‘I’ll take it.’

FOOD modified

So Mike and Cath went to an open house last Sunday. “Should have left when I got there,” he says. It was a suburban apocalypse in Newmarket, a distant Toronto exurb. “People were lined up at the door to get in,” Mike explains,” because the realtor was running late.”

But here’s the interesting part: the house burned seven years ago. To the ground. All that remained was the garage and a smoky foundation, upon which a new structure was built a year later. Was it compromised in any way?

“Nonetheless, the listing agent told us he wasn’t accepting offers until Tuesday at 7:00 pm – primed for a bidding war.” And that’s what happened. Marketed at $599,000, there were seven offers tabled, and the ‘winner’ walked away having spent $775,000.

“In Newmarket!” says Mike. “Another classic sign of an overheated housing market.”

Not far away is another swath of GTA hinterland called Stouffville. Pat lives there. This is her description of the local high life: “We have a Walmart, two Tim Hortons, a McDonalds, a No Frills, IGA, a community centre and two hockey arenas….oh yes, and we do have a GO Train that conveniently runs right through the middle of town and if you’re lucky enough to live close to the tracks, you hear the trains horns ‘Choo Choo’ as my son says several times a day.”

Last Wednesday the local flyer, the Sun-Tribune, had some stunning news: The average house price in Whitchurch-Stouffville jumped 13.6% in the past year and now sits at $726,900. The average in the entire region (York) is north of $900,000. Says a local realtor, Lesley O’Connor: “It’s amazing how many people can afford a $700,000 home. It’s buyers saying, I’ll buy it. No, here’s more money, I’ll take it.”

An average of six homes listed for more than $1 million have sold in the area every seven days. The typical days-on-market? Just 18. Adds O’Connor: “If we were over-pricing, we wouldn’t be selling,”

By the way, Pat rents one of these houses for $1,600 a month. “We must live in the next San Francisco with these prices! We do like it here, it’s a great community, but $736,900….come on!  People are crazy to pay that kind of money!”

BTW, Stouffville is 50 km from downtown Toronto, via two of the most congested and heavily-traveled highways in North America. The commuter train costs $19.10 a day and requires two hours.

Well, there is actually a point to this blog post, which is the frightening run-up in real estate values in thinly-serviced, expensive, semi-rural, car-dependent areas at a time when the population is aging, about to downsize, and becoming increasingly urban. Were it not for historic low mortgage rates (2.6% now for a five-year fixed) and CHMC insurance wiping away the lender’s risk, house values in areas like this would be halved. Sadly, with the population shift and the inevitable increase in rates, that could be exactly what will happen in the years to come.

Moshe Milevsky’s an interesting dude. He’s a biz prof at York U, author and commentator who applies a thick layer of statistical analysis to stuff most people gloss over. Like where they live, what they spend and the inevitable consequences of same. MM raised a lot of eyebrows last week when he published his analysis of StatasCan’s ‘Survey of Household Spending’ that most people shrugged off.

Here’s a quick summary: There are 3.7 million home-owning families with no mortgage. They still spend 15% of their disposable incomes supporting their houses, but manage to save over 14% of their incomes – which bodes well for future years, despite having a low annual income (under $60,000). There are 4.9 million families with mortgages. They earn more ($74,000), likely because, in general, they’re not retired. They spend 30% of incomes on housing and save just 3.5%.

Now, 1.8 million families have CMHC-insured, high-ratio mortgages and spend an average of more than 43% affording their homes (not counting property taxes, maintenance etc.), while saving nothing. In fact, they have a negative savings rate of 13%, meaning they’re going backwards financially. (Recall that the average savings rate in all of BC, were the silly people live, is negative 8%.)

CHART modified

What are these people, many of whom live in Newmarket and Stouffville, counting on?

Simple. They spent all they have on a house and continue to have no capacity to save or invest, plus slide into more debt, because they’re gambling. They put all of their chips on one outcome – that the capital appreciation of their homes will be great enough to cancel their debt and bail out their future. But as Milevsky points out:

“If you work your way backwards, the amount by which housing prices would have to appreciate over the next 10 to 15 years to justify negative savings rates — and still leave a decent liquid nest egg for retirement – is staggering… And, worst case scenario, if real estate disappoints and/or interest rates swell, just when it comes time to renew your mortgage in three to five years, well, I guess these 1.8 million Canadian families will learn what it’s like to run their house like a hedge fund.”

The greatest misconception in this nation, and the Achilles heel we ignore, is that real estate is riskless.

People like me know better. But, of course, I’m irrelevant. You see, it’s different this time.

168 comments ↓

#1 OttawaMike on 04.26.15 at 11:22 am

The Roulette wheel has been hitting continuously for anybody who bought the GTA market the past 7 years.

Sounds like the gaming authority needs to check the wheel’s calibration.

#2 Dr.Dr. on 04.26.15 at 11:28 am

This will not end well

#3 Keswickian on 04.26.15 at 11:30 am

I bought a pre build town home in Stouffville in 2005 for 218. I sold it in 2012 for 385… I thought how much more could it go up.. Huge mistake this year same model same nabourhood is selling with in days on the market for 500
I left 100 thousand on the table. I didn’t listen to smoking man and the heard dynamics

#4 Dr.Dr. on 04.26.15 at 11:34 am

If CHMC wipes away the lenders risk, where is CHMC going to get all the $$$$$ to re-finance the banks?

How much money does CHMC have at the current time?

#5 DM in C on 04.26.15 at 12:00 pm

So Blog Dogs, query to the masses – if we’re considering a job offer (six figures) with office in Richmond, where do we rent? It’s just three of us and a small dog.

#6 Rexx Rock on 04.26.15 at 12:01 pm

I was waiting in the bank of Montreal and seen an add for small new ranchers for $539,000 in Victoria.I thought wow,its sad when families have to spend over a half a million dollars for a new small house.No lie,later that day I checked my email and seen basically the same house in Houston for $129.000.I just laughed and thought Canadians are just plain crazy.Its cheaper to own a nice house in Dallas and Houston than to rent it.
Canadians are getting fleeced and don’t even know it.One day it will come to an end and this racket will implode and it will destroy many Canadian families.

#7 Mike T. on 04.26.15 at 12:13 pm

ha ha
human food
I’ll take what the dog is having
when’s the last time you saw a donut tree?

#8 Bobby on 04.26.15 at 12:13 pm

I remember the late 80’s and early 90’s with the run up in house prices in the GTA. Smaller communities such as Brighton where I lived saw a significant increase in house prices. Commutes to Toronto of 90 minutes plus were the norm. Local salaries didn’t support the prices but it didn’t matter as real estate prices supposedly always went up. I remember looking at some of the crap being slapped up. Just awful. What happened….it all crashed, the prices came tumbling down. Fortunately, I had sold but many were really stuck. Seems like history always repeats itself.

#9 Ogopogo on 04.26.15 at 12:15 pm

As a BC resident, I can testify to the profligate spending habits of my fellow Kelownians, many of whom are obsessed with out-Jonesing each other. The woman who runs a tiny trinkets store next door drives a Beemer. Two months ago the store went into receivership (“everything must go” signs out front). I wonder how she will manage to pay off the lease or car loans on that albatross.

Cue the world’s tiniest violin.

When I see the level of financial illiteracy all around me and friends aghast that with our DINK salaries we still rent I can’t help but feel incredibly lucky to have woken up to the irrefutable beauty of living ridiculously below our means, even as we travel internationally at least once a year and otherwise enjoy the best the Okanagan has to offer.

It’s almost too simple to be true. But it is. Meanwhile, I quietly chuckle at the baying mobs of brick lickers all around us.

#10 Blogbitch on 04.26.15 at 12:24 pm

Garth, I really appreciate it when you share information like this that’s simple to understand for the average person. The table in today’s post was a home run (pun very much intended.)

#11 North Burnaby on 04.26.15 at 12:35 pm

O boy… Housing market in Toronto seems like it’s in a bubble, but its not the case here in Vancouver

#12 no more fuel on the fire on 04.26.15 at 12:38 pm

RE in Canada took a breather and actually corrected in 2012 until the Fed announced QE3. There was a direct correlation between more American lose money policy, the global economy and Canadian RE prices.

QE3 ended late 2014 and the Fed has been warning they will raise rates this year. Absolutely no mention of any further QE measures. The markets are preparing for that but Canadian RE still seems in Kuckoo land on cloud 9.

Are people just not paying any attention what goes on around them? Banks are eager to sign higher mortgages on lower rates because it ensures them the same levels of profitability. Banks are not your friend when the music stops and everyone is clinging for the lifeboats.

Lacking any further QE in the US is the harbinger of the Canadian RE peak. This Spring market is the equivalent to a blow off top.

#13 Nagraj on 04.26.15 at 12:41 pm

“What are these people counting on?”

Good question.

Let me add to that query: Who are these people?

And: Would you wanna have lunch with any of ’em?
And: Would you want to seek their vote?
And: Would you care how they vote?

Holy jumpin’ Jehosofat! These people are ALL neurotic. Ipsoso factoto irrelevance is a symptom of sanity. Symptoms of sanity are HIGHLY suspect in Canada.
Why oh why do otherwise reasonable Canadians (few and far between) have such a problem, such a reluctance to come to terms with the unfortunate (but not historically unprecedented) FACT that a nation can collectively go bonkers.

Canada: coocoo for cocoapuffs coocoo for cocoapuffs coocoo for cocoapuffs coocoo for cocoapuffs coocoocachoo cmhc rosemary’s babies and harper hey see da game las’ nite go losers go

#14 GTA engineer on 04.26.15 at 12:43 pm

We bought a new build in Stouffville in 2008 for $470k+upgrades. It is now sellable at near $900k but we would never pay that out here. Prices are mad. But those of us who bought when prices were more sane are not in a hurry to cash out and rent. Easy come easy go? Maybe. But it is our house and whether it is worth 300k or $1M doesn’t impact us. Our savings go towards diversified investments and we don’t count on the house as providing any investment value.

Btw in defence of Stouffville – we are only 1 Go train stop and 7 minute drive north of Markham’s 400,000 people. For clarity that train takes 1 hour each way and only a few minutes more than Markham, plus you are guaranteed a seat in the morning, unlike Markham (so I hear anyways – I enjoy a nice country drive into Markham for work – at least until Markham paves over their northern farmland into sprawl). Plus it is nice to be outside of the GTA ‘blob’ and yet be close enough to enjoy the city (during non rush hours I can drive to the Don Mills subway in under 20 minutes or downtown to Yonge and Bloor in 30).

#15 SWL1976 on 04.26.15 at 12:56 pm

This real estate wreck is like when a giant ship collides with an immovable object. The collision can take minutes to occur and despite any actions it is bound to happen. The course has been set and the captain has not even tried to steer or stop this ship from disaster

Now on another note this blog post reminded me of a time in my life when my dear Mom thought Bennie babies were all the rage and the `rare’ ones would be sold in a bidding war simply because some site online created a value for them, and that value could only ever go up up up! Oh how people get caught up in the drama and fail to see reality.

I am thinking the people who recently `won’ the bidding war for a house in Stouffville next to Sprawlmart might soon learn that something is only worth as much as the next person is willing to pay… But we all know that.

Now how do we reach the ones who don’t see?

