The tipping point

IMMIGRANT modified

Why don’t you shot this blog down china-boy? Everybody knows you’re traitor by now. Go away weirdo !!!!

Can we all please Stop heckling GT on HAM and other rich immigrants? Garth has made it quite clear in his answers to you — and let me just simplify it for All of you: $$$$Money talks and knows no boundaries$$$$ That’s why he has this blog. He wants a piece of it.

Remember me on your deathbed when you have no children to visit you, you who so smugly helped destroy Canada. You leave nothing behind, barren branch.

Above is a small sample of hundreds of messages that poured into this pathetic blog over the past 48 hours, as it argued that stupid property prices result more from the actions of stupid people (locals, mostly), than any invasion of house-horny Chinese investors. But obviously, nobody’s mind was changed by my words. And lots of misguided people apparently believe I say things because they will profit me.

If they only knew. My career is decorated with the tire tracks of those who tried to run me over for speaking my mind. If you look closely enough you can make out “Goodyear” imprinted on my butt.

However, if I can withstand the full force of the Prime Minister and all his minions (he was driving), then I’ll survive the cowardly and anonymous detritus posted here. The facts remain. Canadians have priced themselves out of houses in many markets, aided and abetted by the central bank’s cheap money, CMHC’s debt encouragement, lender greed, the Bank of Mom, voracious realtors and massive ubiquitous financial illiteracy. And HGTV, of course. But I must admit I’am starting to get a little aroused when Hilary moves a wall.

Well, we’re going to leave this entire topic area today, with these final points to remember:

First, there will be no anti-foreigner laws passed in BC or Canada restricting the right of anyone to buy a house, or taxing them capriciously for not living there. This would be antithetical to our basic principles of free markets and capitalism, invite retaliation from lawmakers in Arizona or Florida, impede economic activity and not reduce a single house price by a single dollar. The latest to agree is BC premier Christy Clark.

Second, the whole hate-the-Chinese and #DontHave1Million moist Millennial movement of entitled YVRers is probably the “tipping point” of the current market, says housing analyst Ross Kay. His argument is that when first-time buyers can’t – or in this case, won’t – enter the market, the jig is up. Less equity is passed up the housing chain because there are fewer newbies at the bottom willing to swallow enough debt. Because the real estate market has never met the power of social media before, he says, this will all be quite the surprise.

“The moment a social movement hits that empowers first time buyers to step back and hold off buying for 60 days, Canada’s New Tipping Point on home prices will be met.  Prices will deflate and home ownership will become more affordable. The question remains how much of a good thing will the socially-connected demand, and how fast will they demand it once they realize the real power social media has over real estate.  Governments and stakeholders in the housing sector are not prepared for this new tipping point to hit homes. They have had almost a decade to prepare but they have taken no action.  Unfortunately now is too late!”

Third, international investing in real estate is a global fact. And Canada is not even a major destination for it. In fact, people living in cities a lot more mature than Vancouver take it in stride. Even court it. In LA, for example, billions a year flows into the market from outside the US. Says a local media report, matter-of-factly: “We know where non-Americans like to buy houses in LA (Beverly Hills, Bel Air, and other expensive neighborhoods) and where they like to invest in development (South Park, for one, where various Chinese firms have a total of three enormous megaprojects in the works).”

A report from real estate firm Savills tabulated the major dozen markets in the world where money is ending up in local real estate. LA is fifth with 11% foreign investment. London is first with 68% and Paris has 46%. Vancouver did not make the list.

CITIES CHART modified

Fourth, when locals protest outside the weary Van Art Gallery for ‘affordable housing’ next Sunday, maybe they should invite an economist to stand and explain what house lust is doing to this nation. We’re so obsessed with borrowing massively to buy and furnish houses – because we don’t earn enough to accumulate big savings – that it’s skewing the financial affairs of the entire country.

Consider this: oil has cratered and so have our energy exports. That’s created a huge outflow of money from Canada – about $3 billion a month – because consumer spending is off the chart and imports are swamping exports. Meanwhile the energy collapse is draining juice from the economy, leading to job losses (20,000 last month, 1,750 yesterday) and encouraged the Bank of Canada to drop rates, spurring more borrowing. It’s a vicious circle, as we swirl and eat our own tails.

Here it is in picture form for those too busy worrying about the Chinese to read my words. This is our export picture once energy is stripped out, courtesy of BMO.

TRADE modified

This is about the worst trade gap ever. It shows you what happens to a country that depended too much on digging stuff up then turned to building condos. Predicts economist David Madani: “Unfortunately, the most likely scenario is that the current account deficit will be closed mainly through a very painful decline in household net borrowing, which depresses domestic demand and imports.”

Well, enjoy the rally. Tell those foreigners with all their money that we don’t need it. No sir.

237 comments ↓

#1 Nerf Herder on 05.14.15 at 6:35 pm

First!…… FINALLY!

Now what’s this post about???

#2 Yogi Bear on 05.14.15 at 6:39 pm

Best blog post pic ever.

#3 TurnerNation on 05.14.15 at 6:41 pm

Jared Dillian on Fed, interest rates – interesting. I read his book.

Appears long bonds are worrying?

(No idea on rest of site, could be metalheads’:)

http://www.mauldineconomics.com/the-10th-man/double-black-diamond

#4 ILoveCharts on 05.14.15 at 6:45 pm

Anyone have a chart of the trade balance with energy included?

Also: If a tourist comes to Canada and spends $10,000 on a vacation, does that get counted as an export?

(a) The deficit is $3 billion with energy in. (b) It isn’t counted as anything. — Garth

#5 Squirrel meat on 05.14.15 at 6:45 pm

And so when did it go negative.. ah just when Harpo took the wheel… and drove the whole country into the ground.

#6 Mr. Pink on 05.14.15 at 6:46 pm

Another market disruption from higher interest rates is virtually certain, according to former Federal Reserve Chairman Alan Greenspan.

“This is a very tough period to get through,” he added about the Fed increasing interest rates. “Normalization is great, but the process of getting there is going to be very rocky.”

Greenspan said there was no way to get around bond market volatility but said it was necessary to help the Fed and other central banks reduce overall debt.

He did not give specifics on how fast Fed Chair Janet Yellen should increase rates, currently predicted to be a highly gradual process from near-zero.

http://www.cnbc.com/id/102675372

#7 LH on 05.14.15 at 6:47 pm

My cousin just won a bidding war.
Approx 1.3 million in M5T, hundreds of thousands above ask.
He is Canadian (lived in Toronto most of his life) but his fiancée is from Shanghai. Guess what, the bulk of the money is not coming from Canada but Pudong. Welcome to the 21st century folks…

Lucky for me I bought into that street 9 years ago when prices were about two fifths of the current level. :)

#8 Monty on 05.14.15 at 6:47 pm

Hey Garth, thanks, but (pun not intended) will not be looking for the Goodyear on your ‘airy butt !!! On a more serious note, do you really think you can convince those who have swallowed the HAM story to think otherwise ? Look at the Ted Cruz’s and their supporters and sometimes you just gotta throw your hands up and yell “uncle” ! The rest of us enjoy the informative posts and tips and tricks, so keep on doing that….

#9 devore on 05.14.15 at 6:50 pm

#223 NoOneOfConsequence

Therefore, as your home increases in “value”, the amount of tax you pay also increases.

Every province and city in Canada uses this structure. Rates and processes are publicly available information.

No, this is not how every province and city does it (provinces don’t raise money through property taxes, fyi).

This is how they do it. The city figures out their budget for the year, and figures out the property tax rate based on total assessed value of all properties. The budget and amount of money they need to raise is not dependent on property values. If house values were to double tomorrow, property tax rates would simply fall by 50%.

http://www.maa.ca/property/millrate.html

#10 everythingisterrible on 05.14.15 at 6:51 pm

How can Vancouver make the list if there’s no data recorded? It’s an omit, not a telling fact. A per capita figure would also be useful.
Who gives a sh*t if we piss off florida or arizona? There are numerous other prosperous countries that place limits of foreign ownership
Also Christy Clark (although hardly an expert on anything) Pretty much said the opposite of what you’re insinuating – that if we limited foreign RE investment house prices would fall too much and reduce credit availability. “But any sudden change could have unintended consequences for those who already have invested in a home, the premier said.

“By moving foreign owners out of the market housing prices will drop,” she said.

Stop twisting things to fit your position GT. (Queue Garth pulling out that crappy victoria pie chart again)

#11 crowdedelevatorfartz on 05.14.15 at 6:51 pm

Well, if it’s not the HAm that are to blame it must be the Boomers…… yup, those damn greedy Boomers.

Time for the Gen X, Gen Y, Millenials, et al. to pull the parent inserted soother out of their mouths…. stop pouting and take a long hard look in the mirror.

Globalization has a whole new level of competion waiting for ya.

“Good Job” has a whole new meaning when you’re underemployed, your company outsources your university degree job skills to a country that graduates smarter people by the 10’s of thousands per year that are willing to work for 30% of your salary.

Life sucks. Then you rent. Buy when you can afford it…..which means …..not now.

#12 Nerf Herder on 05.14.15 at 6:57 pm

I find it interesting that when things are rocking in real estate, you hear nothing but froth. When things are crap, everybody goes into stealth mode.

Mike Fotiou of http://www.calgaryrealestatereview.com generally provides a balanced look at real estate in Calgary. Normally prolific in posting, he hasn’t had any updates since April 2.

Word on the street in Cow Town, is that prices are still pretty sticky with sellers desperately clinging to their equity.

You haven’t had a Calgary update in a while Garth?

#13 Liquid Independence on 05.14.15 at 6:59 pm

I don’t understand why the YVRers want to restrict foreign ownership. Unlike government stimulus, capital investment by private individuals (including from foreign sources,) helps to grow our economy without burdening its citizens with public debt.

#14 Mark on 05.14.15 at 7:00 pm

“This is about the worst trade gap ever. “

No doubt much of that trade gap will dissipate as the ‘wealth effect’ goes into reverse, and consumers stop filling their houses full of imported goods. After all, do you really think its been domestic goods people have bought with those big HELOCs and endless mortgage re-fi’s?

Also, there’s nothing wrong with such a trade gap either. Canada is particularly good at producing oil. But we suck at making low-value trinkets in sweatshops. That’s the beauty of trade — we export products that we’re good at making, and import the products we suck at making. And vice versa. It makes everyone richer in the long run. Yes, there’s some collateral damage in the short-term, but eventually an economy supplied with proper liquidity from the central bank will sprout new industries to take up the slack in labour.

Also: If a tourist comes to Canada and spends $10,000 on a vacation, does that get counted as an export?

Of course. Likewise if a Canadian spends $10k on a vacation overseas, that’s counted as an import, in terms of the balance of trade. The RE decline is almost certain to truncate a large amount of discretionary consumer spending, particularly on foreign travel. Just common sense.

#15 I'm stupid on 05.14.15 at 7:02 pm

The problem with most people is that they don’t realize the consequences of their actions. The rich are getting richer not because gov’t is on their side but because the middle class keeps spending. Is it a coincidence that the gap between rich and poor widened with the decline of the savings rate by the middle class?

Garth mentioned it numerous times that the top 10% hold assets while the rest holds the debt. If the middle class would stop worrying about looking rich and actually save 20% of their income, like a generation ago did, I can assure you that the gap between rich and poor will tighten.

The don’t have a million group should stop buying garbage and maybe they’d have a million someday. Don’t cry for not owning a home, rent one and save. Nothing is better than having the freedom to do what you want when you want to but the only way to get there is to have money.

#16 Mr. White on 05.14.15 at 7:09 pm

Garth, you really must like banging your head against the wall of ignorance on a daily basis to keep this up.

Why anyone would buy in Calgary, Edmonton, Vancouver, Toronto, or other overheated markets is a source of amazement for me. They just can’t do the arithmetic.

We sold out of Edmonton 4 years ago and put the dough into some investments that have returned more than 12 percent each and every year since. We moved to Calgary and rented a million buck home for less than 2 grand a month. We could care less what the effect on the price of oil has on the real estate market in Calgary.

Here’s the thing. I have seen house prices go up and down too many times to think about over the past 40ish years. I made some dough on real estate but always at the expense of other investments. Now I am very clear on what the value of a home is; nothing more than what I can rent it for.

#17 SWL1976 on 05.14.15 at 7:10 pm

China-boy? Wow

I bet that’s a new one.

You’re a trooper Garth, an honest politician who got the boot and still doesn’t quit

#18 Irwin on 05.14.15 at 7:10 pm

“For too long, we have been a passively tolerant society, saying to our citizens ‘as long as you obey the law, we will leave you alone’.” ~David Cameron

independent.co.uk

#19 Riley on 05.14.15 at 7:10 pm

I believe property taxes in Florida are higher for non-residents. Just saying…

#20 Smoking Man on 05.14.15 at 7:11 pm

Garth , that chart showing the trade gap. Its the most important chart for BOC.

Looking at that dismal chart I can guarantee with certainty if it slips a bit more, another BOC cut. With our dollar no sitting at about. .80 that chart will get worce.

Now the being a forexer I can tell you their is a raging currency war going on..

China will cut again too.

Now the reason first quarter usa stats is soft, is because of their high dollar.

But the FED will lose credibility if they dont spike. But its like shooting yourself in the head.

So keep an eye on that chart. That your leading indicator when it comes to rate hikes.

#21 Victoria Boy on 05.14.15 at 7:12 pm

Garth.

I recently presented at the BCNet conference in Vancouver, where Steve Dotto was the keynote speaker. During the course of his discussion he spoke about the value of the comments he recieved in his product reviews (alot of foil heads, which reminded me of your blog). He switched from an anonymous comment model to an authenticated one and could not believe the difference. Trash to gold. Im just sayin… it might be time to pull the trigger.

#22 Brunett43 on 05.14.15 at 7:13 pm

http://www.bnn.ca/News/2015/5/14/Prime-Minister-Stephen-Harper-urges-Canadians-to-control-household-debtPri.aspx

#23 gut check on 05.14.15 at 7:15 pm

just a mass of mixed messages tonight

#24 young & foolish on 05.14.15 at 7:16 pm

” …. your company outsources your university degree job skills to a country that graduates smarter people by the 10’s of thousands per year that are willing to work for 30% of your salary.”

Well, you know what that means for the future, don’t you? Cheaper prices. Lower wages eventually means lower sales figures. Consumer culture depends on disposable income (which appears to be drying up). When the cheap credit party ends, watch out.

#25 Victoria Real Estate Upsate on 05.14.15 at 7:17 pm

History has shown us several examples of how the inflation of a country’s housing bubbles stimulates the economy of that nation in a big way.

It happened in the US. Things were different there until the bubble began to deflate. The deflation of their bubble had a huge negative impact on the US economy for years. It wasn’t fun at all for American families. I’m quite sure that they would rather not go through the fun of an inflating bubble again now that they know how brutal it is to go through the inevitable deflation of the bubble.

Canada’s experience will be much the same, except it won’t be possible to lower interest rates from near normal to emergency levels to slow and stop our housing market correction and improve our economy. Canada’s experience could be much worse than what the States went through.

#26 SteveW on 05.14.15 at 7:19 pm

Time for Candains to stop buying properties in Florida, Vegas and Hawaii. We are destroying American dream and ruining young families.
Now seriously: “This would be antithetical to our basic principles of free markets and capitalism, invite retaliation from lawmakers in Arizona or Florida, impede economic activity and not reduce a single house price by a single dollar. ”

While I agree with most of the sentence, it goes without saying that restricting foreign ownership may impact market. The prices may go down, but not significantly, as there will be fewer housing starts. Further, there is so much dual citizens in Canada (I am one of them) that makes influx of money very difficult to control. To claim that the price will not change att all ir pretty rigid statement. No one can predict anything, especially future.

#27 Mr. Reality on 05.14.15 at 7:22 pm

Thanks sheeple, buying at the bottom will never feel better!

Mr. R.

#28 Fred on 05.14.15 at 7:22 pm

Interesting. I continually read how there is a lack of transparency in RE market yet continue to hear stories throughout the media, including talk radio, about foreign investors (not just HAM).
I can only assume that “absence of evidence, is NOT evidence of absence.”

http://www.theglobeandmail.com/life/home-and-garden/real-estate/some-wonder-if-its-time-vancouver-acts-to-slow-foreign-buyers/article24341903/

#29 Michael on 05.14.15 at 7:23 pm

Of course Vancouver didn’t make that list. No one is collecting data on foreign ownership.

