 at 2:09 pm
Vancouver and Toronto prices really aren’t going up and haven’t been for the past 2 years or so
————————————————–
still as delusional as ever
Did you happen to see the inventory build this morning?
#213 Babblemaster on 03.25.15 at 2:11 pm
#207 Oil Is Sticky
———————————-
BC Bud is a 6 billion $ industry. Lot’s of well remunerated people in BC. It’s just not official.
——
And the drug dealers are paying how much income tax towards healthcare, roads and education?
Vancouver and Toronto prices really aren’t going up and haven’t been for the past 2 years or so
Completely wrong.
RealNet data just released shows sales mix for all real estate in Toronto except condos increased in price. Condos were flat.
Smoking Man and Mark must be polar opposite twins. One is successful and hilarious and the other is hilariously wrong and droll.
I shudder to ask but what is an apt comparison for SM’s liver?
Is that Zimbabwe territory?
” And if you declare bankruptcy you may still owe CMHC for the loss? Maybe you could touch on this in a post?”
The whole point of bankruptcy is that you present all your assets and liabilities to creditors, and in exchange for disgorging all of one’s assets and making certain required payments into the Estate, liabilities are settled on a pro rata share amongst the various creditors. CMHC, obviously, being one of them in such a situation. Absent fraud in obtaining the loan/CMHC subprime insurance, all eligible debts are resolved and ultimately discharged through personal bankruptcy. Only a very narrow range of debts are non-dischargeable.
RealNet data just released shows sales mix for all real estate in Toronto except condos increased in price. Condos were flat.
Obviously the Troll doesn’t know what the sales mix means. It is a little deeper than just comparing across high-level classifications such as condos, SFH, etc. But nice try at the trolling! If you would step back from the obvious ad hominem behaviour and be willing to be educated, maybe you’d learn something.
“If the rate is lowered in April, it is to stimulate borrowing, not deflate it. When the loonie is trawling mid-to-low 70s in the summer, are you gonna drop your silly “low rates mean strong currency” position?”
No, because its not silly. And borrowing is coming to a crashing halt compared to the boom years of the past. Did you see the YoY data released lately?
Look at the USA, look at Japan, low rates = high currency. The ability to run low rates implies a strengthening currency. Deflation in Canada is picking up steam, and commodities are far closer to a bottom in the whole scheme of things than a top. As for a 70 cent Canadian dollar, well, good luck with that….
There is no monkey in a house until it is sold and the monkey gets put in the bank on closing day. I have always found it interesting how people talk about what their monkey is worth based upon what the trannies down the street say. They think they are rich (because of some bank’s gag line) and borrow against the so-called monkey in the house. What I have never understood is what they plan to do when they sell and buy a replacement one. There is no monkey because they already spent it.
My view has always been that a monkey needs a house to live in. Nothing more. I have never worried about what the monkey is doing because if I sell I will need to replace it and the cost of the replacement one will rise and fall with the monkeys like the one I already own.
(My Bombay Sapphired recollection of another blog dog’s post. Oh, bananas. I thought What the heck isn’t rentier-speak about monkeybusiness anyway.)
By the way, if a Picasso is up on some fancy bank lobby’s wall (not likely actually in Toronto, here they’re prone to hang a Group of 17 “Shadows of Fence Post on Snow”) it’s no longer art. It’s propaganda now. Quoting John Grierson.
“Lower rates and much lower inflation over the last 20 years certainly haven’t helped the Yen”
The USD$’s sudden strength is a very recent thing, and is largely on account of its low rates and deflationary policy. Obviously not all economies can lower rates to strengthen their currency and gain an advantage against each other simultaneously.
USDJPY was down to what, 80 cents just a year or two ago? After what 15+ years of minimal interest rate policy? So much for the theory that low rates cause currency depreciation over the long term, a theory which not only doesn’t hold up to scrutiny, but is actually wrong and backwards.
#173
It’s because we have an elected dictatorship run by public servants who only care about their salaries and pensions. Until that type of tyrannical govt in Canada changes – nothing changes.
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Amen.
BIDDING WARS UNDER SCRUTINY AND NEW CHANGES COMING IN ONTARIO….just in from Amanda Lang show.
#206 Shane on 03.25.15 at 1:35 pm
Why are Vancouver and Toronto Housing still going up while rest of Canada suffers. Is there something different about them?
Shane
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Yes there is.
Local Govs addicted to crack property taxes regardless of what part of the world they happen to come from.
Thanks for your money canada.
Next!
“Residential real estate only costs what it does for one reason. Cheap money.”
Unfortunately the same can be said for the stock markets.
There really is no where to hide from the coming apocalypse!
Wrong. Stock values are based on multiples of earnings. House values on multiples of hormones. — Garth
I’d like to also point out on Garth’s ‘weather’ comment that half the continent had an epic warm winter, only the east cost got hammered. So its pretty disingenuous to say the weather is the reason for poor growth. Since QE ended we now have a nearly perfect flat stock market and are now staring down deflation and negative GDP growth. The whole ‘lift off’ meme is starting to be shown to be a total farce. Go ahead and label me a doomer though