#16 Leo Trollstoy on 04.26.15 at 1:12 pm

Unfortunately for buyers, RE in Toronto and surrounding burbs have been rising in price across the board for a long time.

#17 Ralph Cramdown on 04.26.15 at 1:24 pm

#7 Mike T. — “I’ll take what the dog is having”

One of the primary design goals of dog food is to produce stools of a consistency convenient for the humans who pick them up. But the ads say Brand X produces a shinier coat. Which motivation is driving you?

It’s a mad, mad, mad, mad world.
https://www.youtube.com/watch?v=eZXEVVX-RAw

#18 crowdedelevatorfartz on 04.26.15 at 1:29 pm

@#11 North Burnaby
“O boy… Housing market in Toronto seems like it’s in a bubble, but its not the case here in Vancouver…”
++++++++++++++++++++++++++++++++++++

I guess thats why you live in Burnaby.

PS. What ya gonna do for pub night now that the Mountain Shadow is “turning condo”?

#19 Retired Boomer - WI on 04.26.15 at 1:29 pm

With star like that, the new name coming to our northern neighbors will be “Greece West” I think.

I might be older, and dimmer, but math is still a rather unforgiving discipline. THIS math does NOT work.

The renter will be king, all situations change over time.
NO EXCEPTIONS. Tell that to your mother-in-law.

#20 insanity on 04.26.15 at 1:30 pm

BTW, Stouffville is 50 km from downtown Toronto, via two of the most congested and heavily-traveled highways in North America. The commuter train costs $19.10 a day and requires two hours.

———–

So TO is NOT NYC – how come it has two of the most congested and heavily traveled highways in North America?

A 50 km commuter train ride that requires two hours?

I would also add, that in Toronto the traffic lights seem to be coordinated to purposely slow car traffic, probably driven by idiotic short-sided ideology to force more people to use public transit.

The Toronto subway system is not only one of the shortest, but also one of the worst in the world, considering the size and population of the GTA.

In Toronto buses travel in gangs of 3: first bus completely full, second half filled, third nearly empty, all in visible distance from each other – than a 15 minutes gap between the next gang of 3.

#21 Retired Boomer - WI on 04.26.15 at 1:30 pm

OOPs… With Stats like that……

DAM Autocorrect!

#22 Bobs ur uncle on 04.26.15 at 1:30 pm

“the irrefutable beauty of living ridiculously below our means”

Well put. As a society, we seem incapable of even thinking about let alone embracing those values. As a gen Xer who grew up looking down on anyone wearing the shiniest, trendiest crap, little did I know that my counter-culture love of used clothes and furniture could form the basis for long-term financial stability. I’ve got a perfectly good couch in my living room that I got from the Sally Ann for $75 – roughly 8 years ago, and still going strong. Spend less than you make and invest the difference. That basic concept is completely lost on most people.

“I quietly chuckle at the baying mobs of brick lickers all around us.”

lol – that made my morning.

#23 zee on 04.26.15 at 1:32 pm

Hey Garth
We all get it that housing is very expensive by all metrics.
There will be no correction until rates rise which seems that it will not happen for a very long. Just a quarter percentage in 10 years seems so difficult for the feds to do.
And here, no rates rises and in fact the govt is doing everything for housing to keep rising and Canadians to continue taking on more debt. I had mentioned this some time ago to you that the govt here wants us to continue taking on more debt and disagreed.

#24 ‘I’ll take it.’ | Realties.ca on 04.26.15 at 1:32 pm

[…] Source: http://www.greaterfool.ca/2015/04/26/ill-take-it/ […]

#25 Canadian city shortage on 04.26.15 at 1:40 pm

…small new ranchers for $539,000 in Victoria… seen basically the same house in Houston for $129.000.I just laughed and thought Canadians are just plain crazy.Its cheaper to own a nice house in Dallas and Houston than to rent it. Canadians are getting fleeced and don’t even know it.

——-

Part of the reason for crazy house prices in Canada is the shortage of decent Canadian cities.

Where is Dallas, Houston… and all the other top 25 US cities in Canada?

Shortage of decent cities creates higher demand in the existing few.

#26 905 Investor on 04.26.15 at 1:45 pm

I will have to disagree, Garth. Stouffville is a very liveable place, and prices should go up steadily there.

905 real estate has been doing very well and will continue to do so. Tens of thousands are coming into the areas around Toronto every year.

As a real estate professional and investor in the region, your comments have little connection with the reality I see.

Even a stopped clock is right twice a day. You have been wrong now for what, 8 years?

Sorry, your doomsday scenario is just one of many possibilities for the future, and hardly anyone believes in it.

In the meantime, stock markets are looking extremely shaky, jmho.

#27 Ralph Cramdown on 04.26.15 at 1:52 pm

#14 GTA engineer — “We bought a new build in Stouffville in 2008 for $470k+upgrades. It is now sellable at near $900k but we would never pay that out here. Prices are mad. But those of us who bought when prices were more sane are not in a hurry to cash out and rent. Easy come easy go? Maybe. But it is our house and whether it is worth 300k or $1M doesn’t impact us.”

If, when you bought, somebody had given you the choice whether to live in a place that kept up up with inflation and only cost you your interest payments plus property tax and maintenance to live in, or another place that would pay you a tax-free $4,000 a month to live in, would you have been indifferent?

So why, now that it turns out that you got option B, are you indifferent as to whether you’ll end up back at option A over the long term?

#28 4 AM Sunrise on 04.26.15 at 1:56 pm

I’m starting to think that you blog dogs with families who say that it’s no big deal to round up $20,000 a year to feed the TFSA have already built up some non-registered savings before 2009, so it’s no big deal to shuffle funds over. I maxed out my TFSA every year despite my suboptimal employment situation because I already had savings that preceded it.

#29 JO on 04.26.15 at 1:58 pm

Canadian RE is where the Nasdaq was in late 1999
An incredible debt based Ponzi scheme. Madoff would be proud.
When the who thing collapses they will simply add to CMHC by adding to the national debt. During the rise the senior execs in the FIRE industries and your governments laughed all the way to the bank and when the bust happens they are made whole by stealing from the young and unborn
I just met a couple last week. $25 k down but no net worth as they had CC debt and car debt but they want a new house north of TO. I told them to wait and save more and pay off the cc debt but they said they will buy resale
Many of these first time buyers are broke

A historic debt bubble always ends in a historic bust. Debt bubbles make these financial illiterate broke speculators look smart but their day of reckoning will come. Not if, just when

#30 Nemesis on 04.26.15 at 2:00 pm

#Silly&SeriousSunday… #Eclectica&Ephemera…

#QuelleSurprise!…

[Guardian] – Recession rich: Britain’s wealthiest double net worth since crisis: Richest 1,000 families control total of £547bn, rising by more than 112% since 2009, and own more than poorest 40% of British households

http://www.theguardian.com/business/2015/apr/26/recession-rich-britains-wealthiest-double-net-worth-since-crisis

#TheRestiveHoiPolloi,Or… #TheOldRumpyPumpy… #Ain’tWhatItUsedToBe…

[NewRepublic] – It’s Time For a Very British Revolution

…”Rump Politics thrives on keeping silent, saying nothing, giving nothing away, above all not engaging with anyone who your algorithms tell you won’t vote.”…

http://www.newrepublic.com/article/121649/uk-elections-2015-its-time-british-revolution

#RhymesWithBedWetting…

[Telegraph] – How 370 investors lost £18m – in minutes
A shock move by the Swiss National Bank left a group of British investors suddenly in debt. One investor, who staked less than £10,000, now faces losses of £250,000

http://www.telegraph.co.uk/finance/personalfinance/investing/11562202/How-370-investors-lost-18m-in-minutes.html

#RumpPolitics… #AngelinoStyle…

[LAT] – LAPD hunt for graffiti artist who tagged a police horse

…”Charly was on crime suppression detail at Venice Beach when the incident occurred.

The artist tagged ‘R.B.S’ in silver pen on the horse’s behind while the animal was being minded by police.”…

http://www.independent.co.uk/news/world/americas/lapd-hunt-for-graffiti-artist-who-tagged-a-police-horse-10204641.html

#FalseCreekBachelorsBreatheEasier…

[CBC] – Conservation Officers Eradicate Aggressive False Creek coyote: Coal Harbour Cougars Continue to Plague Residents

…”A recent study shows that the majority of Vancouver residents have a positive attitude about coyotes in the city.

The Stanley Park Ecology Society asks that residents try and scare coyotes away with loud noises when they see them and also report sightings on its web site.

The Ministry of Environment becomes involved when it can prove a coyote is engaging in aggressive and threatening behaviour such as stalking, pursuing or lying in wait.”….

http://www.cbc.ca/news/canada/british-columbia/aggressive-false-creek-coyote-killed-by-conservation-officers-1.3048733

[NoteToGT: I may have taken some editorial liberties with the WildLife piece Leader… ]

#31 Retired Boomer - WI on 04.26.15 at 2:02 pm

(Sigh) It’s always different this time.. until it is NOT !!!

#32 Ray Skunk on 04.26.15 at 2:11 pm

Ex-Stouffville here. Bought a 3yr old home in 2011 for $430k, the original buyer paid $300k. Funnily enough they moved to Newmarket. Same house probably worth $550k now. Insanity.

Stouffville is a nice town, and agree that it is just about driveable to Toronto (early early early only). The GO is $19.10 now? Wow, back in my day it was a mere $7 or so each way. I guess that’s what happens when the mighty Metrolinx Sunshine List machine needs to be fed with regular inflation-busting price hikes.

The commute is OK in the morning, although it can be often compromised when there are problems on the Lakeshore line that make you late for work. The way back is a PITA; if you want a seat then you pretty much have to be at Union lining up 20mins before the train departs. If that train is late, it can be pandemonium on the platform.

Outside of the train hours, the bus ride is at the mercy of the DVP traffic. The last bus home at night – full of pissheads – is entertaining. Many an incident on there.

CSB I know. Just reminiscing. It was a nice town, but even if prices came back to reality I don’t think I could move back given the traffic and transit. Also, the small and cute ship has sailed… it will become the next Milton. Nice little downtown ruined with mile after mile after mile of soulless cornflake-box pressed townhousing interrupted by Smart Centres.

#33 Freedom First on 04.26.15 at 2:54 pm

I am a numbers man. The cost of houses these people are bidding on, plus the additional costs of commuting in both money and time is horrifying to me.

I remember as a youth, on my own at 17, working a job paying me $1,000 a month clear, and paying $75 a month rent to an old lady for her tiny basement suite. bought a beater for a few hundred cash, and had about a 15 minute commute. My goal was to save $5,000 asap for an emergency fund, while saving additional funds for a better car. I went to night school to study business, and I always had a girlfriend. Girls at that age didn’t have houses and kids on their minds, or care what we did outside of my place. When I was 27, I had graduated to a 2 year old paid for car, and a diversified portfolio, my own apartment and a 19 year old girlfriend. Life has been very kind to me. for me, debt=slavery. Don’t get me wrong, I have a line of credit for convenience sake for when I pounce on spectacular deals, like when the markets crash, but I pay it back within 1 or two months. I am surprised my banks have never complained about that.