#30 whitey on 05.14.15 at 7:23 pm

Not to worry, soon fresh water will be the new oil for Canada. That will be an interesting spectacle to watch unfold.

As for real estate prices it looks like domestic money is driving the bottom end of the market and foreign money is driving the top. That Victoria pie chart was good for a laugh and little else. Have you been to Richmond lately? Those signs aren’t in any language I grew up speaking nor the one that Mr. Trudeau imposed upon us. Nope, no foreign money there.

#31 not me on 05.14.15 at 7:23 pm

Leave my riding brothers out of this. — Garth

You mean straight-line heros? ;-)

#32 HogtownIndebted on 05.14.15 at 7:26 pm

Is consumer spending also coming to a tipping point?

Some seasonal examples have caught my attention:

This week my sister in law tells us she’s had three calls in two weeks from kids camps that she spoke to at school fairs recently. They each offered to come over to the house, any time, to have a chat about what’s a good fit for their kids.(!) Two of them cut their prices right on the phone by over $500 for two weeks, just like that.

They’ve had their kids in camps for five years, and never had this kind of urgency coming from the directors to book a spot, and certainly never any door-to-door sales. It was always ‘first-come first served’ and good camps filled up by April, ‘come to our office or sign up online quickly’ etc…

Another example, a friend moonlights selling RV trailers north of Toronto. He’s been told the co. will not pay him any salary any longer, only commission because sales have cratered. The salary was puny but at least it guaranteed some dough, so he is passing on all work this season.

Perhaps if you are on financial life support with a HELOC and things are suddenly looking tight, an RV or kids camp don’t look as affordable as just taking a road trip to Sauble Beach or saving up for two days at the CNE this summer?

#33 omg the original on 05.14.15 at 7:27 pm

We’ve had HAM in Victoria for the last 20 years

Funny how things work.

We have had HAM resentment in Victoria since the 1990s.

But in our case its the dammed HOT ALBERTA MONEY coming in and driving up prices so our kids have to buy crappy condos in Langford.

Of course, on the other hand, retired Albertan money was the only thing keeping the Victoria economy going.

#34 McFly on 05.14.15 at 7:31 pm

Noticed this on CMHC website.

“Effective June 1st, 2015, the mortgage loan insurance premium for homebuyers with less than a 10% down payment will increase by approximately 15%.”

#35 omg the original on 05.14.15 at 7:34 pm

Need More Immigration

So with all the younger folks levering up past their eyeballs to buy homes, Lexus, tropical vacations…..

Nobody will have anything money left over to spend on having kids and our birthrate will crater over the next 20 years.

So who’s going to pay for my health care 25 years from now!!!!!

We will need to ramp up immigration big time in order to have enough productive taxpayers to pay for all us frail retired baby boomers.

#36 Ray on 05.14.15 at 7:35 pm

Hi Garth,

You posted a chart few days ago which showed that Toronto averge house is 7x-9x the average income. In that chart, Chicago was 3x-4x the average income.

I looked at some listings in Chicago. It seems like Chicago house prices are similar to Toronto in the good areas where crime is low and prices are very low in the other areas where crime is high. Is this why the average price of US cities low..because they have a lot of houses in the bad areas which are bringing down the average.

Now for a professional who wants to live close to work, in a low crime area, they seemed equivalent. I am not planning to buy a house in Toronto but prices in US cities with good jobs is quite high as well.

Your view will be appreciated.

Thanks!

#37 rawdiswar on 05.14.15 at 7:45 pm

Too bad digging stuff up provides the type of real living wage that is sorely lacking in the current economy.

Don’t worry, if the teachers’ strike continues long enough I feel some might have trouble making mortgage payments on strike pay.

Things are going to get worse before they get better.

#38 MSM-free Zone on 05.14.15 at 7:47 pm

“…..Canadians have priced themselves out of houses in many markets, aided and abetted by the central bank’s cheap money, CMHC’s debt encouragement, lender greed, the Bank of Mom, voracious realtors and massive ubiquitous financial illiteracy…..”
_________________________

….and the actions of well-intentioned, but misguided and over-lobbied former finance ministers.

#39 Oot der Hoos on 05.14.15 at 7:48 pm

To #3 TurnerNation

That Maudlin link has a notable errors in it.

The Excess Reserves Chart is correct but one idea is dead wrong. The excess reserves DO NOT decline when member banks lend money. The only way excess reserves decline is if the central bank sells its holdings. (Bernanke said this himself once, if you listen to his testimonies, instead of just reading books (haha RalphCram; joke. Yes, I read books too.).

Until then, the fast loan growth into housing and government debt only shifts reserves from one member bank to another.

So then you should ask why the reserves would historically decline when such fast loan growth occurs.

The answer is the central banks manually reign in loan growth rates by selling their assets and that is why reserves decline. It is not because member banks withdraw money to loan it out. It is the action of the central banks to slow the lending and raise interest rates.

Why does this understanding matter?

The central banks have failed to reign in the loan growth. They have flooded the system with money and they can push the interest rate equilibrium anywhere.

The amount of inflation central banks will tolerate is the deciding factor regarding when they will act. Asset inflation is high now (houses). Consumer price inflation is 2.4% annual core rate in Canada. (I recall complaints about house inflation for the last two days). It is the world central banks doing the inflation. That is where the money printing went; CPI not so much, yet.

The discussion of poor loan demand and a glut of savings is very misleading. That is only true if you accept the Bernankian idea that CPI inflation is the determining factor and not asset inflation.

If you look at house inflation and other asset inflation as a problem then you would say there was no savings glut in real terms. It was an inflated savings or savings in name only, or nominal, not real savings. In other words, nominal savings rate minus inflation rate = real savings rate.

That is why I say Bernanke is telling a clever obfuscation about a savings glut and poor loan demand. It is his doctrine. It is the inflation measurement debate.

#40 PMO & the Senate on 05.14.15 at 7:50 pm

Yeah especially South Park, you can see and hear it here https://www.youtube.com/watch?v=768h3Tz4Qik

Oh and did you see the don’t have a million chick whining that realtors misappropriated it. http://www.cbc.ca/news/canada/british-columbia/vancouver-housing-debate-who-owns-a-hashtag-1.3071264

#41 Panhead on 05.14.15 at 7:50 pm

Fourth, when locals protest outside the weary Van Art Gallery for ‘affordable housing’ next Sunday …

———————————————————

It’ll be the same group from the 420 rally … should be fun.

#42 coastal on 05.14.15 at 7:51 pm

“…and not reduce a single house price by a single dollar. The latest to agree is BC premier Christy Clark.”

Wrongo Garth. Christy Clark said prices would go down and that would be better for new buyers, but not for those who have plans to take out equity etc. She don’t give a shit about new buyers, those are the families she lied to to get elected. Remember those families she’s taxed to death ?

#43 live within your means on 05.14.15 at 7:56 pm

So glad we don’t owe a cent. House paid off years ago. My 2000 luxury Honda Accord still going strong, & Hubby’s 2012 luxury Camry paid off as well. Nice feeling to not owe a penny. Can sleep well at night not worrying about money problems.

#44 MSM-free Zone on 05.14.15 at 7:58 pm

“…..But I must admit I’am starting to get a little aroused when Hilary moves a wall….”
_________________________

….. stainless and granite really do nothing for me, but Hillary, that’s a completely different story… she could convince me that a bowl of steam has nutritional value.

#45 young & foolish on 05.14.15 at 7:58 pm

“…. Is this why the average price of US cities low..because they have a lot of houses in the bad areas which are bringing down the average. …”

Interesting point. It warrants further investigation. Too often people use the “housing went down 30% during the correction” meme to describe what happened in America.

#46 Daisy Mae on 05.14.15 at 8:02 pm

“My career is decorated with the tire tracks of those who tried to run me over for speaking my mind. If you look closely enough you can make out “Goodyear” imprinted on my butt.”

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

“You can’t handle the truth” (Jack Nicholson). LOL And so the imbeciles lash out…

#47 Sean on 05.14.15 at 8:07 pm

#CrashBitchezz

#48 Daisy Mae on 05.14.15 at 8:09 pm

“….But I must admit I’m starting to get a little aroused when Hilary moves a wall….”

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

Try to behave yourself. Dorothy is going to get ticked off! LOL

#49 Observer on 05.14.15 at 8:09 pm

The facts remain. Canadians have priced themselves out of houses in many markets, aided and abetted by the central bank’s cheap money…..

….and the Bank of Canada says? Poloz? News conference? Statement?

#50 Timmy on 05.14.15 at 8:14 pm

Come to the golf courses, come to the shopping centres, come to the coffee shops, you will have your answer as to what is driving real estate. To everyone who lives in Vancouver this is obvious. How else do you explain million dollar houses in a city with fewer head offices than Calgary and where the median income is about 70K?

#51 MF on 05.14.15 at 8:21 pm

#11 crowdedelevatorfartz

Hey no matter how irritated I got reading your post, I realized I somewhat agree with you in the end.

An unintended consequence of this hilarious run up in home prices is total disengagement from all aspects of the system. That is what I feel now. I posted here a while ago that I finally the got the memo. The memo stated: you are on your own. The government does not care. Our politicians do not care, everyone is out for themselves, Etc.

It’s an unhealthy screw everyone else mentality that I have developed towards a country that has subsidized me from infancy in school, university, doctor visits etc.

I think the frustration is because my generation (i’m 31) equates wealth with home ownership. It is what our boomer parents who we are emulating did.

We are keenly aware of globalization and the competition it brings. Why do I have to work in a job with no security and low pay to save peanuts when someone else can just sit and collect hundreds of thousands of dollars? Heck if I rent, I am ENRICHING his pockets. Screw everyone else right?

Personally, it has taken me years to save up a fraction of what people make doing nothing but owning a home in specuvestor city GTA. It can be frustrating.

Here’s the difference though: I realize it is all my fault. I wish I was better educated in investing at an earlier age. Most people aren’t educated at all in investing and only know real estate. That is what I used to be like. Now that I have enough for a down payment, everyone is in mega bubble territory ripe for disaster. Luckily a few years ago I found this blog and I now see the light.

For many it looks like there are no other options other than RE and that can be frustrating.

MF

#52 Sean on 05.14.15 at 8:21 pm

OK, you can delete that last comment of mine.. it was juvenile, even for me.

An interesting, if not impossibly complex, topic for a future blog post.. is what can / should Canada do to foster sustained, balanced, broad-based economic growth. I know that is moving firmly into the realm of the politics, but I think a lot of blog dogs would be curious to know your opinion Garth. You alluded to Canada having depended too much on resource extraction, and more recently on the FIRE sector. So what is it that makes the US generally so much more of a dynamic economy? Is it more of a free market ideology.. lower taxes and regulatory burden.. simply the advantage of a much larger domestic economy… superpower status.. reserve currency status?

I really enjoy the blog, but honestly there is only so much one can say about housing at this stage.. the outcome has become inevitable. It would be interesting to look ahead, in advance of the inevitable policy response that will be needed, and envision what the Canadian economy could and should look like.

#53 Timmy on 05.14.15 at 8:26 pm

Of course Vancouver doesn’t make that list–those cities are 10 x as big. You talk about people manipulating statistics…Per capita would be an entirely different story.

#54 GTA Engineer on 05.14.15 at 8:31 pm

#36 Ray that is a very good point. In a similar way, it’s like comparing Niagara Falls USA (which has among the lowest housing prices in America) to Niagara Falls, Canada, which is cheap, but likely 2x the price of the American side. It only takes a short drive to understand why. The ‘average’ house on the Canadian side is in a safe, thriving neighbourhood, with a high level of employment, is clean and prosperous. The US side on the other hand is mostly a hellscape of old dilapidated homes, with high crime, unkempt surroundings, low incomes, high unemployment, and generally not somewhere you’d want to catch yourself alone after dark. So the ‘average home price’ doesn’t really mean much does it?

An ignorant comment, as embarrassing as it is uninformed. — Garth

#55 Omar on 05.14.15 at 8:32 pm

Hello,

Does a real estate agent (the trademarked kind) acting for the SELLER/LESSOR need to disclose if they have an immediate family relation to the SELLER/LESSOR, or a financial interest in the property being sold/leased?

Thanks.

#56 ANON on 05.14.15 at 8:49 pm

Pyramid schemes. Puzzling the human mind since the first promises were believed, accumulated, rolled over for a while, and suddenly evaporated into thin air, once perceived as empty. What an apt word: bubbles.
Fascinating subject, never and always different at the same time, with plausible logical arguments on both sides of the divide.

#57 crowdedelevatorfartz on 05.14.15 at 8:59 pm

@#19 Riley
“I believe property taxes in Florida are higher for non-residents.”
+++++++++++++++++++++++++++++++++++
It aint just Florida.
Locals everywhere bitch and moan about “foreign” money buying up all the good land or driving prices to the moon.
I had a similar conversation about a decade ago with an uncle at a big family bbq.
He had about 10 too many beers and began a rant about all the “come from aways” (a quaint P.E.I. term for anyone without Bud the Spud DNA going back 100+ years) buying up all the “best” property and driving real estate prices up.

Being a cottage owner and a “come from away” I asked him,
“How much is YOUR property worth?”
“$150 grand”, was the reply (a 5 bedroom house on 5 acres).
“What do you pay in property tax?”
“$850 a year” was the reply.
“Well, I own a 2 bedroom cottage valued at $75k that I use 1 month a year and my taxes are double what yours are…….So next winter when the plows are clearing the 5th snowstorm of the winter and the garbage is collected……thank the “Come from Aways” for paying for all that”

Crickets……………

#58 johnnyfish on 05.14.15 at 9:02 pm

DELETED (Racist)

#59 Detalumis on 05.14.15 at 9:04 pm

#35, who will pay for your health care, YOU. They are already starting the good old bait and switch now by cutting back on healthcare spending and letting waiting lists ramp up. The current crop of elderly are getting the best care anyone will ever see. It won’t be there for you.

Anything orthopedic is already creeping back over a year. If you have shoulder injuries you can wait upwards of three. In ten years it will be five years for a hip or knee replacement and I’m sure “Chaoulli vs Quebec” will have spread all across Canada. When you’re 70+ you aren’t going to want to wait in pain for 50% of the rest of your life waiting for surgery.

I’m surrounded by elderly who had stuff like free daily physio for broken ankles, some have had all 4 joints replaced. Now they get free home care to “age in place”. None of that will be available to you. So guess what, the joke really is on you.

#60 Chris on 05.14.15 at 9:05 pm

One of my friends works at loan application processing department at a major bank. And she is saying that they are so busy with processing loan applications they don’t even have time for training. Canadians are really pigging out on debt big time. People are taking on debt like there is no tomorrow.

#61 robert turpin on 05.14.15 at 9:07 pm

thank you garth for your insight on the housing market and your help in building a strong financial portfolio.you show immense forebearance and tolerance in allowing some rude obnoxious people to insult you…while you present your comments in a rational respectful manner…you are head and shoulders above these rude people who hide cowardly behind their phony name tags..in my opinion you provide a valuable public service…thank god that no political party hacks can stop your blog..please keep up the great work.

#62 Shawn on 05.14.15 at 9:11 pm

Treade Deficit

ILoveCharts on 05.14.15 at 6:45 pm
Anyone have a chart of the trade balance with energy included?

Also: If a tourist comes to Canada and spends $10,000 on a vacation, does that get counted as an export?

(a) The deficit is $3 billion with energy in. (b) It isn’t counted as anything. — Garth

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

I agree with Mark at 14 the tourist on vacation spending $10k in Canada is counted as an export of services.

Trade figures are kept separate for services and goods.

Here are service exports.

http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3760108

Travel is Canada’s biggest service export. I don’t see a definition for “travel” but it is listed separate from transportation as an export.

Here are service imports

http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=3760108

Travel is again the biggest item. Given our climate we have a deficit in travel we travel for sun more than other folks come here to find ice and snow.

#63 Sebee on 05.14.15 at 9:11 pm

Now thay BMO chart is scary.

I’m sorry to hear Garth that your butt only had one good year. We do too much sitting, ot enough squats. I’m going to di a set now for my beautiful girlfriend Michelle Lin.

#64 Russ L on 05.14.15 at 9:12 pm

Hey all,

These last few days of property angst about the type of neighbours moving in or splitting one lot into two or combining two lots into one and the big question raised… should we allow this?

This really bothers me. Simply, if this is discussed as being achievable then it shows we have no private property rights in Canada, in regards to real estate.

I’m lucky to live in a rural-like area within a small city and can see this attitude coming. It won’t be long and I will sell out and the wife & I will take our freedom back.
Thank you very much.

#65 Obvious Truth on 05.14.15 at 9:15 pm

And the markets chug along. Rate and currency hiccup behind us.

Boc is in a bind here. No easy way out. This will need policy change. And likely some painful adjustments.

Housing may now become the nail in the coffin for the kanucistan economy. Government jobs won’t carry the freight for long. Just until election time.

Winds of change are blowing. JT wins in a landslide. The coverage on the guy makes him out to be a rock star.

#66 Catalyst on 05.14.15 at 9:20 pm

The gov’t purposely doesn’t collect the information then says there is no data to support it. Steve-o gutted Stats Can because the saying really is true, ignorance is bliss.

“there will be no anti-foreigner laws passed in BC or Canada restricting the right of anyone to buy a house, or taxing them capriciously for not living there. This would be antithetical to our basic principles of free markets and capitalism”

Don’t make me gag. Canada is home to several monopolies and restricts foreign investment from telecom companies because god forbid we have cheaper cell plans available.

#67 Trojan House on 05.14.15 at 9:20 pm

#7 LH on 05.14.15 at 6:47 pm

“My cousin just won a bidding war.”

Won???!!! Ha ha, that’s funny.

#68 DON on 05.14.15 at 9:21 pm

#21 Victoria Boy on 05.14.15 at 7:12 pm

Garth.

I recently presented at the BCNet conference in Vancouver, where Steve Dotto was the keynote speaker. During the course of his discussion he spoke about the value of the comments he recieved in his product reviews (alot of foil heads, which reminded me of your blog). He switched from an anonymous comment model to an authenticated one and could not believe the difference. Trash to gold. Im just sayin… it might be time to pull the trigger.
*********************************
I can see your point…but then again it is always good to know what crazy, stupid, spiteful and the rest of the gang are saying behind the curtains. Know your opponent and keep a healthy distance.

#69 BS on 05.14.15 at 9:22 pm

Is this why the average price of US cities low..because they have a lot of houses in the bad areas which are bringing down the average.

Maybe the bad areas are just priced as they should be. We have a lot of houses in bad areas in Canada too. Here in Vancouver we have the the Downtown Eastside and Strathcona. The poorest and highest drug using neighbourhood in Canada. Yet houses sell for $1.5 million. Not new houses but old, mold infested houses on small lots. Micro condos sell for $400K. This is in an area where anything not bolted down is stolen immediately. Things that are bolted down are stolen at night.

Find me a neighbourhood comparable in the US and you will find properties are 90% plus cheaper.

#70 Obvious Truth on 05.14.15 at 9:22 pm

# 57 ‘Come from away’. Awesome. Hand it to the east coasters. Great lingo.

Isn’t everyone in Canada a ‘CFA’.

#71 Shawn on 05.14.15 at 9:26 pm

Central Banks and Loan Growth

Oot der Hoos on 05.14.15 at 7:48 pm

The answer is the central banks manually reign in loan growth rates by selling their assets and that is why reserves decline. It is not because member banks withdraw money to loan it out. It is the action of the central banks to slow the lending and raise interest rates.

Why does this understanding matter?

The central banks have failed to reign in the loan growth.

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

Sounds right.

Except that central banks are certainly not trying to reign in loan growth. They are promoting it as you say by buying assets. They buy Treasury bonds from banks by creating money (reserves) and placing this in the account of the selling bank. (Each bank has in effect a reserve account at the central bank)

The selling bank now has more “cash” (whatever that is) and less bonds. To replace lost interest income the hope is that the selling bank will lend out “money” and that this in turn will stimulate the economy.

It may actually be working to some extent in the U.S.

In this fashion the central banks are actively trying to stimulate lending (which stimulation, they hope, will arouse the economy)

#72 Mr Happy on 05.14.15 at 9:26 pm

I have a lot of respect for Garth…he really tries….

Bottom line. People are stupid. Oh, does that hurt your feelings? If you have no savings….you are stupid.
If you think the government will pay you in the future? Stupid! If you don’t live within your means? Stupid! If you have debt? Yup, you guessed it….stupid!!!

F#@*ing smarten up!

This girlie was visiting friends in Mexico this winter and asked: “how do I make it that I can retire in Mexico at 50?” I said live on 1/3 your income, service your debt with 1/3 and save 1/3.” She said “that’s impossible!” I said “I guess we won’t see you down here soon” Too bad LOL

#73 Rainmaker on 05.14.15 at 9:28 pm

#21 : “He switched from an anonymous comment model to an authenticated one and could not believe the difference. Trash to gold. Im just sayin… it might be time to pull the trigger.”

Not a bad idea Garth. Would surely improve the overall quality of the blog. Sometimes I just read your post and don’t even bother with the comments because it takes time to find the valuable stuff – and there are some real gems in the comments section.

#74 DON on 05.14.15 at 9:31 pm

More and more people lashing out…hmmm. Tipping point?? The storm feels one step closer. Like that sucking sounds when the tide goes out.

#75 Bigdaddy on 05.14.15 at 9:31 pm

Christy got elected in part by her families first slogan. She just neglected to mention she meant Rich Chinese families first.

You can’t be that thick. — Garth

#76 Retired Boomer - WI on 05.14.15 at 9:32 pm

I have got to wonder what the “Trade Agreements” like NAFTA, and CAFTA, and the new super-secret one being foisted upon the US taxpayers (sheep) called the “Trans-Pacific Partnership” constructed in secret, fast-tracked with no public disclosure will mean for us. My gut tells me, you’re gonna be bent over, not kissed, and you will NOT like it….
But, in a representative Republic our elected millionaire representatives surely have our best interests at heart….NOT!!!

NAFTA brought what to the US?? WHAT to Canada??

OK, cheaper Chinese crap, Bangladesh and Viet Nam clothes, lost US jobs and a higher trade deficit.

Who won there? Why? What was the payoff? To whom?

Canadian Real Estate Prices are largely the result of impatient buyers driving up the cost among a time of cheap money. Kill the cheap money, or lower CHMC coverage, and see the party bowl quickly empty.

Do you have lawmakers with the intestinal fortitude to say “No?” I do not believe you do. So, party on like it’s 2006.

Then regret it when prices stall, then fall, along with the jobs, or wages that allowed the party to run. THEN, you can re-elect the same brainless idiots a few years later like we have demonstrated. Rinse & repeat. Soak the poor first, then the middle class, the rich will have left.

Meantime the smarter will be tallying their gains-thanks!

#77 lee on 05.14.15 at 9:39 pm

For those of you who believe all the world’s real estate money wants to land in Toronto or Vancouver that multi-colored chart should show you that a simple point can even be made with Crayons (R). Pull up the chart the next time you think all Chinese are dying to invest in Canada.

#78 Capt. Obvious on 05.14.15 at 9:40 pm

Question: If software is developed here, but the end product it runs in/on is manufactured elsewhere, does that show up in our export numbers? I would guess the answer is no, but someone can educate me.
I work on a product where the software is developed in 5 different countries, but shipped out of Italy (mostly). No joke.

#79 mathman on 05.14.15 at 9:44 pm

RE #32 Hogtown Indebted

funny your comment about summer camps, in the last two weeks I have been called multiple times by high end venues I have previously used telling me they would be more than happy to book things for me. Could be seasonal, could be they now have CRM systems and or possibly could be business is terrible. If I were a betting man, I would bet a significant number of golf courses go under this summer and or sell to developers.

on the TTC adds everywhere for bankruptcy trustee’s and credit counsellors, these have been around for a few years but are now plastered all over on subways, busses and streetcars.

this is very similar to spring summer 08 in the US where everyone was happier than a pig in S, binging on debt even thought there were significant indicators that a storm was brewing.

at some point you have to pay the piper and it looks like that is now. You can only kick the can down the road so far before someone kicks it back at you. We as responsible tax payers will take the brunt of terrible monetary policy and the CMHC. We had every opportunity in the world to avoid the mistakes our American friends made leading up to the credit crisis, instead of learning we IMHO have created an even bigger mess.

#80 Andrew Woburn on 05.14.15 at 9:44 pm

#3 TurnerNation on 05.14.15 at 6:41 pm
Jared Dillian on Fed, interest rates – interesting. I read his book.
Appears long bonds are worrying?
==============

Dillian says, “The banks are sitting on tons of cash and not lending it out, which you can see in this chart of excess reserves—”.

Excess Fed reserves are not cash. They are an IOU from the Fed and presently earn .025%. They came about during quantitative easing when the Fed bought Tbonds and mortgage backed securities using the primary dealer banks as a line of credit. Technically the banks could call for repayment but as claims on the Fed are the ultimate risk free asset, and as the banks are barely meeting their new capital requirements, that would be like shooting themselves in the foot. Besides Janet would not be amused.

This is why I hate doomster/metalhead websites. They just don’t do their homework. The real concern surfacing about bonds is that tighter capital rules have reduced the banks ability to play market maker and cushion abrupt price changes. The issue is, if a bond panic starts, they won’t have the resources to catch the safe as it falls.