#34 Oh, the insanity! on 04.26.15 at 3:26 pm

Yup. Here in Cookiecutterville, prices are nuts. There are 40 houses, built between 3 and 5 years ago, on this street. Of these, 20 have sold,at least once in the five years we have been renting. Money spent on RE agent fees = “value” of one home. Money “invested” in “improvements” = beyond crazy. Sign on one lawn announcing new windows and doors …… For a new home? Another home – and not the first by any means – has had at least three “landscapers” working in the back yard for the past two weeks. Work continues. Trust me, these houses don’t have enough “land” to “scape”.
Another home had been carefully maintained and had many “upgrades” including granite and finished basement in the four years since it was built. Nevertheless, the agent persuaded the sellers to repainted and “stage” the interior. The house sold in two days. The new owner is thrilled with his purchase, says it’s value has increases $15K in the two months since he bought it. He hasn’t moved in yet. He’s scraping the “popcorn” off the ceilings, reprinting the place yet again and sanding and restaining the floors. Says the colour scheme wasn’t to his liking.
Sigh!

#35 Obvious Truth on 04.26.15 at 3:27 pm

#26

You are likely right for now on housing but only in a couple markets.

Q’s just broke out. And still nobody likes the markets. You are likely wrong there.

When guys like you write and opine but don’t understand the mechanics of what is going on it scares people like me.

It’s like playing blackjack when the guy on your left has no idea what hes doing.

#36 X on 04.26.15 at 3:50 pm

So roughly 21% of homeowners are between a rock and a hard place in 3-5 years.

From the sounds of things, they aren’t financially able to contribute to boosting the economy even now, outside of maintaining their home ownership, they are financially strapped.

Too bad minimum down payments or CMHC insurance wasn’t altered more, so that the sheep were protected from their own financial ignorance more.

#37 Broke Dick on 04.26.15 at 4:10 pm

For Turnernation re Dollarama.
read a bit in the Globe that shows some insider buying

http://www.theglobeandmail.com/globe-investor/investment-ideas/insiders-buying-at-dollarama-as-loonie-bounces/article24087861/

As a long and loyal customer here are my thoughts.
Due to the drop in the Canadian dollar a few months ago our favorite store was forced to raise prices on many items. What was $1 is now $1.25, $2 is now $2.50 and so on. As a thrifty shopper I notice the increases but I continue to shop there because where else are you going to get comparable value. My betting is that the insiders are also noticing sales are not slowing down and combined with the price increases the profit margin has gone uppa, uppa, uppa.

Please share your thoughts and let me know when you think it would be a good time to jump back into the stock.
Thanks

#38 Mark on 04.26.15 at 4:30 pm

“Unfortunately for buyers, RE in Toronto and surrounding burbs have been rising in price across the board for a long time.”

Sounds like you’re stuck in the past. The appreciation stopped two years ago. What’s left is the sales mix having changed substantially in favour of the higher end and brand-new units. Which doesn’t help sellers of existing single resale units for which changes to the sales mix don’t mean squat.

“If CHMC wipes away the lenders risk, where is CHMC going to get all the $$$$$ to re-finance the banks?”

The GoC has a legal obligation to provide funding for the CMHC to make good on the loan guarantees they’ve provided. However, there is likely to be a lot of political turbulence (and hence, volatility in bank stock prices) in actually signing on the dotted line. It will eventually happen, but that’s not to say that the politicians couldn’t invoke a significant amount of theatrics around such.

The ‘weapon’ the banks wield in return is the threat of cessation of lending to the residential RE sector. So basically the term, “mutually assured destruction” or “MAD” comes to mind.

#39 Basil Exposition on 04.26.15 at 4:40 pm

Seeing the same bidding wars going on in Oshawa, the most eastern city in the godless GTA. An hours commute by GO Train to downtown Toronto.
Blessed by highways 401, 407,a GO Train, and a great Junior A hockey team, this former industrial wasteland has, above all, affordable detached houses in safe neighborhoods where the kids can walk to school and participate in sports at several brand new community centres. Buying a Condo in downtown Toronto is great until you decide to have kids and realize that no new schools have been built anywhere near the glass forests of Liberty Village, City Place, or the Queen’s Quay.
The root cause of these outer suburban bidding wars is the gap in affordability between the selling price of a Toronto Condo and a house in a Toronto neighborhood with good schools. But, for your Condo selling price and maybe a little more, you can get a patch of grass at the end of the GO Train line with a detached house. Kids will be happy, while you commute your life away. The GO Train has transformed these communities.

#40 Vlad the inhaler on 04.26.15 at 4:41 pm

Can someone on this blog explain the lender’s risk in a collateral loan?

#41 Mark on 04.26.15 at 4:52 pm

“Part of the reason for crazy house prices in Canada is the shortage of decent Canadian cities.”

Ummm, no, not really. If that were the case, rents would be sky-high too. But as we see, its the price to rent ratio that is extremely high. Renting in Canada’s major cities is actually quite affordable, and extremely affordable compared to owning.

In the meantime, stock markets are looking extremely shaky

Shaky? At prices of 7 years ago and significant earnings growth inbetween, with most of the cyclicals at the bottom of their range, not at the top, you think the “stock markets” are shaky?

#42 rosholt on 04.26.15 at 4:52 pm

I don’t know why many are surprised of this new paradigm. People are living way longer than they did 30 years ago. 80 is the new 65.

Where a generation ago you wanted your mortgage paid off by 50, now that age is 65. Have it paid off by 65 nowadays and you’re in great shape.

Gov’t pensions will start to kick in and now you have no mortgage. Most work until 67-72 years and that will rise slowly. It’s the evolution of mankind.

Many here seem to think that mankind should still be in the stoneage. Guess what people? People live longer and carry more debt, its what evolution causes.

I’m surprised that you guys don’t toss around debt stats from the 1600’s-1800’s! Plain and simple, you can’t compare the past to the future. The seniors of today didn’t have cell phones, tablets, internet just as the great-great seniors of yesteryear didn’t have tv’s, cars, airplanes…. times C-H-A-N-G-E!!

Old foggies try to use the 60’s and 70’s as comparisons because they are out of touch with reality and TODAY.

News flash seniors – today’s generation doesn’t care about a little 2% debt. Big whoop, I’m going to pay a whole 2500$ in interest in one year. Wow, one pay cheque- how obscene.

The sky is always falling with people who are out of touch. The trend is your friend.

Regards, Rosholt.

#43 T5_INCOME on 04.26.15 at 4:54 pm

I spoke with a higher up at BMO, he had colleagues with a nice spread out in Stoufville. He told me they close the heating vents in 3-4 of their unused rooms to save on heating/cooling costs.

You cant write this stuff.

#44 Smoking Man on 04.26.15 at 5:05 pm

#3 Keswickian on 04.26.15 at 11:30 am
I bought a pre build town home in Stouffville in 2005 for 218. I sold it in 2012 for 385… I thought how much more could it go up.. Huge mistake this year same model same nabourhood is selling with in days on the market for 500
I left 100 thousand on the table. I didn’t listen to smoking man and the heard dynamics
…….

It’s more than Herd Dynamics..

UCC Universal Consouness Consolidater.

Has to do with macroscopic world. Every atom of our brain matter has an elecrtron, if an atom was the size of a basket ball, the electron would be circling at about twenty miles away. Lots of empty space.

Bottom line, all atoms can communicate with each other in wave vibration..

I have figured out a way to send and receive vibs and wavelengths.

Again happy thoughts bring good fortune, negative thoughts bad luck.

Truth is somewhere between the second and thierd glass.

#45 Mark on 04.26.15 at 5:11 pm

“Can someone on this blog explain the lender’s risk in a collateral loan?”

The risk is the value of the collateral decreases abruptly in a manner faster than the bank can realize such and adjust rates and/or liquidate the collateral accordingly. This, in turn, causes the cost of capital (debt and equity) to the bank to rise dramatically, which impairs lending and causes what effectively amounts to a deflationary spiral where a cessation in new lending further impairs prices and hence existing loans.

For instance, the US RE collapse, in many cases, was so sudden that the entire RE community, including the lenders, were in disbelief as to the new valuations. Bids almost disappeared overnight. The problem was viewed as a malfunction of the banking system, not of houses being dramatically overvalued relative to their long-term fundamentals. There were even cries of houses being priced at “below-market”, which is a complete logical fallacy.

#46 Maggie the Teck Writer on 04.26.15 at 5:18 pm

Basil Ex
“Buying a Condo in downtown Toronto is great until you decide to have kids and realize that no new schools have been built anywhere near the glass forests of Liberty Village, City Place, or the Queen’s Quay.”

Actually, there is a rather attractive school at Queen’s Quay and Bathurst. On the LRT under normal conditions. Only downsides are the traffic and fumes associated with the Poisonous Porter (Air).

#47 Julia on 04.26.15 at 5:29 pm

So you work in downtown Toronto as an example, purchase a home in Stouffville at an average price of $726,900, spend 2 hours commuting on the Go train at a cost of close to $100 per week. Plus you have to drive everywhere, most likely need 2 cars.
What are you saving exactly compared to renting downtown/mid-town Toronto?

#48 Mathman on 04.26.15 at 5:34 pm

I take a quantitative view of the idea of living in the burbs, and the math never works. Lets use our Stouffville example.

– Go – 19.10/day or /$382 month
– Car for simply getting to the Go $250/month(Cheap four door)
– Insurance on that car for getting to the go $150/month
-Gas $100/month – just getting to the Go
– Time lost on the train – priceless
– total cost $882/month and 40 hours/month or 20 Days per year sitting on the train you will never get back

If you and your spouse both do the same thing, I would argue far better to live in the city, have one car and an actual work life balance. The amount of net income it would take you just to get to work in this example is staggering, yet thousands upon thousands do this all around the suburbs. If you actually run the numbers on what you wouldn’t need, the difference is marginal. One car, the ability to walk to most things you would need, no more go pass and associated commuting costs.

But hey if you like the huge house, the lawn, the inability to walk to anything and worrying all day about getting to your train on time, go nuts. I see the panicked faces of folks doing the bay street dash everyday at 4:30, and wonder why anyone would choose to live this way. I can’t judge, simply hoping folks actually do a proper analysis before that take the plunge to move 50km away from their job.

#49 Julia on 04.26.15 at 5:57 pm

#47 Mathman

I’m with you. Plus, moving to the suburbs for the kids, ok, but as a parent, I know that kids get sick, daycare/school calls: Come and pick up your child. Then what?

#50 Mark on 04.26.15 at 6:05 pm

“I see the panicked faces of folks doing the bay street dash everyday at 4:30, and wonder why anyone would choose to live this way.”

At the moment, “Bay St.” compensation is sufficient to make it worthwhile for a lot of people. Lots and lots of very highly paid bank employees and the various legal and professional firms that support them.

But should it be taken for granted that the banking sector will be the most highly (market) capitalized sector in the Canadian economy perpetually? Of course not. At the end of the day, banking is just a utility function of society, and new electronic systems, trading platforms, ETFs, etc., allow for much of the functionality that used to be vested solely in the banking system, to be spread out amongst the broader investing population at relatively low cost.

As I wrote in one of yesterday’s posts to the comments, I believe the future is going to be one of higher interest rates. Higher interest rates being bad for senior and ‘savers’. Facing such poor returns on account of rising/higher rates, there is going to be incredible pressure on the Canadian banking system to become efficient. And the practical result of such is that the extravagant banking sector/legal sector/professional sector/public compensation will be chopped down dramatically. Will this have a serious effect on Toronto RE, given that those occupations represent an overwhelming proportion of the high income crowd in the GTA? You betcha!