#81 waiting on the westcoast on 05.14.15 at 9:45 pm

#14 Mark on 05.14.15 at 7:00 pm
“This is about the worst trade gap ever. “

No doubt much of that trade gap will dissipate as the ‘wealth effect’ goes into reverse, and consumers stop filling their houses full of imported goods. After all, do you really think its been domestic goods people have bought with those big HELOCs and endless mortgage re-fi’s?

~~~~~~~~~~~~~~~~~~~~~~~

Mark – maybe they do keep buying their iPhones, Honda Civics, California produce and Argentinian Malbecs…

Often – during times of economic struggle, people don’t sit back and save but go out and indulge on day to day things. Unfortunately, much of that indulgence will be on foreign goods since we don’t produce much beyond raw materials… although I hear some fast cat ferries might be manufactured in Alberta starting next year…

#82 Smoking Man on 05.14.15 at 9:47 pm

#3 TurnerNation on 05.14.15 at 6:41 pm
Jared Dillian on Fed, interest rates – interesting. I read his book.

Appears long bonds are worrying?

(No idea on rest of site, could be metalheads’:)

http://www.mauldineconomics.com/the-10th-man/double-black-diamond
……..

Its temporary, celebrity bond god gross said go short.
The cattle follow..

Reality will burn the shorts shorty.

Take it from a Nectonite.

#83 Mark on 05.14.15 at 9:47 pm

“Question: If software is developed here, but the end product it runs in/on is manufactured elsewhere, does that show up in our export numbers? I would guess the answer is no, but someone can educate me.”

Of course it does. Its an export of software. Now whether its fully accounted for or not is a question of how much faith you have in the honesty of Canadian businesses with respect to transfer pricing. But yes, software is a component of Canada’s exports, and embedded firmware is one of Canada’s many exports (and imports).

#84 Gypsykid on 05.14.15 at 9:48 pm

Pearls to pigs, Garth, pearls to pigs.

People who will get it, already got it. The rest won’t.

Garth, you are one in a million and thousands of us thank you for it.

Peace…

#85 Tom from Mississauga on 05.14.15 at 9:57 pm

I almost died laughing at that pic today
Thanks GT

#86 PM on 05.14.15 at 9:58 pm

I believe property taxes in Florida are higher for non-residents. Just saying…

Just like tuition for non-residents is higher but hey, don’t let facts get in the way of a good rant.

#87 HappyJack on 05.14.15 at 10:03 pm

Hey Garth:

Hang in there cause we`re truckin for ya, EH !!!

Keep Smiling !!

#88 waiting on the westcoast on 05.14.15 at 10:04 pm

#76 Retired Boomer – WI on 05.14.15 at 9:32 pm

Free-trade diatribe….

If you look throughout history… Freer trade is generally beneficial. Sometimes, certain industries are hurt and if the disparity in the actors is to great it can put undue pressure on the lessor state.

The benefits for the smaller country (ie Canada) is access to larger markets.

The benefits to the larger country (ie US) is compliance to their system/influence in addition to a smaller economic benefit.

All the examples of closed markets are am example of economic hardship… USSR and China prior to opening up, Cuba, North Korea and Venezuela more recently.

#89 Investorz on 05.14.15 at 10:11 pm

Harper on housing:

“Canadian Prime Minister Stephen Harper warned on Thursday that some consumers are overexposed to mortgage debt even if the housing market remains stable, a rare nod by the government to high consumer debt levels in an uneven housing market.” – Reuters

#90 Mukadi on 05.14.15 at 10:12 pm

I have a lot to say but let me sum it up for Garth in a single quote:

“Only two things are infinite, the universe and human stupidity, and I’m not sure about the former”

#91 Transplant on 05.14.15 at 10:16 pm

#56 Ray: Chicago vs Toronto

I can only speak from personal observations but I’m pretty sure equivalent homes are significantly less expensive in Chicago than Toronto. If you were looking at luxury real estate in the Gold Coast area you are talking big money but still cheaper than downtown Toronto I believe. My daughter and her husband owned a condo in the heart of downtown and it was still cheaper than my in-laws’ place at the foot of Bathurst on the Lakefront with far better amenities as well.

About 1 1/2 years ago they purchased a detached home in a very nice area, Lincoln Park, an easy 20 minute train trip to Downtown and the Loop. It’s one of the more modest homes on the block (I’m not using “modest” as a euphemism for dump) and there are several new homes built after teardowns in the area, one next door in fact. These homes in Chicago are unlike those I see in Toronto, they’re conservative in their architecture and are very attractive. The one next to my daughter’s home is listed on Zillow at $1.2M-I’m sure this place would be $4M in Toronto. Of interest, my nephew bought a house in Toronto at the same time my daughter bought. The 2 houses cost the same, but the Toronto home is much less house, in a less desirable neighborhood and does not have a detached 2 car garage, in fact no parking at all. My kids also put 30% down and have a fixed rate 20 year mortgage at just under 4%. Property taxes are higher in Chicago though.

There are areas in Chicago I would not go near. There are also areas in Toronto I avoid. The last time I was in Toronto I wasn’t too keen on riding the subway at 11 PM on Saturday night either. Also, the Blue Line gets you from Downtown to O’Hare 24 hours a day for $5 and is a 45 minute trip.

I currently live in a large metropolitan area in Florida and people don’t seem to be very concerned where real estate owners/investors come from. Lots of Canadians of course, but also a lot of Germans and English-many of them own property that they vacation in part time and rent the rest of the time. Nobody here on the Gulf Coast seems to care where they’re from as long as they’re good citizens, which they are.

#92 Tom from Mississauga on 05.14.15 at 10:18 pm

How could our dollar be on a 4 year downtrend off 26 cents if all this foreign currency was pouring in and converted to CAD to buy our real estate? Prentice was right ‘math is hard’.

#93 Oot der Hoos on 05.14.15 at 10:21 pm

To #39
I found the Bernanke testimony about bank reserves.

Play from 1:15:00, Sanders questioning Bernanke,
if you are interested in learning how central bank reserves of member banks work.

Sanders demanded a 2% fee on reserves.
The fed currently pays 1/4% on reserves.

http://www.jec.senate.gov/public/index.cfm?p=Hearings&ContentRecord_id=fc790bc0-9493-499b-8904-2cebf3e229e0&ContentType_id=14f995b9-dfa5-407a-9d35-56cc7152a7ed

I misspelled rein as reign in #39.

#94 OwlEyes on 05.14.15 at 10:24 pm

When will they get it? The only way for housing to drop to sane levels is for people **not to want it insanely**

#95 Leo Trollstoy on 05.14.15 at 10:36 pm

Why is this blog still talking about irrelevant foreign money?

Oh yeah, the majority of Canadians are poor corporate slaves and blame outwards (always blaming outwards).

I forgot. Please continue.

#96 deaner on 05.14.15 at 10:40 pm

It deserves restating garth. Cristy Clark said the opposite:

“By trying to move foreign buyers out of the market, housing prices overall will drop,” said Clark. “That’s good for first-time home buyers but not for anybody who is depending on the equity in their home to maybe get a loan or use that to finance some other projects.”

However, it wouldn’t be the first time a politician had to play to the ignorance of the masses.

Regardless of her misguided comment, there will be no action. — Garth

#97 Smoking Man on 05.14.15 at 10:43 pm

Nick Pizzalito , writer guru.. Creator of True Detective.

Emails me last week , just read it now.

June. 21 true dick. Episode 1.

Said , smokey you are an inspiration on GF publish your book damb it.

Garth , best present day screen writer in world just pumped your blog.

Slow clap…

#98 Waterloo Resident on 05.14.15 at 10:43 pm

Hey Garth, always remember that saying “IT TAKES ONE TO KNOW ONE.”

So when a guy calls you a moron or idiot, it only shows that ‘HE’ is a moron or idiot.

If you remember that then you can be like a Teflon fry-pan and no bad vibes will ‘stick’ to you.

Take care.

#99 Ralph Cramdown on 05.14.15 at 10:45 pm

http://www.neighborhoodscout.com/ny/niagara-falls/crime/#data

#100 Washed Up Lawyer on 05.14.15 at 10:45 pm

Can I offer an ill informed comment from the cheap seats in Fort McMurray about Vancouver real estate?

When I lived in Vancouver for three years, I formed the impression that BC is almost a different country from the rest of Canada. Ottawa seemed like a distant, foreign and irrelevant place. It was hard to find real news and sound analysis about the federal government in the local media.

BC is a large land mass and a few mountain ranges from Alberta with the Cascades, Cariboo, Selkirk, Monashee, Purcell and then the Rocky portions of the Cordillera. Similarly, Albertans do not care nor know much about Manitoba and PEI.

At the end of the day, I think that the Vancouver real estate market is of diminished importance to the real estate market in Calgary or up here in the Taiga.

#101 Shawn on 05.14.15 at 10:48 pm

What is Cash

Andrew Woburn at 80 said:

Excess Fed reserves are not cash. They are an IOU from the Fed and presently earn .025%.

**************************************
Okay, to the bank, Fed reserves are a deposit account earning a tiny amount of interest.

If you or I have such an account at a bank we think of that as “cash” in the bank.

Paper dollars are also supposedly an IOU from the Central Bank except they earn no interest.

The following may not be the whole story but Money or cash is basically units of legal tender or anything that can be traded and exchanged like legal tender.

Bank deposits (which are IOUs of private banks) are counted as money as “cash” because you can buy things (anything) with them by using a debit card or writing a cheque or doing an electronic transfer.

You get to have a deposit in a bank by earning money which is usually paid to you as a deposit or by getting a loan from the bank.

Blacksheep explained some time ago that in olden times people of good standing in the community could effectively create their own legal tender or cash by writing an IOU note dated say 60 days in the future and trading such note for goods or services and the person who received said note could trade it to another person for goods or services. That was risky if our upstanding citizen defaulted on the note so these days we use a bank as an intermediary to create cash by getting a loan.

I would say the Federal Bank reserves owned by a bank are as good as any other kind of cash in our system. So they are in fact cash.

Units of “cash” have taken on a relatively stable value (in the short term) and we use such units to measure all forms of economic value and wealth and to make essentially all economic transactions (essentially all exchanges of value). The value in terms of real goods and services of a unit of cash (a dollar) is set and maintained collectively by all participants in the economy. If we are all confident that a dollar today will be worth a dollar tomorrow than it will be. If we lose confidence then the value of the dollar can slip over time. Central banks are charged with helping to maintain such confidence.

The value of this comment? Priceless, I am sure.

#102 whitehorn on 05.14.15 at 10:52 pm

Have a relative that listed their house in Edmonton for 1.1 million in 2014, in a upscale area and did not get any meaningful bites, then took it off the market. It is now presently listed for 950k and been on the market for more than a month. I recall that neighborhood sold houses for 1/2 that price as early as 2006. They want/need to sell the house for settlement reason. Oil as mentioned in the commentary as well as uncertainty, could be a tough sell, more so than last year. That seems to be the trend this year, houses are not moving like last year in Alberta. I’ve also seen that with rural land in Alberta as well, which got scooped up quickly and now not moving. Oil “does not” appear to be going much above 75 dollars and staying there for at least a couple of years. This definitely affects investments from oil companies, plus risk associated if oil does climb to those levels. Plus, there is more talk of migration out of Alberta. Anyways, you can always sell a house for a price. Looks like the pendulum is now swinging to a buyers market.

#103 Mark on 05.14.15 at 10:55 pm

“Mark – maybe they do keep buying their iPhones, Honda Civics, California produce and Argentinian Malbecs… “

Of course people will keep buying that stuff. Just less of it. As another poster here pointed out, the discretionary vacations are some pretty big ticket imports, and those typically are the first things to be chopped.

How could our dollar be on a 4 year downtrend off 26 cents if all this foreign currency was pouring in and converted to CAD to buy our real estate? Prentice was right ‘math is hard’.

Precisely. If anything, the weakness in the CAD$ argues for people selling Canadian assets, rather than buying.

#104 Freedom First on 05.14.15 at 10:57 pm

I don’t know, but for myself, I see today’s Post as nothing but good news. I enjoy watching the world go round. It pays well.

#105 Snowboid on 05.14.15 at 11:00 pm

#13 Liquid Independence on 05.14.15 at 6:59 pm…

We were told many times by our neighbours and retail stores how happy they were we invested in Phoenix. Even though we are only there a few months a year we still pay taxes, fees, etc as if we were full-time residents.

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

#19 Riley on 05.14.15 at 7:10 pm…

As they are in most jurisdictions. We pay about 10% more in property tax in Arizona as non-residents (as do our US friends who reside in other states during the summer).

In BC you cannot claim the homeowner grant as a non-resident.

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

#30 whitey on 05.14.15 at 7:23 pm…

We actually love the international flavour of Richmond. The diverse signage and language is part of what made Canada great.

You do realize that many Canadians speak and read more than French and English?

When we shop in Richmond all we see is Canadians, sorry.

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

#43 live within your means on 05.14.15 at 7:56 pm…

Same here, even with the recent vulching of an Okanagan property (paid cash), we still don’t owe anything.

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

#69 BS on 05.14.15 at 9:22 pm…

Very true, the city in the northwest valley of Phoenix we winter in has a crime rate similar to Kelowna, and the 5000 home subdivision where we own has a low rate that puts any similar Canadian area to shame.

#106 Oot der Hoos on 05.14.15 at 11:01 pm

To #71 Shawn

That is the official story, but I hope you did not miss my main point about the asset inflation problem.

I add to your explanation the Fed bought all assets which were being panic-sold. That is a fair role of the central bank in a panic. The largest member banks were bankrupt and GAAP changes hid the problem. The central bank was the only lender unencumbered by capital requirements.

The economic stimulation mostly failed in that it has created a new bad side-effect: too much house, consumer, corporate debt.

They did buy some time for the member banks to recover losses with profits from six years of paying nothing on deposits and so the banks are not as bankrupt as they were. So you could say that stimulated their ability to lend now. The similar strategy was done 1990-1994.

I just filled in the blanks for others, if they are interested.
I shade the scenario not so much as encouraging lending to stimulate the economy, as you say, and more as: repairing bank balance sheets.

#107 Retired Boomer - WI on 05.14.15 at 11:04 pm

#88 Waiting on the west coast

Thanks. That’s exactly what the text books said 40 years ago. So, where IS the benefit of that “free Trade?”

Who got it FREE? We used to have managed tirade -mutually beneficial trade. Canada used to make good GM cars, I’ve owned several. How’s that working for ya?

After FREE Trade our trade deficit current account numbers grew markedly in a few years. Maybe we can’t compete, or maybe “FREE” is more a one way street?

Somebody got good numbers on the last two decades of trade? I smell something akin to a dead carp…

One further point: Trade policies should never be debated without pubic input, and open discussion.

Whether we give away the store, or not, we should know the content of legislation that will affect residents. Same should apply to all other country participants as well.

#108 Washed Up Lawyer on 05.14.15 at 11:06 pm

I should also ask a few questions. Do the economic forces in North America move South and North as opposed to East and West? Is Canada an artificial construct fighting the inevitable?

Maybe that is why I always felt more comfortable having a Coors in a bar in Sandpoint, Idaho or Babb, Montana than in Jerry’s Cove on West 4th.

Is Jerry’s still there?

#109 Cowtown Cowboy on 05.14.15 at 11:10 pm

We sold out of Edmonton 4 years ago and put the dough into some investments that have returned more than 12 percent each and every year since. We moved to Calgary and rented a million buck home for less than 2 grand a month. We could care less what the effect on the price of oil has on the real estate market in Calgary.

Less than 2 grand a month huh? Sure you did….idiot

Why don’t you post where you were able to find SUCH a deal

#110 Show Me The Money on 05.14.15 at 11:17 pm

Garth, I keep hearing of a bubble brewing in the stock market, is this indeed happening? And if so would it be wise to keep cash or continue to invest? You need to enlighten us, what’s going on with the market’s?

#111 Hawk on 05.14.15 at 11:18 pm

#60 Chris on 05.14.15 at 9:05 pm

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

And the 0.1% who are on the other side of that “debt” equation are rubbing their hands in glee.

#112 nonplused on 05.14.15 at 11:19 pm

Maybe #DontHave1Million can all build themselves a micro-house. The apartments these days aren’t much bigger anyway.

Buyers strikes never work unless the demand can actually be reduced long term. Part of the problem is game theory, your fellow strikers bail and jump in as soon as they think they are getting a deal (ha ha chump!), and part of it is just physical. For example there was a movement some time ago to fight high gas prices by not filling up on Mondays. Ha ha, guess what happened Tuesday? Jams at the filling stations.

Another reason besides low interest rates and obscene borrowing for high real estate prices is that most city counsels and planning departments are in cahoots with the major developers and smaller developers are shut out of the market by the bureaucracy. It’s an artificial oligopoly. The chief criminal around Calgary for this behaviour is Carma.

Don’t buy in LA they are almost completely out of water. If the California drought doesn’t end soon this is going to be a major headline in about a year. Anyway moving away is probably advisable without the drought considering the amount of radiation leaking from Fukashima.

Unfortunately digging stuff up is the most economic thing to do if you have stuff to dig up. And areas where Canada has a lead in technology are often associated with digging stuff up. Anyone remember Safety-Boss in Kuwait? Also we have a lot of good geo-science we can sell to the world. But any time we come up with something purely tech (Nortel, Blackberry), some one in California “innovates” (copies) it and soon we are back to digging.

And now a rant about copier in chief Apple. Well Microsoft might be worse but let’s talk Apple. They did not invent the personal computer (Altar did), they did not invent the mouse or the graphic interface (Xerox), they did not invent the internet (Al Gore ;-), they did not invent the MP3 player (a host of folks were out front), they did not invent the smart phone (probably Blackberry), and they did not invent the tablet (Jobs hated them until the chips got fast enough). But they are really good at marketing, and cornering a market (iTunes).

#113 Carpe Diem on 05.14.15 at 11:25 pm

Hi Garth,

In terms of RE: You sure focus on RE for TO and YVR.

Calgary takes lots of space.

Ottawa and MTL must mean something in the mix???

Number 2 and 4 versus 1 and 3 …

What say you?

#114 dosouth on 05.14.15 at 11:26 pm

I certainly agree on this point Garth. I spoke with a friend who truly believes that the Chinese are the cause of the YVR house price fatigue.

He lives in the north of the Island and is complaining that they will soon take over V. Island as well. Ignorance is not bliss and for certain this will not end well….and sooner than some may think.

#115 Cici on 05.14.15 at 11:30 pm

#16 Mr. White

Thanks for your post…what a relief and delight to realize that there are still some signs of intelligent life clinging to the black hole of the blog comments.

#116 Cici on 05.14.15 at 11:32 pm

#16 Mr. White

Ignore the cowboy at #110, and do not in any circumstances give him your address.

#117 Shawn on 05.14.15 at 11:40 pm

U.S. Banks were Bankrupt in financial crisis? (Not!)

Oot der hoos and I seem to be in geral agreement buy=t he also said:

The largest member banks were bankrupt and GAAP changes hid the problem.

***************************************
A lot of people were sure that the U.S. banks were “technically insolvent” during the financial crisis (If only they would mark their loans to market.)

Well, sure they would have had trouble selling their loans for 90 cents on the dollar during the crisis. And But they kept those lions and generally collected the full $1.00 plus interest.

I bought Wells Fargo and Bank of America during that time. Those who said the banks were bankrupt did not make money but I did. Those doomers are left to moan that the banks were bailed out.

It’s not clear that Wells Fargo ever needed a bail out but anyhow at the end of the day the doomers lost.

The U.S banks are now generally healthier than ever. Equity ratios twice what they were just BEFORE the financial crisis. All is good.

Remember Buffett also invested in the banks back then

Rule Number 1: Always assume that Buffett is correct.

Rule Number 2: Don’t forget rule number 1.

I have been slagged as a Buffett groupie on this Board for years. I’m guilty and proud of it. I proudly study the methods and thinking of the world’s greatest investor. Some people think its more logical to slag Buffett. Whatever. As his partner Charlie Munger said the other week, “if people weren’t often wrong, we wouldn’t be so rich.”

#118 Shawn on 05.14.15 at 11:42 pm

And But they kept those lions and generally collected the full $1.00 plus interest.

oops the banks kept those LOANS, it was only Royal bank that kept the lions…

#119 Godth on 05.15.15 at 12:12 am

#108 Retired Boomer – WI on 05.14.15 at 11:04 pm

Good luck.
NSA Whistleblower William Binney: The Future of FREEDOM
https://www.youtube.com/watch?v=3owk7vEEOvs

#120 Jon on 05.15.15 at 12:16 am

http://www.bnn.ca/News/2015/5/14/Prime-Minister-Stephen-Harper-urges-Canadians-to-control-household-debtPri.aspx

Is Harper pulling a Prentice here by blaming the voters? Ndp or liberals for the federal win this year?

#121 will on 05.15.15 at 12:25 am

Hey #15 I’m Stupid

Yup. The rich get richer and the middle class get poorer – and it’s mostly because the middle class are stupid. As for the poor, the poor don’t get poorer. They just stay poor. They don’t move up or down. Just poor. Gettin’ by. Makin’ the payments. No movement.

#122 will on 05.15.15 at 12:29 am

I used to say smugly that the rich get richer and the poor get poorer because the poor are stupid. I don’t think that anymore. The poor stay at the same level. It’s the middle class that get poorer. It’s the middle class that are stupid.

#123 Exurban on 05.15.15 at 12:41 am

#109 Washed Up Lawyer

Is Jerry’s still there?

The Cove Pub

#124 waiting on the westcoast on 05.15.15 at 12:46 am

#108 Retired Boomer – WI on 05.14.15 at 11:04 pm

Thanks. That’s exactly what the text books said 40 years ago. So, where IS the benefit of that “free Trade?”

Who got it FREE? We used to have managed tirade -mutually beneficial trade. Canada used to make good GM cars, I’ve owned several. How’s that working for ya?

After FREE Trade our trade deficit current account numbers grew markedly in a few years. Maybe we can’t compete, or maybe “FREE” is more a one way street?

Somebody got good numbers on the last two decades of trade? I smell something akin to a dead carp…

One further point: Trade policies should never be debated without pubic input, and open discussion.

Whether we give away the store, or not, we should know the content of legislation that will affect residents. Same should apply to all other country participants as well.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Despite its name, it is still managed trade, just with far fewer regulations than in the past.

Who benefits

1. Consumers can buy numerous products / services for far lower costs than ever before.

2. Developing nations have been able to reduce poverty as we have sold technology in and they have sold their services/labour out.

3. The world is generally more peaceful as countries are more tied together than in the past and wars constitute a major threat to the plurality. Note – many of the wars are more violent due to the technology available if they do happen but the size/level of skirmishes tend to be shorter and less frequent.

4. Opening up of markets have allowed opportunists everywhere to find new niches to grow businesses. Both in developing nations coming here and vice versa.

Note – of course there are downsides. But the decline of the US middle class has less to do with free trade and more due to the country maintaining its role as the world policeman (which it does better than most empires of the past). Just like what happened to England, the cost of maintaining an empire eventually causes decline in the home country. But hey – you guys were basically the dominant power for ~100 years and will continue for at least another 30.

With respect to your comments on having an open process – I totally agree. One of my biggest fears of the past 15 years since 9/11 is the intensification of the political parties reducing our rights and the apathy of the general populace on major legislation facing all of us. Noam Chomsky was right…

#125 Details Details on 05.15.15 at 12:49 am

#14 Mark on 05.14.15 at 7:00 pm
“Also: If a tourist comes to Canada and spends $10,000 on a vacation, does that get counted as an export?

Of course.”

Whoa, not so fast there partner….many Asian tourists come to Canada on overpriced pre-paid packages from their home countries….the tour company then sub-cons the work out to local Canuck outfits at bargain basement rates, and the bulk of the profits stay in the country of origin, meaning the net benefit to the local economy is significantly diminished……

#126 Andrew Woburn on 05.15.15 at 12:54 am

#102 Shawn on 05.14.15 at 10:48 pm
Okay, to the bank, Fed reserves are a deposit account earning a tiny amount of interest.
If you or I have such an account at a bank we think of that as “cash” in the bank.
==============

I get what you are saying but, from an accounting point of view, cash you can’t spend within one year is just another financial asset like a promissory note or a term deposit even though it has cash value.

My issue was that Dillian made it sound like the banks are awash with immediately spendable cash and that is why interest rates are low. In fact the Fed excess reserves are all but frozen and have no day to day impact on the economy other than to make it more difficult for the Fed to manage overnight interest rates.

I tend to agree with Oot Der Hoos that the main effect of QE was to prop up the banks by boosting their risk free assets and by taking crappy mortgage debt off their balance sheet. If QE was really responsible for holding down short term rates, it’s interesting they haven’t popped up much since it ended. Overnight rates in the free-market non-banking sector are still below the Fed’s target rate of .025%.

My quibble was that

#127 Andrew Woburn on 05.15.15 at 1:07 am

#100 Ralph Cramdown on 05.14.15 at 10:45 pm
http://www.neighborhoodscout.com/ny/niagara-falls/crime/#data
=================

In my misspent and callous youth, when crossing the US border took maybe three minutes, we would drive down from Hamilton to the John’s Club in Niagara Falls, NY to drink really cheap beer and watch the bar fights. Sounds like it hasn’t changed much.

#128 Ponzius Pilatus on 05.15.15 at 1:23 am

Thanks Garth for fighting the good fight.

#129 Andrew Woburn on 05.15.15 at 1:24 am

#109 Washed Up Lawyer on 05.14.15 at 11:06 pm
I should also ask a few questions. Do the economic forces in North America move South and North as opposed to East and West? Is Canada an artificial construct fighting the inevitable?
================

In my cynical view Western Canada was likely a construct of Eastern money men who realized that, the only chance they had to keep Americans from grabbing all the Western goodies would be to build a transcontinental railway so they could defend them and haul them back.

In Eastern Canada the border seems natural. In BC the same kinds of people, often related, settled on both sides so the distinction seems arbitrary. You go to the rodeo in Sumas, WA and half the people are from Abbotsford, BC.

Is the border inevitably doomed? As long as we don’t want their gun laws and they don’t want more “socialist” voters, we’re probably safe.

#130 juno on 05.15.15 at 1:27 am

I work with a lot of offshore people, china, india and Russian.

They all end up saying the same thing. You can’t get rich in Canada, its too socialist and they tax the crap out of you.

Coming from China, Russian and India. I was quite surprise, but note these guys all have good careers and at contracted out at nice rates. So they are considered above normal.

Some of them have maids and housekeepers from where they come from. But at the end of the day once the jobs is done, most goes back to their native country

#131 Nagraj on 05.15.15 at 2:00 am

Add me to #32 HogtownIndebted
#60 Chris
#79 mathman
as also citing anecdotal evidence of cash-strapped consumers. Owners of all three of my favourite restaurants have complained that business has suddenly fallen off this Spring.

#132 Catch22 on 05.15.15 at 2:01 am

@ 65 obvious truth
JT doesn’t have a hope in hell. Can’t even answer a simple question or address an issue without experiencing an embarrassing bout of verbal diarrhea. Painful to watch, to be honest. I have always held to a personal adage that those that overcomplicate simplicity are, well, not terribly bright. He is green, granted, but I see no leadership abilities there…Not sure that his slick hair and good looks will get him far in the next election.
I think the NPD has a good shot come next federal election. Perhaps scary but the natives are restless. Libs as usual have picked a dud, the masses have no faith in the cons- what’s left?
Besides, Muclair has a great beard, just like Garth!

#133 nubbers on 05.15.15 at 3:17 am

LH @7 Well done to your cousin.

By paying double the long term sensible value for the house, I estimate that your cousin’s HAM (Hot Asian Millionairess) has ultimately boosted the Canadian economy by at least 600,000 CAD, and paid for some lucky boomer’s retirement.

Does she have a sister?

#134 fisheman on 05.15.15 at 3:40 am

Jerry’s or at least a tired facsimile is still there. Thirty plus years ago we sat in there with a lawyer explaing the ramifications of Sparrow & his kid going out in front of the village on the south arm of the Fraser & getting arrested for catching 16 sockeye. We had this new constitution you see, and the UBC profs in anthropology & law were all over it. Well us commercial guys were flush so we coughed up the money & got the ball rolling.Your a washed up lawyer so you know where that led. You remember the 30 acre Army base at Jericho just up 4th. The feds just gave it to the Musqueum band. The Sparrows are now special friends of the Aquilini”s & are welcome in the owners box at Canuck games anytime I hear. The Squamish band just turned down a billion dollars for a LNG terminal up Howe Sound.
Too bad we took those cases to the Supreme Court & lost. Too bad when we went to Ottawa, the MP’s laughed at us, or at least at John Cummins & his crazy fishermen.Too bad we made the law of the land by losing all those stupid fish cases. too bad the feds now can’t get their pipeline or their terminals or whatever. i think back on that smoky bar, half juiced with the tape deck blaring Warren Zevon, “Bring lawyers, guns & money”

#135 Londoner on 05.15.15 at 4:33 am

If I were a foreign investor looking to buy real estate in Canada, I suppose I would be happy that Vancouver and Toronto are not on that list. After all, as an investor, I’m looking for new opportunities instead of chasing already exploited ones.

Also, it’s now accepted as fact that foreign investment in real estate is what pushed up property prices in London. I’m not saying that it’s the case here but at what point could the same be said for cities such as Vancouver? As the trend is beginning or only after it has already occurred?

NEways, going back to your call for higher rates by thanksgiving… this seems baseless now that Q1 data is out and leading indicators for Q2 seem equally as dire. I’m glad that you’re starting to include trade balance and employment figures in your posts. It’s this kind of data and analysis that will help people understand how the economy is doing and why the BoC will be under pressure to keep rates low (or possibly lower them) over the next 12-18 months.

#136 observer on 05.15.15 at 4:40 am

I realize that putting restrictions on foreign ownership doesn’t hit the heart of the problem. Where only about 2% of the buyers are foreign.

But what it does is win Votes. It may not help the balance sheet, but perception!!!

Imaging if the fear of foreigners is taken out of the fear equation. The buy now or never buy because HAM is buying everything all the sudden changes the landscape.

Even my banker friends are saying they are coming in with truck loads or suitcases of money, all hidden from site. Well every time I cash a cheque my paycheck which is over 15,000 per month, they put a hold on it. I took out 40,000 from the bank in cash and move it over to another bank, and I had to sign a bunch of forms. So when they tell you bag loads of cash is being transferred into Canada’s banks to pay , that’s a bunch of BS because I believe anything over 10,000 in cash is recorded.

I wonder how why people think you can easily hide money or wash money in Canada, there are better places in the world with less regulations which can do that.

BTW imagine if the Chinese government went after these accounts. The price of breaking the law in China is much harsher that in Canada

#137 davikk on 05.15.15 at 4:51 am

The smart money (Wall Street Hedge Funds) is exiting as the dumb money (flippers & your cousin Eddie) arrives on the scene to take the losses. Some people never learn.

http://investmentwatchblog.com/the-smart-money-wall-street-hedge-funds-is-exiting-as-the-dumb-money-flippers-your-cousin-eddie-arrives-on-the-scene-to-take-the-losses-some-people-never-learn/

#138 Jimmy on 05.15.15 at 5:08 am

Save the Kids
We need to do something to save the kids who likes to buy a house but cant afford
to do so because the price of housing is too high. We need the Goverment to help.
I propose a program called ‘Save the Kids’. The idea would be for the Goverment to
subsidize the mortgage payments for 16, 17 and 18 years old to buy lane houses in
Vancouver. Instead of a 2 percent morgage the kids would get a morgage for 1 percent
over 35 years. It would be administered by local credit unions such as VanCity.
This will make the cost of homes affordable again.
The Goverment can get the monies from rich folks by introducing a wealth tax just like in France. Just .025 % of all financial assets would fund lots of great programs such and ‘Save the Kids’ and more!

Should be called ‘Enslave the Kids’. — Garth

#139 Sheane Wallace on 05.15.15 at 6:36 am

#22 Brunett43

Lip service, the drug dealer is warning the addicts.

#140 What about CMHC? on 05.15.15 at 6:41 am

http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2015/2015-04-02-1605.cfm

“The new rate for a loan-to-value ratio up to 95% is 3.6%, up from 3.15%.”
“For a loan-to-value ratio from 90.01% to 95%, but a non-traditional down payment, the premium climbs to 3.85% from 3.35%.”

What’s a “non-traditional” down payment?

#141 Ray on 05.15.15 at 7:36 am

#92 Transplant: thanks for a balanced view. I really liked Chicago when I was there last time. So thanks for putting it in perspective. And yes I did notice that the taxes are higher. At the same time income for my profession should be 20% to 25% higher before taking into account the exchange rate.

#142 Oot der Hoos on 05.15.15 at 8:20 am

To #118 Shawn

I am surprised at your over reaction there. I honestly did not think many believed any of that and I am not being insulting.

The trillion dollar AIG and FNM Lehman Bear Stearns events are proof that I am not far off the mark. The banks were all near complete failure. Those large mergers, taxpayer payments, and the conversion of Goldman Sachs and Ally into banks, happened for a reason.

The ability of central banks to move the goal posts while the ball is in the air is something I am convinced is true. I did not know it then. Apparently, one can succeed by relying on that fact. So carry on, but have some perspective that lies were told to sustain confidence.

#143 crowdedelevatorfartz on 05.15.15 at 8:29 am

@#134 fisheman

Ahhhh yes, was that you leering at the waitresses at Jerry’s Cove 30 years ago?
Cant say I blame ya, they were stunning.

#144 First Gen Xer on 05.15.15 at 8:31 am

When my parents moved to Canada, they bought their land from a Canadian who wanted to sell it. At the time it was a hayfield and dumping ground for dead livestock, now it’s a beautiful place with fruit trees and charming buildings. If their WW2 veteran neighbors had concerns about a German couple moving in, they were very polite about it.

It is unfortunate that today’s neighbors are so much less welcoming – and that without the justification of having been shot at by the immigrant’s relatives. All there is today is a vague complaint of “Dey raised’r rennnts!” which really, can only increase by so much under Canadian law.

I’ve spent enough time in China and with Chinese-Canadians to believe that Chinese buyers are bidding up the Vancouver and Toronto markets, for reasons more related to our democracy than our resources. But I don’t find it an interesting question to speculate how much of an effect this has. I think it’s much more worthwhile to ask what the pros and cons of foreign money are. The pros seem to outweigh the cons.

Not too long ago, Canadians were worried our best and brightest were all leaving for the US. Nowadays, they’re worried that China’s best and brightest are moving here. Seems shortsighted to complain about rich, educated foreign families moving in just because they take up jobs and living space.

As for the vacant house issue, one would thing that this would be a self-correcting problem, given the size of Vancouver’s homeless population. Surely the prospect of gaining squatter’s rights to a million-dollar asset would be worth the risk of getting asked to leave to a lot of people.

#145 crowdedelevatorfartz on 05.15.15 at 8:34 am

@#138 Jimmy
I propose a program called ‘Save the Kids’. The idea would be for the Goverment to