#51 CalgaryRocks on 04.26.15 at 6:23 pm

#47 Mathman on 04.26.15 at 5:34 pm
I take a quantitative view of the idea of living in the burbs, and the math never works. Lets use our Stouffville example.

I do not want to sound like ‘Freedom First’, but here’s my opinion. No man has ever said, “Honey, let’s live 1 hour away from my job (by smelly public transportation) so that little Johnny can have a backyard.”

I myself was horny for an affordable SFH in ’05. But never, ever, ever would I put up with a 2 hour daily commute by public transportation.

This is why we moved to Calgary. I could live less then 15 minutes by car from a well paying job downtown YYC AND own a SFH for less than 180K. WIN – WIN

#52 takla on 04.26.15 at 6:25 pm

of course the gov. wants to keep this housing bubble inflated..somewhere deep in gov databases the facts and figure exist on just how much $ they pull in when inflated property values are taxed on resale , ,realestate related industry personal income tax’s ,home improvement ect ect.
Always follow the money trail
Their gonna ride this tax banaza right into the ground,dame the social impacts of a crashing realestate market…Bubble economics,brought to you by a government near you

#53 Mr. Pink on 04.26.15 at 6:42 pm

“Marketed at $599,000, there were seven offers tabled, and the ‘winner’ walked away having spent $775,000.”

Crazy.

#54 DreamingInTechniColour on 04.26.15 at 6:50 pm

History show that the homes on the outer ripples of the pond are the first to fall in price…

#55 bigtown on 04.26.15 at 6:51 pm

Milton is another suburban story in the GTA with a twist.

CN owns 1,000 acres of land south of the 401 and needs to set up an intermodal transportation hub which would require approximately most of that acreage but there is a huge HULABALU now with the Mayor of Milton and the Halton Hills Townies opposed to CN. CN has the needed approval from the Feds for the hub and the blessing of the MP Transportation Minister Raitt from that neck of the woods.

The townspeople are anxious about falling house values from the industrial project but there is no support for the 1,000 direct jobs CN would create.

House values rule in Milton and jobs…not so much.

#56 I will on 04.26.15 at 6:53 pm

#45 -Maggie the tech writer

The island school is much better. And there is no such thing as poisonous air from porter. The airport is awesome – and its a benefit for the waterfront and all torontonians.

#57 Bubble dreamers on 04.26.15 at 6:57 pm

People like me know better. But, of course, I’m irrelevant. You see, it’s different this time.

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

Yes it is and yes you are.
Any negative price movement will be absorbed through a taxpayer bailout.
No problems here folks just more price growth without end.

If the US couldn’t do it, why could we? — Garth

#58 bob on 04.26.15 at 7:22 pm

Ah Garth,
Don’t you know anything?
Stouffville is where all the mainland Chinese are buying up homes, sight unseen, and leaving it empty.

It’s the HAM that is causing the bidding wars there!

#59 Jean Tupain on 04.26.15 at 7:34 pm

I can tell you that the problem is in vancouver and toronto, not in quebec. Here in montreal, prices are in fact below fair marker price, i believe. We have lots of wealthy immigrants coming in, and with the canadian dollar tumbling our manufacturing base is starting to make a comback. Combine that with Couillard’s work in progress to balance the budget, and the future looks very bright here. Also, sovereignty is now mostly a thing of the past, the most fanatic proponents are all getting old now. So, I think in the coming years we will see serious increases in our housing market valuations here in montreal.

#60 Linda on 04.26.15 at 7:37 pm

Garth, could you clarify a point for me – are the 1.8 million in addition to the 4.9 million with a mortgage or are they a segment of the 4.9 million households with a mortgage? Just trying to figure out how many official mortgage holders we are talking about here. Thanks.

#61 GeorgeSoonToBeRetired on 04.26.15 at 7:42 pm

We did some visiting near Collingwood this weekend.

Lots and lots of cottage and chalet for sale signs and friends say things are feeling nervous for the first time in years, in spite of the wealthy clientele.

The in-laws told us of how around 1989, people were buying into a new development called Todd Brooker Lodge (named after the great but injury-riddled skier, who is now a real estate agent in the area).

Prices then were up to around $200,000 for each chalet condo unit. By 1992, you could have snapped one of those up for about $48,000, big ads in the Toronto Star, a 75% price drop.

Today, there are lots of condo chalets around the area asking around $400,000, even more.

I wonder if they know what they could be in for.

#62 NoName on 04.26.15 at 7:46 pm

@47 methman

I agree with wasted time on go train, but what about strata/condo fees (an average estimate 70¢ sq-ft) for an 1500-ih sq-ft condo.
Is that waste?

#63 Sebee on 04.26.15 at 7:51 pm

I used to work at the IGA. Oh…those were the days.

Didn’t know there were locations open still. Stoufville sounds super…retro.

#64 45north on 04.26.15 at 7:52 pm

BTW, Stouffville is 50 km from downtown Toronto, via two of the most congested and heavily-traveled highways in North America.

Google Maps: Stouffville to 615 Huron Street (where I used to work) 49.2 km , 40 mins without traffic (like right now on Sunday night). So on the trip home, I’m guessing the return trip is over an hour and a dozen times a year it’s over two.

Mark: When RE collapsed in the US, in many cases, the collapse was so sudden that the entire RE community, including the lenders, were in disbelief as to the new valuations. Bids almost disappeared overnight.

the response of the US Federal Reserve was dramatic:

The response of the US Federal Reserve, the European Central Bank, and other central banks was dramatic. During the last quarter of 2008, these central banks purchased US$2.5 trillion of government debt and troubled private assets from banks. This was the largest liquidity injection into the credit market, and the largest monetary policy action, in world history. The governments of European nations and the US also raised the capital of their national banking systems by $1.5 trillion, by purchasing newly issued preferred stock in their major banks.[307] On Dec. 16, 2008, the Federal Reserve cut the Federal funds rate to 0-0.25%, where it has remained since then; this period of zero interest-rate policy is unprecedented in U.S. history.[315]

http://en.wikipedia.org/wiki/Subprime_mortgage_crisis#Governmental_policies

the Bank of Canada will not do the same because it cannot.

#65 it's all relative on 04.26.15 at 8:04 pm

if you think property prices are bad in Stouffville, take a look at Nobleton.

as for Stouffville itself… it’s a nice enough town. there is some expansion, but there is a limit. the bigger problem is going to be expansion from Markham, and destruction of prime farmland.

the Go Train commute is less than an hour from town to Union station. not 2 hours.

I said it takes two hours a day, which it does. That is 10 work weeks a year on the train. — Garth

#66 Daisy Mae on 04.26.15 at 8:08 pm

#42: “The seniors of today didn’t have cell phones, tablets, internet just as the great-great seniors of yesteryear didn’t have tv’s, cars, airplanes…. times
C-H-A-N-G-E!!”

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

Yes, we do….we’re keep up. Make no mistake.

#67 Daisy Mae on 04.26.15 at 8:10 pm

“keeping up”. You get the gist…

#68 takla on 04.26.15 at 8:22 pm

re#56…Remember,tax paying home owners DONT get bailed out when the market corrects…That’s reserved for the to big to fail Banks.
Read yur history
you sink along with your property values and end up with a whole lot of negative equity,and an unsellable depreciateing asset.Those mortgage holders”lucky” to sell later at a loss will continue to have to service that debt legacy here in canuckville.

And as Garth says”if the US couldn’t do it,why could we”?He has an important point as when the U.S 08 crash happened they started QE shortly afterwards.Help for the banks but nothing for indebted homeowners loseing properties

#69 Babblemaster on 04.26.15 at 8:25 pm

I remember three years ago somebody commenting on this blog, “why would anyone buy a house now, when you can smell blood on the street.” This was in response to my post that houses would only continue to rise. I say the same thing now, houses in the GTA will only continue to rise for the next few years. Rising rates will NOT materialize. It is not in the interest of any central bank for rates to rise. It is also true that the bond market will accept these lower rates. Any opinion to the contrary is just nuts.

#70 Godth on 04.26.15 at 8:31 pm

#15 SWL1976 on 04.26.15 at 12:56 pm

Don’t worry about them. It’s self correcting – painful as it might be (for all of us).
https://www.youtube.com/watch?v=ITGcZZsNUn0

p.s. this guy is a neurotic genius madman. His brain is about as big as the globe.

#71 Mark on 04.26.15 at 8:32 pm

“the Bank of Canada will not do the same because it cannot.”

I wouldn’t say that. Much of the ‘bailout’ of Canada’s banks in response to falling housing prices is already embedded into the system through the CMHC. The CMHC being legally responsible to make good, at 100 cents on the dollar, nearly all of Canada’s subprime and at-risk mortgage debt.

Which brings us to what the BoC will likely have to do, and that is, provide systemic liquidity support to the economy through prolonged low interest rate policy, and perhaps QE in the form of purchasing GoC bonds. Similar to what occurred in the US and Europe.

I also believe the BoC will be fighting a very strong CAD$ in the not-so-distant future. I know such seems absurd right now, but just watch!

#72 Obvious Truth on 04.26.15 at 8:44 pm

Ontarians have lost minds collectively. Newmarket and stouffville are nowhere near Toronto.

Seriously. If you have kids you may as well be living 4 hours from Toronto. You’ll get there just as often. And you’ll have money and life.

And if you do that commute then you need a doctor.

No amount of money can save these folks.

#73 lala on 04.26.15 at 8:50 pm

Another Sunday afternoon…. How many of you have that bad feeling in their stomach? It’s called fear, first time I feel it when I came in Canada. It will eat you alive….work, work, work, die.

#74 totalinvestor.com on 04.26.15 at 8:51 pm

The Economist: world’s most over-valued housing in Canada

http://totalinvestor.blogspot.ca/2015/04/the-economist-worlds-most-over-valued.html

#75 it's all relative on 04.26.15 at 9:01 pm

I said it takes two hours a day, which it does. That is 10 work weeks a year on the train. — Garth
___________________________________________

so what. if you live in Scarborough, and work in Mississauga, what’s the difference?
if you life anywhere in the GTA and have to get to the other side it takes 45-60 min

easier to take the GO train, sit and read your paper, have a coffee, and avoid the whole mess.

#76 Dual Citizen In Canada on 04.26.15 at 9:19 pm

Maple Go station to Union is about 35 minutes, and that’s not 35 minutes of paying attention driving to downtown, rather, a 35 minute read of Garth’s blog. Some people work on the train and that’s value to them. It’s not always about wasted time commuting.

#77 Victor V on 04.26.15 at 9:29 pm

http://www.reddit.com/r/toronto/comments/2sfbzz/commuting_by_go_train_from_barrie/

I moved to Oak Ridges (King Road/Bathurst) for a couple years, then sold the house and moved back to the city. A few more notes from my 2.5 years of hell:

– I really missed diversity of food. Not just in restaurants, but even in grocery stores.

– Regimented schedule: You know those guys at work who leave the office mid-sentence to catch a train? That’ll be you. It can make it tougher to advance at work if you can’t stick around after 540 or whatever (maybe, depends on your work obvs)

– It can take a LONG time to get out of GO parking lots. People seriously SPRINT to their cars. So add another 10 minutes to your trip home for that.