subsidize the mortgage payments for 16, 17 and 18 years old to buy lane houses in
Vancouver. ”
+++++++++++++++++++++++++++++++++++

Jimmy .
Please stick to helping the politicians make Translink TRY to balance its ever expanding budget.

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=6&cad=rja&uact=8&ved=0CDoQFjAF&url=http%3A%2F%2Fwww.bcbusiness.ca%2Fmanufacturing-transport%2Fmayors-turn-to-jimmy-pattison-to-keep-translink-accountable&ei=SudVVb_fGveUsQT9o4DABA&usg=AFQjCNHAOv3ZQN7t4BMxb0x_JXNtNAi4ow&bvm=bv.93564037,d.cWc

Wasting ANOTHER $1 billion dollars on Translink would be cheaper than what you propose.

#146 Ralph Cramdown on 05.15.15 at 9:08 am

#140 What about CMHC? — What’s a “non-traditional” down payment?

Livestock. Nah, but a traditional down payment is not just money from any old place, but evidence that the buyers could accumulate same. Non-traditional means a gift or a loan or some type of money which does not provide such evidence.

But I googled cmhc non-traditional down payment, just for kicks, and:

“Traditional sources of down payment include: Applicant’s savings, RRSP withdrawal, funds borrowed against proven assets, sweat equity (< 50% of minimum required equity), land unencumbered, proceeds from sale of another property, non-repayable gift from immediate relative, equity grant (non-repayable grant from federal, provincial or
municipal agency). ** Non-traditional sources of down payment include: Any source that is arm’s length to and not tied to the purchase or sale of the property such as
borrowed funds, gifts, 100% sweat equity and lender cash back incentives."

So a gift from an immediate relative is traditional (maybe because they’ll gift you more if you get into trouble?) but a gift from elsewhere is not. And “sweat equity” apparently counts as a down payment. This makes no sense to me, as I understand it as something you can only accumulate after you’ve bought the house and, once accumulated, it’s just plain old equity, as the value of the house has hopefully gone up. It looks like CMHC might be using the term “sweat equity” when they mean “an intention to fix up the fixer-upper” which is no equity at all, in my mind.

More subprime.

#147 Ralph Cramdown on 05.15.15 at 9:43 am

#13 Liquid Independence — “I don’t understand why the YVRers want to restrict foreign ownership. Unlike government stimulus, capital investment by private individuals (including from foreign sources,) helps to grow our economy without burdening its citizens with public debt.”

How does a foreigner buying a house in Vancouver West from a local grow the economy? I’m curious as to your take, but here’s mine:
– if the new owner lives in the house full time and spends according to his means in the local economy, there’s no net benefit, excepting what the seller does with his investment
– if the new owner doesn’t live in the house, but leaves it vacant, there’s a loss, as the local economy is diminished by the missing spending
– if the new owner rents the house to tenants, there is an ongoing stream of rental income leaving the country perpetually, growing with inflation

I’m sure you can expand on this somewhat (what if the owner continues to live abroad, but sends his children to school locally?)

Now, what happens to the money received by the seller?
– If he’s older and richer (a fair assumption), at least half of it may well go into government bonds
– If the house remains vacant, the money eventually finds its way into constructing homes on the other side of the bridge to house a family that was displaced and will need to commute to work over said bridge
– if the vendor had children, maybe some of the money will go towards downpayments for their homes. This is Ponzi economics

Overall, I think it would be better to sell foreigners government bonds, which we can always repurchase, default on or inflate our way out from under. This is largely what the US has done. The government uses the money to invest in infrastructure, or to reduce the current tax burden of its citizens, in a somewhat democratically accountable way. Selling valuable land means paying rents in perpetuity, one way or another.

And the notion that Canada needs gobs of foreign equity capital to grow our economy is nuts. We end up with the jobs, foreigners end up with the equity. A poor trade, long term. Basically colonialism.

You are wrong on almost every count. A country with a trade deficit and a condo-centric GDP benefits from all forms of foreign investment. Bond sales do not grow an economy. Besides, foreign buyers constitute a minuscule portion of residential housing market in YVR and elsewhere, and are not responsible for overall pricing. Sellers who are wise enough to part with their properties usually buy another, or invest the funds. Both actions generate economic activity. — Garth

#148 Hot Albertan Money on 05.15.15 at 9:43 am

@ omg the original #33…

But in our case its the dammed HOT ALBERTA MONEY coming in and driving up prices so our kids have to buy crappy condos in Langford.

Please get in touch so that I can sue you for using my screen name without permission

#149 TorontoBull on 05.15.15 at 9:49 am

@sm
the yuan is pegged to the US dollar…

#150 Aman on 05.15.15 at 10:04 am

Hi Garth, I was talking to one of my Chinese volt, who mentioned investors are not directly buying the properties here now, rather their are organize groups back their who collect investments from them and have their representatives here who are buying properties here in Vancouver on their own name and flip to share the profits. Funds are exchanged since companies which they run ( on papers) operates in both countries

#151 Jeff in Moose Jaw on 05.15.15 at 10:15 am

“We’re so obsessed with borrowing massively to buy and furnish houses – because we don’t earn enough to accumulate big savings”

Bingo for 80% of us Canadians.

#152 Rational Optimist on 05.15.15 at 10:16 am

Hilarious picture. We need more people with great senses of humour like that.

#153 james on 05.15.15 at 10:17 am

The use of macro prudential tools at this time is justified as the fall out from an over leveraged consumer will be even more severe once interest rates start to rise. Governments in Asia, not particularly thought of as being anti-capitalist have taken prudent measures to cool their housing markets now, well in advance of the turn in the interest rate cycle. The policy of taxing foreigners in the RE market is both a sensible and prudent move and will dampen the move in RE once IR start to rise. It’s not ideological but based on pragmatism and a better understanding of market dynamics and mass psychology.

#154 Rational Optimist on 05.15.15 at 10:17 am

When I say “we,” I mean humanity could use more people with humour, everywhere.

#155 rosie "moving forward" in the knowledge that, "this won't end well" on 05.15.15 at 10:34 am

Apparently, this has upset some people. Stupidity is a universal human trait.

http://www.dailymail.co.uk/news/article-3079117/Without-China-Australia-views-one-property-developer-Australian-market-says-Chinese-investors-buying-luxury-housing-expensive-cars.html

#156 Kris on 05.15.15 at 10:36 am

LA is fifth with 11% foreign investment. London is first with 68% and Paris has 46%. Vancouver did not make the list.
——————————-

1. Did Toronto make the list?

2. If neither Toronto nor Vancouver are noteworthy for foreign investment.. Just imagine when foreign money DOES start coming in.

If R/E was a poker player, cheap rates and foreign money are like 2 trump cards. The first card’s been used for 4-5 years now, and it’s done wonders to keep the winnings coming. And when rates start to inch up, Mr.R/E will deal the second card..

Where’s the hope for this market to deflate? Honest question – Welcome rebuttals with an economic basis.

#157 smoke and fly on 05.15.15 at 10:37 am

Garth, why does Canada’s deficits matter but not the States?

Uh…because we live here? — Garth

#158 Larry1 on 05.15.15 at 10:40 am

Christy got elected in part by her families first slogan

She lost her riding and is somehow still able to be premier.

#159 The American on 05.15.15 at 10:58 am

At #19: Riley, well Not really. Property taxes are higher in Florida (and some other states) if the home is not your PRIMARY residence. However, the tax rate for a non-resident (which includes any owner who is not a resident of that state, whether American, Canadian, Chinese, German, British, etc.) is only subject to pay the normal real estate tax. No race, religion, color, creed, sexual orientation, nationality is EVER subject to pay a higher real estate tax rate than another property owner in the same jurisdiction. It is only “lower,” per se, for residents when they file for a homestead exemption, which provides them a discount from the normal property tax rate. You, as a Canadian, may also file for homestead exemption if you use the home as your primary residence and can demonstrate you are occupying it most of the year. Otherwise, you pay a standard rate.

I’ve actually heard from quite a few Canadian friends thy Canadians have to pay higher property tax rates when they own property in the U.S. It’s pure nonsense and misinformation. All property owners pay the exact same rates as other owners in the same jurisdiction, unless the owners have filed for homestead exemption.

#160 Blogbitch on 05.15.15 at 10:59 am

“My career is decorated with the tire tracks of those who tried to run me over for speaking my mind.” – Garth Turner

Eloquent, poignant and hilarious. A rare combination, indeed.

#161 saskatoon on 05.15.15 at 11:01 am

garth,

canadian home prices up almost 10% in april:

http://www.thestar.com/business/2015/05/15/canadian-house-prices-climb-more-than-9-in-april.html

Not exactly. The year/year increase was 9%. Without GTA and YVR, it was 3.4%. — Garth

#162 The American on 05.15.15 at 11:05 am

At #30: Whitey, fresh water won’t be Canada’s savior. I’ve heard this from so many Canadians recently, and it is laughable. For example, a state in drought in the U.S., California, will not bypass it’s closet neighbor with an ABUNDANCE of fresh water, Oregon, and instead import it from what would be considerably more costly Canada. I’m perplexed why Canadians believe California would import their water from Canada. Also, statistical fact, the U.S. has the third most abundant potable water reserves in the world, only slight behind Canada by about 9%.

#163 Setting the Record Straight on 05.15.15 at 11:07 am

@64
“bothers me. Simply, if this is discussed as being achievable then it shows we have no private property rights in Canada, in regards to real estate.”

You do not actually own your property. You have some rights to the property. The Crown is the ultimate owner.

#164 saskatoon on 05.15.15 at 11:14 am

#164 Setting the Record Straight

yes.

technically private property rights are not part of the canadian constitution.

unlike china.

#165 Mark on 05.15.15 at 11:15 am

“Whoa, not so fast there partner….many Asian tourists come to Canada on overpriced pre-paid packages from their home countries….”

The same happens to Canadians travelling overseas as well. And for the people who overpay, there are people who underpay (as in, find a great bargain). The tour industry hasn’t exactly been known for creating a lot of wealth over the years, with so many operators going belly up, so to say that margins are artificially and unilaterally inflated for “Asian” tour operators to Canada is really a stretch. Its a very competitive marketplace, both in Canada and in Asia.

#166 Mark on 05.15.15 at 11:17 am

“Just imagine when foreign money DOES start coming in.”

More than likely, closer to the bottom of the cycle. Much like very few Canadians paid the bubble valuations to buy in Florida/Arizona, but were more than thrilled to take the bargains in the aftermath.

As a rule of thumb, rich people tend to have a decent eye to value. Most don’t get rich otherwise.

#167 Bottoms_Up on 05.15.15 at 11:18 am

#163 The American on 05.15.15 at 11:05 am
——————————————————-
The US shares access to the great lakes with Canada. So I’m not sure either why Canadians would think we have some type of advantage. If anything, the concern would be the US taking their fair share, per capita. We’d draw a thimble and you a pint.

#168 dogman01 on 05.15.15 at 11:20 am

Smokingman is the Hari Seldon of Herdonomics

Herdonomics – the first second step in the development of Psychohistory.

Psychohistory is a fictional science in Isaac Asimov’s Foundation universe which combines history, sociology, and mathematical statistics to make general predictions about the future behavior of very large groups of people.

All the evidence lines up as you describe it, Canadian Interest rates stay put (or down) US up a bit, means more hell for Can$.
May be a good time to load up on US$ if you plan a trip or non-hedged US ETF.

57 Smoking Man on 05.12.15 at 8:51 pm
Variable all the way..
Mfg not coming back to Ontario till we rid the commies.
Banking and insurance using more off shore labour. Suppressing wage growth in the only sector that has the potential to lift things up.
Telecoms going to get bitch slapped when google offers wireless. Those jobs will get creamed.
Electricity going to go up up up.
The huge corp profits in the last few years only going to management and share holders and not trickling down to the slaves that could spark some growth.
The slaves consumption driven by debt. Not wage growth. That will dry up soon.
Low oil prices till the next war in middle east.
No damn way in China, Canada will spike the over night. In fact my crystal ball sees negative rates on the horizon.
We need wage inflation to drive growth to pay down debt, the opposite is happening.

#169 The American on 05.15.15 at 11:24 am

At #54: GTA Engineer, comparing two border towns on either side of Niagara Falls is a little myopic in approach. Some things to consider…. 1) American border towns along the Canadoan border will often appear as “lesser” towns when compared to Canadian border towns. Why? Well, the truth is 90% of the Canadian population lives within 60 miles of the U.S. border, so naturally the concentration of industry and wealth ar near your border towns as well. Also, Canadians LOVE a good bargain, hence why Canadians come in freaking droves to shop across the border. There are other reasons as well, but we won’t get into that for now. Americans overwhelmingly choose not to live in towns close to the border as it means they would be loving in the extreme North of the U.S., subjecting them to nasty winters, as well as dealing with the inconveniences with being very remote from the rest of the nation’s population pools, wealth, and centers of industry. Canadians often have a viewpoint of the U.S., based on their immediate views as they cross the border. It’s an unfair assumption, and it is ignorant.

#170 Ralph Cramdown on 05.15.15 at 11:27 am

“A country with a trade deficit and a condo-centric GDP benefits from all forms of foreign investment. “

I think you need to rethink that one.

Posit a world with two countries. Country A sells commodities to country B. Country B sells manufactured goods of a greater total value to country A. To make up the difference, country A is slowly selling some of its land (permanent and appreciating capital stock, generating perpetual rents), buildings (long-lived and slowly depreciating capital stock, generating rents for a long period) and commodities in-situ (endowment capital) to country B.

Explain the long term outcome.

We export $19.8B to China, which exports $47.7B to us.
https://atlas.media.mit.edu/en/explore/tree_map/hs/export/chn/can/show/2012/
https://atlas.media.mit.edu/en/explore/tree_map/hs/export/can/chn/show/2012/

We are not a developing country which is rapidly industrializing, needing large quantities if capital to grow our manufacturing capacity. To the contrary, we’re spending more than our income on stuff from China at the Dollar Store, they’re using our dollars to buy houses from our parents in Point Grey, and our parents are giving the money to their kids to put a downpayment on a townhouse in Maple Ridge. If you think this is a long term net benefit to the country because of the construction jobs it creates in Maple Ridge, I’ve got some Endowment Lands to sell you.

Some economics is hard. This isn’t.

You are obsessed with the Chinese. Get over it. — Garth

#171 The American on 05.15.15 at 11:28 am

At #66: Catalyst, you said, “Don’t make me gag. Canada is home to several monopolies and restricts foreign investment from telecom companies because god forbid we have cheaper cell plans available.”

I must admit, I completely agree with you. In fact, I’m not sure I’m aware of a country in the G20 with more permitted monopolies than Canada.

#172 Chris on 05.15.15 at 11:32 am

We had a key senior employee from our Vancouver office resign this morning to seek greener pastures elsewhere. We don’t have the profit margin to pay him what it would take to keep him.

I appreciate that real estate investment is seen as a boost for the economy, but the government should really be trying to assess whether this is driving away jobs in productive non-RE industries by making it harder to hire and retain staff.

#173 Mike T. on 05.15.15 at 11:53 am

‘I propose a program called ‘Save the Kids’. The idea would be for the Goverment to
subsidize the mortgage payments for 16, 17 and 18 years old to buy lane houses in
Vancouver’

just….WOW

I don’t have the words to properly note the level of stupidity this comment portrays.

The housing problem is directly related to bad government policy, so let’s do more!

And make our kids (?) debt slaves before they even have a chance to see the world!!!

The smartest thing I ever did if NOT LISTEN and NOT BUY A HOUSE.

https://www.youtube.com/watch?v=kNqQx7sjoS8

you people can keep you dreams

#174 AB Boxster on 05.15.15 at 11:56 am

Recent comments by Christy Clark just serve to confirm the following:

1. The impact of of foreign money on the real estate market in Vancouver is ‘significant’.
2. There will be no ‘adjustment’ in housing prices in Canada.

Sorry Garth, but your Nortel moment is a fantasy.
If a major correction was to happen, it would have happened in 2007.

It is now painfully obvious that politicians and bureaucrats in Canada will use all of the tools at their disposal to prop up this absurd bubble.

BOC rates will remain low despite the Fed. The CDN dollar will continue to tumble. Whatever, good for exports right?
Foreign cash will continue to be ‘welcomed’ regardless of other societal impacts, (such as wealth disparity or limits to opportunity) as it helps prop up the market.

Canada will increase the level of immigration (certainly favoring those with the most wealth) so that our domestic real estate market bubble can continue.
The level of domestic unemployment, underemployment will have no influence on this as the primary goal will be to keep this bubble growing.
(Sorry kids but my home is my retirement. Maybe move to the States to get that job)

CMHC and gov’t will continue to support lending on absurd property valuations.

Even if there happened to be a 20% fall in real estate valuations on every property in the country, how does somehow make this real estate affordable when it is 100% overpriced today?

The real estate owner class (this includes politicians, bureaucrats, business leaders, etc) have for too much ‘invested’ in this mess to let it end.

Will it all come crashing down someday?
Maybe, but not in the near future.

Meanwhile the effects of policies to keep the ponzi scheme alive and growing will continue to have negative effects on the domestic economy as more money continues to flow into ‘tulip bulbs’.

Think of it like the US (and frankly the whole world) and debt. Debt has grown to the point that it will never be repaid. Used to be that was a problem.