– if you walk anywhere now, that’ll likely end. Everything is farther away. You may have to drive somewhere to take a nice walk.

– not every neighbourhood has the ‘neighbourhood feel’ because a good number of the people that live there have crap commutes as well. The joke in my house is that we all owned houses, but lived in our cars.

– WEATHER. There were days that it felt like I was taking my life in my hands driving to the GO lot, and I’d be tempted to work from home rather than risk it…then get off the train at Union and there’s not a snowflake to be seen. That can also damage your rep at work.

– reliability of trains. I’d say 19/20 days everything was fine, but what a nightmare on that other day. Sometimes there’s an accident and the train is replaced by busses, what an experience that is.

I got a lot of reading done on the train though, so that was nice.

Looks like you’ll be spending at least 4.5 hours per day commuting? Try that tomorrow morning — leave the house at 645am, and return at 715pm. See how that feels, then imagine doing it every day.

#78 GTA businesses dying on 04.26.15 at 9:30 pm

Businesses all over the GTA from small to big are struggling with many even closing down as seen in the news. You have a lot retail for lease spaces everywhere and some sitting empty since 2009. Canadians are the most indebted people in the world. All thanks to the FIRE industry who has greedily bankrupted Canadians and Canada. Highly mortgaged Canadians are pulling back on their spending since a disproportionate amount of their income is going to paying off their mortgage and other basic living expenses leaving nothing let over. The credit cards and HELOC’s are tapped out. When the canadian ponzi RE scheme crashes look out.

#79 Godth on 04.26.15 at 9:33 pm

Slavoj Zizek “To Begin from The Beginning”
https://www.youtube.com/watch?v=XazepKzJhfU

#80 Sheane Wallace on 04.26.15 at 9:37 pm

#70 Mark

The BOC interest rates will stay low for a while. Actually for much longer than we can imagine. At least until 2020. In fact they will actually move lower.
The level of household debt is astronomical by any measures (north of 170 % of income) and is climbing.

The idiots in power can not think of any other way to support the economy (in fact our economy has really become mindless consumption with nothing in the stores manufactured in Canada, we only ‘produce’ services) except extension of debt guaranteed by CMHC and CDIC.

CA dollar will be obliterated. I can’t see a single item at the stores except gas, that has not increase at least 5 % in the last year, food increases are north of 20 %, 40 % for meat officially!

Strong Ca dollar? I would say it will become most likely confetti.

If I look at the countries candidates for disaster of biblical proportion I see only 2 – Greece and Canada.

Greeces’ fallout will be easier, they have been there and have nicer weather.

God help us.

#81 Sheane Wallace on 04.26.15 at 9:46 pm

I will believe in deflation when I see the one cent coin reappearing, in the meantime get ready for stellar inflation and NO INTEREST RATES INCREASE!

How do you savers and retirees on fixed income (so zero return on savings) feel? Rich with the ‘value’ of your homes? Sweet dreams!

#82 4 AM Sunrise on 04.26.15 at 9:47 pm

#5 DM in C on 04.26.15 at 12:00 pm

Do you mean “which neighbourhood in Richmond”? I’ll assume yes and give you the rundown:

* Downtown Richmond: higher levels of property crime than the rest of the city. Thumbs down from me.
* Steveston: lots of new real estate with accompanying growing pains
* Cambie/East Richmond: family-oriented but it’s on the flightpath out of YVR so it can be noisy
* Terra Nova: quiet, nice
* South Richmond/Ironwood: quiet, many older SFH’s still standing but the flimsy townhouses and McMansions are moving in. (Greater Fool trivia: this was where a developer was giving away a car with a townhouse purchase.)
* West Richmond: crowded; “Seafair” is a little bit shady

The nicest neighbourhood to rent in is “Sunnymede” where big rancher-style houses are still standing. I don’t know for how much, though.

Does that help?

#83 Ralph Cramdown on 04.26.15 at 10:04 pm

#68 Babblemaster — “I remember three years ago somebody commenting on this blog, “why would anyone buy a house now, when you can smell blood on the street.” This was in response to my post that houses would only continue to rise.”

And here we are. People who held houses, long term debt or equities all saw the value of their assets continue to rise. People who held cash, gold or short term debt were beaten about the head with a baseball bat by comparison.

“I say the same thing now, houses in the GTA will only continue to rise for the next few years. Rising rates will NOT materialize.”

Maybe. I see the GTA housing boom as akin to a forest fire that’s burning so fast it’s creating its own wind, with a greater percentage of the economy (and jobs) than usual involved in building, financing and selling those homes, along with all the sundries that go along with moving (furniture, renovation, landscaping etcetera). First time buyers are the fuel that keeps the fire going, and I’m amazed that mania and low interest rates haven’t already pulled forward demand long enough ago that we’d now be in a slump. Shows what I know.

Meanwhile, back at the ranch, Ben Rabidoux posted an interesting set of charts. MLS inventory in BC+Ontario ex-Ottawa, 3 1/2 months. In the rest of the country, 8.1 months. I know, it’s a funny way to carve the country in half, but undeniably boom versus suckage.
https://twitter.com/benrabidoux

One wonders how the real estate lobby is presenting this to the Conservative Housing Caucus. “Our head is in the oven and our feet are in the freezer, so on average, we’re comfortable. Please don’t change any regulations!”

#84 Ralph Cramdown on 04.26.15 at 10:06 pm

#5 DM in C — “Richmond, where do we rent?”

Consider Marpole.

#85 hmmmm on 04.26.15 at 10:07 pm

I really don’t think the people paying 700k for a house are thinking too much about their retirement, or their financial security. They are thinking; i grew up in a home and ill be damned if my children don’t have grass to play in! They are living in the NOW not worrying about the future.

We don’t know what it was like in the great depression. Baby boomers have their parents stories, but they did so well in life they think everything is different. People in their 20s-40s now, with no old age security, no pensions, will have their great depression and it will be a lesson to their kids. Time is cyclical and history repeats.

I don’t mind renting, i take my kids to the park. The suckers will get burned, and drag the whole economy down with them. Developing useful skills is the only defence and security against the future. Useful skills your grandparents had, not the skills of finding a great parking space at the mall.

#86 Mark on 04.26.15 at 10:08 pm

“How do you savers and retirees on fixed income (so zero return on savings) feel?”

Minimal to zero real return on “savings” is the long-term historic norm. What savers and retirees should fear is higher interest rates and negative real after-tax returns. See my earlier posts on the topic.

“CA dollar will be obliterated. I can’t see a single item at the stores except gas, that has not increase at least 5 % in the last year, food increases are north of 20 %, 40 % for meat officially!”

Strange because I’m not seeing any of this. Beef is more expensive here, but pork and chicken are cheaper than they have been in years pretty much balancing things out meat price wise. Vegetables, pretty much the same as they were a year ago (cheaper transportation balancing out the weaker CAD$). Everything else seems to be stable. And of course energy prices are down. As the ‘wealth effect’ goes into reverse on account of falling house prices, consumer consumption is certain to be truncated, and that is profoundly deflationary and supportive of the CAD$. As is a higher savings rate and mortgage debt repayment.

If you recall, there was significant USD$ weakening in the 2006-2008 timeframe, but as housing price declines became front and centre, and as US interest rates fell, there was tremendous upwards pressure on the USD$. No reason to believe the same won’t occur in Canada as our turn for housing panic and consumer austerity sets in.

#87 nonplused on 04.26.15 at 10:20 pm

Irrelevant? No I don’t think so. I think you just expect the mad crowds to come to their senses too quickly.

People go mad in crowds, but regain their senses one by one.

#88 Smoking Man on 04.26.15 at 10:35 pm

#69 Godth on 04.26.15 at 8:31 pm
#15 SWL1976 on 04.26.15 at 12:56 pm

Don’t worry about them. It’s self correcting – painful as it might be (for all of us).
https://www.youtube.com/watch?v=ITGcZZsNUn0

p.s. this guy is a neurotic genius madman. His brain is about as big as the globe.
…….

Another fabulous discovery on GF, that guys a beauty..

#89 Sheane Wallace on 04.26.15 at 10:35 pm

#85 Mark

It is obvious that you watch but can’t see the inflation.

http://www.huffingtonpost.ca/2015/04/20/beef-meat-prices-canada-inflation_n_7101174.html

Prices of chicken are up over 5 %.
While pork prices are nearly 12 per cent higher than they were a year ago

————————–

Are you not tired of sounding stupid and being wrong?

Ca dollar has seen decline only due to oil prices decline and due to Mr Poloz’s verbal diarrhoea.

The decline due to the inability to grow further debt, de-levering and QE that we saw in US has not YET happened here.

When Ca dollar hits 40 cents US all the house prices will start making sense.

#90 Sheane Wallace on 04.26.15 at 10:48 pm

Mark,

It is clear that house prices can not be let to decline meaningfully, if the do then either the banks or the government or both would be in serious trouble to cover the losses through CMHC, the nominal value of houses has to be kept up or we get a catastrophe, it is that simple.

Housing crash (back to ‘normal’ values of 30-40 % of the current prices in Toronto and Vancouver) will reduce in real terms our GDP by at least 10 % – construction, banking, insurance, services, government, everyone will suffer. Maybe even more than 10 %. Without housing what is really left of Canada?

So housing will be defended at any cost.

Considering this and thinking that Ca dollar will not decline but instead strengthen makes you a clear mental basket case, how can a country without economy and with plenty of land and resources has one of the most expensive hosing markets in the world in absolute terms (nominal ridiculous prices multiplied by strong dollar) (if not the most expensive one if we exclude Hong Kong which is not really a country) on a consistent bases?

Are you really that crazy?
Ca dollar will be destroyed, period.

If you think that we can be more expensive then Switzerland and 3-5 more expensive than Germany you are clearly nuts. A house short distance of Frankfurt (the Financial centre of Germany) can be had for 300 k Euro. Les than 2 bedroom (760 sq. feet) glass wall condo in Toronto.

Yes, we are that crazy and there is more to come.

#91 TurnerNation on 04.26.15 at 10:49 pm

37 BD I closed off remaining Dollarama kaputs late last week and began into a few calls. 1-2 week trade. Action at 74 said no more.

I’d rather buy at 60.

#92 Sheane Wallace on 04.26.15 at 10:58 pm

Actually less than 2 bedroom (760 sq. feet) glass wall condo in the suburbs of Toronto.

Drove today around Rutherford and Keel and saw new town house complex to be build starting from the low 600 k…. Nuts, really nuts, Bathurts and Hwy 7 – ‘estate’ home starting from 1.9 mil. on golf coarse – starting from 5 millions.

Who cares about the numbers when the measure is confetti? And you can’t even wipe your behind with it as they are plastic!

#93 Sheane Wallace on 04.26.15 at 11:01 pm

damn that spell checker, Keele and golf course

#94 james on 04.26.15 at 11:05 pm

“I will have to disagree, Garth. Stouffville is a very liveable place, and prices should go up steadily there.”

The first of those statements does not imply the second.

Many US cities are quite pleasant, but crashed nonetheless. Sacramento being a good example.

Put another way: pleasantness seems to persist through ups and downs of real estate valuation, suggesting that pleasantness does not confer monotonic increases in price.