Not anymore, today its just a financial ‘inconvenience’.

The world seems to be OK with the fact that most of the money lent out will never be repaid.
Ponzi schemes are only a problem when they crumble.
Our governments have unlimited ways to keep the real estate ponzi scheme alive and well.

The only remaining question for Canadians is whether they want to play the game.

#175 Ralph Cramdown on 05.15.15 at 11:56 am

You are obsessed with the Chinese. Get over it. — Garth

Your blog, your topic. My country. If we were in England or Cyprus, we’d be talking about the Russians. But, as an investor, I’d still be spending a lot of time thinking about the world’s #1 and #2 economies, current massive global trade imbalances, and their effects.

#176 Ralph Cramdown on 05.15.15 at 12:08 pm

#160 The American

Your explanation of the Florida homestead exemption is, AFAIK, correct, but I’ve always considered it semantic nitpickery to say that non-residents don’t pay higher taxes, but year-round resident owner-occupiers pay lower taxes.

Things are more interesting in California.

“The California Constitution sets the process for determining a property’s taxable value. Although there are some exceptions, a property’s assessed value typically is equal to its purchase price adjusted upward each year by 2 percent. Under the Constitution, other taxes and charges may not be based on the property’s value. […] California’s property tax system […] can result in different treatment of similar taxpayers. For example, newer property owners often pay a higher effective tax rate than people who have owned their homes or businesses for a long time.”

http://www.lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx

That’s pretty nutty!

#177 Panhead on 05.15.15 at 12:13 pm

#115 dosouth on 05.14.15 at 11:26 pm

I spoke with a friend who truly believes that the Chinese are the cause of the YVR house price fatigue.
He lives in the north of the Island and is complaining that they will soon take over V. Island as well.

Every so often a grizzly bear crosses over from the mainland to the north Island. I think they have more chance of taking over … won’t be nice neighbours though.

#178 Mr. Pink on 05.15.15 at 12:16 pm

Surprise surprise.

“Economists now think a Bank of Canada rate hike could come even sooner than expected”

http://business.financialpost.com/news/economy/why-economists-think-a-bank-of-canada-rate-hike-could-come-sooner-than-expected

#179 Shawn on 05.15.15 at 12:22 pm

Why Interest rates are so low

There was a discussion above at 3, 39, 71, 80, 102 and 127 about Banks having excess reserves at the Fed. This means in excess of the minimum required. And did this prove banks are awash in lendable cash and is that why rates are so low.

The most obvious reason that any price in the economy including that of money would be low is that there is ample supply. So much supply that in order to balance supply and demand the price is low.

True, when a bank creates a loan it does not need to draw down cash immediately from the Fed. This is because it simply debits a loan receivable and credits a deposit account and no cash has moved at the outset.

But if required reserves are say 5% of deposits then its required reserves at the Fed have gone up and the excess reserve down. And if the deposit is moved to another bank then the cash reserve at the Fed is drawn down by the transfer to the other bank.

Banks are not now and not typically constrained in their lending. They have more than enough cash reserves at the Fed. And they have more than the required equity (else why could they issue dividends).

There is “money” available to be lent (or created and lent if you wish). The real constraint on bank lending is finding credit worthy borrowers worth bothering to lend to at low market interest rates.

As a U.S. Bank are you rushing to lend at low interest rates? Not unless guaranteed by the likes of Fannie and Freddie or unless you can securitize and sell to investors and still make a reasonable profit.

Are you rushing to lend mortgage money? Well maybe as long as it is guaranteed and as long as you can securitize and sell the loan to investors.

Another reason for low rates is tepid demand for loans. Americans (unlike Canadians) were badly burned by the house price collapse and are not rushing to sign up for the fattest possible mortgage that they can possibly afford. That is changing slowly, they are bidding up the price of houses slowly and will likely continue.

There are a lot of moving parts. The Fed has succeeded in keeping expectations of future interest rate rises low. There are investors awash in money to invest and they are accepting low rates.

Low rates are due to lots of money to lend, few perceived safe alternatives for investment, tepid demand for new loans (in the U.S.) and expectations that rates will not rise much and burn the investor.

In Canada our rates are low despite high domestic demand for loans. This is partly because in a global world interest rates are set by world supply and demand not Canadian supply and demand for loans.

#180 Alberta was almost FINISHED on 05.15.15 at 12:24 pm

The NDP like most other parties that inherent the failed CONservative steal, spend and waste policies now has a huge problem to fix. Sure Alberta should have hundreds of billions of dollars upto a trillion dollars in the coffers but the corporate oil criminals with the blessing of the steal, spend and wasting CONServatives has left Alberta in financial ruin. How any working class or middle class voter could be fooled into voting for CON scum is beyond any rational explanation.

http://www.cbc.ca/news/canada/edmonton/recession-predicted-for-edmonton-calgary-following-oil-price-fallout-1.3075643

#181 MF on 05.15.15 at 12:29 pm

#173 Chris

Lol you need to understand the Government does not care about any of us, or our well being. I know I finally realized that.

As Garth has alluded to, there are social consequences of the unsustainable run up in home prices. Lots of resentment, suspicion, xenophobia, etc.

I know I have completely disengaged and now I am out for myself, which is sad I guess. Oh well.

MF

#182 John on 05.15.15 at 12:30 pm

CBC mainstream enough for ya?
http://www.cbc.ca/player/News/Business/The%20Exchange%20with%20Amanda%20Lang/ID/2666703865/

Now look at a chart of our national debt as it exploded in 1973. Debt borrowed from private banks. Wake-up people.

#183 kommykim on 05.15.15 at 12:34 pm

The movie Looper seems like it was written for the Blog Dogs here. It’s got everything this blog has and more:

Gold and Silver bars
Chinese obsession
Screwing over your future self
Future economic predictions of Chinese dominance

#184 Jeff in Moose Jaw on 05.15.15 at 12:40 pm

Its been a stressful day at the taxfarm so far like most people – while multi-taking tedious requests, the only way to keep my blood pressure at a reasonable level is because I’m listening to this at the moment….

https://www.youtube.com/watch?v=X02JiZxnvEM

#185 Randy Randerson on 05.15.15 at 12:46 pm

Well, today I pulled a Mark and was banned from RFD, for pointing out certain realturd’s fanciful math and deceit. I guess being anti-realturd on a board that’s known for its anti-anti-realturd’s stance isn’t a smart choice.

GT’s message isn’t all that popular, especially in places that are known to be RE pumping and full of liars. It’s funny that liars are rewarded yet truth tellers are promptly kicked to the curb.

#186 Mark on 05.15.15 at 1:12 pm

“GT’s message isn’t all that popular, especially in places that are known to be RE pumping and full of liars. It’s funny that liars are rewarded yet truth tellers are promptly kicked to the curb.”

Unfortunate, isn’t it? But what do you expect from a forum that allowed, for months, a thread that essentially libelled our generous host here. Led by an “economist” working for a RE management firm who thought nothing of being a bully towards those who disagreed with him on a daily basis.

In my particular case, the trolls simply overwhelmed the mods with more reported posts than they could handle. I understand, literally hundreds every day. And the boorishness from the RE pumper crowd was off-the-charts. Not only that, but they thought nothing of libelling an individual who doesn’t even live in Canada in their posts!

“Economists now think a Bank of Canada rate hike could come even sooner than expected”

Lol, good one. People actually still pay to read that “newspaper”?

#187 Paul on 05.15.15 at 1:22 pm

186 Randy Randerson on 05.15.15 at 12:46 pm
————————————————————-You a truth teller lmao

#188 Julia Greenbaum on 05.15.15 at 1:41 pm

Here is some perspective. Forbes article — Ten best cities to invest in a home
http://www.forbes.com/pictures/geeg45klkl/introduction/

#189 Shawn on 05.15.15 at 1:46 pm

Loand won’t be reaoid?

AB Boxster said:

The world seems to be OK with the fact that most of the money lent out will never be repaid.

****************************************
The lenders, or those who guarantee the loans, believe that their loans will be repaid.

Given today’s low interest rates lenders must perceive there to be a very low risk of defaults.

Things could change and change fast. I’ve been expecting a sharp rise in loan defaults in Canada for years.

So far it has not happened. In part because house price keep rising and in part because it is easy to borrow new money to pay old loans.

If we get a lot of job losses we should see higher defaults. We all wait and see.

The “market” seems to be voting that there is little danger ahead. Few defaults on the horizon.

I never make unequivocal predictions about the future. I expect things to work out well in the long term but with unpredictable bumps along the way. Predicting the short term and giving virtual guarantees about the short term (as some do) is folly.

#190 Nagraj on 05.15.15 at 1:52 pm

The American press would have a field day if their president stood up and said, “My fellow Americans, some of you are borrowing too much money. Quit it.”

But Canadian MSM is in genuflecting mode when the PM says: Some of yas is borrowin’ too many dollars.

It’s one thing for Turner et alia to point out a household debt crisis – but astonishingly stupid for the head of gov’t to kinda notice that, heaven only knows why, some of yas is, shall we say reckless.

Holy s–t.

#191 John on 05.15.15 at 1:54 pm

I live in Vancouver and I am agree with you when you say that the locals are buying houses for overvalued prices but you can not ignore the fact that foreign buyers and their cash is igniting the speculations even though they might not be interested in all areas.

There is something ells as well that I think you are ignoring deliberately or maybe not and I like to hear your view on that. In Vancouver there are a lot of new comers that I assume you consider “local” but in reality they have bought their way to Canada in immigration classes that only requires money and nothing ells. I have no problem with that at all but my point is that this so called “locals” do not really live here. They arrive and shortly after that buy a house in cash of course and leave the city and go back to their country to make more money while the house is vacant here. I have no problem with that either beside the fact that with the average salaries here in the city I do not see myself or anybody in my situation ever get out of old small rental apartment.

#192 cramar on 05.15.15 at 1:56 pm

@36 Ray & #92, and others re Chicago

One of the funniest things I heard years ago was while visiting #1 son in Regina. I met an older gentlemen who said in his younger days in sophisticated Saskatchewan he and friends took a road trip to the U.S. As they were traveling the Interstate they saw a sign for a city. They never heard of it before. Some city called “Chick-agoo” ROFL!

Anyhow, #2 son lives in Chicago and owns 3 condos, which he bought in the lake area north of Lincoln Park. Great area, great beaches, great views, and condos were cheap since they were repros. He lives in one and rents the other two. RE values are coming back slowly after the Great Recession, but if Chicago ever follows some other U.S. cities the gains will be good. I know taxes are higher, but he said for your residence you can claim both your mortgage and taxes on your income tax.

The one thing I found interesting. Is that a condo does not come with a parking space. You have to buy them separately. I believe the going rate was around $30k several years ago. He owns a few to park his vehicles or rent them out. Interesting way to get into RE cheaper. Buy a parking spot and rent it out.

#193 Retired Boomer - WI on 05.15.15 at 2:12 pm

#125 Waiting on the west coast

I basically agree with many of your points, the one about the duration of wars is debatable. The link you shared a bit earlier on the “security state” and internal spying was revealing. While it was a bit over 2 hours… worth the look.

Yes, our NSA and related agencies have essentially gone berserk since 9/11. Yes, there are some defenses to it.

Noam Chomsky was right, as have been Robert Scheer, Chris Hedges, and many other writers.

There are bigger worries than trade policies, negotiated in secret. Although secrets have been a US staple of government for many years, and we (the sheep) are never entrusted to know the full extent. News (propaganda) has been managed since WW1 nothing new there.

So we live -pretty well, too- inside the bubble.

Thanks for the exchange.

#194 Randy Randerson on 05.15.15 at 2:12 pm

http://business.financialpost.com/personal-finance/family-finance/with-four-kids-this-gen-x-couple-needs-to-pay-off-student-loans-buy-a-bigger-house-and-still-find-a-way-to-save

Another couple with no savings, huge debt (student loans), kids, and want to buy more things. Geez.

#195 Mark on 05.15.15 at 2:19 pm

“The American press would have a field day if their president stood up and said, “My fellow Americans, some of you are borrowing too much money. Quit it.””

Last US President to try that (or something very similar) was summarily ejected from office:

https://www.youtube.com/watch?v=-tPePpMxJaA

#196 Bottoms_Up on 05.15.15 at 2:20 pm

#164 Setting the Record Straight on 05.15.15 at 11:07 am
———————————————————-
That’s right, try not paying your property taxes for a few years, or own something that gets expropriated. Then you’ll see who has the real rights to your land.

#197 Rational Optimist on 05.15.15 at 2:23 pm

193 cramar on 05.15.15 at 1:56 pm

“Interesting way to get into RE cheaper. Buy a parking spot and rent it out.”

It’s only a matter of time before developers in Toronto are encouraging young ‘uns to “get on the property ladder” with an underground spot!

#198 Victoria Real Estate Update on 05.15.15 at 2:25 pm

# 175 AB Boxster

“If a major correction was to happen, it would have happened in 2007.”

You must not have seen these charts:

In 2008-09 prices in Vancouver fell at a rate of 14.2% PER YEAR (for 10 months) until EMERGENCY interest rates were brought in.

. . . . . Vancouver House Prices. . . . . .
. Percent Below July 2008 Price Level . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
. .0%. . .*. . . . . . . . . . . . . . . . . . . .
– 1%. . . . . . . . . . . . . . . . . . . . . . . .
– 2%. . . . . . . . . . . . . . . . . . . . . . . .
– 3%. . . . . . . . . . . . . . . . . . . . . . . .
– 4%. . . . . . . . . . . . . . . . . . . . . . . .
– 5%. . . . . . . . . . . . . . . . . . . . . . . .
– 6%. . . . . . . . . . . *. . . . . . . . . . . .
– 7%. . . . . . . . . . . . . . . . . . . . . . . .
– 8%. . . . . . . . . . . . . . . . . . . . . . . .
– 9%. . . . . . . . . . . . . . . . . . . . . . . .
-10%. . . . . . . . . . . . . . . . . . . . . . . .
-11%. . . . . . . . . . . . . . . . . . . . . . . .
-12%. . . . . . . . . . . . . . . . . . . . * . . .
—————————————————————-
. . . . . .July. . . . December. . . . May. . .
. . . . . 2008. . . . . 2008 . . . . . 2009. . .

(source: Teranet’s index)

If interest rates weren’t suddenly dropped from near-normal levels to emergency levels, Vancouver’s price plunge would have continued.

From 2007 to early 2009, SFH prices in Calgary fell at a rate of 12.2% PER YEAR (for 18 months) until emergency interest rates were brought in.

. . Calgary Single Family Home Prices. . .
. .Percent Below July 2007 Price Level. . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .0%. . .*. . . . . . . . . . . . . . . . . . . . .
– 2%. . . . . . . . . . . . . . . . . . . . . . . .
– 4%. . . . . . . . . . . . . . . . . . . . . . . .
– 6%. . . . . . . . . . . . . . . . . . . . . . . .
– 8%. . . . . . . . . . . . . . . . . . . . . . . .
-10%. . . . . . . . . . .* . . . . . . . . . . . .
-12%. . . . . . . . . . . . . . . . . . . . . . . .
-14%. . . . . . . . . . . . . . . . . . . . . . . .
-16%. . . . . . . . . . . . . . . . . . . . . . . .
-18%. . . . . . . . . . . . . . . . . . . . *. . .
—————————————————————-
. . . . . .July. . . . .January. . . . January.
. . . . . 2007. . . . . 2008 . . . . . .2009. .

(source: a Calgary realtor’s site)

From 2007 to early 2009, SFH prices in Edmonton fell at a rate of 12.4% PER YEAR (for 21 months) until interest rates were slashed from near-normal levels to emergency levels.

. Edmonton Single Family Home Prices. .
. Percent Below May 2007 Price Level . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
. .0%. . .*. . . . . . . . . . . . . . . . . . . .
– 2%. . . . . . . . . . . . . . . . . . . . . . . .
– 4%. . . . . . . . . . . . . . . . . . . . . . . .
– 6%. . . . . . . . . . . . . . . . . . . . . . . .
– 8%. . . . . . . . . . . . . . . . . . . . . . . .
-10%. . . . . . . . . . . . . . . . . . . . . . . .
-12%. . . . . . . . . . *. . . . . . . . . . . . .
-14%. . . . . . . . . . . . . . . . . . . . . . . .
-16%. . . . . . . . . . . . . . . . . . . . . . . .
-18%. . . . . . . . . . . . . . . . . . . . . . . .
-20%. . . . . . . . . . . . . . . . . . . . . . . .
-22%. . . . . . . . . . . . . . . . . . . . .*. . .
—————————————————————-
. . . . . May. . . . February. . . . February.
. . . . .2007. . . . . 2008 . . . . . . .2009. .

(source: a Calgary realtor’s site)

#199 gut check on 05.15.15 at 2:29 pm

@#88 waiting on the westcoast on 05.14.15 at 10:04 pm”

your post was the funniest one of the night. Nostalgic, really.
Did you still have a copy of the NAFTA propaganda in your junk drawer or something?
Or did you write it, maybe?

#200 Ponzius Pilatus on 05.15.15 at 2:30 pm

#151 Aman on 05.15.15 at 10:04 am
Hi Garth, I was talking to one of my Chinese volt, who mentioned investors are not directly buying the properties here now, rather their are organize groups back their who collect investments from them and have their representatives here who are buying properties here in Vancouver on their own name and flip to share the profits. Funds are exchanged since companies which they run ( on papers) operates in both countries
—————–
That’s exactly how it works.
Just go to any Annual meeting of Condo Stratas in Vancouver: 2 or three representatives of oversea owners have 80% of the proxies.

#201 gut check on 05.15.15 at 2:31 pm

“#173 Chris on 05.15.15 at 11:32 am
I appreciate that real estate investment is seen as a boost for the economy, but the government should really be trying to assess whether this is driving away jobs in productive non-RE industries by making it harder to hire and retain staff.”

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

Yes, that is where the rubber will hit the road.

#202 devore on 05.15.15 at 2:37 pm

#139 Jimmy

A subsidy doesn’t make anything cheaper in the long run. All you’re doing is increasing prices of the already stupid expensive laneway houses.

#203 Victoria Real Estate Update on 05.15.15 at 2:46 pm

# 175 AB Boxster

“It is now painfully obvious that politicians and bureaucrats in Canada will use all of the tools at their disposal to prop up this absurd bubble.”