Stouffville can be cute, if you avoid the big box sprawl and you are into semi-rural living. I lived in Markham and used to go there all the time for various purposes. The train into town from Markham was a drag, to be honest. Even with the station in walking distance it was tiring five days a week. If you don’t work in walking distance of Union, it means a further subway ride or walk. A delay or two on the tracks and you aren’t getting in on time. Still, it beats the stress of driving.

#95 65% haircut on 04.26.15 at 11:31 pm

https://www.google.ca/url?sa=t&source=web&rct=j&ei=p6w9VcD2B4XSoATN94HADA&url=http://m.huffpost.com/ca/entry/6438440&ved=0CDAQFjAE&usg=AFQjCNHZoa46-gPiAPpPAIU4cr-rbhejjA&sig2=v8i_H6V3ux2T6iEaNTLgOQ

Smarter than experts?? Although experts do get it wrong. But they are analytical not emotional like the home buyers

#96 Carpe Diem on 04.26.15 at 11:31 pm

Trust no one!

I invest with 2 institutions. One offers me stress free the other flexibility.

If you buy and sell ETFs outside TSFAs and RRSPs ensure you figure out your ACB carefully for your income tax return!!!

I had a few sales of ETFs this year and it sure made me go hummmm….

It is amazing how inaccurate your Book Value can be and if you have more than one place you invest … well good luck!

After researching and getting little bites, this link rocks in knowledge.

https://www.pwlcapital.com/pwl/media/pwl-media/PDF-files/White-Papers/PWL_Bender_As-Easy-as-ACB_2015-January.pdf?ext=.pdf

Here is another!

https://www.adjustedcostbase.ca

#97 biato on 04.26.15 at 11:49 pm

A few observations….

don’t the feds have a vested interest in inflated real estate so that property taxes keep increasing….

on a completely different level, what place does forex hold in a couch potato portfolio. For instance if I am bullish on USD, bearish on CAD, should I include a percentage of my portfolio on a USD/CAD long position…..how would nay gains from this be treated for tax purposes?

#98 millenial1982 on 04.26.15 at 11:55 pm

I have no idea how the GTA folk can handle the general day to day. Sure a quick business or entertainment trip is fine but after that get me the heck outta there! Jobs don’t grow on trees up here in NWO but I enjoy my 5 min drive to work everyday and a very modest $110,000 mortgage for 1,500 Sq ft 3 bed 2 bath bung with full finished basement. Bought 6 years ago for under asking at $145,000 because it required some cosmetic TLC. Loving life and the ability to save!

#99 Victor V on 04.26.15 at 11:58 pm

http://www.slate.com/articles/business/moneybox/2011/05/your_commute_is_killing_you.html

Commuting is a migraine-inducing life-suck—a mundane task about as pleasurable as assembling flat-pack furniture or getting your license renewed, and you have to do it every day. If you are commuting, you are not spending quality time with your loved ones. You are not exercising, doing challenging work, having sex, petting your dog, or playing with your kids (or your Wii). You are not doing any of the things that make human beings happy. Instead, you are getting nauseous on a bus, jostled on a train, or cut off in traffic.

In the past decade or so, researchers have produced a significant body of research measuring the dreadfulness of a long commute. People with long transit times suffer from disproportionate pain, stress, obesity, and dissatisfaction. The joy of living in a big, exurban house, or that extra income left over from your cheap rent? It is almost certainly not worth it.

#100 I.B on 04.26.15 at 11:59 pm

Hi Garth
Blue Shore Financial in the lower main land is offering “own to rent mortgages” They claim “an investment rental property could be your source of great returns”.
My friend had a new house next door in West side Vancouver sell for $2.2 million so it could be rented out. Can you explain how you make money from renting that out in a market that might bring $3500.00 a month?
IB

#101 Waterloo Resident on 04.27.15 at 12:22 am

When you think about how all the ‘CHEAP MONEY’ that is flooding the financial system is pushing house prices up like this, then you have to wonder where is the stock market going to end up with a similar flood of ‘Cheap Cash’ sloshing around. I’ve been reading reports about how they expect the NASDAQ to double in price over the next 12 months, and when I see house prices in Crazy-Toronto, I just might believe that NASDAQ will indeed double. Buy TQQQ and watch your money go up 6 times if NASDAQ doubles.

or, if this is like 2000, just before NASDAQ crashed 60%, watch your money go to zero.

#102 BS on 04.27.15 at 12:22 am

89:

So housing will be defended at any cost.

The problem is the Canadian government does not have magic powers to keep housing inflated. The US tried to defend housing at any cost and it still crashed. They are stilling every trick in the book to inflate it again. Japan has had zero interest rates for 25 years and housing is still down 65%.

I guess what you are saying is it is different here? I don’t think so.

#103 SE Asian Expat on 04.27.15 at 12:23 am

The increase in valuation of housing in Canada is no where near that in Hong Kong. I bought a 354sqm flat in Hong Kong in 2009 for about 148k usd and sold it in 2013 for 258k usd. Out of curiosity, I checked the valuation and it is now worth 554k usd! That’s insane, yet there is no cry of overvaluation there.

There is no comparison between HK and any major city in Canada in any other way other than the incredible rate of rising valuation in housing prices. Land is scarce in Hk and not so much in Canada. The spread between rich and poor is a lot higher in HK. Taxation is even more favorable for the relatively wealthy in HK.

My point is, that regardless of most variables, owning a roof is becoming impossible for an average person almost anywhere in the world, except for the very wealthy or indentured tax slaves. NWO.

#104 BS on 04.27.15 at 12:33 am

88:

Are you not tired of sounding stupid and being wrong?

According the article you linked food prices are up an average 3.8% over the last year. If a family of 4 spent $800 per month on food they would be paying $12 extra per month over inflation. Most would save more than that on the lower fuel prices.

There is always volatility in beef and pork prices because there are no marketing boards controlling supply like chicken. Both are produced in Canada and increased prices in the last year have little or nothing to do with a lower CAD. As we see prices rise farmers will produce more and prices will fall.

#105 Lillooet, BC on 04.27.15 at 1:55 am

The real estate market in places like Markham, Stouveville and Newmarket will not crash, not now, not ever.

Why? Because 125,000 new immigrants arrive in the GTA each and every year, and they gotta live somewhere.

Same thing in Vancity and suburbs. Another 125,000 immigrants each and every year, but it’s worse than Toronto cause you have the US border to the south, a wall of mountains to the north, and the Salish Sea to the West. Therefore, they get squeezed further and further east along the Fraser Valley towards Hope and beyond. Heck, even my pathetic little town of Lillooet, BC has seen a flurry of sales in the past month. I guess $175,000 homes with an Arizona-like climate is finally attracting a few urban refugees.

#106 pwn3d on 04.27.15 at 2:03 am

Lol, Mark hits the trifecta in one night. Toronto housing not moved up in 2 years, high interest rates bad for seniors and savers, and CAD going to 1.50US any day now.

:facepalm: Garth you’re being trolled.

Btw those thinking housing in york region is going to 50% are dead wrong. Population growth is exploding and single family detached will only be 1/3 of all new housing starts. Low interest rates is a component, but also is supply and demand and there’s low supply and high demand. And some HAM for good measure. Short term and long term prices are going up. There may be bumps in the road but it’s still a safe investment imo.

#107 BigM on 04.27.15 at 2:22 am

@60 George
We did some visiting near Collingwood this weekend.

I went to high school in that town.. ugh.

Some perspective:
Parents bought an 1880 5 bedroom house in 1981ish.
Paid $63,500
Sold 1986 for $125,000
Property flipped again 2 years later for over $250,000

I saw the same house several months ago, listed
for $395,000; probably sold for close to that.

What was funny; kitchen was exactly the same.
Walls were painted, but the carpet we put down in the
80’s was still there.

#108 Betamax on 04.27.15 at 7:10 am

#42: “People are living way longer than they did 30 years ago.”

Ave. is 5 yrs longer. Google it.

“80 is the new 65.”

80 is, at best, the new 75. See above.

“Most work until 67-72 years and that will rise slowly.”

Ave. retirement age is 62.

“It’s the evolution of mankind.”

Meaningless generalities and fabricated numbers are not a viable substitute for evidence, no matter how many iPads you own.

#109 Julia on 04.27.15 at 7:58 am

#96 Biato

Property taxes do not automatically increase because property values increase. In fact, the tax RATE has lowered when values have increased significantly. In Toronto they try to keep the tax increases to the rate of inflation, based on the average house values. So if your assessment has gone up more than the average house then your taxes increase more.

#110 BG on 04.27.15 at 8:26 am

I don’t think a house or even a well built condo (it gets rare) in a central Toronto or Vancouver area is really at risk to undergo a correction big enough that it suddenly becomes a good deal or even more affordable.

But this kind of isolated Real Estate property in the blog post of today, this is what would get hurt really really bad.

#111 jess on 04.27.15 at 8:38 am

Mutatis mutandis?

“non binding” sending a message
http://www.cbc.ca/news/business/cibc-shareholders-vote-against-pay-packets-for-outgoing-execs-1.3047215

==================
Lynn Stout: The Shareholder Value Myth : UK parliament banking commission

The proposition that privatisation of Lloyds would deepen share ownership by individuals is not supported by evidence of privatisations over the last 40 years. …(The table shows that direct ownership of shares by individuals has decreased from 54 per cent in 1969 to just 10.7 per cent in 2012.)

see chart – The only thing that has increased is foreign ownership of companies listed on the LSE.
http://leftfootforward.org/2015/04/the-tory-mirage-of-share-owning-democracy/
https://leftfootforward.org/2014/09/the-nonsense-of-shareholder-ownership-what-we-should-know/
=========================

From the report summary :
“Too many bankers, especially at the most senior levels, have operated in an
environment with insufficient personal responsibility. Top bankers dodged
accountability for failings on their watch by claiming ignorance or hiding behind
collective decision-making. They then faced little realistic prospect of financial
penalties or more serious sanctions commensurate with the severity of the failures
with which they were associated. Individual incentives have not been consistent with
high collective standards, often the opposite.”….read more @
http://www.parliament.uk/documents/banking-commission/Banking-final-report-volume-i.pdf

#112 Sheane Wallace on 04.27.15 at 8:40 am

#103 BS

correct, I saw another article with much higher increase than 3.8 %, I will look it up and post a link.

ALL imported food increased significantly more than 10 %, there is noting Canadian farmers can do about it, most of the food at the stores is imported.

I saw yesterday a small case of figs for $ 30 at Highland Farms, it was $ 12 not that far ago.

#113 crowdedelevatorfartz on 04.27.15 at 9:02 am

@#68 Babblemaster
” houses in the GTA will only continue to rise for the next few years. Rising rates will NOT materialize…..”
+++++++++++++++++++++++++++++++++++

A house is only worth what it eventually sells for.
The majority of greedy “greaterfools” will assume(like you) that prices will rise forever.
So, in a few years, when the price of housing in Van or TO gets hammered due to inevitable rising interest rates and a contracting economy……please babble about THAT.

#114 Broke Dick on 04.27.15 at 9:05 am

#104 Lillooet, BC on 04.27.15 at 1:55 am
Heck, even my pathetic little town of Lillooet, BC has seen a flurry of sales in the past month. I guess $175,000 homes with an Arizona-like climate is finally attracting a few urban refugees.
++++++++++++++++++++++++++++++++++++
Don’t be so modest. Obviously your promoting Lillooet on this blog is responsible for the flurry of sales.

#115 Nagraj on 04.27.15 at 9:13 am

Hey hey hey! It’s tea time with the Anglican ladies!

Let’s all be very polite: “BoC poodles” – what’s “poodles” supposed to be? How about pseudo-academic shills for bankster profiteers.
And what’s with “dinglenuts” over at the G&M? What’s a “dinglenut”? Cute. How about “yellow running dogs”.
“Housing bubble” is kinda pretty too. How about housing hysteria.
Opacity in CREA reporting: how about crooks in high places lookin’ the other way to the point where their moral necks are dysfunctional.

I don’t got nuthin agin Anglican ladies – I just don’t have the patience for their clever indirectness.

Canada: “pooched”. FUBAR. (FHRITP)

Have a nice day.

#116 Dup on 04.27.15 at 9:22 am

Canadian Real Estate is in trouble. We are too blind to see it, because we refuse to see anything negative. Even if we are in the red, we like to imagine it is green. Oh Canada, the land of sheeples and bricks… Is that all we have?

#117 Godth on 04.27.15 at 9:35 am

#87 Smoking Man on 04.26.15 at 10:35 pm
Perverts Guide to Ideology
https://vimeo.com/106036638

#118 Colin on 04.27.15 at 9:42 am

Is the data from the third column included in the second, or are those two columns mutually exclusive? Either way, something doesn’t add up. There are 13.3 million households in Canada and the home ownership rate is roughly 70%, which means 9.3 million households own their home. If we add the first two columns we get 8.6 = 3.7 + 4.9 and if we add all three columns we get 10.4 = 3.7 + 4.9 + 1.8. There’s no way to get to 9.3 million.

#119 ok ok! We have now and only now entered the bubble terittory on 04.27.15 at 9:44 am

ok ok! We have now and only now entered the bubble territory

905 will be dead by july, and never recover. ever. in out life time. looking at price drops of 10% then flattening a few years before more drops.

416 upper klass areas continue to grow 7.5% in average a year for another 3 years, then get exhausted, drop 20% and stay flat for a decade.

you heard it from me!

SELLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL

#120 Leo Trollstoy on 04.27.15 at 9:44 am

Lol, Mark hits the trifecta in one night. Toronto housing not moved up in 2 years, high interest rates bad for seniors and savers, and CAD going to 1.50US any day now.

Mark is a penniless clown. Readers should take his ‘opinion’ with a pound of salt

#121 Mark on 04.27.15 at 9:51 am

“Is the data from the third column included in the second, or are those two columns mutually exclusive? “

3rd column is a subset of the 2nd column. The data is from the 2008 census as cited. Home ownership rates have expanded since 2008, and immigration has increased the population.

#122 Mark on 04.27.15 at 9:52 am

“Mark is a penniless clown”

Not true. Now apologize and go sit in a corner.

#123 Mark on 04.27.15 at 10:07 am

“on a completely different level, what place does forex hold in a couch potato portfolio. For instance if I am bullish on USD, bearish on CAD, should I include a percentage of my portfolio on a USD/CAD long position…..how would nay gains from this be treated for tax purposes?”

I think the commonly held opinion is that when one is doing the ‘Couch Potato Portfolio’, the currency diversification afforded by the various exposures to foreign stocks should *not* be hedged out and are an important element of diversification within the portfolio. Hence, buying currency hedged ETFs or funds is a “no-no”. However, just because an ETF or fund is denominated in USD$, doesn’t mean that the fund’s currency exposure is to the USD$.

As for taxes, everything is ultimately translated back to CAD$ and calculations performed accordingly. If you’re unfamiliar with the calculations, seek professional advice.

#124 Capt. Obvious on 04.27.15 at 10:16 am

To the GTA apologists: There was immigration to the GTA in the early 1990s too and housing prices still fell. It is not different this time.

#125 cramar on 04.27.15 at 10:30 am

#113 Broke Dick on 04.27.15 at 9:05 am
#104 Lillooet, BC on 04.27.15 at 1:55 am
Heck, even my pathetic little town of Lillooet, BC has seen a flurry of sales in the past month. I guess $175,000 homes with an Arizona-like climate is finally attracting a few urban refugees.
++++++++++++++++++++++++++++++++++++
Don’t be so modest. Obviously your promoting Lillooet on this blog is responsible for the flurry of sales.

————

You never know! Possibly true. We have friends in Kitchener who are fed up with Ontario winters (London & Kitchener even got snow a few days ago), and talking about moving to B.C. I recommended they check out Lillooet. Sounds ideal to me. Warm in winter, drier than the coast, hot in summer. Housing affordable. If you dislike large cities, Lillooet might be perfect for retirement. If I get to B.C. again, I will check it out myself since I love Arizona.

#126 Colin on 04.27.15 at 10:37 am

“3rd column is a subset of the 2nd column. The data is from the 2008 census as cited.”

Thank you for clarifying, Sir. In this case I’d say that using 7-year old data to prove that Canadians are in a pickle right now seems a bit excessive. Especially since we all know that 2008-2015 were exceptional years.

One could reasonably assume the situation has worsened. — Garth

#127 Ralph Cramdown on 04.27.15 at 10:46 am

Lillooet might be nice and all, but I think it lacks two features that most expatriate Ontarians look for when moving to BC.

They need a place from whence they can phone their old friends back in Ontario, then say “Hang on, I’ve got to close my window. My neighbour is mowing his lawn” — in January.

And from whence they can report on the progress of the snowdrops — in February.

#128 retired Boomer - WI on 04.27.15 at 10:51 am

According to the chart 4.8 million Canadians with a mortgage, nothing too unusual there. There average ‘savings’ rate is below standard, so they best ramp it up at the first sign of gray hair.

It appears a ‘subset’ of these with a mortgage 1.8 million are presently ‘underwater’ and from their other spending, are more profligate. Overspending by -13% annually might make the Visa folks happy, but perpetual debt-sucks!! 5 years to Bankruptcy, maybe less…

Don’t we love charts they tell us less than nothing

Hmmm… take away RE and what else does Canada have going for it right now? Oil?? ..besides DEBT, I mean…

#129 Bottoms_Up on 04.27.15 at 10:51 am

#90 TurnerNation on 04.26.15 at 10:49 pm
——————————————————
Discussions on blogs on how to swing trade the Dollarama stock speaks volumes about our society. We’re screwed.

#130 Harbour on 04.27.15 at 10:58 am

True?

Stock board comment….

One cool thing about Canada.
I was able to max out my tax free savings account of which contribution limit just doubled, simply by transferring XXXX over I get to claim a loss on the sale for the transfer and when XXXX recovers the profits will be tax free. Sweet, I’m sure the government wasn’t expecting people making these moves.

#131 Waldo on 04.27.15 at 11:02 am

Hey what is wrong with commuting? I welcome my 1 hour go train ride. It is the only time in the day that I can actually sit back and read my book and i do enjoy reading.

#132 Squirel Meat on 04.27.15 at 11:23 am

One of the main roads into Lillooet is unpaved with a shear 1000ft drop off… the other way out is a single lane wooden bridge ….

And yup it’s dry!

http://www.vancouverite.com/wp-content/uploads/2009/08/Mount-McLean-Fire.jpg

They do have a fine coffee shop as a pit stop on the way to whistler.

#133 valleyrenter on 04.27.15 at 11:23 am

Starting to notice some Alberta plates moving in here. Got a couple from la belle province as well, now that is a far move.

#134 Mark on 04.27.15 at 11:42 am

“I was able to max out my tax free savings account of which contribution limit just doubled, simply by transferring XXXX over I get to claim a loss on the sale for the transfer and when XXXX recovers the profits will be tax free.”

Careful. If a related entity (ie: a TFSA trust for which you are the beneficiary) acquires an asset that is identical to one that you previously disposed of in the past 30 days, the loss is disallowed.

#135 Snowboid on 04.27.15 at 11:44 am

#104 Lillooet, BC on 04.27.15 at 1:55 am…

“…I guess $175,000 homes with an Arizona-like climate is finally attracting a few urban refugees…”

Good one, I nearly had a stroke I was laughing so hard!

But you forgot to add “…and it’s 24C today in the sun…”

Looking at the listings in the $ 150K – $ 175 range shows nothing interesting, except that one RE agent has almost all the listings. Maybe that’s you?

P.S. Lillooet seems to be a nice village, certainly not an Arizona-like climate, no matter how you spin it.

#136 SWL1976 on 04.27.15 at 11:59 am

#87 Smoking Man – Another fabulous discovery on GF, that guys a beauty..

————————————–

There are three classes of people.

Those who see

Those who see when they are shown

Those who do not see

Leonardo da Vinci – Circa 1490

#137 bdy sktrn on 04.27.15 at 12:20 pm

hey do have a fine coffee shop as a pit stop on the way to whistler.
___________________
The looooooong way to whistler.

Unless you are coming from prince George!

What about pemberton, as nice as lilloet?

#138 Babblemaster on 04.27.15 at 12:20 pm

#112 crowdedelevatorfartz

“So, in a few years, when the price of housing in Van or TO gets hammered due to inevitable rising interest rates and a contracting economy……please babble about THAT.”

————————————————-

Houses in those areas are ridiculuosly prices based on any fundamental analysis, but I believe they have more room to grow. The government is heavily invested in high RE prices and will continue to do anything and everything to maintain them. Your hopes of higher interest rates in the near future are sadly misplaced. People said the same thing about rates in Japan twenty years ago. Please blow that out your hole.

#139 TurnerNation on 04.27.15 at 12:22 pm

BU, Dollarama is almost blue chip status these days. ;-)

Such a pervasive trend which may not be ignored.
Five and Dime Stores. Bread lines. Everything old is true again.

#140 Setting the Record Straight on 04.27.15 at 12:30 pm

@91/92
I thought “golf coarse”was a pun.

#141 Vlad the inhaler on 04.27.15 at 12:37 pm

@mark
Congratulations
That’s the 3rd time i have asked that question here
No one even tries to answer it
You are the only one
If i owned a bank i’d hire you
However i remain unconvinced
When money is created as debt there is no risk in a collateral mortgage
A lie belived by everyone is not the truth

#142 jh on 04.27.15 at 12:47 pm

#133 Mark on 04.27.15 at 11:42 am

“I was able to max out my tax free savings account of which contribution limit just doubled, simply by transferring XXXX over I get to claim a loss on the sale for the transfer and when XXXX recovers the profits will be tax free.”

Careful. If a related entity (ie: a TFSA trust for which you are the beneficiary) acquires an asset that is identical to one that you previously disposed of in the past 30 days, the loss is disallowed.
——————————————————
Pretty sure what she meant was she’s making a contribution in kind.

in which case if you have a capital loss on a security held but decide to contribute it in kind to a registered account, you cannot claim the capital loss.

http://www.cra-arc.gc.ca/E/pub/tg/rc4466/rc4466-e.html#p3021_26451

#143 Retired Boomer - WI on 04.27.15 at 1:13 pm

#114 Nagraj

You want to see crooks in high places? Try looking at who ran, and who still runs American Banks. These fools brought you 2008, none ever prosecuted, sure a few share holders in the banks paid some fines.