Canada’s housing bubble was built on lax lending standards (starting in 2000) and emergency interest rates (in 2009).

As Canada’s bubble inflated, there was a gradual loosening of lending standards. This was done to keep house prices from correcting. It can easily be argued that there aren’t many “tools” left to be used at this point.

Other countries such as the US, Ireland, Spain, Japan, Greece, Iceland… didn’t simply let their housing bubbles deflate without much concern. It would be ridiculous to assume that these countries wanted house prices to correct. This proves that when a bubble forms and a price correction is due – it will happen.

In 2007-08 several Canadian markets were in correction mode. Emergency rates (2008-09) stopped these market corrections and prevented other Canadian markets from falling.

Several Canadian markets appear to have peaked and are in correction mode. This time interest rates can’t be slashed from near-normal to emergency levels to stop Canadian markets from correcting.

It can be argued that Canada already has the loosest lending standards in the world. It is doubtful that there is an effective move that could be made to stop a major price correction in Canada.

It simply isn’t different in Canada. There will be a major housing market correction.

#204 Daisy Mae on 05.15.15 at 2:46 pm

#133 Catch22: “Libs as usual have picked a dud, the masses have no faith in the cons- what’s left?”

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

Not much. Did the Libs really believe choosing a ‘Trudeau’ to lead the party would impress the voters?

#205 Bottoms_Up on 05.15.15 at 2:50 pm

#10 everythingisterrible on 05.14.15 at 6:51 pm
———————————————————–
Exactly. US states such as Florida having property tax exemptions for primary residences is actually a hidden tax on foreign owners (ie, those that don’t qualify to have their house classified as their primary residence).

This is actually a great way to tax foreign ownership, and could be a reasonable strategy for BC.

#206 young & foolish on 05.15.15 at 2:50 pm

“Those who said the banks were bankrupt did not make money but I did. Those doomers are left to moan that the banks were bailed out.”

The doomers seem to consistently get the order of things backwards … it’s always politics first (necessity) , then economics (rationalizations).

#207 Bottoms_Up on 05.15.15 at 2:59 pm

#35 omg the original on 05.14.15 at 7:34 pm
——————————————————-
Because there are some foreigners that are buying Canadian real estate for the sake of accessing our health care system, yet choose to live, elsewhere, don’t they have to be able to prove that they lived in Canada for a certain length of time to retain access to that healthcare? What are those rules, and how easy would it be to circumvent these rules (ie, to show you lived in Canada for 6 months when in fact you didn’t)?

If this anti-newcomer, hate-immigrant theme continues here I am shuttering this blog. I will not provide a vehicle for knuckle-dragging xenophobes. — Garth

#208 Bottoms_Up on 05.15.15 at 3:13 pm

I found it.

One can own a home in BC, and be outside the country for 7 months, and still retain medical coverage.

http://www2.gov.bc.ca/gov/topic.page?id=A24BB960F5234630BCB9DE847EEFD07B

So now the question is, who is monitoring this?

#209 everythingisterrible on 05.15.15 at 3:44 pm

If this anti-newcomer, hate-immigrant theme continues here I am shuttering this blog. I will not provide a vehicle for knuckle-dragging xenophobes. — Garth

You determine the comments theme with your blog post topics. You’re in the driver’s seat bud, we’re just riding the bus. Just admit it, you enjoy the debating this topic as much as the rest of us.

The topic is not hate. It’s not exclusion. It’s not prejudice. I’m done with you. — Garth

#210 Mr. Pink on 05.15.15 at 3:54 pm

Bank of America forecasting another rate cut and a .73 Loonie.

“Even as the Fed begins a gradual rate hike cycle this year, we think the Bank of Canada will remain accommodative, and will likely ease by another 25 basis points to 0.5 per cent if growth disappoints, as we expect”

http://www.cbc.ca/news/business/bank-of-america-forecasts-another-rate-cut-in-canada-1.3076304

Shots fired.

#211 jess on 05.15.15 at 3:56 pm

“It is the fact that you have $2trn of accumulated profit of US companies located where? In Bermuda or the Cayman Islands – there is no activity there.”
Pascal Saint-Amans: “You have giants making billions in profits and not paying taxes where they operate” oecd


http://www.europarl.europa.eu/news/en/news-room/content/20150511IPR54731/html/Tax-warm-welcome-for-whistleblowers-and-investigative-journalists

Canadian corporations hoarding record amounts in offshore tax havens
http://www.statcan.gc.ca/daily-quotidien/150424/t150424a001-eng.htm
http://nupge.ca/content/12254/canadian-corporations-hoarding-record-amounts-offshore-tax-havens

Canadian $$ in Tax Havens Reach $199 Billion
calculations are based on Statistics Canada’s Foreign Direct Investment data
Coca-Cola, Oracle, Intel Use Cayman Islands to Avoid U.S. Taxes
By David Evans – May 5, 2009 00:01 EDT
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWoQkk2WY1oc
…They will also be required to pay more tax in a number of other countries and publish, country-by-country, how much they pay.
http://www.bbc.com/news/business-32730305

======

Elizabeth Warren’s Trade Deal Fears Confirmed: Canada Uses NAFTA to Challenge Volcker Rule – 05/14/2015 – Yves Smith

Canada Uses NAFTA to Challenge Volcker Rule
Posted on May 14, 2015 by Yves Smith

Volcker Rule applied to Canadian government debt since 2012, why the Nafta argument was hauled out at this juncture

#212 Not happy on 05.15.15 at 3:57 pm

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#213 everythingisterrible on 05.15.15 at 4:08 pm

DELETED

#214 waiting on the westcoast on 05.15.15 at 4:14 pm

#200 gut check on 05.15.15 at 2:29 pm

“Did you still have a copy of the NAFTA propaganda in your junk drawer or something?
Or did you write it, maybe?”

Hey… I just regurgitate what I am told… ;-)

I know it might be hard to believe but there are waaaay more wealthy people (and the average person is far better off economically) in countries the advocate and practice free trade than in countries that do not. Maybe you should travel a bit (and not just to an all inclusive resort).

Check our Argentina versus Chile. Argentina has the resources of Canada (in fact was as wealthy as Canada in the early 1900s). Corruption and protectionist practices have kept the country a bit of a basket case. Chile with its more open policies since the expulsion of their Dictatorship phase, is rapidly growing.

There are numerous other examples (as per my later post).

#215 Not happy on 05.15.15 at 4:15 pm

DELETED

#216 eddy on 05.15.15 at 4:19 pm

I agree that the cause of crazy prices is easy credit not cash.
Blaming people with cash is a false argument because only the principles in a transaction know the details. There’s an old curse

-may you count other people’s money

#217 Mark on 05.15.15 at 4:36 pm

“Check our Argentina versus Chile. Argentina has the resources of Canada (in fact was as wealthy as Canada in the early 1900s). Corruption and protectionist practices have kept the country a bit of a basket case. Chile with its more open policies since the expulsion of their Dictatorship phase, is rapidly growing.”

The other significant factor in Argentina is the weighting of their resources. Chile is copper-heavy. Argentina, well, as its name implies, is more heavy with the precious metals, and thus, has seen rather poor numbers out of that industry for a long time.

You speak of corruption in Argentina and less corruption being in Chile. That certainly doesn’t appear to be the case with Barrick’s Pascua-Lama mine, where it is Chilean corruption that is causing a world of hurt for Barrick and the people of the area who want to move on with the development of such a fabulous resource.

Bank of America forecasting another rate cut and a .73 Loonie.

Rate cuts, of course, but they’re way out to lunch on where they think the loonie is going. Way out to lunch. But that’s not surprising since most economists today do not properly understand deflation.

That’s okay, there isn’t any. — Garth

#218 raisemyrent on 05.15.15 at 4:41 pm

#208 Bottoms_Up
you’re hilarious. you need proper immigration documents to get health care. our health care is the only one in the developed world without prescription drug coverage. we also have wait times, I don’t know if you’ve heard.
so now you’ve got a foreigner who can pay for real estate (6-7 figures, presumably cash), but is doing it to get health insurance, just in case (but no prescription). do you think before you post?
let’s just assume all of the above is true. why are they not entitled to healthcare? they would’ve injected money by then into our country, and had documentation to justify their coverage as per our regulations. get a grip.

#219 The American on 05.15.15 at 4:54 pm

At #206: Bottoms_Up, you said, “US states such as Florida having property tax exemptions for primary residences is actually a hidden tax on foreign owners (ie, those that don’t qualify to have their house classified as their primary residence).”

This is actually not a hidden tax, nor is it targeted at foreign ownership. This is simply a tax exemption for persons who own real estate in the State of Florida who live there most of the year. Even I, an American living in Seattle, own property in Florida. I cannot claim the reduced tax rate through the homestead exemption because I do not live in Florida. Most states operate like this. I also pay the full tax rate in the State of Oregon, as I cannot claim homestead exemption there either.

The purpose of the homestead exemption, its origins, reasoning, and some brief overview from state to state are included in this link (yes, it is Wikipedia, but I’ve reviewed it, and it is indeed accurate)… http://en.wikipedia.org/wiki/Homestead_exemption

#220 jess on 05.15.15 at 5:18 pm

…” the Supreme Court has now decided that an alleged illicit action by a disloyal employee has no relevance as to whether the Italian tax authorities can utilize the data it has obtained. The tax authorities, it confirmed, may use “any such circumstantial evidence in their activity against tax evasion.”

In fact, it added, there could not be assumed a right of secrecy (which does not exist under Italian law against action by the tax authorities) over any Italian citizen’s undeclared foreign bank account, while the information could not be said to have been obtained in violation of any Italian laws or by any action by the Italian tax authorities themselves.

The Supreme Court also confirmed that the data was legitimately acquired following a request to the French tax authorities within the exchange of tax information stipulations foreseen in European Union directives and the double taxation agreement between Italy and France. It was emphasized that there could be no presumption that any Italian citizen with alleged undeclared funds should have been warned of the request for assistance from one tax authority to the other or be involved in it, or its outcome, in any way.

Following the Court’s judgment, which will also be valid for any other information obtained in the future in a similar fashion, it is now expected that there will be an increased recourse to the current voluntary disclosure program by Italian overseas account holders looking to regularize their undeclared assets before they become the subject of an audit by the Italian Revenue Agency.
– See more at: http://www.tax-news.com/news/Italian_Revenue_Can_Use_Offshore_Account_Holder_Lists____68016.html#sthash.c60r5vkc.dpuf

#221 Not a hypocrite on 05.15.15 at 5:20 pm

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#222 Not a hypocrite on 05.15.15 at 5:22 pm

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#223 Big Cojones on 05.15.15 at 5:27 pm

1) Oil sands land prices hit new high indicating the smart money see’s further down the road than reporters and the green blob fanatics.

http://calgaryherald.com/business/energy/oilsands-land-prices-reach-highest-level-in-eight-years-amid-crude-rebound

2) Poloz has now flip flopped a gut wrenching 180 from saying the economy was a basket case ( likely just driving down the dollar for the NB coal barons that fill his brain trust) to where he says rates must rise sooner than later. The man is a wacko, but it has stabilized the dollar.

I consider this a ‘dinner bell moment’ in investing history, a chance to gorge on cheap energy stocks. I wouldn’t be surprised to double my money every year for the next five after the Obama Attack on Canada is in the rear view mirror.

#224 Spaccone on 05.15.15 at 5:30 pm

Don’t remember if this has been mentioned in a blog post or someone commented on it but I just saw this:

Apri 18 – The Star: “Bridle Path (“Palace of Versailles”) monster mansion fails to sell at auction

#225 ron on 05.15.15 at 5:44 pm

According to this CNBC clip, Toronto is the worlds hottest luxury market (highest number of $2 million+ homes sold). Second on the list is London, third is Beverly Hills. Beverly Hills and London are in the list of where foreign money goes to buy properties, but not Toronto. So I guess it’s only us super rich Toronto folks buying these $2 million+ Toronto homes.

http://video.cnbc.com/gallery/?video=3000375672

I live in one. Rent it from a local. — Garth

#226 Not a hypocrite on 05.15.15 at 5:48 pm

DELETED

#227 Nemesis on 05.15.15 at 5:50 pm

“Besides, foreign buyers constitute a minuscule portion of residential housing market in YVR…” – HonGT

#AndYetItMoves… #YaKnow… #I’veBeenWaitingYearsToUseThisOne…

https://youtu.be/vQLNS3HWfCM

#228 Snowboid on 05.15.15 at 6:07 pm

#206 Bottoms_Up on 05.15.15 at 2:50 pm…

Already happens in BC and has for a long time.

What planet do you reside on?

#229 Snowboid on 05.15.15 at 6:13 pm

#209 Bottoms_Up on 05.15.15 at 3:13 pm…

Oh, you are from another planet – maybe Nectonite?

Your link clearly states you “…must be a citizen of Canada or be lawfully admitted to Canada for permanent residence…”

You can’t just buy a home in BC and collect Medical – duh!

#230 The American on 05.15.15 at 6:15 pm

At #177: Ralph Comedown, actually most states have measures in place similar to that of California’s. In most cases, new owners will almost always pay a higher property tax (not higher rate) than the previous owners. Why? Well, it boils down to keeping affordability in check, not only from a property’s monthly mortgage payment, but also to a property’s taxes.

In real estate cycles of prices moving upward in an extreme manner, much like the most recent U.S. real estate boom, if taxes followed the same trend, it could potentially lead to people losing their homes as the taxes could easily double in a short amount of time. Therefore, most states have caps placed on the yearly increase that a property’s tax can raise at the time of purchase. This also allows the consumer to more easily budget long term, even in the wake of an unexpected real estate boom.

A 2% cap YOY for increases in property taxes in California seems reasonable. Depending on jurisdiction, you can expect to pay about 2% of a property’s purchase price in taxes each year. So, you buy a small home in Cali for $750,000, you can expect to pay about $15,000 in real estate taxes the following year. The following year, they can expect to pay no more than $15,300, and so on, and so on. Families must budget, and these measures help keep it fair, especially for people on fixed incomes. It would certainly be difficult and unrealistic for most owners to shell out $30,000 in taxes a year if prices doubled in a few years, much like it did in Canada. This is more often than not why you will see a home on the tax records that has an “assessed value” much, much lower than its actual “market value,” especially throughout the U.S.

I purchased a condo in Seattle in 2009 for $837,000, and my initial tax basis was based on this amount. I paid roughly $8,500/year in taxes for this property (You can expect to pay about 1% real estate taxes on the purchase price of the home in this area). The “assessed value” initially reflected this amount as well, and it rose each year, but not as fast as the actual market value increased. My taxes raised year after year by about 3%. Then, I sold in 2013 for $1,200,000. The new owners are now paying about $12,700/year in taxes on the property as the new “assessed value” reset to the new purchase price.

#231 Entrepreneur on 05.15.15 at 6:53 pm

“The slip of the tongue” is usually the truth.

Nations are built by the people that live within, and so, should be protected by their government.

Remember this when the next election comes but you have to vote.

#232 gut check on 05.15.15 at 9:24 pm

“#215 waiting on the westcoast on 05.15.15 at 4:14 pm
#200 gut check on 05.15.15 at 2:29 pm

“Did you still have a copy of the NAFTA propaganda in your junk drawer or something?
Or did you write it, maybe?”

Hey… I just regurgitate what I am told… ;-)

I know it might be hard to believe but there are waaaay more wealthy people (and the average person is far better off economically) in countries the advocate and practice free trade than in countries that do not. Maybe you should travel a bit (and not just to an all inclusive resort).

Check our Argentina versus Chile. Argentina has the resources of Canada (in fact was as wealthy as Canada in the early 1900s). Corruption and protectionist practices have kept the country a bit of a basket case. Chile with its more open policies since the expulsion of their Dictatorship phase, is rapidly growing.

There are numerous other examples (as per my later post)”

I am not protectionist. I’m not anti free trade. I am PRO free trade.

NAFTA isn’t Free Trade, that’s all. Why haven’t you been able to suss that out? You seem stuck on the version of it that they sold to the people instead of looking around and realizing, “OOOOOOOOhhhh, free to exploit labour and resources, Free for the monopolists, Free for the tax evasion schemes… but not free FOR the labour, free for the small businesses, or free for the tax slaves.”

#233 MikeEdmonton on 05.15.15 at 10:07 pm

GRANT:

New drilling instrumentation product

Pason Systems Corp.
Calgary, Alberta$167,617

#234 souvereigninternational on 05.16.15 at 2:03 am

“When your bank offers to protect you, run.”

I won’t feel protected Until they Can offer 30 year unlocked at 3.69% :

http://www.usatoday.com/story/money/personalfinance/2015/02/12/mortgage-rates/23318829/

Unless one has enough liquidity to pay off the loan in full at the end of 5 or 10 years it is like playing russian roulette. Lost your job – screwed, credit rating down – screwed, mortgage rates up -screwed, property value down – screwed. You signed below, sorry, said TNLATB.

#235 souvereigninternational on 05.16.15 at 2:10 am

My point is all Canadian mortgages are adjustable. These during GFC in US would be considered subprime. It’s a subprime country with big HELOC (to be called in soon) to boot. No jingle mail for you Canadians either, just bankruptcy, they got you by the….

#236 Tamsen on 05.16.15 at 2:42 am

“Foreign buyers constitute a minuscule portion of residential housing market in YVR”

Trying to reconcile that statement with the fact that average homes in West Van are 2 MILLION dollars and rising …

#237 Made in BC on 05.16.15 at 4:24 pm

#179 Mr. Pink on 05.15.15 at 12:16 pm
Surprise surprise.

“Economists now think a Bank of Canada rate hike could come even sooner than expected”

http://business.financialpost.com/news/economy/why-economists-think-a-bank-of-canada-rate-hike-could-come-sooner-than-expected
++++++++++++++++++++++++++++++++++++

BOA says the opposite. Which means no one has a clue.

http://www.huffingtonpost.ca/2015/05/16/bank-of-america-forecasts_n_7294100.html