Our prosecutors couldn’t find a control fraud if their lives depended on it, especially when the elected guy in charge was mainly funded by banking interests. We are not done with bank fraud yet…stay tuned.

#144 Centurion on 04.27.15 at 1:14 pm

#42: “People are living way longer than they did 30 years ago.”

Ave. is 5 yrs longer. Google it.

“80 is the new 65.”

80 is, at best, the new 75. See above.

“Most work until 67-72 years and that will rise slowly.”

Ave. retirement age is 62.

“It’s the evolution of mankind.”

Meaningless generalities and fabricated numbers are not a viable substitute for evidence, no matter how many iPads you own.

======

Those are franken-numbers if I’ve ever seen any.

“80 is the 65! My third iPad purchase is therefore justified!”

People will try to use any excuse to justify any stupid price.

#145 What to do... on 04.27.15 at 1:29 pm

My mortgage is up for renewal. The NLATB is offering 5 year fixed @ 2.64 or 5 year variable @ Prime – 0.60

In my case if I go variable I’d save about $50/month but I told myself last year that if the fixed rate fell below 3% that I would take it and run.

what to do… what to do….

#146 Eaglebay on 04.27.15 at 1:36 pm

Curious.
Has anyone have any experience using “robo advisors”?
It is a misnomer obviously. One outfit’s website that I visited was Whealthsimple.
It seems ideal for people starting out with small amounts to invest.
Just curious as I know some people with little money looking at options for a diversified portfolio.
They want to start somewhere. Thanks.

#147 Eaglebay on 04.27.15 at 1:40 pm

#134 Snowboid on 04.27.15 at 11:44 am

The Arizona climate is boring and so is the state.
Much more to do in Lillooet.
Sun is nice, rain is nice, mountains are nice, the ocean is nice, wildlife is nice, hiking is nice, golfing is boring.
You get what you pay for.

#148 Ralph Cramdown on 04.27.15 at 2:18 pm

#144 What to do… — “what to do… what to do….”

Shop.
http://www.ratespy.com/

#149 Doug in London on 04.27.15 at 2:18 pm

As I said before, anyone who has sold their house recently in the GTA has WON THE LOTTERY!!!!!! I don’t know why more people there haven’t been cashing in their winnings before it’s too late.

#150 Rumpelstilskin the Elder on 04.27.15 at 2:21 pm

Of course, people are living longer.
Artificially kept alive and propped up in their wheelchairs, warehoused in the old age homes.
Go see for yourselves.

#151 Paul on 04.27.15 at 2:28 pm

@144
What to do you answered you own question, if you are not selling in the next 5 years

#152 HAM operator on 04.27.15 at 2:29 pm

Stop talking about Lillooet.
HAM operators are listening in.

#153 Nemesis on 04.27.15 at 2:52 pm

#MiscreantsMonday,Or… #MischiefFitForFortuneTellers&OtherClairvoyants…

#BlimeyGuv!… #TheyDon’tLike[redacted]Either…

[Guardian] – I’m sick of this estate agent election

…”In the blur of last-minute election promises, party leaders have come to resemble glorified estate agents, each selling dream houses at knock-down prices. They are bidding against each other to make home-owning more affordable. Cameron’s utterly bizarre policy, to make the most secure of the rental sector’s tenants – those of Housing Associations – able to buy their own properties, has been met with Miliband’s promise to cut stamp duty on properties worth less than £300,000 and to bring in rent controls.”…

http://www.theguardian.com/commentisfree/2015/apr/27/home-ownership-sick-estate-agent-election

#SmokingMan’sProgenyDeclaredSafe…

[NewRepublic] – Elite Universities Are Turning Our Kids Into Corporate Stooges

…”we’re letting our most talented students, who could be the next generation of thinkers, be drawn into jobs where they devise new ways to separate workers from their salaries or to help millionaires avoid paying taxes. We’re allowing the big business of college to dominate the real purpose of education, which is to learn to question everything, not make sure you’re on time to your Bain Capital interview.”…

http://www.newrepublic.com/article/121644/elite-universities-are-turning-our-kids-corporate-stooges

#FromThoseNicePeople… #WhoBroughtYouTheWalkman… #AndTheMitsubishiZero,Or… #WhenForeignPolicyGoesFullKamikaze…

[LAT] – Japan’s Shinzo Abe visits U.S. to discuss new threat: China

…”When Japanese Prime Minister Shinzo Abe rises to address a joint session of Congress on Wednesday, it will represent a diplomatic sea change so great that it may seem incomprehensible to the lingering members of the “Greatest Generation.”…

http://www.latimes.com/world/asia/la-fg-us-japan-visit-20150427-story.html#page=1

#Yikes!,Or…#IKnowWhat… #GroupCaptainLionelMandrake.. #WouldSay!…

http://quotacle.com/watch/53d554c86e

#MeanWhile,BackInBustlingLilloett…

[BridgeRiverLillooetNews] – District finances “hit the wall”

…” The axe has fallen on the Lillooet REC Centre.

District of Lillooet Council confirmed tonight that the municipally-owned facility will be shutting down several of its operations in a bid to cut costs and to ensure the municipality avoids a deficit situation.

Reviewing the proposed cuts to the District’s new budget, Director of Finance Leslie Piderman commented, “These are really severe cuts, but the District is not allowed to operate with a deficit.”…

http://www.lillooetnews.net/news/local-news/rec-centre-arena-survives-budget-cuts-as-district-finances-hit-the-wall-1.1829531

#NeverMindIt’sNotAsThough… #LillootiansReallyNeededALibrary… #AndBesides,They’veStillGotTheirBats…

[BridgeRiverLillooetNews] – Discovery of rare bat species forces 23 Camels bridge closure

…”Because of the bats’ extreme rarity, the provincial government decided to close the bridge to protect the breeding pair. Vibrations and loud noises, especially sounds emanating from heavy trucks and equipment, are particularly disturbing to the reclusive mammals.”…

http://www.lillooetnews.net/news/local-news/discovery-of-rare-bat-species-forces-23-camels-bridge-closure-1.1810895

#154 Andres on 04.27.15 at 3:09 pm

@ DM in C

You have a lot of options – I used to commute to East Richmond from directly downtown Van which was against the normal flow of traffic. 20-25 minutes to work usually, typically a half hour to get home was considered bad traffic. So anywhere along Granville or Oak from South Van right to downtown is totally viable. As for Richmond itself, lots of new “investment” condos being rented out. But I don’t care for it at all. Realistically Richmond is really small so don’t feel too bound to it.

#155 Demi LoBlotto on 04.27.15 at 3:24 pm

I don’t understand how anyone who owns outright is paying 15% of income to ‘support their houses’ . I pay a little less than 2.5% in City Utilities, Strat Fee’s and Property taxes in total.

#156 Shawn Allen on 04.27.15 at 3:38 pm

Addicted to this Blog?

Mark do you think perhaps you are addicted to this blog. Just wondering (and a bit concerned).

#157 Godth on 04.27.15 at 4:02 pm

#135 SWL1976 on 04.27.15 at 11:59 am
The EuroDiVision Contest – feat. Merkel, Žižek & IMF [RAP NEWS 31]
https://www.youtube.com/watch?v=y1OnDgBNlRU

#158 A funny country on 04.27.15 at 4:30 pm

DELETED

#159 A funny country on 04.27.15 at 4:36 pm

DELETED

#160 Smoking Man on 04.27.15 at 5:08 pm

#135 SWL1976 on 04.27.15 at 11:59 am
#87 Smoking Man – Another fabulous discovery on GF, that guys a beauty..

————————————–

There are three classes of people.

Those who see

Those who see when they are shown

Those who do not see

Leonardo da Vinci – Circa 1490
……..

Being a seasoned lush, I can honestly say, I’ve been on everyone of those category’s..

I’m happiest when I can’t see

#161 Bottoms_Up on 04.27.15 at 6:32 pm

#154 Demi LoBlotto on 04.27.15 at 3:24 pm
——————————————————–
15% of a retirees $50,000 income is $7500 per year, which doesn’t go all that far in property taxes and repairs and maintenance.

#162 barb on 04.27.15 at 6:41 pm

#3 Keswickian on 04.26.15 at 11:30 am

your mistake is listening to advice on the blog. Dude your talking about a sfh in GTA/Toronto. #winning

#163 EmpCod on 04.27.15 at 6:52 pm

#129 Harbour on 04.27.15 at 10:58 am

I was able to max out my tax free savings account of which contribution limit just doubled, simply by transferring XXXX over I get to claim a loss on the sale for the transfer and when XXXX recovers the profits will be tax free.

======

Technically if you transfer the property you cannot claim the loss because of the ‘superficial loss’ rule. Better to sell the proprety, crystalize the loss, then transfer the cash to TFSA and buy something else in there or wait 30 days to buy the same.

#164 Gitano on 04.27.15 at 6:58 pm

The new TFSA rules are probably going to generate another stampede of investment to the equity markets. A lot seems to be said on here about how real estate is being fed by cheap money (low rates); however, is there an impending downside to over investing in the equity markets through a TFSA? When rates rise, one of the first things to go is the stock market and its associated basket of derivatives. Millions of homeowners will more quickly dump their stocks to cover their mortgages and save their homes than the other way round. History has shown that time and time again.

#165 crowdedelevatorfartz on 04.27.15 at 7:01 pm

@#137 Babblemaster
“Your hopes of higher interest rates in the near future are sadly misplaced. People said the same thing about rates in Japan twenty years ago. Please blow that out your hole……”
++++++++++++++++++++++++++++++++++++

Ummmm, It wasnt high interest rates that crushed the Japanese economy 20 years ago.
It was rampant speculation in the stock market and the real estate market that drove Japan to the brink.
http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&uact=8&ved=0CB4QFjAA&url=http%3A%2F%2Fen.wikipedia.org%2Fwiki%2FJapanese_asset_price_bubble&ei=I74-VYf-LYKJoQT4zIHoDw&usg=AFQjCNHRHBgeO0FSTCmsbUw_8eSOLaccaA&bvm=bv.91665533,d.cGU

It was the highest priced real estate on the planet ( at one point in 1989 the land under the Imperial Palace in Tokyo was valued at more than the entire State of California) and the eventual realization that real estate prices had so skewed the economy…..the Bank of Japan tried raising interest rates from 4.5% to 6% to no avail…..prices collapsed, loans defaulted, bankruptcies flourished.
The end result?
Lower interest rates to revive the economy and 25 years later….still struggling with deflation.

Pray that doesnt happen here.

Apparently hot air doesnt only emanate from my nether regions…. if your babbling is any indication.

#166 Joe2.0 on 04.27.15 at 7:11 pm

CIBC Lonsdale N Vancouver.
Poster in window.

New to Canada?
Get a credit card.
No credit history and no deposit necessary.
Viva la Canada.

#167 Leo Trollstoy on 04.27.15 at 9:52 pm

Why not just get the CMHC out of the subprime mortgage insurance business

Done.

CMHC is not in the subprime mortgage insurance business.

What’s the next topic?

#168 Gidget's Gadget on 04.27.15 at 11:00 pm

#104 Lillooet, BC on 04.27.15 at 1:55 am

Funny to read this guy constantly pumping this place….mewonders whether he be real estate peddler?

Soon with all the new gadgets and technologies, people will be willing to live anywhere, including hell….
reality is virtual!

To paraphrase Macluhan “the gadget is the massage”